Balanced, diverse production mix • International exposure • Vast, balanced resource base to develop • Growing, sustainable adjusted funds flow • ~48% light crude oil and SCO production BALANCED PRODUCT MIX PROVIDES FLEXIBILITY 9…
2019 Track Record What CNQ Delivered on our Four Pillars Returns to Shareholders ? Distributed ~$2.6 billion to shareholders in 2019 ? ~$878 million of common shares repurchased year-to-date November 30, 2019 ? Increased quarterly…
2019F Production per Share Growth Top 15 Companies 6 of 14 peers delivered: > 7% production per share growth 20% -15% -10% -5% 0% 5% 10% 15% 20% Group Average TOP TIER PRODUCTION PER SHARE GROWTH 13 2019F Production per…
2020F Free Cash Flow Yield Top 15 Companies 3 of 14 peers delivered: > 7.5% free cash flow yield; & > 7% production per share growth
Share Repurchases – Trailing 12 Months Top 15 Companies Peers include: APA, CHK, COP, CVE, CVX, DVN, ECA, EOG, HSE, IMO, NBL, OXY, SU and XOM. Source: Bloomberg data as at November 13, 2019. Deliverable of C$1.2 billion based upon…
Dividend Growth – 10 Year CAGR Top 15 Companies Peers include: APA, CHK, COP, CVE, CVX, DVN, ECA, EOG, HSE, IMO, NBL, OXY, SU and XOM. Source: 10 year CAGR based upon 2010 to current 2019 quarterly dividend annualized. Bloomberg data…
Unique, Sustainable & Robust >10% Dividend CAGR >$1.2 Billion of Share Repurchases >7.5% Free Cash Flow Yield Peer Group >7% Production Per Share Growth OUR STRATEGY DELIVERS INDUSTRY LEADING PERFORMANCE 17 Canadian Natural Top…
Canadian Natural Leading Free Cash Flow $9.0 2018 2019F 2020B Capital ($ billion) $4.7 $3.8 $4.05 SUSTAINABLE FREE CASH FLOW 19 Canadian Natural Leading Free Cash Flow ($ billion) (1) Based upon current dividend. (2) Excludes…
Free Cash Flow Allocation Policy Targets = 1.5x Debt/EBITDA and $15.0 billion in Absolute Debt Note: Policy is effective November 1, 2018 and is to be reviewed quarterly by the Board of Directors. Budgeted Capital Expenditures excludes…
($ billion) SIGNIFICANT TORQUE TO COMMODITY PRICE 21 2020B Free Cash Flow Generation The Canadian Natural Opportunity *Based upon 2019 dividends paid. Dividends have historically been reviewed in the first quarter of the year. Note:…
Canadian Natural Balance Sheet Strength Debt/EBITDA (x) Note: See Advisory for cautionary statements, definitions, and pricing assumptions. Actual Forecast Debt/Book Cap (%) ~1.6x ~41% ~35% ~2.7x 0.0 0.5 1.0 1.5 2.0 2.5…
Horizon Oil Sands Operating Costs (1) Reflects YTD 2019 operating costs as at September 30, 2019. (2) Reflects natural gas costs used in operations. Note: Operating costs reflect production downtime for turnarounds (unadjusted). ~50%…
Area knowledge, extensive infrastructure and operatorship • Top tier effectiveness and efficiency • Strong history of capturing margin growth opportunities ? Examples: ? Horizon Oil Sands ~$22/bbl operating cost reduction since 2013,…
Typical Conventional & Unconventional Well Profile Price Impact on Production & Value • Timing has major impact on project NPV • Significant declining production • Operating costs increase with lower production Production* *Single…
30 Canadian Natural’s Assets Unique, Sustainable & 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…
Balanced Model – Production per Share Basis Price Impact on Production & Value • Production per share grows at a higher rate • Production per share grows at a higher rate • Assets deliver free cash flow in low price environment •…
Oil Sands Mining & Upgrading vs Typical Unconventional Well Unique, Sustainable & Robust Oil Sands Mining & Upgrading • No decline, reservoir or reserve replacement risk • Long reserve life Typical Unconventional Well • Increasing…
Oil Sands Mining & Upgrading ~0% Decline Pelican & Thermal ~13% Decline BOE Production Mix Long Life Low Decline Production ~62% Conventional & Unconventional Production ~38% Maintenance Capital of ~$3.7 billion required…
Maintenance Capital 2019F • Significantly lower maintenance capital requirements ? Strategic advantage of a Long Life Low Decline asset base ? Production of over 1,150,000 BOE/d maintained with investment of ~US$6/BOE • Allows for…
1P Reserves After Royalties 2018 *Reserve Life Index based upon 2018 Net Proved reserves, constant dollar over 2018 average net production. Peers include: APA, APC, CVE, CHK, DVN, ECA, EOG, HSE, IMO, NBL, OXY, SU. Source: 2018 Net…
Canadian Natural Development Potential (bbl/d) Total Corporate ~2,640,000 BOE/d* of potential future capability ~55% from Long Life Low Decline assets *Assumes US$50/bbl WTI, C$1.50/GJ AECO, US$2.00/bbl SCO differential, 22% WCS…
Dividends Share Repurchases & Distribution • 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…
Canadian Natural Returns to Shareholders Horizon Phase 1 build years *2019F share repurchases are YTD, as at November 30, 2019. Note: Based upon annualized dividends declared. 19 years of dividend increases ~21% CAGR since…
Canadian Natural Unique, Sustainable & Robust 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…
Returns via dividends are unique, robust and sustainable • Strong track record displays commitment to dividend growth • Canadian Natural increased dividend for 19 consecutive years ? Only 2 of 6 supermajors with similar record…
Largest natural gas producer in Canada ? Q3/19 ~1,425 MMcf/d ? 2P reserves 9.6 Tcf(1) • Significant light crude oil and NGL production base in Canada ? Q3/19 ~96,100 bbl/d ? 2P reserves 665 million barrels(1) • High return…
Natural Gas, Light Crude Oil & NGLs Development Potential *Assumes US$50/bbl WTI, C$1.50/GJ AECO and US$1.00 to C$1.25 foreign exchange and IP365. Note: See Advisory for cautionary statements. ~1,700 defined locations* ~340,000 bbl/d…
Natural Gas, Light Crude Oil & NGLs Montney Large inventory of defined drilling opportunities • Large contiguous land holdings ? ~1.0 million net acres • Top tier key liquids rich / light crude oil properties ? Greater Wembley…
Strategic owned infrastructure in place ? Owned plant capacity of ~186 MMcf/d • ~155 sections undeveloped land de-risked by proven production ? ~365 locations* ? ~210 additional locations* in emerging Montney prospective layers •…
Leveraging technology and innovation to drive significant value in Wembley ? Productivity improvements through: ? Optimizing completion style and frac intensity ? Leveraging expertise to refine well length and spacing CONTINUOUS…
Technology & Innovation Liquids Enhancement & Gas Storage (LEGS) Increased margins & long-term value Increased liquids rates/reserves from existing assets ~30% to 70% Price cycle optimization 0 100 200 300 400 500 600…
5 MMcf/d Septimus pilot early results ? Recovery within forecast range ? Injectivity/productivity suitable for gas storage ? Supports potential for incremental liquids ? No drilling required ? No additional major infrastructure…
Extensive owned and controlled infrastructure • Drives costs lower • Strategic infrastructure proximal to liquids rich land base • Low capital exposure drill to fill strategy • Flexible timing in response to market conditions •…
International Light Crude Oil • Maximizing value through: ? Leveraging offshore expertise in Aberdeen ? Capturing low risk development opportunities ? Effective and efficient operations ? ~46% reduction in operating costs since 2015…
• Significant gas condensate discovery in Q1/19 ? 5 structures identified with significant potential • 20% working interest ? Upfront cash consideration and financial carry ? Future bonus payments on commercial development • Next…
• Vast high quality land base ? ~1,700 light crude oil and liquids rich opportunities ? ~340,000 bbl/d and ~3.4 Bcf/d capability(1) • Owned and controlled infrastructure ? Control pace of development to lower costs and optimize…
Largest primary heavy crude oil producer in Canada ? Q3/19 production ~88,000 bbl/d • Industry leading polymer flood at Pelican Lake ? Q3/19 production ~60,000 bbl/d • 2P reserves 697 million barrels(1) VAST LAND BASE & OWNED…
• Industry leading EOR technology • Long Life Low Decline asset • Industry leading heavy crude oil recovery ? Primary recovery ~6% ? Water flood after primary ~15% ? Polymer after water flood ~22% ? Polymer after primary ~28% • 2P…
Heavy Crude Oil Pelican Lake Case Study – Benefit of Polymer Flooding • Prior to Q4/17, ~35% of production was on water flood or low viscosity polymer flood • Q4/17 optimized this portion of the field ? Converted water to polymer…
Pelican Lake Margin Enhancement ($/bbl) • Leveraging area and technological expertise, economies of scale to drive value growth ? Completed 2018 and 2019 savings ? Facility consolidation ? Improved polymer quality and price ?…
• Large concentrated land base and extensive infrastructure • Deep inventory of traditional CHOPS and multilateral opportunities • Repeatable, scalable programs to fit market access LEVERAGING TECHNOLOGICAL LEARNINGS TO CREATE…
Innovation required for consolidated reservoirs where traditional CHOPS wells have low or no productivity • Unlined multilaterals ? Increased productivity ? Lower per barrel costs ? Economic at US$50 WTI • Key areas ? Golden Lake,…
Multilateral Example Golden Lake • Multilateral technology unlocks multi-year drilling opportunities in a mature CHOPS field ? Average production rate increased ~16x over vintage vertical well ? Average ultimate recovery increased…
Fishbone Example Manatokan • Fishbone technology unlocks multi-year drilling opportunities in a mature CHOPS field ? Average production rate increased ~7x over vertical vintage well ? Average ultimate recovery increased ~5x over…
• Achieved initial target of ~$40 million of annual margin improvement ? Additionally achieved an incremental ~$6 million of annual margin improvement ? Additionally achieved ~$17 million of one time savings ? Targeting future…
Liquids Current Production Q3/19 Future Potential POTENTIAL TO UNLOCK MASSIVE VALUE 77 Conventional & Unconventional Development Potential ~1,200,000 BOE/d* of potential future capability
9 billion barrels BIIP* ? Currently producing at Primrose and Wolf Lake ~3 billion barrels BIIP* ? Currently producing at Peace River ~44 billion barrels BIIP* ? Significant future potential ~18 billion barrels BIIP* ? Currently…
Long Life Low Decline assets ? 2P reserves 3.06 billion barrels(1) • Facility capacity of ~340,000 bbl/d(2) ? Q3/19 production of ~206,400 bbl/d • 100% working interest and operatorship on developed properties • Leverage use of…
Thermal In Situ Oil Sands Primrose / Wolf Lake Overview • Total facility capacity ~140,000 bbl/d ? Q3/19 production of ~73,700 bbl/d • Leverage unutilized facility capacity of ~60,000 bbl/d ? Average capital efficiency of…
• Total facility capacity of ~200,000 bbl/d(1) ? Q3/19 production of ~129,000 bbl/d ? Kirby North ~40,000 bbl/d in early 2021 • Highly economic pad development to utilize facility capacity ? Adding ~21,000 bbl/d at Jackfish for ~$8…
Thermal In Situ Oil Sands Continuous Improvement in Development Costs • Leveraging technology and innovation and Canadian Natural’s culture of continuous improvement ? Improved well design lowers costs ? Reservoir enhancements…
Reservoir enhancements to reduce SOR by ~10% ? Improved steam conformance and well design • Using solvents to potentially reduce SOR by ~50% ? ~$1.00/bbl operating cost savings ? Targets to reduce GHG emissions intensity by ~50% ?…
Thermal In Situ Oil Sands Development Potential Unutilized capacity of ~135,000 bbl/d(2) Solvent potential future capability of ~285,000 bbl/d(2) Future expansion potential capability of ~320,000 bbl/d(2) (1) Includes…
• Industry leading oil sands mine operator • Q3/19 production of ~432,200 bbl/d of SCO • No decline, reservoir risk or reserve replacement cost ? 2P reserves 7.03 billion barrels(1) ? 50+ year reserve life(2) • Significant resource…
Oil Sands Mining & Upgrading Plant Capacity Utilization Note: Sourced from 2019 TD research, Mine your own Business reports. Peers Include: IMO, SU, Syncrude and Shell (for 2014-2016 data). 70% 80% 90% 100% 3 year 5 year CNQ Peer…
Cash Costs Fuel Costs CONTINUOUS IMPROVEMENT MAXIMIZES VALUE 98 Horizon Oil Sands Operating Costs (1) Reflects YTD 2019 operating costs as at September 30, 2019. (2) Reflects natural gas costs used in operations. Note: Operating…
Horizon Oil Sands Operating Costs – Margin Advantage *2019F is average of first three quarter actuals. Operating expenses include energy costs and reflect production downtime for turnarounds (unadjusted). Source: Company reports. Peers…
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