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April 2019 Corporate Presentation – Canadian Natural Resources (CNRL)

Canadian Natural Resources (CNRL) · Apr 3, 2019 · 73 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 1
    Corporate Presentation April 2019
  2. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 2
    Delivering Value & Growth SNAPSHOT 2018 2019B Capital expenditures – net (C$ million) $4,731 $3,700 Annualized dividend (C$/share)* $1.34 $1.50 Production (annual average, before royalties) Crude Oil (Mbbl/d) 821 782 - 861 Natural…
  3. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 3
    TABLE OF CONTENTS • Corporate Strategy Page 1 • A World Class Company Built for All Cycles Page 2 • Delivering Real Value to Shareholders Page 6 • Value/Growth Opportunities Page 11 ? Montney Page 12 ? Heavy Crude Oil Page 13 ?…
  4. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 4
    Key Message Optimal Cash Flow Allocation Increasing Returns Unique, Balanced Asset Base Robust Throughout Cycles Proven Effective Strategy
  5. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 5
    Canadian Natural A Unique E&P Company • Long Life Low Decline asset base • Low maintenance capital requirements • Effective and efficient operations • Flexible, disciplined free cash flow allocation • Strong Balance Sheet,…
  6. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 6
    A World Class Company Built for All Cycles
  7. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 7
    Strategy • Flexible capital allocation to maximize value • Strong Balance Sheet supports investment grade credit ratings • Defined growth / value enhancement plans by product and basin • Large, diverse, balanced asset base ?Product…
  8. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 8
    North America North Sea Offshore Africa Heavy Crude Oil ~23% Light Crude Oil & NGLs ~13% Natural Gas ~24% • Balanced, diverse production mix • International exposure • Vast, balanced resource base to develop • Growing,…
  9. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 9
    Oil Sands Mining & Upgrading ~0% Decline Pelican & Thermal ~12% Decline BOE Production Mix Long Life Low Decline Production ~57% Low Capital Exposure Production ~43% Maintenance Capital of ~$3.1 billion required ~10%…
  10. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 10
    MAXIMIZES CORPORATE ASSET VALUE AND FREE CASH FLOW 8 Balanced Asset Model Robust Through All Cycles Time • Ability to ramp up production faster with improving prices • Stronger Balance Sheet • Long life low decline assets provide…
  11. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 11
    1P Reserves After Royalties – 2018 Peers include: APA, APC, CVE, CHK, DVN, ECA, EOG, HSE, IMO, NBL, OXY, SU. Source: 2018 Net Proved reserves, constant dollar, per corporate reports. (MMBOE) CNQ Peers Integrated Peers MASSIVE LOW…
  12. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 12
    Long-Term Ratings Outlook Short-Term Ratings DBRS BBB High Stable n/a Standard & Poor’s BBB+ Stable A-2 Moody’s Baa2 Stable P-2 BALANCE SHEET CONTINUES TO STRENGTHEN 10 Robust Financial Position Debt/Book Cap Note: Liquidity…
  13. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 13
    • Balanced portfolio of assets ? Diverse product inventory and time horizons ? Owned and controlled infrastructure ? Long Life Low Decline assets ? Low maintenance capital requirements ? Size drives economies of scale • Strategic ?…
  14. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 14
    Safety is a Core Value 0.0 0.5 1.0 2013 2014 2015 2016 2017 DELIVERING EFFECTIVE & EFFICIENT OPERATIONS 12 Delivering Safe, Effective & Efficient Operations Total recordable injury frequency (per 200,000 hours) Operating Costs…
  15. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 15
    Delivering Real Value to Shareholders
  16. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 16
    Canadian Natural 2019 Targeted Free Cash Flow Scenarios ($ billion) Note: Free cash flow represents adjusted funds flow less capital. See Advisory for cautionary statements, definitions and pricing assumptions. Free Cash Flow ~$2.9B…
  17. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 17
    DISCIPLINED ALLOCATION, FOCUSED ON VALUE CREATION 15 Balance & Optimize the Four Pillars of Capital Allocation • Balance Sheet Strength ? Balance Sheet strengthens through free cash flow allocation policy • Economic Resource…
  18. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 18
    FLEXIBLE AND DISCIPLINED FREE CASH FLOW ALLOCATION Free Cash Flow Allocation Policy 16 Targets = 1.5x Debt/EBITDA and $15.0 billion in Absolute Debt Note: Policy is effective November 1, 2018 and targeted to be in place until at least…
  19. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 19
    5 Year Production per Share Growth (Production/Share) Capital ($ billion) Strip pricing $4.7 $3.7 $4.7 $4.7 $4.5 *Based upon 2018 actuals to midpoint for indicated year range. Note: See Advisory for pricing assumptions, cautionary…
  20. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 20
    • Disciplined allocation of capital delivers sustainable dividend policy ? 19 consecutive years of dividend increases ? 12% increase to current quarterly dividend per common share over 2018 levels ? $1.50 per common share annualized…
  21. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 21
    Canadian Natural Returns to Shareholders Horizon Phase 1 build years ($ million) Note: Based upon dividends declared. *2019F share purchases are YTD, as at March 6, 2019. 19 19 years of dividend increases 21% CAGR since inception…
  22. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 22
    Committed Management Peers include APC, APA, CVE, DVN, ECA, EOG, PXD and SU. Note: Based on share ownership data from October 2018 (excluding options). Outstanding shares as at Q2/18 for Canadian peers and as at Q3/18 for US peers per…
  23. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 23
    Value/Growth Opportunities
  24. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 24
    Natural Gas & Light Crude Oil(2) 2,000 200,000 Heavy Crude Oil(2) - 250,000 Thermal in Situ Oil Sands - 120,000 Oil Sands Mining & Upgrading Near Term - 95,000 Long Term - 610,000 International Côte d’Ivoire - 12,000 Big E…
  25. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 25
    Lean Gas…
  26. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 26
    CNQ Land Base Existing Montney wells Gas Plants Pipelines Progress Gas Plant Sexsmith Gas Plant Wembley Gas Plant Large, concentrated liquids rich Montney land ? Facilitates efficient area program • Leveraging technology &…
  27. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 27
    Gas cycling/storage targets two objectives ? Increased liquids recovery ? Store produced gas during low price periods • Pilot targeted for Septimus late in Q2/19 • Opportunities throughout liquids rich land base • Leveraging…
  28. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 28
    EXTENSIVE LAND BASE PROVIDES POTENTIAL TO CREATE ADDITIONAL VALUE 26 Heavy Crude Oil Technological Advancement – Horizontal Multilateral Opportunities ~500 km AB SK CNQ Land Base CNQ Heavy Crude Oil Producing Properties Potential…
  29. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 29
    Peace River Lindbergh Saleski Liege Germain Pelican Wolf Lake Primrose Grouse Leismer Gregoire Birch Mtn. Ells River Marie Lake Kirby Ipiatik CNQ Thermal Producing Properties CNQ In Situ Project Inventory Peers…
  30. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 30
    Joslyn Lease Plan Estimated cost savings of over $500 million ? Significant value realized from savings and efficiencies through optimizing the mine plan • Paraffinic Froth Treatment Expansion 40,000 - 50,000 bbl/d of diluted bitumen ?…
  31. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 31
    Oil Sands Mining & Upgrading Potential Long Term Opportunities • Horizon Phase 4 & 5 ?Increase capacity by ~260,000 bbl/d of SCO ?Executed in a step wise and disciplined manner ?Significant potential, contingent on market access •…
  32. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 32
    • 5 structures identified with up to ~1.0 billion barrels OOIP per structure • 20% working interest* ? Upfront cash consideration and financial carry ? Future bonus payments on commercial discovery ? In Q1/19 the operator made a…
  33. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 33
    Asset Overview
  34. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 34
    • Largest natural gas producer in Canada ? 2018 annual ~1,490 MMcf/d ? 9.6 Tcf 2P reserves* • Significant light crude oil and NGL production base ? 2018 annual ~94,000 bbl/d light oil & NGLs ? 665 million barrels 2P reserves* ?…
  35. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 35
    2018 annual light crude oil production ? ~44,000 bbl/d • 2P reserves ? 307 million barrels* • North Sea ? Low decline ? Low risk development opportunities • Côte d’Ivoire ? High return, low risk development opportunities ?…
  36. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 36
    • Largest Primary heavy crude oil producer in Canada ? 2018 annual production of ~86,000 bbl/d • Industry leading polymer flood at Pelican Lake ? 2018 annual production of ~63,000 bbl/d • 2P reserves ? 697 million barrels* • Large…
  37. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 37
    Industry leading Enhanced Oil Recovery (EOR) technology • Long Life Low Decline assets • Industry leading heavy crude oil recovery ? Polymer after primary 28% • Effective and efficient operations ? 2018 annual operating costs of…
  38. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 38
    CNQ Thermal Producing Properties CNQ In Situ Project Inventory Peers Peace River Lindbergh Saleski Liege Germain Pelican Wolf Lake Primrose Grouse Leismer Gregoire Birch Mtn. Ells River Marie Lake Kirby Ipiatik • Long…
  39. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 39
    Primrose & Wolf Lake Development Opportunities Primrose North Primrose South Wolf Lake Primrose East Primrose 1,158 CSS wells 22 SAGD well pairs Wolf Lake 278 CSS wells 273 SAGD well pairs Acquired Lands – Primrose North 231…
  40. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 40
    Thermal In Situ Oil Sands Kirby SAGD Kirby South Approved Project Area Approved Development Area Drilled Development Pads Kirby Future Pads Ipiatik Future Pads Ipiatik Kirby Southwest Kirby North Kirby South ? 2018 annual…
  41. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 41
    CNQ Horizon Oil Sands CNQ AOSP CNQ Operating Oil Sands Mines CNQ Lands Joslyn • 2018 annual production of ~426,000 bbl/d • Total of ~17.5 billion barrels OBIP(1) • 2P reserves ? 7.03 billion barrels(2) • Significant resource…
  42. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 42
    Oil Sands Mining & Upgrading Operating Costs Note: Operating expenses reflect production downtime for turnarounds (unadjusted). Source: Company reports. (C$) Equivalent to ~$3.5 billion in additional margin in 2018 Cash Costs Fuel…
  43. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 43
    Potential for cost savings of $2.00/bbl - $3.00/bbl for operating and sustaining costs • ~40% less GHG emissions during bitumen production • Eliminates tailings ponds • Overburden mining – shovel to conveyor – reducing haul truck…
  44. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 44
    Marketing
  45. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 45
    • Natural gas ? WCSB production constrained by takeaway capacity ? Production base shifting to liquids rich natural gas and associated gas from crude oil ? Increased natural gas export pipeline access in 2021 and LNG in 2025+ ?…
  46. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 46
    Canadian Natural Balanced Portfolio of Natural Gas Sales 2019B* Export MMcf/d Dawn/Ontario 160 Empress 190 Emerson (Minnesota) 100 California 15 Canadian Natural Consumption 37% Exports 31% AECO Sales International…
  47. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 47
    Heavy Crude Oil Curtailments (US$/bbl) Note: Based on strip pricing as of February 20, 2019. Line 3 In-Service Keystone Outage AB Government Curtailment Announcement • Canadian Natural actively engaged with Government of Alberta…
  48. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 48
    Incremental in 2019 Throughout 2019 May be higher 2H/2020 TAKEAWAY CAPACITY IMPROVING 46 Crude Oil Outlook Effective Takeaway Capacity Increasing Incremental 2019 NWR Refinery(1) ~50,000 bbl/d Incremental rail(2) ~150,000 bbl/d…
  49. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 49
    Demand / Pricing for low sulphur diesel likely to increase ? Value of synthetic crude oil (“SCO”) likely to increase ? SCO has high distillate yield amenable to low sulphur diesel production ? 50% owned NWR Refinery produces low…
  50. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 50
    2019 Plan
  51. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 51
    Strategy • Align capital spend and production growth with takeaway capacity in short-term • Disciplined capital allocation ?2019 base capital budget slightly above maintenance capital $3.7 billion • Curtail volumes in short-term…
  52. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 52
    ($ million) 2018 Actual 2019 Base Budget 2019 Normalized Budget North America Natural Gas & NGLs $485 $365 $365 North America Crude Oil 1,180 775 1,055 International Crude Oil 489 460 460 Total Exploration & Production $2,154…
  53. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 53
    Targeted Production 2018 2019B % Change(1) Natural Gas (MMcf/d) 1,548 1,485 - 1,545 (2%) Crude Oil & NGLs (Mbbl/d) North America 243 221 - 241 (5%) North America – Thermal In Situ 108 104 - 124 6% North America – Oil Sands Mining &…
  54. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 54
    2019 Base Budget Capital Breakdown Maintenance Capital ($ million)(1) 2019B Exploration & Production(2)(3) $1,490 Thermal In Situ Oil Sands 375 Oil Sands Mining & Upgrading 950 Abandonment & Reclamation 265 Total Maintenance…
  55. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 55
    2019 Value Adding Options Growth Projects ($ million) Value Oil Sands Mining* $200 Horizon Stages 1B/2 Horizon Paraffinic Froth On-stream date not delayed one year Increase reliability and lowers operating costs Restart execution,…
  56. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 56
    Technology, Innovation & Continuous Improvement
  57. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 57
    • Leading R&D investor ? ~$3.1 billion invested since 2009* • Benefits ? Unlocking reserves ? Becoming more effective and efficient ? Increasing production ? Reducing environmental footprint • Canadian Natural’s culture of…
  58. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 58
    ?Environmental Excellence Corporate GHG Emissions Intensity (tonnes CO2e/BOE) ~18% Overall Reduction Proactive environmentally responsible operations • Reducing corporate greenhouse gas emissions intensity ? ~18% reduction since…
  59. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 59
    3rd largest CO2 capturer and sequesterer for oil and gas sector in the world(1) • Reduced CO2 footprint • Reduced CO2 charges STRONG ENVIRONMENTAL INITIATIVES 57 Tonnes per Year Horizon 0.4 million Quest(2) 1.1 million NWR(3) 1.2…
  60. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 60
    GHG Emissions Intensity (kgCO2e/bbl) Note: Total emissions intensity includes: production and upgrading, transportation, refining, transportation of refined product and combustion. CNQ Oil Sands includes: Oil Sands Mining and Upgrading…
  61. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 61
    GHG Emissions Intensity (kgCO2e/bbl) US Refined Average Note: Total emissions intensity includes: production and upgrading, transportation, refining, transportation of refined product and combustion. CNQ Oil Sands operations includes:…
  62. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 62
    Summary
  63. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 63
    Canadian Natural A Unique E&P Company • Long Life Low Decline asset base • Low maintenance capital requirements • Effective and efficient operations • Flexible, disciplined free cash flow allocation • Strong Balance Sheet,…
  64. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 64
    Key Message Optimal Cash Flow Allocation Increasing Returns Unique, Balanced Asset Base Robust Throughout Cycles Proven Effective Strategy
  65. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 65
    Cautionary Statement Project progress and financial results are dependent upon economic and regulatory conditions, commodity prices, global economic factors, project sanction and capital allocation. Definitions & non-GAAP Measures…
  66. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 66
    Pricing Assumptions 2018 2019B 2019F 2020F 2021F 2022F Strip(1) Base Budget Dec 3, 2018 Guidance Mar 7, 2019 US$ WTI/bbl $ 64.78 $ 52.88 $ 57.33 $ 71.33 $ 72.07 $ 73.71 C$ AECO/GJ $ 1.45 $ 1.26 $ 1.51 $ 2.35 $ 2.70 $ 2.89 SCO…
  67. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 67
    At March 6, 2019, the Company had the following derivative financial instruments outstanding to manage its commodity price risk: Sales Contracts Remaining term Volume Weighted average price Index Natural Gas AECO basis swaps Jan - Mar…
  68. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 68
    Reserves Notes: (1) Company Gross reserves are working interest share before deduction of royalties and excluding any royalty interests. (2) Company Net reserves are working interest share after deduction of royalties and including any…
  69. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 69
    (5) A barrel of oil equivalent (“BOE”) is derived by converting six thousand cubic feet of natural gas to one barrel of crude oil (6 Mcf:1 bbl). This conversion may be misleading, particularly if used in isolation, since the 6 Mcf:1 bbl…
  70. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 70
    Key Historic Data Operational & Financial Information 2013 2014 2015 2016 2017 2018 Daily production, before royalties Crude oil and NGLs (Mbbl/d) 478 531 564 524 685 821 Natural gas (MMcf/d) 1,158 1,555 1,726 1,691 1,662 1,548…
  71. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 71
    Results of operations (C$ million, except per share) Adjusted funds flow 7,477 9,587 5,785 4,293 7,347 9,088 per share – Basic 6.87 8.78 5.29 3.90 6.25 7.46 Net earnings (loss) 2,270 3,929 (637) (204) 2,397 2,591 per share – Basic…
  72. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 72
    Corporate Guidance March 7, 2019 Q1/19 2019 Base Budget Daily Production Volumes (before royalties) Natural gas (MMcf/d) 1,490 - 1,520 1,485 - 1,545 Crude oil and NGLs (Mbbl/d) North America – E&P 221 - 229 221 - 241 North America…
  73. April 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 73
    Total Capital Expenditures $ 3,700 North America Average Annual Cost Data and Other Information Royalty Rate Operating Cost Natural Gas - North America (Mcf) 3.0 - 5.0% $1.20 - 1.30 Crude oil and NGLs (bbl) North America (Excluding…

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