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March 2019 Corporate Presentation – Canadian Natural Resources (CNRL)

Canadian Natural Resources (CNRL) · Mar 15, 2019 · 71 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. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 1
  2. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 2
    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 gas (MMcf/d) 1,548 1,485 -…
  3. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 3
    Increasing Returns Unique, Balanced Asset Base Robust Throughout Cycles Proven Effective Strategy Optimal Cash Flow Allocation
  4. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 4
    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,…
  5. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 5
    A World Class Company Built for All Cycles
  6. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 6
    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…
  7. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 7
    2019 Base Budget • Balanced, diverse production mix • International exposure • Vast, balanced resource base to develop • Growing, sustainable adjusted funds flow • >50% light crude oil and SCO production BALANCED PRODUCT MIX…
  8. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 8
    Canadian Natural’s Advantage Low Corporate Decline Rate Oil Sands Mining & Upgrading ~0% Decline Pelican & Thermal ~12% Decline Conventional Assets ~19% Decline Maintenance Capital of ~$3.1 billion required ~10% Corporate…
  9. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 9
    Balanced Asset Model Robust Through All Cycles Time • Ability to ramp up production faster with improving prices • Stronger Balance Sheet • Long life low decline assets provide sustainable production and free cash flow •…
  10. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 10
    0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 CNQ SU CVE IMO EOG OXY NBL DVN APC CHK APA ECA HSE MASSIVE LOW COST RESOURCE TO DEVELOP 9 1P Reserves After Royalties – 2018 Peers include: APA, APC, CVE, CHK, DVN, ECA,…
  11. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 11
    Robust Financial Posit Moody’s upgraded long-term debt rating to Baa2 September 13, 2018 • Strong financial position as of December 31, 2018 ? Debt to book capitalization 39.1% ? Financial bank covenant of 65% ? Debt to adjusted…
  12. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 12
    Canadian Natural’s Competitive Advantages Balanced portfolio of assets ? Diverse product inventory and time horizons ? Owned and controlled infrastructure ? Long Life Low Decline assets ? Low maintenance capital requirements ? Size…
  13. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 13
    Safety is a Core Value 0.0 0.5 1.0 2013 2014 2015 2016 2017 DELIVERING EFFECTIVE & EFFICIENT OPERATIONS 12 Delivering Safe, Effective & Efficient Operations Total recordable injury frequency (per 200,000 hours) Effective &…
  14. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 14
    Delivering Real Value to Shareholders
  15. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 15
    Canadian Natural 2019 Targeted Free Cash Flow Scenarios ($ 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…
  16. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 16
    TION 15 Balance & Optimize the Four Pillars of Capital Allocation • Balance Sheet Strength ? Balance Sheet strengthens through free cash flow allocation policy • Economic Resource Development ? Disciplined corporate capital…
  17. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 17
    Free Cash Flow Allocation Policy 16 Targets = 1.5x Debt/EBITDA and $15.0 billion in Absolute Debt Note: Policy is effective November 1, 2018 and targeted to be in place until at least the Company’s Normal Course Issuer Bid renewal in…
  18. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 18
    5 Year Production per Share Growth (Production/Share) Capital ($ 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…
  19. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 19
    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 ? $1.50 per common share annualized •…
  20. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 20
    Canadian Natural Returns to Shareholders Horizon Phase 1 build years ($ 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…
  21. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 21
    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…
  22. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 22
    Value/Growth Opportunities
  23. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 23
    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…
  24. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 24
    • Large inventory of defined development projects • Many large contiguous land holdings ? ~1.0 million net acres • Key liquids rich / light crude oil properties ? Greater Wembley Area ? Wembley, Albright, Knopcik, Gordondale ?…
  25. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 25
    Large, concentrated liquids rich Montney land ? Facilitates efficient area program • Leveraging technology & area expertise to lower costs • ~155 net sections of undeveloped land de-risked by proven production • Strategic owned…
  26. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 26
    • 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…
  27. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 27
    Heavy Crude Oil Technological Advancement – Horizontal Multilateral Opportunities ~500 km AB SK CNQ Land Base CNQ Heavy Crude Oil Producing Properties Potential Multilateral Horizontal Opportunities Smith Golden Lake •…
  28. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 28
    Thermal In Situ Oil Sands Portfolio Potential 5.4 billion barrels OBIP* ? Primrose and Wolf Lake potential phased facilities expansions of ~80,000 bbl/d • ~17.5 billion barrels OBIP* ? Peace River currently producing • ~44.0…
  29. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 29
    Oil Sands Mining & Upgrading Near Term Opportunities Joslyn Lease Plan Estimated cost savings of over $500 million ? Significant value realized from savings and efficiencies through optimizing the mine plan • Paraffinic Froth…
  30. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 30
    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…
  31. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 31
    • 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…
  32. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 32
    Asset Overview
  33. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 33
    • 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* ?…
  34. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 34
    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 ?…
  35. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 35
    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…
  36. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 36
    Heavy Crude Oil Pelican Lake 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 ?…
  37. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 37
    Thermal In Situ Oil Sands Portfolio (1) Includes Kirby South, Kirby North, Primrose and Wolf Lake facility capacities. (2) Company Gross proved plus probable reserves as at December 31, 2018. CNQ Thermal Producing Properties CNQ In…
  38. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 38
    2018 pad add program drilling 63 wells ? Targeted first oil production in Q4/19 ? Targeted first 12 month production of ~26,000 bbl/d • Significant development opportunities (50+ years) ? Maximize utilization of existing facilities…
  39. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 39
    • Kirby South ? 2018 annual production of ~35,000 bbl/d and SOR of 2.8 ? Operating…
  40. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 40
    • 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 in place 50+ year life(3) • No decline, reservoir risk or reserve replacement cost •…
  41. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 41
    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…
  42. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 42
    Potential for cost savings of $2.00/bbl - $3.00/bbl for operating and sustaining costs • ~40% less GHG emissions during bitumen production • Eliminates tailings ponds • Overburden mining – shovel to conveyor – reducing haul truck…
  43. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 43
    Marketing
  44. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 44
    Marketing Natural gas ? WCSB production constrained by takeaway capacity ? Production base shifting to liquids rich natural gas and associated gas from crude oil ? Increased natural gas export pipeline access in 2021 and LNG in 2025+…
  45. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 45
    Canadian Natural Balanced Portfolio of Natural Gas Sales 2019B* Canadian Natural Consumption 37% Exports 31% AECO Sales International Export MMcf/d Dawn/Ontario 160 Empress 190 Emerson (Minnesota) 100 California 15
  46. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 46
    Heavy Crude Oil Curtailments (US$/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…
  47. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 47
    Crude Oil Outlook Effective Takeaway Capacity Increasing Incremental 2019 NWR Refinery(1) ~50,000 bbl/d Incremental rail(2) ~150,000 bbl/d Conventional declines(3) ~45,000 bbl/d Total ~245,000 bbl/d Incremental 2020 Enbridge Line…
  48. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 48
    IMO 2020 Regulations Positive Net Impact to CNQ 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…
  49. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 49
    2019 Plan
  50. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 50
    2019 Budget Strategy • Align capital spend and production growth with takeaway capacity in short-term • Disciplined capital allocation ? 2019 base capital budget slightly above maintenance capital $3.7 billion • Curtail volumes in…
  51. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 51
    ($ 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 $2,154…
  52. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 52
    2019 Base Budget Production Targeted Production 2018 2019B % Change(1) Natural Gas (MMcf/d) 1,548 1,485 - 1,545 (2%) Crude Oil & NGLs (Mbbl/d) North America 243 221 - 241 (5%) North America – Thermal In Situ 108 104 - 124 6% North…
  53. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 53
    2019 Base Budget Capital Breakdown Maintenance Capital ($ million)(1) 2019B Exploration & Production(2)(3) $1,490 Thermal In Situ Oil Sands 375 Oil Sands Mining & Upgrading 950 Abandonment & Reclamation 265 Total Maintenance…
  54. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 54
    2019 Value Adding Options Growth Projects ($ 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,…
  55. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 55
    Technology, Innovation & Continuous Improvement
  56. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 56
    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 leveraging…
  57. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 57
    Proactive environmentally responsible operations • Reducing corporate greenhouse gas emissions intensity ? ~25% reduction over last 6 years • Meet or exceed all regulatory requirements • Continuous improvement initiatives have…
  58. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 58
    Carbon Capture & Sequestration / Storage Te 3rd largest CO2 capturer and sequesterer for oil and gas sector in the world(1) • Reduced CO2 footprint • Reduced CO2 charges Tonnes per Year Horizon 0.4 million Quest(2) 1.1 million…
  59. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 59
    Oil Sands Well-to-Combustion 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:…
  60. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 60
    Capturing Technological Improvements in Oil Sands Oil Sands Operations Pathway to the Future GHG Emissions Intensity (kgCO2e/bbl) US Refined Average Note: Total emissions intensity includes: production and upgrading, transportation,…
  61. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 61
    Summary
  62. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 62
    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,…
  63. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 63
    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…
  64. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 64
    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…
  65. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 65
    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…
  66. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 66
    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 Barrels of oil…
  67. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 67
    Drilling activity, net wells Crude oil 1,117 1,023 115 174 495 483 Natural gas 44 75 19 9 21 18 Dry 30 19 6 7 7 9 Strats and service 384 437 166 268 289 615 Realized product pricing, before hedging activities & after transportation…
  68. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 68
    Capital expenditures (net, including combinations) 7,274 11,744 3,853 3,794 17,129 4,731 Balance Sheet Info (C$ million) Property, plant and equipment (net) 46,487 52,480 51,475 50,910 65,170 64,559 Total assets 51,754 60,200 59,275…
  69. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 69
    Corporate Guidance 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 – Thermal In Situ 92 - 98 104 - 124…
  70. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 70
    Capital Expenditures (C$ million) North America natural gas and NGLs $ 365 North America crude oil 775 International crude oil 460 Total Exploration and Production 1,600 Total Thermal In Situ Oil Sands 545 Net acquisitions,…
  71. March 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 71
    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 Oil Sands Mining) 12.0 - 14.0% $12.50…

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