Canadian Natural Resources Limited · TSX:CNQ
Canadian Natural Resources — Merger or Acquisition (March 2017)
36 slides from Canadian Natural Resources's merger presentation, Mar 9, 2017
Slide 1: Athabasca Oil Sands Project Acquisition
Athabasca Oil Sands Project Acquisition March 9, 2017 ATHABASCA OIL SANDS PROJECT ACQUISITION March 9, 2017 PREMIUM VALUE. DEFINED GROWTH. INDEPENDENT. Agenda • Transaction ‒ Significant Opportunity ‒ Overview & Metrics ‒ Operational Impact • Asset Overview ‒ Summary & Upside Opportunities ‒ Mines ‒
Slide 2: Forward Looking Statements
Athabasca Oil Sands Project Acquisition March 9, 2017 Forward Looking Statements Certain statements relating to Canadian Natural Resources Limited (the “Company”) in this document or documents incorporated herein by reference constitute forward-looking statements or information (collectively referre
Slide 3: Transaction: Significant Opportunity - Key Messages
Athabasca Oil Sands Project Acquisition March 9, 2017 TRANSACTION SIGNIFICANT OPPORTUNITY Key Messages • Transformational acquisition • World class assets • Highly accretive • Strengthens Key Balance Sheet Metrics • Leverages strengths of Canadian Natural and Shell • Unlocks upside and synergy oppor
Slide 4: Transformational Acquisition; World Class Assets
Athabasca Oil Sands Project Acquisition March 9, 2017 Transformational Acquisition • Canadian Natural becomes more robust and sustainable • Significant increase in cash flow • Leverages our core strengths • Increases exposure to long life, low decline assets • Increase sustainability through the bus
Slide 5: Highly Accretive; Strengthens Key Balance Sheet Metrics
Athabasca Oil Sands Project Acquisition March 9, 2017 Highly Accretive Proved Reserves per share Canadian Natural current 5.37 boe/share Pro forma (1) 7.08 boe/share 32% Increase Production per 100 share Canadian Natural current 768 boed/share Pro forma (1) 886 boed/share 15% increase Cash flow per
Slide 6: Leveraging Strengths; Unlocks Upside & Synergies
Athabasca Oil Sands Project Acquisition March 9, 2017 Leveraging Strengths • Canadian Natural ‒ Top decile utilization, reliability, effectiveness, and efficiencies in mining and extraction ‒ Two mines and extraction plants – economies of scale ‒ Synergy opportunities • Shell ‒ World class refining
Slide 7: Robust & Sustainable
Athabasca Oil Sands Project Acquisition March 9, 2017 Robust & Sustainable • Increases robustness of Canadian Natural ‒ Production increase 25% over 2017F ‒ Reserves increase 50% over 2016 level ‒ Ratio of long life, low decline crude oil 2017F production increases from 60% to 70% ‒ Corporate 2018 d
Slide 8: Summary
Athabasca Oil Sands Project Acquisition March 9, 2017 Summary • Acquiring ‒ Shell’s 60% interest in the AOSP ‒ Half of Marathon’s 20% interest in AOSP Shell is acquiring the other half of Marathon’s interest ‒ Equates to 70% interest in the Albian mines and the Scotford Upgrader Remaining owners
Slide 9: Acquisition Metrics
Athabasca Oil Sands Project Acquisition March 9, 2017 Acquisition Metrics • Strong acquisition multiples • 40% lower cost than Horizon with immediate cash flow EBITDA Multiple 2017 strip 5.9 times 2017 $60.00 5.3 times FD&A cost $4.85/boe Cost per flowing barrel Transaction Horizon* Variance Heavy b
Slide 10: Canadian Natural's Advantage: Long-Life, Low Decline Assets
Athabasca Oil Sands Project Acquisition March 9, 2017 Canadian Natural’s Advantage Long-Life, Low Decline Assets • Low reserve replacement costs • Significant, sustainable funds flow • More tolerant to commodity price volatility ‒ Low production decline ‒ Low costs to maintain production • Minimal t
Slide 11: Pro forma Impact on Consolidated Reserves
Athabasca Oil Sands Project Acquisition March 9, 2017 Pro forma impact on Consolidated Reserves CNRL 2016 Acquisition Pro forma • Proved Reserves RESERVES ‐ PROVED increase by 44% Crude Oil (mmbbl) North America E&P 790 31 821 Thermal 1,269 14 1,283 Oil Sands Mining 2,559 2,583 5,142 International 2
Slide 12: Building a World Class Company
Athabasca Oil Sands Project Acquisition March 9, 2017 Building a World Class Company Rosneft PetroChina Exxon Mobil BP Lukoil Petrobras CNQ Net Proved Reserves* Royal Dutch Shell AOSP Net Proved Reserves Total CNQ Net Probable Reserves* Chevron Gazprom CNQ Resources** ConocoPhillips AOSP Resource EN
Slide 13: Transitioning to a Longer Life Asset Base
Athabasca Oil Sands Project Acquisition March 9, 2017 Transitioning to a Longer Life Asset Base (% of CNQ Liquids Production)* 80% 70% Pelican Lake - Sold as Heavy Crude Oil Thermal In Situ - Sold as Heavy Crude Oil 60% Horizon - Sold as Synthetic Crude Oil AOSP - Sold as Synthetic Crude Oil 50% 40%
Slide 14: 4 Year Production Growth; Balance Sheet Improves Quickly
Athabasca Oil Sands Project Acquisition March 9, 2017 4 Year Production Growth (Mboe/d) 1,350 1,250 1,150 Pro forma 1,050 CNQ 950 850 750 2016 2017F 2018F 2019F Capital ($ Billion) CNQ Base $3.9 $3.8 $4.2 $4.5 Pro forma - $17.3 $4.7 $4.9 *2016 midpoint to 2019F midpoint using Strip pricing. See Advi
Slide 15: 4 Year Free Cash Flow; Key Messages
Athabasca Oil Sands Project Acquisition March 9, 2017 4 Year Free Cash Flow ($ Billion) $5 $4 $3 Pro forma CNQ $2 $1 $0 -$1 Capital ($ Billion) 2016 2017F 2018F 2019F Strip pricing $3.9 $4.3* $4.7 $4.9 Note: Free cash flow represents cash flow from operations less capital and current dividends. See
Slide 16: Asset Overview: AOSP Overview Map
Athabasca Oil Sands Project Acquisition March 9, 2017 ASSET OVERVIEW SUMMARY & UPSIDE OPPORTUNITIES AOSP Overview Map • AOSP Mines ‒ Operating mines across river from Horizon AOSP Jackpine current ~126,000 dry bitumen mines Muskeg River current ~154,000 dry bitumen Other leases nearby included
Slide 17: AOSP Material Product Movements; Recent Performance
Athabasca Oil Sands Project Acquisition March 9, 2017 AOSP Material Product Movements Market Sales from Upgrader Heavy Blend (AHS) Premium SCO (PAS) Remaining with Value Chain Shell Shell Scotford AOSP Scotford Upgrader Common Owned Refinery & (70% Canadian Natural) Facilities Chemicals (100% Shell)
Slide 18: Asset Overview: The Mines
Athabasca Oil Sands Project Acquisition March 9, 2017 ASSET OVERVIEW MINES The Mines AOSP Mine Lease Map Undeveloped Growth Producing Jackpine Mine Expansion 2.9 Billion barrel Resource 70% TV:BIP10 or less Pierre River Mine Regulatory approval for Regulatory application prepared 100 Mbbl/d
Slide 19: Vast Resource Base; Extensive Infrastructure in Place
Athabasca Oil Sands Project Acquisition March 9, 2017 Vast Resource Base of AOSP Area North Block Namur Pierre River Horizon Jackpine CNQ Mine Horizon Oil Sands Muskeg River Ells River Mine CNQ 37 The Mines Extensive Infrastructure in Place • Many of the assets can be leveraged for broader use in th
Slide 20: The Mines: Process Overview
Athabasca Oil Sands Project Acquisition March 9, 2017 The Mines Process Overview MRM nameplate capacity = 92.0 Mt per year JPM nameplate capacity = 68.6 Mt per year Opportunities to commercialize value CNQ PARAFFINIC DILBIT MEETS SALE MARKETS SPECS 39 ASSET OVERVIEW UPGRADER 20
Slide 21: The Upgrader: Process Flow Diagram
Athabasca Oil Sands Project Acquisition March 9, 2017 The Upgrader Process Flow Diagram CNQ 41 Upgrader Product Flow AOSP Scotford Upgrader Co-Gen 70% Canadian Natural Off-Gas AOSP Mine Corridor 4,600 boe/d 70% Canadian Natural 100% Inter Pipeline Upgrader Diluted Bitumen ~280 Mbbl/d VGO Shell Scotf
Slide 22: The Upgrader: Utilization; Intellectual Technology
Athabasca Oil Sands Project Acquisition March 9, 2017 The Upgrader Improved Utilization But Significant Upside Remains Throughput Utilization (Mbb/d) Capacity = 300 Mbbl/d (%) 300 100% 87% 90% 88% 82% 83% 83% 77% 77% 87% 83% 80% 75% 73% 80% 80% 250 71% 79% 14 77% 77% 75% 5 70% 73% 13 10 71% 0.4 60%
Slide 23: The Pipelines: Wholly Dedicated With Spare Capacity
Athabasca Oil Sands Project Acquisition March 9, 2017 ASSET OVERVIEW INFRASTRUCTURE PIPELINES The Pipelines Wholly Dedicated With Spare Capacity • Capability to expand production without incremental transportation cost • Overview: ‒ Transportation of dilbit, diluent and other products used or produc
Slide 24: The Pipelines: Identified Opportunity, Capacity
Athabasca Oil Sands Project Acquisition March 9, 2017 The Pipelines • Capacity ‒ 42” dilbit pipeline: ~465,000 bbl/d ‒ Current excess capacity of ~100,000 bbl/d ‒ Possible expansion capacity up to ~1,100,000 bbl/d ‒ Incremental increases to pumping stations • Firm Service Agreement ‒ 25 years commen
Slide 25: Quest Carbon Capture & Storage
Athabasca Oil Sands Project Acquisition March 9, 2017 ASSET OVERVIEW QUEST CCS Quest Carbon Capture & Storage Metrics & Value Creation • The Quest CCS Project is fully integrated CCS initiative ‒ Capture, transport and storage • 1.1 Million Tonnes (gross) per Annum Carbon Reduction ‒ Equivalent to 2
Slide 26: Quest CCS: Metrics & Value Creation (cont'd)
Athabasca Oil Sands Project Acquisition March 9, 2017 Quest Carbon Capture & Storage Metrics & Value Creation (cont’d) • Value Creation ‒ Market Access: Potential for additional credits in California and B.C. ‒ Future Opportunities: Post government funding, potential to leverage CO2 for EOR /other v
Slide 27: Other Oil Sands Assets: Peace River
Athabasca Oil Sands Project Acquisition March 9, 2017 Other Oil Sands Assets • Canadian Natural has significant heavy oil and thermal expertise which we can apply • Acquired assets complement our own resource base • Provides future development potential CNQ DECADES OF FUTURE DEVELOPMENT POTENTIAL 53
Slide 28: Opportunities to Create Value
Athabasca Oil Sands Project Acquisition March 9, 2017 OPPORTUNITIES TO CREATE VALUE Opportunities to Create Value • Short term opportunities ‒ Improve mine efficiencies ‒ Garner improved efficiencies at Upgrader through one-site • Longer term opportunities ‒ Synergies with Horizon Purchasing, ware
Slide 29: Summary of Financial Impact
Athabasca Oil Sands Project Acquisition March 9, 2017 FINANCE SUMMARY OF FINANCIAL IMPACT Summary of Financial Impact • Immediately and highly accretive • Compliments 4 year growth targets • Consolidated impact • Balance sheet improves quickly • Significant free cash flow generated CNQ 58 29
Slide 30: Highly Accretive; 4 Year Production Growth
Athabasca Oil Sands Project Acquisition March 9, 2017 Highly Accretive Proved Reserves per share Canadian Natural current 5.37 boe/share Pro forma (1) 7.08 boe/share 32% Increase Production per 100 share Canadian Natural current 768 boed/share Pro forma (1) 886 boed/share 15% increase Cash flow per
Slide 31: Consolidated Impact; Balance Sheet Improves Quickly
Athabasca Oil Sands Project Acquisition March 9, 2017 Consolidated Impact 2017 2018 (1) (C$ billions, unless otherwise stated) 2016A 2017F Pro forma 2018F Pro forma (2) Production (boe/d) 805,782 857,329 1,075,365 948,317 1,166,353 34% over 2016 25% over 2017F Proved Reserves (MMboe) 5,713 5,969 8,5
Slide 32: Balance Sheet Improves Quickly (cont'd)
Athabasca Oil Sands Project Acquisition March 9, 2017 Balance Sheet Improves Quickly (cont’d) Debt / Book Cap. (%) 70 Bank Covenant 60 50 40 30 20 10 0 2012 2013 2014 2015 2016 2017F 2018F 2019F Actual Pro forma Impact Covenant Note: For illustrative purposes all 2017 values are annualized figures,
Slide 33: 4 Year Free Cash Flow; Financing Plan
Athabasca Oil Sands Project Acquisition March 9, 2017 4 Year Free Cash Flow ($ Billion) $5 $4 $3 Pro forma CNQ $2 $1 $0 -$1 Capital ($ Billion) 2016 2017F 2018F 2019F Strip pricing $3.9 $4.3* $4.7 $4.9 Note: Free cash flow represents cash flow from operations less capital and current dividends. See
Slide 34: Bridge Facility & Other Considerations
Athabasca Oil Sands Project Acquisition March 9, 2017 Bridge Facility & Other Considerations • Total acquisition costs of Shell and Marathon portions of assets shall be underpinned by: ‒ Issuance of C$4 billion of Canadian Natural common equity to Shell ‒ Signing of a new C$9 billion acquisition fac
Slide 35: Transaction Benefits; Conclusion
Athabasca Oil Sands Project Acquisition March 9, 2017 Transaction Benefits • Operational ‒ Synergies with Horizon to reduce costs ‒ Opportunities to increase mine production ‒ CO2 sequestration (Quest) ‒ Leverages Canadian Natural’s strengths (mining and extraction) • Financial ‒ Accretive on a CFPS
Slide 36: Advisory
Athabasca Oil Sands Project Acquisition March 9, 2017 PROVEN EFFECTIVE STRATEGY Advisory Cautionary Statement Project progress and financial results are dependent upon economic and regulatory conditions, commodity prices, global economic factors, project sanction and capital allocation. Pricing Assu
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