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July 2019 Corporate Presentation – Canadian Natural Resources (CNRL)

Canadian Natural Resources (CNRL) · Jul 5, 2019 · 80 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. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 1
  2. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 2
    Delivering Value & Growth SNAPSHOT 2018 2019B Capital expenditures – net (C$ million)(1) $4,731 $3,700 Annualized dividend (C$/share)(2) $1.34 $1.50 Production (annual average, before royalties) Crude Oil (Mbbl/d) 821 782 - 861…
  3. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 3
  4. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 4
    Canadian Natural A Unique E&P Company • Top tier free cash flow generation • CFPS, EPS, Production per share growth • Increasing ROCE, ROE, Dividend Yield • Increasing returns to shareholders through dividends and share purchases •…
  5. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 5
  6. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 6
    Strategy • Top tier free cash flow generation providing real returns to shareholders ?Dividend increases and share purchases • Strong Balance Sheet supports investment grade credit ratings • Flexible capital allocation to maximize…
  7. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 7
    • 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 PROVIDES FLEXIBILITY…
  8. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 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 sustainable production and free cash flow •…
  9. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 9
    Conventional Assets ~19% Decline Oil Sands Mining & Upgrading ~0% Decline Pelican & Thermal ~13% Decline BOE Production Mix Long Life Low Decline Production ~60% Low Capital Exposure Production ~40% Pro forma Maintenance…
  10. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 10
    0.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 (US$/BOE) • Significantly lower maintenance capital requirements than a typical E&P ? Strategic advantage of a long life low decline asset base ? Production of over 1,000,000…
  11. July 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. Excludes recently closed acquisition. (MMBOE) CNQ…
  12. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 12
    DBRS BBB High Stable n/a Standard & Poor’s BBB+ Stable A-2 Moody’s Baa2 Stable P-2 • Moody’s upgraded long-term debt rating to Baa2 September 13, 2018 • Strong financial position as of March 31, 2019(1) ? Debt to book capitalization…
  13. July 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. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 14
    Free Cash Flow Yield 2019F Peers Integrated Peers
  15. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 15
    Delivering Safe, Effective & Efficient Operations Total recordable injury frequency (per 200,000 hours) Operating Costs ($/BOE) 0.8 2014 2015 2016 2017 2018 Effective & Efficient
  16. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 16
  17. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 17
    Canadian Natural 2019 Targeted Free Cash Flow ($ billion) Note: Free cash flow represents adjusted funds flow less capital. See Advisory for cautionary statements, definitions and pricing assumptions. Excludes recently closed asset…
  18. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 18
  19. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 19
    Free Cash Flow Allocation Policy 18 Targets = 1.5x Debt/EBITDA and $15.0 billion in Absolute Debt Note: Policy is effective November 1, 2018 and targeted to be in place until at least the Company’s Normal Course Issuer Bid renewal in…
  20. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 20
    5 Year Production per Share Growth (Production/Share) Capital ($ billion) Strip pricing $4.7 $3.7 $4.7 $4.7 $4.5 *Based upon 2018 actuals to midpoint for indicated year range. Excludes recently closed asset acquisition. Note: See…
  21. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 21
    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 •…
  22. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 22
    Canadian Natural Returns to Shareholder 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F Dividend Share Purchase PSK Distribution HISTORY OF GROWING RETURNS TO SHAREHOLDERS Canadian Natural Returns to…
  23. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 23
    Committed Management Peers include APC, APA, CVE, DVN, ECA, EOG, PXD and SU. Note: Based on share ownership data from March 2019 (excluding options). Outstanding shares as at Q1/19 for peers per Bloomberg. Source: SEDI and BD…
  24. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 24
  25. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 25
    Potential Rate(1) (MMcf/d) Potential Rate(1) (bbl/d) 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 -…
  26. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 26
    • 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 ?…
  27. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 27
    Large, concentrated liquids rich Montney land base ? Facilitates efficient area program • Leveraging technology & area expertise to lower costs • ~155 net sections of land de-risked by proven production • Strategic owned…
  28. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 28
    Gas cycling/storage targets two objectives ? Increased liquids recovery ? Store produced gas during low price periods • 5 MMcf/d injection pilot targeted for Septimus late in Q2/19 • Opportunities throughout liquids rich land base…
  29. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 29
    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 •…
  30. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 30
    Thermal In Situ Oil Sands Portfolio Potential Peace River Lindbergh Saleski Liege Germain Pelican Wolf Lake Primrose Grouse Leismer Gregoire Birch Mtn. Ells River Marie Lake Kirby Ipiatik CNQ Thermal Producing…
  31. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 31
    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 ?…
  32. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 32
    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 •…
  33. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 33
    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…
  34. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 34
  35. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 35
    Natural Gas, Light Crude Oil & NGLs Core Area Summary *Company Gross proved plus probable reserves at December 31, 2018. AB SK MB CNQ Land Base BC • Largest natural gas producer in Canada ? Q1/19 ~1,450 MMcf/d ? 9.6 Tcf 2P…
  36. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 36
    Q1/19 light crude oil production ? ~47,900 bbl/d • 2P reserves ? 307 million barrels* • North Sea ? Low decline ? Low risk development opportunities • Côte d’Ivoire ? High return, low risk development opportunities ? Exploration…
  37. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 37
    Heavy Crude Oil Core Area Summary • Largest Primary heavy crude oil producer in Canada ? Q1/19 production of ~68,500 bbl/d • Industry leading polymer flood at Pelican Lake ? Q1/19 production of ~61,200 bbl/d • 2P reserves ? 697…
  38. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 38
    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 ? Q1/19 operating costs of…
  39. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 39
    Long Life Low Decline assets • Facility capacity of ~220,000 bbl/d(1) ? Q1/19 production of ~94,100 bbl/d • 2P reserves ? 3.06 billion barrels(2) • Majority working interest and operatorship • Effective and efficient thermal…
  40. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 40
    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…
  41. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 41
    Thermal In Situ Oil Sands Kirby SAGD Kirby South ? Q1/19 production of ~30,000 bbl/d and SOR of 3.1 ? Maximize value from consolidated land base • Kirby North ? Project on budget and ahead of schedule ? First steam May 1, 2019 ?…
  42. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 42
    Oil Sands Mining & Upgrading Q1/19 production of ~416,200 bbl/d • 2P reserves ? 7.03 billion barrels(1) • Significant resource in place 50+ year life(2) • No decline, reservoir risk or reserve replacement cost • Significant…
  43. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 43
    Cash Costs Fuel Costs INDUSTRY LEADING UTILIZATION DRIVES SIGNIFICANT VALUE 42 Oil Sands Mining & Upgrading Operating Costs Note: Operating expenses reflect production downtime for turnarounds (unadjusted). Source: Company reports.
  44. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 44
    Potential for cost savings of $2.00/bbl - $3.00/bbl for operating and sustaining costs • ~40% less GHG emissions during bitumen production • Eliminates tailings ponds • Overburden mining – shovel to conveyor – reducing haul truck…
  45. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 45
  46. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 46
    Natural gas ? WCSB production constrained by takeaway capacity ? Production base shifting to liquids rich natural gas and associated gas from crude oil ? Increased natural gas export pipeline access in 2021 and LNG in 2025+ ?…
  47. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 47
    Canadian Natural Balanced Portfolio of Natural Gas Sales 2019F* Export MMcf/d Dawn/Ontario 160 Empress 190 Emerson (Minnesota) 100 California 15 Canadian Natural Consumption 37% Exports 31% AECO Sales
  48. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 48
    Crude Oil Curtailments (US$/bbl) Note: Based on strip pricing as of June 4, 2019. Keystone Outage AB Government Curtailment Announcement • Canadian Natural actively engaged with Government of Alberta to evaluate options to bring…
  49. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 49
    Crude Oil Outlook Effective Takeaway Capacity Increasing Incremental 2019 Conventional declines(1) ~45,000 bbl/d Incremental rail(2) ~150,000 bbl/d NWR Refinery(3) ~50,000 bbl/d Total ~245,000 bbl/d Enbridge Line 3 ~370,000 bbl/d
  50. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 50
    Demand / Pricing for low sulphur diesel likely to increase ? ~50% of BOE production is synthetic crude oil (SCO) and light crude oil ? Value of SCO likely to increase ? SCO has high distillate yield amenable to low sulphur diesel…
  51. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 51
  52. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 52
    Strategy • Maximize top tier free cash flow generation and shareholder value • Align capital spend and production growth with takeaway capacity in short-term • Disciplined capital allocation ? 2019 base capital budget slightly above…
  53. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 53
    2018 Actual 2019 Base Budget North America Natural Gas & NGLs $485 $365 North America Crude Oil 1,180 775 International Crude Oil 489 460 Total Exploration & Production $2,154 $1,600 Thermal In Situ Oil Sands $960 $545 Oil Sands…
  54. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 54
    Targeted Production 2018 2019B % Change(1) Natural Gas (MMcf/d) 1,548 1,485 - 1,545 (2%) Crude Oil & NGLs (Mbbl/d) North America 243 221 - 241 (5%) North America – Thermal In Situ 108 104 - 124 6% North America – Oil Sands Mining &…
  55. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 55
    2019 Base Budget Capital Breakdown Maintenance Capital ($ 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…
  56. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 56
  57. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 57
    Canadian Natural to acquire substantially all of the assets of Devon Canada ? Significant producing assets include thermal in situ and conventional primary heavy crude oil • Production capability ? ~128,300 bbl/d of crude oil ?…
  58. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 58
    Accretive to 2019F ? Adjusted Funds Flow Per Share increase targeted at $0.48/share ($0.85/share annualized) ? Earnings Per Share increase targeted at $0.25/share ($0.53/share annualized) • Free cash flow strengthens ? Share purchase…
  59. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 59
    • Current production capability ? ~108,200 bbl/d ? ~103,000 bbl/d curtailed allowable • Three 100% owned Central Processing Facilities ~40,000 bbl/d each, with 120,000 bbl/d AER scheme approved ? 300,000 bbl/d steam generation…
  60. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 60
    Excellent fit with Canadian Natural operations • Leverage Canadian Natural Primary Heavy Crude Oil expertise and area synergies ? Product optimization ? Operating cost improvement ? Capital cost improvement • Increased economies…
  61. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 61
  62. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 62
    Leading R&D investor ? ~$3.4 billion invested since 2009* • Benefits ? Unlocking reserves ? Becoming more effective and efficient ? Increasing production ? Reducing environmental footprint GHG emission reductions are a priority •…
  63. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 63
    Proactive environmentally responsible operations • Reducing corporate greenhouse gas emissions intensity ? ~29% reduction since 2012 • Meet or exceed all regulatory requirements • Continuous improvement initiatives have reduced…
  64. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 64
    Continuous improvement initiatives have reduced environmental emissions • Heavy Oil Casing Gas vent reduction ? Solution Gas Conservation has reduced GHG emissions STRENGTHENING ENVIRONMENTAL INITIATIVES 63 Heavy Crude Oil…
  65. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 65
    Top tier CO2 capturer and sequesterer in the world(1) • Reduced CO2 footprint • Reduced CO2 charges LEADING CANADA IN CARBON CAPTURE & STORAGE 64 Tonnes per Year Horizon 0.4 million Quest(2) 1.1 million NWR(3) 1.2 million 2.7…
  66. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 66
    Canadian Natural Delivering Climate Leadership at Horizon Oil Sands 0.06 0.07 0.08 0.09 0.10 0.11 2012 2013 2014 2015 2016 2017 2018 GHG Emissions Intensity (tonnes CO2e/BOE) 37% Reduction at Horizon 2012 - 2018 *Relative to…
  67. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 67
    Oil Sands Well-to-Combustion 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 and…
  68. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 68
    Capturing Technological Improvements in Oil Sands Operations Pathway to the Future Note: Total emissions intensity includes: production and upgrading, transportation, refining, transportation of refined product and combustion. CNQ Oil…
  69. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 69
  70. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 70
    Capturing Technological Improvements in Oil Sands Operations Pathway to the Future Note: Total emissions intensity includes: production and upgrading, transportation, refining, transportation of refined product and combustion. CNQ Oil…
  71. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 71
  72. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 72
    Pricing Assumptions 2018 2019B 2019F 2020F 2021F 2022F Strip(1) Base Budget Dec 3, 2018 Guidance May 9, 2019 US$ WTI/bbl $ 64.78 $ 52.88 $ 62.71 $ 71.33 $ 72.07 $ 73.71 C$ AECO/GJ $ 1.45 $ 1.26 $ 1.44 $ 2.35 $ 2.70 $ 2.89 SCO…
  73. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 73
    2019 2020 2021 2022 2023 Crude oil and NGL WTI at Cushing (US$/bbl) 63.00 67.00 70.00 71.40 72.83 Western Canada Select (C$/bbl) 59.47 62.31 67.45 69.53 71.66 Canadian Light Sweet (C$/bbl) 75.27 77.89 82.25 84.79 87.39 Cromer LSB…
  74. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 74
    Hedging Note: The Company’s outstanding commodity derivative financial instruments are expected to be settled monthly based on the applicable index pricing for the respective contract month. Sales Contracts Remaining term Volume…
  75. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 75
    Key Historic Data Operational & Financial Information 2013 2014 2015 2016 2017 2018 Daily production, before royalties Crude oil and NGLs (Mbbl/d) 478 531 564 524 685 821 Natural gas (MMcf/d) 1,158 1,555 1,726 1,691 1,662 1,548…
  76. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 76
    Realized product pricing, before hedging activities & after transportation and blending costs Crude oil and NGLs (C$/bbl)(1) 70.24 71.59 38.53 34.32 45.77 43.84 Oil Sands Mining and Upgrading (C$/bbl) 99.18 98.42 59.58 56.82 62.44…
  77. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 77
    Ratios Debt to adjusted funds flow, trailing 12 months 1.3x 1.4x 2.6x 3.5x 3.1x 2.3x Debt to book capitalization 27% 33% 38% 39% 41% 39% Return on common equity, trailing 12 months 9% 14% (2%) (1%) 8% 8% Daily production before…
  78. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 78
    Q2/19 2019 Base Budget Daily Production Volumes (before royalties) Natural gas (MMcf/d) 1,500 - 1,530 1,485 - 1,545 Crude oil and NGLs (Mbbl/d) North America – E&P 224 - 232 221 - 241 North America – Thermal In Situ 100 - 106 104 -…
  79. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 79
    Capital Expenditures (C$ 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,…
  80. July 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 80
    North America Average Annual Cost Data and Other Information Royalty Rate Operating Cost Natural Gas - North America (Mcf)(1) 3.0 - 5.0% $1.20 - 1.30 Crude oil and NGLs (bbl) North America (Excluding Oil Sands Mining)(1) 14.0 - 16.0%…

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