Canadian Natural Resources Limited · TSX:CNQ
Canadian Natural Resources — Investor Presentation (March 2004)
42 slides from Canadian Natural Resources's investor presentation, March 2004
Slide 1: Corporate Presentation
CNQ TSX / NYSE March 2004 Corporate Presentation The Premium Value, Defined Growth Independent
Slide 2: Delivering Value and Growth
Delivering Value and Growth SNAPSHOT (All production and reserve information shown before royalties) 2004E(1) 2003 2002 Earnings (C$ millions) 780 - 825 1,407 570 Per share - basic 5.80 - 6.15 10.48 4.46 - diluted -- 10.14 4.31 Cash Flow (C$ millions) 2,600 - 2,750 3,160 2,254 Per share - basic 19.4
Slide 3: Agenda / Who is Canadian Natural?
Corporate Presentation March 2004 Agenda • Who is Canadian Natural? • Why own Canadian Natural? • Company overview • Strategy • Operations • North America • North Sea • Offshore West Africa • Financials • Investment recap CNQ The Premium Value, TSX/NYSE Defined Growth Independent Who is Canadian Nat
Slide 4: Who is Canadian Natural?
Corporate Presentation March 2004 Who is Canadian Natural? • Canadian based E&P company with international exposure • Canada • North Sea • Offshore West Africa • Significant exposure to North American natural gas Production mix (2004E) • Measured approach to growth North Sea Offshore West Africa and
Slide 5: Why Own Canadian Natural?
Corporate Presentation March 2004 Who is Canadian Natural? • Consistent growth in Reserve History reserves over the last (mmboe gross proved, 6:1) decade through 1,800 • Exploitation 1,600 1,496 1,526 1,400 • Exploration 1,201 1,245 1,200 • Acquisitions 1,000 918 • 100% of reserves 800 subject to in
Slide 6: Balanced Product Mix
Corporate Presentation March 2004 Why Own Canadian Natural? • Balanced product mix • Large independent producer • Significant exposure to North American natural gas • Low cost competitive advantage • Track record of value creation • Proven/committed management • Winning strategy - defined plan CNQ T
Slide 7: Large Independent Producer; Significant Exposure to NA Natural Gas
Corporate Presentation March 2004 Large Independent Producer • Canadian Natural Net Production – Q4/03 ranks as the 7th (mmboe/d) largest independent 800 714 E&P company based 700 624 on total current 600 536 production 500 454 449 420 397 400 324 300 264 178 193 200 100 0 ECA DVN APC BR APA UCL CNQ
Slide 8: Low-cost Competitive Advantage; Track Record of Value Creation
Corporate Presentation March 2004 Low-cost Competitive Advantage • Canadian Natural’s 2002 Total Cost Peer Comparison operating and (C$/boe - net) administrative costs 30 rank among the lowest of its peers 25 • Low cost production 20 is a key competitive advantage 15 • Winning strategy in a commodit
Slide 9: Shareholder Return; Committed Management
Corporate Presentation March 2004 Shareholder Return • TSR equals capital gain and Total Shareholder Return (US$) - 2003 dividend return 100% on investment. 80% CNQ NXY TLM 60% APA 40% BR PXD ECA DVN UCL 20% KMG APC 0% Note: Dividends paid are assumed to be reinvested in shares of the company at the
Slide 10: Company Overview: Strategy
Corporate Presentation March 2004 Company Overview: Strategy CNQ The Premium Value, TSX/NYSE Defined Growth Independent Objectives Defined • Value creation on “per share” basis • Production • Reserves • Cash flow • Net asset value • Returns on employed capital • Before future tax • EBITDA CNQ Our Go
Slide 11: Our Strategy
Corporate Presentation March 2004 Our Strategy • Capital allocation to maximize value • Defined growth/value enhancement plans by product/basin • Balance • Products • Project time horizons • Acquisitions/exploration with exploitation focus • Financial • Opportunistic acquisitions • Control costs thr
Slide 12: Overview of Global Operations; North American Overview
Corporate Presentation March 2004 Overview of Global Operations Canada Liquids Gas BOE % of Total 2004E Production (mboe/d) 196-208 215-225 411-433 84% 2003 Proved Reserves (mmboe) 672 501 1,173 77% North Sea Liquids Gas BOE % of Total 2004E Production (mboe/d) 55-60 4-6 59-66 13% 2003 Proved Reserv
Slide 13: North American Natural Gas Future Plan
Corporate Presentation March 2004 North American Natural Gas Future Plan • Near-Term • Drill approximately 700-900 natural gas wells p.a. in four core areas • ~6% average or ~8% entry to exit growth in 2004 • Mid-Term • Growth from two highly prospective areas • Northeast B.C. • Northwest Alberta •
Slide 14: Natural Gas Growth Prospects; North American Liquids Future Plan
Corporate Presentation March 2004 Natural Gas Growth Prospects Northeast B.C. BC AB SK • 1.5 million acres of net undeveloped land • 72 facilities/2,000 mi pipe • Average decline 21% • 700 – 1,000 expected locations • New reserve potential, next 5 years • Helmet ~ 0.75 Tcf potential • Fort St. John
Slide 15: Acquisition of North Alberta Properties; Crude Oil Marketing Strategy
Corporate Presentation March 2004 Acquisition of North Alberta Properties Edmonton Calgary Regina • Land base integrates well with existing Canadian Natural land • Acquisition fits with operating and marketing strategy • Daily production • 27,500 bbl/d heavy oil • 9 mmcf/d natural gas • Royalty inte
Slide 16: Customer Focus Strategy; Chicago Synbit Value
Corporate Presentation March 2004 Customer Focus Strategy Light Ends Synthetic Synthetic – Bitumen Synergy Naphtha 3% Distillate VGO 26% 38% Resid 2% 3% 33% 24% 13% 25% 17% Athabasca 23% VS. Bitumen 38% 32% 23% 12% 40% 48% 50% Synthetic USGC Medium 50% Bitumen Sour Crude CNQ TSX/NYSE A New Blend to
Slide 17: Horizon Oil Sands Project Overview; Project Economics
Corporate Presentation March 2004 Horizon Oil Sands Project Overview • Reserves • 6 billion bbl recoverable oil (unbooked) • Production CNQ SHELL HORIZON SYNCRUDE • 2008 113,400 bbl/d SCO AURORA • 2010 154,800 bbl/d SCO SHELL MUSKEG SUNCOR • 2012 232,200 bbl/d SCO FIREBAG • Project IRR 15.1% SYNCRUD
Slide 18: Sensitivity Analysis On Project Economics; Construction Plan
Corporate Presentation March 2004 Sensitivity Analysis On Project Economics WTI US$20 US$26 Capital Increase $ 1 billion Decrease $ 1 billion Prod @ 209/d @ 255/d C$ C$ = 0.765 US$ C$ = 0.705 US$ Op Costs $ 13.36 per bbl SCO $ 11.36 per bbl SCO Nat Gas $ 5.66 per GJ $ 3.66 per GJ 12.0% 13.0% 14.0% 1
Slide 19: Execution Strategy – Financing Plan
Corporate Presentation March 2004 Execution Strategy – Financing Plan • Phase I financing requirements of C$4.9 billion • Principles • Maximize ownership while maintaining credit ratings • No equity dilution • Financing tools • Cash flow with hedge protection • Business partners • Debt capital marke
Slide 20: International Plan Defined; North Sea
Corporate Presentation March 2004 International Plan Defined • Near/Mid/Long-term - North Sea • Exploitation opportunities • Control core assets • Add value via cost reduction • Acquisition opportunities • Near/Mid/Long-term - Offshore West Africa • Continue Espoir development • Develop Baobab for 2
Slide 21: Côte d'Ivoire; Angola
Corporate Presentation March 2004 Côte d’Ivoire • Area of light oil growth Côte d’Ivoire Abidjan • Espoir development upside • Acajou delineation to Siru peline l Gas Pi • West Espoir development CI-26 Natura CI-27 • Baobab development FPSO Ivorien 100 FOXTROT West Espoir • First oil mid-2005 PANTHE
Slide 22: Company Overview: Financials; A History of Value Creation
Corporate Presentation March 2004 Company Overview: Financials CNQ The Premium Value, TSX/NYSE Defined Growth Independent A History of Value Creation Daily Production per 1,000 shares Reserves per share (boe/d) (boe) 4.0 18 3.5 16 R 14 CAG 3.0 R 2.5 17 % 12 CAG 2.0 10 20 % 1.5 8 6 1.0 4 0.5 2 0.0 0
Slide 23: Future Growth; Guidance
Corporate Presentation March 2004 Future Growth – Current Dev’t Projects (mboe/d) 800 700 AGR 10% C 600 500 400 300 200 100 0 2002 2003 2004 2007 2008 Base NA Gas Growth Baobab W Espoir NA Heavy Primrose Horizon CNQ A Well Defined, Controlled Path to Future Growth TSX/NYSE Guidance 2004E 2003 Produc
Slide 24: Financial Strength; Wrap Up
Corporate Presentation March 2004 Financial Strength • Strong debt ratings (Baa1, BBB+, BBB(high)) • History of balance sheet management • Ratio objectives • Debt to EBITDA (1.5-2.0x) • Debt to Capitalization (40-45%) • Return on Capital Employed (10%+) • Exploitation of recent acquisitions will lif
Slide 25: Wrap Up – The Canadian Natural Story
Corporate Presentation March 2004 Wrap Up – The Canadian Natural Story • NA natural gas asset base is strong and delivering • NW AB and NE BC drive the growth • NA conventional oil asset base is vast • 3 billion bbl to develop • Defined marketing strategy • North Sea is performing as we utilize matu
Slide 26: Forward-Looking Statements
Corporate Presentation March 2004 Forward-Looking Statements Certain statements in this document or incorporated herein by reference may constitute “forward-looking statements” within the meaning of the United States Private Litigation Reform Act of 1995. These forward-looking statements can general
Slide 27: Current Valuation Metrics – Peer Group; Twelve Month Highlights
Corporate Presentation March 2004 Current Valuation Metrics – Peer Group Current Enterprise Value (boe/d, net of royalties, US$) $40,000 APA.US $35,000 APC.US NXY ECA BR.US $30,000 TLM DVN.US $25,000 CNQ $20,000 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 2004 Enterprise Value / Debt Adjusted Cash Flow Sour
Slide 28: Sensitivity Analysis; Crude Oil Hedging Summary
Corporate Presentation March 2004 Sensitivity Analysis – Fourth Quarter Annualized Sensitivities Including Hedges Cash Flow Earnings Oil Pricing (US$1/bbl) $65 - 88 million $46 - 63 million Per Share $0.48 - 0.66 $0.34 - 0.47 Natural Gas ($0.10/mmcf AECO) $32 - 34 million $19 - 21 million Per Share
Slide 29: Natural Gas Hedging Summary; Reserves per Share
Corporate Presentation March 2004 Natural Gas Hedging Summary - 2004 Q1/04 Natural gas collars AECO Volume (mGJ/d) 300 Average floor price (C$/GJ) 6.00 Average ceiling price (C$/GJ) 10.14 CNQ TSX/NYSE History of Growth – Reserves / Share 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% CNQ DVN APA NBL TLM ECA NXY
Slide 30: History of Growth – Production per Share; Clean Balance Sheet
Corporate Presentation March 2004 History of Growth – Production / Share 20% 15% 10% 5% 0% CNQ APC DVN TLM ECA APA NXY KMG UCL BR NBL PXD -5% -10% -15% Source: Merrill Lynch 1998 – 2002 production/share CNQ TSX/NYSE Clean Balance Sheet – No Goodwill Goodwill as Percentage of Debt + Equity 30% 25% 20
Slide 31: Strong Balance Sheet Compared to Industry; Horizon Capital Cost
Corporate Presentation March 2004 Strong Balance Sheet Compared to Industry Industry Debt/(Debt + Equity) Comparison 70% 60% 50% 40% 30% 20% 10% 0% KM G NXY UCL PXD NBL DVN BR AVERAGE APC TLM ECA CNQ APA KMG NXY UCL PXD NBL DVN BR AVERAGE APC TLM ECA CNQ APA As at Sept 30, 2003. Preferred shares inc
Slide 32: Capital Cost Benchmark; Project Schedule
Corporate Presentation March 2004 Capital Cost - Benchmark Bitumen SCO Original Unit % Revised Increase Original Latest Production Production Budget Cost per Forecast Unit Cost over Project per day Yield per day bbl per bbl Original millions millions Delayed Coking Process CNQ Horizon 270,000 0.86 2
Slide 33: Competing Projects; Ninian Operating Philosophy
Corporate Presentation March 2004 Competing Projects Alberta industrial construction projects >C$100mm 2000-2008 (# of craft) 22000 20000 Shutdowns Shutdowns 18000 16000 14000 12000 Opti / Nexen - Upgrade 10000 Shell Suncor Upgrader Suncor Imperial 8000 Millennium Voyageur Kearl 6000 Canadian Natura
Slide 34: Ninian Reservoir Management; Cardium Well Cost Reductions
Corporate Presentation March 2004 Ninian Reservoir Management North Ninian Gross Oil Prod (bbl/d) 12,000 10,000 CNQ takes over control 8,000 6,000 10% decline p.a. 4,000 2,000 65% decline p.a. 0 2002 2003 CNQ Improved Waterflood Management, TSX/NYSE Arrests Decline, Adds Reserves, Extends Life Cardi
Slide 35: NW Alberta 5 Year Comparison; Fort St. John Reserve Additions
Corporate Presentation March 2004 NW Alberta - 5 Year Comparison Production Reserves (mmcfe/d) (bcfe) 600 1200 2002 2003 500 1000 Forecast Forecast 400 800 5 year locations 500 800 - 900 Drilled/year 100 160 - 180 300 600 Reserves/well (bcfe) 1.7 1.7 200 400 Prod/well (mmcfe/d) 0.9 1.0 100 200 0 0 2
Slide 36: Helmet Reserve Additions; Thermal Oil Summary
Corporate Presentation March 2004 Helmet - Reserve Additions Production Reserves (mmcfe/d) (bcfe) 180 600 160 2002 2003 140 500 Forecast Forecast 120 400 Future locations 200 300 100 300 Drill/year 40 52 80 Reserves/well (bcf) 2.4 2.5 60 200 Prod/well (mmcf/d) 0.7 0.8 40 100 20 Ultimate potential (b
Slide 37: Expanding Pipeline Options
Corporate Presentation March 2004 Expanding Pipeline Options Prince Rupert Announced expansion of existing line and possible Edmonton Potential 400 mbbl/d line to twinning with 400 mbbl/d of Hardisty deepwater port targeted for heated heavy oil 2008 Vancouver Proposed Proposed expansion of Expansion
Slide 38: Notes
NOTES:
Slide 39: Special Notes
Special Notes Special Note Regarding Currency, Production and Reserves In this document, all references to dollars refer to Canadian dollars unless otherwise stated. Reserves and production data is presented on a before royalties basis unless otherwise stated. In addition, reference is made to oil a
Slide 40: Key Historic Data
Key Historic Data 1998 1999 2000 2001 2002 2003 Operational Information Daily Production, before royalties Crude oil and NGLs (mbbl/d) 76 87 174 206 215 242 Natural gas (mmcf/d) 673 721 794 918 1,232 1,299 Barrels of oil equivalent (mboe/d) 188 207 306 359 421 459 Daily Production, after royalties C
Slide 41: Corporate Guidance
Corporate Guidance February 25, 2004 First Quarter 2004 2004 Budget Daily Production Volumes, before royalties Natural Gas (mmcf/d) North America 1,235 - 1,250 1,290 - 1,350 North Sea 45 - 55 25 - 35 Offshore West Africa 5 - 10 5 - 10 1,285 - 1,315 1,320 - 1,395 Crude oil and NGLs (mbbl/d) North Ame
Slide 42: Contact Information
CONTACT INFORMATION Allan P. Markin John G. Langille Steve W. Laut Chairman President Chief Operating Officer Corey B. Bieber Director, Investor Relations (403) 517-6878 CANADIAN NATURAL RESOURCES LIMITED 2500, 855 - 2nd Street S.W., Calgary, Alberta, T2P 4J8 Telephone: (403) 514-7777 Facsimile: (40
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