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October 2019 Corporate Presentation – Canadian Natural Resources (CNRL)

Canadian Natural Resources (CNRL) · Oct 8, 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. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 1
  2. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 2
    SNAPSHOT 2018 2019F Capital expenditures – net (C$ million)(1) $4,731 $3,800 Annualized dividend (C$/share)(2) $1.34 $1.50 Production (annual average, before royalties) Crude Oil (Mbbl/d) 821 839 - 888 Natural gas (MMcf/d) 1,548…
  3. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 3
    • Industry Leading Free Cash Flow ? Unique, Sustainable and Robust • Increasing, Sustainable Returns to Shareholders with Significant Upside ? World Class Track Record • Capital Discipline & Operational Excellence ? Top Tier •…
  4. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 4
  5. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 5
    Canadian Natural 2019 Targeted Free Cash Flow ($ billion) Note: Free cash flow represents adjusted funds flow less net capital expenditures (excluding major acquisitions). Base Capital includes maintenance capital plus development…
  6. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 6
    Free Cash Flow Yield 2020F (12%) (9%) (6%) (3%) 0% 3% 6% 9% 12% 15% Peers include: APA, CVE, DVN, ECA, EOG, HSE, IMO, PXD and SU. Source: Peter\'s & Co. August 19, 2019 overview tables. Peers Integrate
  7. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 7
    Canadian Natural’s Assets are Unique 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…
  8. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 8
    Oil Sands Mining & Upgrading vs Unconventional Shale Robust, Unique & Sustainable 0 2,000 4,000 6,000 8,000 10,000 12,000 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 Oil Sands…
  9. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 9
    Oil Sands Mining & Upgrading vs Unconventional Shale Unique & Sustainable Capital Profile ~50 years with Low Risk (US$ billion) Source: Company reports and presentations. (Well count) 0 2,000 4,000 6,000 8,000 10,000 12,000…
  10. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 10
    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 Capital of ~$3.4 billion required…
  11. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 11
    Maintenance Capital 2019F • Significantly lower maintenance capital requirements ? Strategic advantage of a long life low decline asset base ? Production of over 1,100,000 BOE/d maintained with investment of ~US$6/BOE • Allows for…
  12. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 12
  13. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 13
    Disciplined allocation of capital delivers sustainable dividend policy ? 19 consecutive years of dividend increases ? 12% increase over 2018 levels in March 2019 to quarterly dividend per common share ? $1.50 per common share…
  14. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 14
    Canadian Natural Returns to Shareholders Horizon Phase 1 build years ($ million) *2019F share purchases are YTD, as at August 31, 2019. Note: Based upon annualized dividends declared. 19 years of dividend increases 21% CAGR since…
  15. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 15
    Canadian Natural Unique & Sustainable Dividend Growth • Only 9 out of TSX60 companies across all sectors in Canada have increased dividends for 19 or more consecutive years • Canadian Natural is the only crude oil and natural gas E&P…
  16. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 16
    Canadian Natural World Class Dividend Growth • Returns via dividends are robust, unique and sustainable • Strong track record displays commitment to dividend growth • Canadian Natural increased dividend for 19 consecutive years…
  17. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 17
    Committed Management Peers include APA, CVE, DVN, ECA, EOG, PXD and SU. Note: Based on share ownership data from June 2019 (excluding options). Outstanding shares as at Q2/19 for peers per Bloomberg. Source: SEDI and BD Corporate.…
  18. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 18
  19. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 19
  20. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 20
    Free Cash Flow Allocation Policy 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 May…
  21. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 21
    Area knowledge, extensive infrastructure and operatorship • Top tier effectiveness and efficiency • Strong history of capturing margin growth opportunities ? Examples: ? Oil Sands Mining ~$22/bbl operating cost reduction since 2013,…
  22. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 22
    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…
  23. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 23
    Cash Costs Fuel Costs INDUSTRY LEADING UTILIZATION DRIVES SIGNIFICANT VALUE 22 Oil Sands Mining & Upgrading Operating Costs
  24. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 24
    Delivering Safe, Effective & Efficient Operations Safety is a Core Value 0.3 0.5 0.8 2014 2015 2016 2017 2018 Effective & Efficient DELIVERING EFFECTIVE & EFFICIENT OPERATIONS 23 Delivering Safe, Effective & Efficient…
  25. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 25
  26. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 26
    Potential Rate* (Mbbl/d) Thermal in Situ Oil Sands 85 - 95 Oil Sands Mining & Upgrading 75 - 95 International – Côte d’Ivoire 10 - 12 Total 170 - 202 VALUE GROWTH OPPORTUNITIES 25 Near-term Robust Economic Growth Opportunities
  27. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 27
    • Strong track record of execution on margin growth opportunities • Leveraging technology, innovation and continuous improvement ? Mine plan optimization, autonomous hauling and In Pit Extraction Process (IPEP) pilots ? Solvent…
  28. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 28
  29. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 29
    Q4/19 Q1/20 Q2/20 Q3/20 Q4/20 NWR ENB Mainline Enhancements ENB Express Expansion TRP Keystone Optimization CVE Rail AB Government Rail IMO Rail AB Curtailment Egress Deficit SIGNIFICANT MARKET ACCESS OPPORTUNITY 28 Incremental WCSB…
  30. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 30
    The new Government of Alberta is highly engaged and supportive of industry ? Supportive of competitive pricing model for Alberta crude oil ? Delivered fiscal & regulatory enhancements to attract businesses and create jobs ? Established…
  31. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 31
    Distributions to shareholders – distributed over $2.5 billion in 2019 ? ~$766 million of common shares purchased year-to-date August 31, 2019 ? Increased quarterly dividend 12% over 2018 levels ~$1.7 billion annualized • Debt…
  32. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 32
  33. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 33
  34. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 34
    Q2/19 production of ~375,000 bbl/d of SCO ? July 2019 production ~463,000 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 •…
  35. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 35
    Long Life Low Decline assets • Facility capacity of ~340,000 bbl/d(1) ? Q2/19 production of ~109,600 bbl/d • 2P reserves ? 3.06 billion barrels(2) • Majority working interest and operatorship • Effective and efficient thermal…
  36. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 36
    Development Opportunities Primrose & Wolf Lake 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…
  37. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 37
    Five 100% owned and operated Central Processing Facilities ? ~200,000 bbl/d facility capacity(1) • Jackfish acquisition ? Significant operating cost and marketing synergies ? Targeting ~$135 million per year(2) ? Close proximity…
  38. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 38
    Kirby South ? Q2/19 production of ~29,000 bbl/d ? Maximize value from consolidated land base • Kirby North ? Project on budget and ahead of schedule ? First steam May 1, 2019 ? First oil achieved in Q2/19 ? Targeted capacity of…
  39. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 39
    Acquisition closed June 27, 2019 ? Significant operating cost and marketing synergies • Production capability ? ~108,200 bbl/d ? ~103,000 bbl/d curtailed allowable ? Current SOR of 2.4x • Three 100% owned central processing…
  40. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 40
    • 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 ? Q2/19 operating costs of…
  41. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 41
    Natural Gas, Light Crude Oil & NGLs Core Area Summary *Company Gross proved plus probable reserves at December 31, 2018. • Largest natural gas producer in Canada ? Q2/19 ~1,480 MMcf/d ? 9.6 Tcf 2P reserves* • Significant light crude…
  42. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 42
    Q2/19 light crude oil production ? ~51,100 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…
  43. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 43
    Heavy Crude Oil Core Area Summary • Largest Primary heavy crude oil producer in Canada ? Q2/19 production of ~77,700 bbl/d • Industry leading polymer flood at Pelican Lake ? Q2/19 production of ~55,000 bbl/d • 2P reserves ? 697…
  44. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 44
  45. October 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. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 46
    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 45% Exports 31% AECO Sales 21% 3%
  47. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 47
    Manage crude oil market dynamics through temporary production curtailments and storage • Support improved nomination processes and procedures • Maximize netbacks through optimized blending and transportation options • Diversify sales…
  48. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 48
    Crude Oil Curtailments (US$/bbl) *October base allowable increased to 20,000 bbl/d from 10,000 bbl/d. Curtailment program extended until end of 2020 by Government of Alberta August 20, 2019. Note: Based on strip pricing as of July 23,…
  49. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 49
    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…
  50. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 50
  51. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 51
    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 annual capital guidance slightly…
  52. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 52
    2018 Actual 2019 Forecast North America Natural Gas & NGLs $485 $365 North America Crude Oil 1,180 800 International Crude Oil 489 460 Total Exploration & Production $2,154 $1,625 Thermal In Situ Oil Sands $960 $620 Oil Sands…
  53. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 53
    Targeted Production 2018 2019F % Change(1) Natural Gas (MMcf/d) 1,548 1,485 - 1,545 (2%) Crude Oil & NGLs (Mbbl/d) North America 243 231 - 251 (1%) North America – Thermal In Situ 108 157 - 172 52% North America – Oil Sands Mining &…
  54. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 54
    2019 Forecast Capital Breakdown Maintenance Capital ($ million)(1) 2019F Exploration & Production(2)(3) $1,515 Thermal In Situ Oil Sands 450 Oil Sands Mining & Upgrading 950 Abandonment & Reclamation 265 Total Maintenance Capital…
  55. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 55
  56. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 56
    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 •…
  57. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 57
    Environmental Excellence • Proactive environmentally responsible operations • Reducing corporate greenhouse gas emissions intensity ?~29% reduction since 2012 • Meet or exceed all regulatory requirements • Continuous improvement…
  58. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 58
    Heavy Crude Oil Continuous Improvement in GHG Emissions • Continuous improvement initiatives have reduced environmental emissions • Heavy Oil Casing Gas vent reduction ? Solution Gas Conservation has reduced GHG emissions Primary…
  59. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 59
    Top tier CO2 capturer and sequesterer in the world(1) • Reduced CO2 footprint • Reduced CO2 charges LEADING CANADA IN CARBON CAPTURE & STORAGE 58 Tonnes per Year Horizon 0.4 million Quest(2) 1.1 million NWR(3) 1.2 million 2.7…
  60. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 60
    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…
  61. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 61
    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…
  62. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 62
    2018 Current Technology Execution Future Technology Execution Future Techology Development Intensity after Mitigation Aspiration Net Zero PATHWAY TO CONTINUE TO REDUCE GHG EMISSIONS 61 Capturing Technological Improvements in Oil…
  63. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 63
    Pricing Assumptions 2018 Base Budget Dec 3, 2018 August 1, 2019 Guidance Strip(1) US$ WTI/bbl $ 64.78 $ 52.88 $ 56.90 C$ AECO/GJ $ 1.45 $ 1.26 $ 1.40 SCO Diff/(prem) US$/bbl $ 6.16 $ 8.81 $ 0.74 WCS Differential US$/bbl $ 26.29…
  64. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 64
    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$/bbl) 75.27 77.89 82.25 84.79 87.39 Cromer LSB…
  65. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 65
    Hedging At June 30, 2019, the Company had the following derivative financial instruments outstanding to manage its commodity price risk: Note: The Company’s outstanding commodity derivative financial instruments are expected to be…
  66. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 66
    Operational & Financial Information 2013 2014 2015 2016 2017 2018 Daily production, before royalties Crude oil and NGLs (Mbbl/d) 478 531 564 524 685 821 Natural gas (MMcf/d) 1,158 1,555 1,726 1,691 1,662 1,548 Barrels of oil…
  67. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 67
    Realized product pricing, before hedging activities & after transportation and blending costs Crude oil and NGLs (C$/bbl)(1) 70.24 71.59 38.53 34.32 45.77 43.84 Oil Sands Mining and Upgrading (C$/bbl) 99.18 98.42 59.58 56.82 62.44…
  68. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 68
    Ratios Debt to adjusted funds flow, trailing 12 months 1.3x 1.4x 2.6x 3.5x 3.1x 2.3x Debt to book capitalization 27% 33% 38% 39% 41% 39% Return on common equity, trailing 12 months 9% 14% (2%) (1%) 8% 8% Daily production before…
  69. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 69
    Q3/19 Revised 2019 Daily Production Volumes (before royalties) Natural gas (MMcf/d) 1,440 - 1,460 1,485 - 1,545 Crude oil and NGLs (Mbbl/d) North America – E&P 242 - 252 231 - 251 North America – Thermal In Situ 198 - 206 157 -…
  70. October 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 70
    Capital Expenditures (C$ million) North America natural gas and NGLs $ 365 North America crude oil 800 International crude oil 460 Total Exploration and Production 1,625 Total Thermal In Situ Oil Sands 620 Net acquisitions,…
  71. October 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)(1) 3.0 - 5.0% $1.20 - 1.30 Crude oil and NGLs (bbl) North America (Excluding Oil Sands Mining)(1) 11.5 - 13.5%…

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