Canadian Natural Resources Limited · TSX:CNQ

Canadian Natural Resources — Investor Presentation (July 2022)

68 slides from Canadian Natural Resources's investor presentation, July 2022

  1. Slide 1: Canadian Natural Corporate Presentation July 2022

    Canadian Natural CORPORATE PRESENTATION July 2022

  2. Slide 2: Our Strategy

    Our Strategy • Flexible capital allocation to maximize value • Strong Balance Sheet supporting investment grade credit ratings • Defined growth/value enhancement plans by product/basin • Diverse, balanced asset base – strong differentiation versus peers ‒ Product mix ‒ Project timelines ‒ Long reser

  3. Slide 3: Canadian Natural's Assets are Unique

    Canadian Natural’s Assets are Unique Robust Through All Cycles • Long life low decline assets provide sustainable production and free cash flow even in lower • Ability to ramp up production price environment faster with improving prices • Exercising capital flexibility by reducing spend • Low capita

  4. Slide 4: Operational Excellence

    Canadian Natural Operational Excellence • Area knowledge, extensive infrastructure and operatorship • Top tier effectiveness and efficiency • Strong history of capturing margin growth opportunities • Process optimization and improvement • Technology and innovation • Economies of scale STRONG HISTORY

  5. Slide 5: Capital Discipline

    Canadian Natural Capital Discipline • Balance and optimize the four pillars of capital allocation ‒ Flexible capital allocation maximizes shareholder value • Further strengthen balance sheet Maximizing ‒ Maintain investment grade credit ratings Shareholder Value • Returns to shareholders ‒ Sustainab

  6. Slide 6: Premium Value – Assets, Execution, Management & Cost Structure

    Canadian Natural Premium Value – Assets, Execution, Management & Cost Structure • Unique, diverse, long life low decline asset base • Large, low risk, high value reserves Competitive • Low maintenance capital requirements advantages • Top tier cost structure drive material free cash flow • Balanced

  7. Slide 7: Asset Base Drives Long-Term Value – 2022

    Canadian Natural Asset Base Drives Long-Term Value – 2022 Increased ~6% Significant YTD Disciplined Executing on Leading dividend by Targeted returns to capital free cash free cash flow ~28% to production shareholders of program flow policy generation $3.00/share growth ~$3.1 billion(2) annualized(1

  8. Slide 8: Balanced, Diverse Portfolio

    Canadian Natural Balanced, Diverse Portfolio • Balanced, diverse production mix North Sea ‒ Long Life Low Decline production ~78% of liquids North America • International Brent exposure • Vast, balanced resource base to develop • Light crude oil and SCO production ~46% of BOE • Natural gas ~26% of B

  9. Slide 9: Canadian Peers – 2021

    Total Proved & Proved Developed Producing Reserves Canadian Peers – 2021 ~60% of reserves are high value SCO, light crude oil & NGLs Total Proved Reserve Life Index Total Proved ~30 years(1) peer average Reserve Life Index ~19 years(2) Total Proved Proved Developed Producing 0 5,000 10,000 15,000 (M

  10. Slide 10: Global Peers 2021 – Greater than 5 Billion Barrels

    Total Proved Reserves After Royalties Global Peers 2021 – Greater than 5 Billion Barrels ~60% of reserves are high value SCO, light crude oil & NGLs Reserve Life Index ~30 years* Only Canadian company with >5 billion barrels 0 5,000 10,000 15,000 20,000 (MMBOE) Peers include: BP, COP, CVX, SHEL, TTE

  11. Slide 11: Low Corporate Decline Rate

    Canadian Natural’s Advantage Low Corporate Decline Rate 2022B BOE Production Mix Oil Sands Mining Long Life & Upgrading Low Decline ~0% Decline Production ~58% Pelican & Thermal ~10% ~13% Decline Corporate Decline Rate Conventional & Unconventional Conventional & ~19% Decline Unconventional Producti

  12. Slide 12: 2021E Maintenance Capital Ratio

    2021E Maintenance Capital Ratio (%) 90% Canadian Natural is a leading, economic source of sustainable crude oil & natural gas supply 70% 50% Peer Average 30% 10% Canadian Peers US Peers Source: BMO Capital Markets estimates - Aligning Ambitious Industry Plans With Delusional Political Dreams, Novemb

  13. Slide 13: 2022 Budget

    Canadian Natural 2022 Budget Capital Expenditures ($ millions)(1) 2021 2022B Base Capital $3,480 $3,645 Strategic Growth Capital - $700 Total Capital $3,480 $4,345 Targeted Production 2021 2022B % Change(2) Natural Gas (MMcf/d) 1,695 1,980 - 2,030 ~18% Conventional E&P Crude Oil & NGLs (Mbbl/d) 245

  14. Slide 14: Conventional E&P – Near-Term Growth

    2022 Capital Budget Conventional E&P – Near-Term Growth Conventional (near-term growth) ($ millions) Targeted Opportunity Base Capital(1) ~$1,875 Sustains safe and reliable base production  Growth of ~66,000 BOE/d in 2022 from 2021 average volumes, an increase of ~12% • 2022 exit rate of ~605,000

  15. Slide 15: Thermal In Situ – Mid- & Long-Term Growth

    2022 Capital Budget Thermal In Situ – Mid-, & Long-Term Growth Thermal In Situ (mid- & long-term growth) ($ millions) Targeted Opportunity Base Capital ~$340 Sustains safe & reliable base production Strategic Growth Capital Opportunities(1) ~$385 Adds ~22,000 bbl/d in 2024, increasing to ~49,000 b

  16. Slide 16: Oil Sands Mining & Upgrading – Mid- & Long-Term Growth

    2022 Capital Budget Oil Sands Mining & Upgrading – Mid- & Long-Term Growth Oil Sands Mining (mid- & long-term growth) ($ millions) Targeted Opportunity Base Capital ~$1,430 Sustains safe & reliable base production Strategic Growth Capital Opportunities(1) ~$315 Adds ~5,000 bbl/d of capacity in 202

  17. Slide 17: Drilling Program

    2022 Capital Budget Drilling Program Net producer wells 2021 2022B Natural Gas wells 49 54 Crude Oil wells Primary Heavy 94 161 Pelican Lake 10 - Light 32 29 International 5.9 - Total Conventional E&P wells 191 244 Thermal wells 8 102 DISCIPLINED DRILLING PROGRAM 17

  18. Slide 18: 2022 Execution Priorities

    Canadian Natural 2022 Execution Priorities • Disciplined 2022B base capital of ~$3,645 million focused on free cash flow generation and maximizing value for shareholders ‒ Allocate to highest return projects ‒ Maintain capital flexibility  Strategic growth capital in 2022B over base capital ~$700 m

  19. Slide 19: Financial Strength

    Financial Strength

  20. Slide 20: Asset Base Supports Strong Financial Position

    Canadian Natural Asset Base Supports Strong Financial Position Increased dividend Implemented Achieved net Significant twice in 2021 Accelerated Long-term free cash flow debt of debt reduction ~38%* share shareholder allocation ~$13.8 billion in 2021 repurchases value Incremental policy in Q1/22 ~28

  21. Slide 21: Long-Term Dividend Growth vs. Global Peers

    Long-Term Dividend Growth vs. Global Peers 10 Year CAGR (% CAGR) 25%  Leading long-term dividend growth  Maintained dividend in low commodity price period while 20% others cut sustainable  Increased dividend for 22nd consecutive year 15%  Current annualized dividend $3.00 per share 10% 5% Peer A

  22. Slide 22: Balancing the Four Pillars

    Canadian Natural Balancing the Four Pillars • Balance Sheet Strength ‒ Balance Sheet strengthens with Maximizing free cash flow generation Shareholder Value • Returns to Shareholders ‒ Growing, sustainable dividends ‒ Increasing share repurchases Balance Returns Resource Sheet Strength to Shareholde

  23. Slide 23: Free Cash Flow Allocation Policy

    Canadian Natural Free Cash Flow Allocation Policy Adjusted Funds Flow Less: Base Capital Expenditures Less: Dividends 50% Free Cash Flow 50% Enhanced in May 2022 • Further enhancement to free Balance Sheet Share cash flow allocation policy: Balance Sheet Value Growth Shareholders Opportunistic Repur

  24. Slide 24: Cash Returns

    Canadian Natural Cash Returns Market Cap Returned(1) • Committed to returns to shareholders (%) 15% ‒ Current annualized dividend $3.00 per share  22 consecutive years of dividend increases  ~22% CAGR since inception in 2001  ~$1.6 billion in dividends paid year-to-date in 2022(2) 10%  ~$3.3 bil

  25. Slide 25: Production per Share Growth

    Canadian Natural Production per Share Growth (BOE production/share) 0.44 0.42 0.40 0.38 0.36 0.34 0.32 2019 2020 2021 2022E Capital* ~$3.9 ~$2.7 ~$3.5 ~$4.3 ($ billions) *Capital excludes net acquisition costs. Note: Based upon actual and forecasted ending period shares outstanding. See Advisory for

  26. Slide 26: Returns to Shareholders

    Canadian Natural Returns to Shareholders ($ millions) 12,000 Potential incremental returns 22 years of consecutive dividend increases through free cash flow policy 10,000 ~22% CAGR since inception 8,000 6,000 4,000 Horizon Phase 3 complete 2,000 Horizon Phase 1 build years 0 2008 2009 2010 2011 2012

  27. Slide 27: Balance Sheet Strength

    Canadian Natural Balance Sheet Strength Debt/Cash Flow(1) (x) 5.0 • Strengthening metrics through the cycle 4.0 • Prudent free cash flow allocation • Priority towards debt repayment 3.0 2.0 Targeted net debt reduction of 1.0 >$13 billion over 2 year period(2) 0.0 at ~US$96 WTI in 2022 2020 2022E Deb

  28. Slide 28: Robust Financial Position

    Canadian Natural Robust Financial Position Long-Term Ratings Outlook Short-Term Ratings DBRS A (low) Stable R-1 Standard & Poor’s BBB- Stable A-3 Moody’s Baa1 Stable P-2 • Balance Sheet strength as at March 31, 2022 • Net debt ~$13.8 billion • Debt to book capitalization ~26% • Significant liquidity

  29. Slide 29: Balanced Credit Facility Profile

    Canadian Natural Balanced Credit Facility Profile Revolving Credit Facilities (C$ millions) Fully Drawn Term Credit Facilities(3) (C$ millions) June 2024(1)(3) $2,495 February 2023 $1,150 June 2025(2)(3) $2,495 February 2023(3) $500 • Lenders Operating demand loan $100 ‒ 15 banks diversified by loca

  30. Slide 30: Financial Summary

    Canadian Natural Financial Summary • Significant debt reduction 50% of free cash flow Returns to shareholders to increase when $8 billion of • Increased share repurchases 50% of free cash flow net debt is achieved • Sustainable and growing dividend ‒ Increased quarterly dividend twice in 2021 ‒ Addi

  31. Slide 31: Canadian Natural Advantages Summary

    Canadian Natural Advantages Summary • World class asset base ‒ ~77% of reserves are Long Life Low Decline(1) ~78% of total liquids production in 2022B(2)  Includes no decline, high value net SCO production capacity ~475,000 bbl/d  Top tier corporate decline rate ~10% • Diversified across products

  32. Slide 32: Asset Overview

    Asset Overview

  33. Slide 33: Natural Gas, Light Crude Oil & NGLs Core Area Summary

    Natural Gas, Light Crude Oil & NGLs Core Area Summary • Large, Canadian natural gas producer ‒ 2021 annual production of 1,695 MMcf/d ‒ 2022B 1,980 - 2,030 MMcf/d ‒ Targeting 54 natural gas wells in 2022B ‒ NEBC and NW Alberta  Montney and Spirit River • Significant light crude oil and NGL producti

  34. Slide 34: Natural Gas, Light Crude Oil & NGLs – Montney

    Natural Gas, Light Crude Oil & NGLs Montney Lean Gas (<10 bbl/MMcf) Liquids Rich Gas (10-100 bbl/MMcf) • Large inventory of defined drilling opportunities Light Oil • Large contiguous Montney land holdings Umbach BC AB ‒ ~1.4 million net acres Townsend • Top tier key liquids rich natural gas and lig

  35. Slide 35: Infrastructure Advantage

    Natural Gas, Light Crude Oil & NGLs Infrastructure Advantage • Extensive owned and controlled infrastructure Umbach ‒ Drives costs lower ‒ Strategic infrastructure proximal to liquids rich Townsend land base Farrell Creek • Low capital exposure drill-to-fill strategy Stoddart Septimus ‒ Flexible tim

  36. Slide 36: Heavy Crude Oil Core Area Summary

    Heavy Crude Oil Core Area Summary • Largest primary heavy crude oil producer Cliffdale in Canada Pelican Lake ‒ 2021 annual production ~64,400 bbl/d AB SK ‒ Targeting 161 heavy crude oil wells in 2022B Smith  This includes 41 heavy crude oil wells targeted at our Clearwater development at Smith  P

  37. Slide 37: Heavy Crude Oil Horizontal Multilateral & Fishbone Wells

    Technology & Innovation Heavy Crude Oil Horizontal Multilateral & Fishbone Wells Multilateral & Fishbone • Multilateral technology unlocks multi-year low-risk development opportunities ‒ Benefits:  Increased recovery up to 30x over vertical wells  Higher initial crude oil rates  Lower per barrel

  38. Slide 38: Thermal In Situ Oil Sands Asset Overview

    Thermal In Situ Oil Sands Asset Overview Birch Mtn. • Long Life Low Decline assets ‒ ~126 billion barrels BIIP(1) Ells River • Facility capacity of ~340,000 bbl/d(2) Liege ‒ 2021 annual production ~259,300 bbl/d(3) Gregoire • Strategic growth capital ~$385 million in 2022B • 100% working interest an

  39. Slide 39: Primrose / Wolf Lake Overview

    Thermal In Situ Oil Sands Primrose / Wolf Lake Overview • Total facility capacity ~140,000 bbl/d • Leverage annual unutilized facility capacity of ~70,000 bbl/d Primrose North ‒ Future pad adds capital efficiency ~$10,000/bbl/d* Primrose East ‒ Targeting 1 SAGD pad and 2 CSS pads  2022B strategic c

  40. Slide 40: Kirby / Jackfish SAGD Overview

    Thermal In Situ Oil Sands Kirby / Jackfish SAGD Overview • Total facility capacity of ~200,000 bbl/d(1) Kirby Jackfish • Leverage annual unutilized facility capacity North of ~30,000 bbl/d ‒ Future pad adds capital efficiency ~$8,000/bbl/d(2) ‒ Targeting 3 pads at Kirby and 2 pads at Jackfish  2022

  41. Slide 41: Solvents – Reducing GHG Emissions Through Steam Efficiencies

    Technology & Innovation Solvents – Reducing GHG Emissions Through Steam Efficiencies • Co-injecting solvent with steam ‒ Kirby South is currently piloting solvent SAGD  SOR and GHG intensity reductions of ~45% Steam Assisted Gravity Drainage  Solvent recovery of ~85% (SAGD) • Next steps: ‒ Primros

  42. Slide 42: Oil Sands Mining & Upgrading

    Oil Sands Mining & Upgrading • Industry leading oil sands mine operator ‒ Net capacity ~475,000 bbl/d of SCO CNQ Operating Oil Sands Mines ‒ 2021 annual production ~448,100 bbl/d of SCO CNQ Lands • No decline, reservoir risk or reserve replacement cost ‒ 50+ year reserve life(1) • Significant resour

  43. Slide 43: Oil Sands Mining & Upgrading (cont'd)

    Oil Sands Mining & Upgrading (cont’d) • Horizon 2022B targeted activities ‒ Sustain safe and reliable base production CNQ Operating Oil Sands Mines ‒ Advancing reliability enhancement project CNQ Lands  Targeting to extended major maintenance cycle  Adds ~5,000 bbl/d of capacity in 2023  Increase

  44. Slide 44: Plant Capacity Utilization

    Oil Sands Mining & Upgrading Plant Capacity Utilization (%) 100% 90% 80% 70% 1 year 2 year CNQ Peer Average Peers Include: IMO Kearl, SU Base, SU Fort Hills and Syncrude. Note: Sourced from TD research: Mine your own Business report on May 12, 2022, includes trailing data as of January 2022. CONTINU

  45. Slide 45: Operating Costs

    Oil Sands Mining & Upgrading Operating Costs ($/bbl) $45.00 $40.00 Over a 50% reduction in $35.00 operating costs $30.00 Equates to a ~$3.7 billion reduction in annual $25.00 operating costs in 2021 $20.00 $15.00 $10.00 2013 * 2013 * 2021 2021 (C$) (US$) (C$) (US$) Cash Costs Fuel Costs *2013 operat

  46. Slide 46: In-Pit Extraction Process (IPEP)

    Technology & Innovation In-Pit Extraction Process (IPEP) • IPEP is a modular extraction plant that separates bitumen in the mine pit • IPEP pilot was successful ‒ Next Step: front end engineering for a demonstration plant  ~$10 million in 2022B • Benefits IPEP Field Pilot at Horizon ‒ Reduces GHG e

  47. Slide 47: Environmental, Social & Governance

    Environmental, Social & Governance

  48. Slide 48: Environmental Achievements

    Canadian Natural Environmental Achievements • ESG is a priority and we have a strong history of environmental stewardship • Reporting aligned with recommendations from the Task Force on Climate-related Financial Disclosures and the reporting framework from the Sustainability Accounting Standards Boa

  49. Slide 49: New Environmental Targets – 2021

    Strong Commitment to Improving Performance New Environmental Targets – 2021 50% in E&P methane emissions by 2030 from 2016 baseline Reduction 40% in in-situ fresh water intensity Reduction by 2026 from 2017 baseline 40% in mining fresh river water intensity Reduction by 2026 from 2017 baseline DELIV

  50. Slide 50: The World Needs More Canadian Energy

    The World Needs More Canadian Energy (Aggregate ESG Score) 300 Environment(1) Social(2) 250 Governance(3) 200 Average 150 100 50 0 (1) 2020 Yale Environment Protection Index (EPI). (2) 2021 Social Progress Index (SPI) prepared by Social Progress Imperative. (3) 2020 World Governance Indicators (WGI)

  51. Slide 51: Advancing Innovation

    Canadian Natural Has Delivered Advancing Innovation • Recognize the need to reduce GHG emissions ~$3.9 billion • Leverage technology and Canadian ingenuity Invested in Research & Development* • Opportunities to reduce emissions further ~$48 million Invested in GHG research & technologies in 2020  R

  52. Slide 52: Continuous Improvement in GHG Emissions

    Continuous Improvement in GHG Emissions Corporate GHG Emissions Intensity (tonnes CO2e/BOE) 0.075 0.070 ~32% 0.065 Reduction in GHG intensity since 2012 0.060 Equivalent to removing 0.055 ~1.9 million cars off the road annually* 0.050 0.045 2012 2013 2014 2015 2016 2017 2018 2019 2020 *Go forward es

  53. Slide 53: Leading Canadian Oil Sands Intensity

    Leading Canadian Oil Sands Intensity GHG Emissions Intensity (kgCO2/bbl) 80 70 60 50 ~35% 40 Lower than total peer upstream scope 1 average 30 20 10 0 Average Peer Oil Sands Total peer average includes all Canadian thermal in situ and oil sands mining peer assets. Source: Facility Greenhouse Gas Rep

  54. Slide 54: Carbon Capture & Sequestration / Storage Technology

    Carbon Capture & Sequestration / Storage Technology Quest TOP TIER CO2 capturer & sequesterer in the world(1) • Reduced CO2 footprint • Reduced CO2 charges Tonnes/Year Quest(2) ~1.1 million Horizon Equivalent to removing Horizon ~0.4 million NWR(3) ~1.2 million ~576,000 cars off the road annually To

  55. Slide 55: Journey to Net Zero

    Technology & Innovation Journey to Net Zero Current Actions Medium-Term Actions Long-Term Actions • IPEP demonstration plant • IPEP commercialization • Carbon capture and • Solvent EOR pilots • Solvent EOR commercialization conversion (carbon fibers, ‒ Progressing commercial scale pad • Technology s

  56. Slide 56: Oil Sands Pathways to Net Zero Initiative

    Oil Sands Pathways to Net Zero Initiative • Canada’s largest oil sands producers form an alliance to achieve net zero GHG emissions ‒ Members includes Canadian Natural, Cenovus, ConocoPhillips Canada, Imperial, MEG and Suncor ‒ Progressing towards Canada’s climate goals ‒ The initiative targets a nu

  57. Slide 57: Industry Leading Safety Performance

    Industry Leading Safety Performance (Per 200,000 Hours) 0.75 ~25% 0.50 TRIF reduction vs 2019 ~58% 0.25 TRIF reduction vs 2016 0.00 2016 2017 2018 2019 2020 Total Recordable Injury Frequency TARGET: NO SAFETY INCIDENTS, NO HARM TO PEOPLE 57

  58. Slide 58: Investing in Indigenous Communities

    Investing in Indigenous Communities ~$490 million in contracts with local indigenous businesses in 2020 >$1.0 billion in last 2 years Canadian Natural works with ~160 Indigenous businesses Fort McKay Métis Elder and Fort McKay First Nation Cultural & Special Events Lead with Canadian Natural staff d

  59. Slide 59: Governance – Risk Assessment & Mitigation

    Governance Risk Assessment & Mitigation • Strong track record of identifying, assessing, adapting, aligning and executing • Board of Directors as well as Board Governance and Risk Committees ‒ Review and hold management accountable to identify and mitigate risks • Strong, effective strategies to pla

  60. Slide 60: Management Aligned With Shareholders

    Management Aligned With Shareholders Management Ownership (% of Outstanding Shares) 2.5% ~2.3% 2.0% Substantial Management & Director invested wealth delivers clear alignment with shareholder interests 1.5% 1.0% 0.5% 0.0% Peers Integrated Peers Peers include APA, COP, CVE, DVN, EOG, IMO, OVV, PXD an

  61. Slide 61: The Strength of Canadian Natural's Business Model

    The Strength of Canadian Natural’s Business Model • Leaders in ESG performance • Advantaged assets ‒ Long life low decline assets ‒ Effective and efficient operations • Leverage technology, innovation and continuous improvement ‒ Delivered game changing environmental performance ‒ Track record of co

  62. Slide 62: Canadian Natural – Proven Effective Strategy

    Canadian Natural PROVEN « EFFECTIVE # STRATEGY

  63. Slide 63: Advisory – Forward-Looking Statements

    Advisory Special Note Regarding 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 referred to herein as "forwar

  64. Slide 64: Advisory – Currency, Financial Information and Production

    Advisory Special Note Regarding Currency, Financial Information and Production This presentation should be read in conjunction with the Company's unaudited interim consolidated financial statements (the "financial statements") for the three months ended March 31, 2022 and the Company's MD&A and audi

  65. Slide 65: Advisory – Non-GAAP Definitions

    Advisory Long-term debt, net Long term debt, net (also referred to as net debt) is a capital management measure that is calculated as current and long-term debt less cash and cash equivalents. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for more details. Capita

  66. Slide 66: Advisory – Cautionary Statement

    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. Thermal In Situ Oil Sands Overview – Clearwater, McMurray, Bluesky, Grand Rapids and Grosmon

  67. Slide 67: Advisory – Pricing Assumptions and Glossary

    Advisory Pricing Assumptions Glossary of Terms 2022E 2021 AECO – Alberta Energy Company (benchmark pricing) Strip AOSP – Athabasca Oil Sands Project US$ WTI/bbl $ 96.76 $ 67.96 BOE – barrels of oil equivalent C$ AECO/GJ $ 5.74 $ 3.38 BBL – barrels of oil SCO Diff/(Prem) US$/bbl $ (1.39) $ 1.60 Bcf –

  68. Slide 68: Advisory – Reserves Notes

    Advisory Reserves Notes: 1. Company Gross reserves are working interest share before deduction of royalties and excluding any royalty interests. 2. Information in the reserves data tables may not add due to rounding. BOE values and oil and gas metrics may not calculate exactly due to rounding. 3. Fo

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