Canadian Natural Resources Ltd. Q3 FY2024 earnings call

Key Points

• Unique and diverse asset base provides competitive advantage.
• Achieved strong Q3 production: ~1.363 million BOEs.
• Oil sands mining and upgrading assets had record production in August.
• Announced acquisition of Chevron's interests in AOSP and Duvernay assets, targeting Q4 2024 closure.
• Increased crude oil transportation capacity on TMX by 75,000 bpd.
• Financial results: adjusted funds flow CAD3.9 billion, adjusted net earnings CAD2.1 billion, returned CAD1.9 billion to shareholders.
• Dividend increased by 7%, payable in January 2025.

In the third quarter, Canadian Natural achieved an average production of approximately 1.363 million BOEs, including 1.022 million barrels of liquids and over 2 Bcf of natural gas. The world-class oil sands mining and upgrading assets had a record monthly production of ~529,000 bpd of SCO in August, with Q3 production of ~498,000 bpd and operating cost of CAD20.67 per barrel. Conventional heavy oil averaged ~76,800 bpd, a 1% increase y-o-y, with operating cost CAD18.69 per barrel. Pelican Lake production was ~45,100 bpd, a 4% decrease y-o-y, with operating cost CAD8.74 per barrel. North American light crude oil and NGL production was ~106,300 bpd, a 3% decrease y-o-y, with operating cost CAD13.73 per barrel. North American natural gas was 2 Bcf, a 5% decrease y-o-y, with operating cost CAD1.23 per Mcf. Thermal in situ had ~271,500 bpd, a 5% decrease y-o-y, with operating cost CAD10.52 per barrel.

Guidance

• 2024 corporate annual natural gas guidance remains 2.12 Bcf to 2.23 Bcf.
• Acquisition of Chevron's interests targeted to close in Q4 2024.
• Dividend increased by 7%, marking 25th consecutive year of dividend increases.

Q: Dennis Fong asked about Horizon's cost savings and thermal project progress.

A: Mark Stainthorpe said cost savings in non-turnaround year could be ~CAD75 million, and Scott Stauth mentioned Pipe 1 project work has commenced.

Q: Neil Mehta asked about cost efficiency in lower commodity prices and 2025 budgets.

A: Mark Stainthorpe said focus on production optimization and continuous improvement, and Scott Stauth said they're working on 2025 budget.

Q: Greg Pardy asked about solvent pilot at Kirby North and OpEx at Horizon/AOSP.

A: Scott Stauth said solvent pilot results are positive and could be applied to future pad adds, and operating costs at Horizon/AOSP are a result of strong volumes and lower AECO pricing.

Q: Manav Gupta asked about all-in breakeven and offshore Africa assets.

A: Mark Stainthorpe said all-in breakeven is in low 40s WTI, and Scott Stauth discussed offshore Africa assets.

Q: Menno Hulshof asked about Chevron transaction and basin egress.

A: Scott Stauth said it's a mix of internal growth and opportunism, and discussed basin egress benefits.

Q: Patrick O'Rourke asked about TMX deal and M&A appetite.

A: Scott Stauth said TMX deal is similar to existing contract, and Mark Stainthorpe said they'll look at M&A opportunities in core areas.