Canadian Natural Resources Limited (CNQ) Earnings

Management highlights

- Operational Achievements & Performance * Q2 2026 set 8 new operational and financial records across the company's asset base, despite challenging spring weather including heavy snowmelt and rain that impacted other oil sands operators. * The acquired additional working interest in the AOSP mines (closed Q4 2025) and completed turnaround has been fully integrated, driving strong year-over-year production growth. * Recent Peace River area acquisitions completed in H1 2026 are already well integrated and contributing meaningfully to returns. - Financial & Shareholder Returns * Generated $4 billion in total shareholder returns in Q2 2026: $2.4 billion in direct returns ($1.3 billion in dividends, $1.1 billion in share repurchases) and $1.6 billion in indirect returns via net debt reduction. * Year-to-date 2026 direct shareholder returns exceed $5.7 billion. The board approved a $0.625 per share quarterly dividend, marking 2026 as the 26th consecutive year of dividend increases. * The current share buyback program targets 75% of free cash flow (calculated as fund flow after dividends, capital and abandonment expenditures) and remains robust in the current strong pricing environment. * Liquidity is strong with ~$8 billion in available capacity from undrawn credit facilities and internally generated cash flow, providing significant financial flexibility. - Strategic Update on Regulatory Framework * The recently announced trilateral MOU between the Oil Sands Alliance, Government of Alberta, and the federal government is a positive first step to establish a regulatory and fiscal framework that supports long-term industry competitiveness and responsibly emission-aligned production growth. * All medium and long-term growth projects (including the 30,000 bpd Jackfish expansion, 70,000 bpd Pike 2 project, and longer-term Albion/Horizon oil sands mining expansions) remain on hold until definitive agreements for the MOU are finalized, which is targeted for fall 2026. * Management confirmed that shareholder returns will not be sacrificed regardless of project development status, and any future growth projects will deliver strong returns at mid-cycle pricing.

Guidance

- Annual production guidance for 2026 has been upwardly revised for the second time in 2026, to a range of 1.637 million BOEs per day to 1.682 million BOEs per day, representing a 20,000 BOE per day increase at the midpoint from the prior guidance range. - The 2026 total operating capital expenditure program remains unchanged at ~$6 billion before net acquisition costs. - Management targets reaching the stated $13 billion long-term net debt goal in early 2027, based on current commodity pricing. - Once the $13 billion net debt target is achieved, the company will shift the share buyback program to return 100% of free cash flow to shareholders.

Segment performance

1. Oil Sands Mining and Upgrading: Average quarterly production hit a company record of 625,000 barrels per day, a 35% (161,000 barrels per day) year-over-year increase from Q2 2025. Upgrader utilization reached 106%, with an all-time high per barrel netback of ~$78 per barrel driven by an $8.37 US per barrel SCO premium to WTI and industry-leading operating costs of $22.19 per barrel. This segment represents ~37% of total corporate production and two-thirds of the company's high-value total liquids production. 2. North American Conventional E&P: Hit a record quarterly liquids production of 338,000 barrels per day, a 25% (67,000 barrels per day) year-over-year increase from Q2 2025. Light crude oil and NGL production hit a record 205,000 barrels per day, a 45% (64,000 barrels per day) year-over-year increase, driven by accretive acquisitions and strong drilling results. 3. Thermal In Situ (Jackfish): Achieved record production of 136,000 barrels per day, exceeding the 120,000 barrels per day facility nameplate capacity. The two new SAGD-PADS at Pike 1 currently average ~46,000 barrels per day with a 1.8 steam-to-oil ratio, with resource performance exceeding internal expectations. 4. Corporate Total: Record total corporate production of 1,677,000 BOEs per day, an 18% (256,000 BOEs per day) year-over-year increase. Record total liquids production of 1,249,000 barrels per day, a 23% (230,000 barrels per day) year-over-year increase, with two-thirds of total liquids being high-value SCO, light crude, and NGLs. Financial results set company records, with adjusted net earnings of $4.6 billion ($2.20 per share) and adjusted funds flow of $6.9 billion ($3.30 per share). Sulfur production (30% of Canada's total supply) generated $450 million in net revenue for the first half of 2026.

Risks & headwinds

- Finalization of definitive agreements for the trilateral MOU is required to provide regulatory and fiscal clarity for future medium and long-term growth projects; unresolved details could delay or alter project development plans. - SCO pricing has high day-to-day volatility, which impacts quarterly cash flow and netbacks. - Adverse weather conditions (heavy spring snowmelt, rain) create operational challenges for oil sands mining operations, which could impact production if not effectively managed. - Commercial-scale deployment of solvent technology for in situ production still requires pilot testing to confirm full-cycle economic viability, with uncertain upside potential at this stage.

Analyst Q&A

• Q: What operational strategies allowed Canadian Natural to manage through Q2's challenging adverse weather better than peers, and what key learnings informed this performance?

  A: Management noted that teams have spent years preparing for adverse seasonal weather, with pre-planning focused on maintaining haul roads, pre-staging necessary materials, and ensuring sufficient ore inventory is available ahead of poor conditions. On-site teams are trained to make real-time adjustments to operations based on conditions and forecasts, which allowed the company to maintain higher production than peers through the quarter.

• Q: What is the status and scale of the solvent technology pilot at Kirby, and what upside could commercial deployment deliver?

  A: The diluent solvent pilot at Kirby is a small-scale test on wells drilled from existing pads, with deployment scheduled for Q1 2027. The pilot is intended to test full-cycle economics: diluent was selected as a lower-cost alternative to other solvents to improve potential returns, and results will be evaluated to inform future larger-scale deployment, which could reduce greenhouse gas emissions for in situ operations.

• Q: If the trilateral MOU's definitive agreements meet management expectations, what is the timeframe for FID and progress on the company's queued growth projects?

  A: Management stated the immediate priority is finalizing the definitive agreements to confirm all details align with the MOU's core framework. Any future project development will follow the company's disciplined capital allocation approach: growth projects will not sacrifice shareholder returns, and capital will be deployed in a balanced manner that avoids overextending the company's capital budget on long-term projects at the expense of medium-term returns.

• Q: What is the appeal of the Peace River region for recent acquisitions, and are more consolidation opportunities expected there?

  A: Consolidation in Peace River delivers meaningful synergies from increased scale, shared infrastructure, and reduced operating costs that were not available when multiple smaller operators held assets in the area. Canadian Natural's existing regional expertise allows the company to optimize operations and maximize liquids production from the acquired assets, and the company will continue to pursue similar accretive consolidation opportunities that deliver value for shareholders.

• Q: What are the gating factors for the trilateral MOU to deliver improved egress and industry growth, and what is the biggest risk to successful implementation?

  A: Management noted the MOU is transformative for Canada and the oil sands industry, as it creates a pathway for new egress to the West Coast, which would improve differentials and broaden customer access, while also supporting greenhouse gas emissions reduction and job creation. The key gating factor is finalizing all fiscal and regulatory details in the definitive agreements to provide the clarity needed to move forward with growth plans.