Canadian Natural Resources Limited · TSX:CNQ
Canadian Natural Resources — Investor Presentation (January 2003)
30 slides from Canadian Natural Resources's investor presentation, January 2003
Slide 1: Canadian Natural Resources Limited Corporate Presentation - Investment Highlights
Canadian Natural Resources Limited Top Tier ROE EPS GROWTH RESERVE GROWTH PRODUCTION GROWTH 2nd LARGEST NATURAL GAS PRODUCER IN CANADA 5th LARGEST INDEPENDENT WORLD PETROLEUM PRODUCER Investment Highlights § >450,000 boe/d § 45+% North American natural gas § Balanced asset base § Near/Mid/Long-Term
Slide 2: Objectives Defined
Objectives Defined § Value creation on “per share” basis § Production § Reserves § Cash flow § Net asset value § Returns on employed capital § Before future tax § EBITDA Our Goal is 10%p.a. Rolling Average Value Growth Top-of-Class Performance Defined Cash Flow per Share Daily Production per 1,000 S
Slide 3: Financial Returns / Our Strategy
Financial Returns 50 45 40 35 %age 30 25 20 15 10 5 0 1998 1999 2000 2001 2002 2003 Before FIT Return on Capital Employed EBITDA on Capital Employed Strong Consistent Returns Our Strategy § Capital allocation to maximize value growth § Defined growth/value enhancement plans by product/basin § Balanc
Slide 4: Core Area Review
Core Area Review North Sea Canada 11% Production 86% Production Offshore West Africa 3% Production We Concentrate on Our Core Areas Natural Gas Core Areas § 8.3 million acres of net undeveloped 400 mmcf/d land § Vast infrastructure 475 mmcf/d § High ownership levels approx 80% 260 mmcf/d Edmonton Ca
Slide 5: Natural Gas Exposure Defined
Natural Gas Exposure Defined 2003 Net North American Natural Gas Production (cubic feet per day per US $1,000 equity investment) 287 262 211 179 171 155 105 CNRL (US $1,000 investment divided by Nov. 5, 2002 NYSE close price times forecast 2003 average North American natural gas production after roy
Slide 6: NE BC and NW AB Natural Gas Strategy Defined
NE BC Natural Gas Strategy Defined § 1.5 million acres of net undeveloped land § Vast infrastructure § Three distinct resource plays § Helmet > 0.5 tcf of Helmet new reserve potential § Fort St John > 0.2 tcf of new reserve potential FSJ § Foothills - deep potential Foothills Largest Identified Land
Slide 7: Natural Gas - 2003 Development Plan
Natural Gas - 2003 Development Plan § Drill 580 natural gas wells § Target average production of 1,280 - 1,330 mmcf/d § North America gas entry to exit volume increase reaching 5% - excluding Ladyfern § North American natural gas entry to exit corporate volumes remain flat Growth Offset by Ladyfern
Slide 8: International Liquids
International Liquids North Sea Offshore West Africa § ~55,000 bbl/d § Two development projects § Exploitation opportunities - Espoir - Baobab § Exploration opportunities Murchison Hutton North Sea Lyell Strathspey Columba B/D Ninian Columba E Côte d’Ivoire Banff Kyle Curlew Angola Focus on Two Core
Slide 9: Côte d'Ivoire - Land Base and Seismic
Côte d’Ivoire - Land Base and Seismic Area of Existing 3-D Seismic 100m CNRL 200m Lands 500m Area of Proposed 3-D Seismic 1000m 10 km A Decade of Growth Prospects Côte d’Ivoire Update § Espoir update § 3 producers, 2 injectors - only lower zone on to date § Drill satellite exploration pool (Acajou)
Slide 10: International Liquids - Angola
International Liquids - Angola Kizomba Plutao Omba * BLOCK 16 Zenza * Girassol/Dalia Rosa Lirio § High risk/high impact light oil exploration § Excellent relationships with government agencies High Impact Exploration Prospect International - 2003 Development Plans § North Sea § Drill 8 Ninian wells
Slide 11: International - Future Development Plans
International - Future Development Plans § Medium-Term § Bring Baobab onstream § Bring West Espoir onstream § Drill additional exploration wells in Angola § Execute development plans in North Sea § Further satellite development in North Sea § Long-Term § Bring any Angola Block 16 success onstream §
Slide 12: North American Liquids Strategy Defined
North American Liquids Strategy Defined § Expand markets to allow heavy oil growth § Develop exploitation projects Inventory Resource Potential Primary Heavy 1,000+ Locs 110 million barrels ~65 mbbl/d Thermal Heavy Primrose 700 million barrels ~40 mbbl/d Gregoire/Horizon 2 billion barrels Pelican La
Slide 13: NA Liquids - 2003 Development Plans
NA Liquids - 2003 Development Plans § Light oil and NGLs § Nipisi infill drilling (6 wells) § Waterflood implement/optimization (40 wells) § Light oil drilling in new and existing pools § Pelican Lake oil § Pelican Lake secondary/tertiary recovery § Drill 40 horizontal wells § Primary heavy oil § Dr
Slide 14: Horizon Oil Sands Project
Horizon Oil Sands Project § 100% owned and operated Koch Shell § 50+ year CNRL future reserve Horizon Syncrude Aurora life Shell Muskeg Suncor Firebag Syncrude Aurora Syncrude Mildred Lake Millennium Suncor Edmonton World Class Project Horizon Oil Sands Leases Project Horizon Defined § Reserves (unb
Slide 15: Cap Ex and Cash Flow Profile
Cap Ex and Cash Flow Profile Capital Expenditure and Income Profile 100% Project with Full Upgrading (Cdn $ Millions) $2,000 Income from Ops $1,500 Capex Net Cashflow $1,000 $500 $- $(500) $(1,000) $(1,500) Total project financing $4.9 billion Project Investment: $8.4 billion Estimates include curre
Slide 16: Capital Discipline - Expenditures / Production Growth
Capital Discipline - Expenditures Expenditures 2003 for Post Budget 2003 Cash Flow Natural gas $ 691 50 NA liquids 517 284 UK liquids 281 54 OWA liquids 280 193 Horizon 211 211 Property acquisitions 300 - Total $ 2,280 792 35% 2002 - 23% 2001 - 20% Growing Investments in the Future Production Growth
Slide 17: Cash Flow From Operations
Cash Flow From Operations Millions of Dollars Commodity Price Natural Oil Differential Assumptions Gas- AECO WTI WTI-LLB $Cdn/mcf $US/bbl $US/bbl 2002F Pricing 3.85 26.05 6.50 2003B Pricing 5.20 24.00 8.50 2,350 2,000 to 2,500 to 2,200 1,884 1,920 724 444 1998 1999 2000 2001 2002F 2003B Strong Cash
Slide 18: 2002 Financial Highlights / Financial Strength Defined
2002 Financial Highlights (3) (3) ($ millions, except per share amounts) 2003B 2002F (1) Net earnings 450 - 500 500 - 550 Per share - basic 3.35 - 3.75 3.90 - 4.30 (1) Cash flow 2,350 - 2,500 2,000 - 2,200 Per share - basic 17.50 - 18.65 15.65 - 17.20 Long-term debt 4,100 4,200 Net capital expenditu
Slide 19: Lower Risk Profile / Investment Recap
Lower Risk Profile § 97% reserve audits § Clean balance sheet § Exploitation focus § Future growth owned and controlled § Commodity production balance reduces sole price risk exposure § 96% of production in G7 Countries, other production is offshore § 90+% of production operated § Solid debt ratings
Slide 20: Forward-Looking Statements / Contact Information
Forward-Looking Statements This presentation contains forward-looking statements under applicable securities laws, including, in particular, statements about Canadian Natural Resources’ plans, strategies and prospects. Although the Company believes that the expectations reflected in these forward- l
Slide 21: Alignment with Shareholder Interests / Balanced Asset Base
Alignment with Shareholder Interests US $Million More than any other E&P, CNRL's 450 Management team's 400 interests are aligned with those of the 350 investor, both in the short term and through 300 the long run. 250 Actual investments 200 (excluding options for which no capital is at 150 risk) hel
Slide 22: Sensitivity Analysis
Sensitivity Analysis Cash Flow Earnings Oil Pricing (US$1/bbl) $115 million $93 million Per Share $0.86 $0.69 Heavy Oil Diff. (US $1/bbl) $92 million $74 million Per Share $0.69 0.56 Natural Gas ($0.10/mmcf AECO) $36 million $22 million Per Share $0.27 $0.16 Protection from Downside for Base Product
Slide 23: Major Oil Hedge Summary
Major Oil Hedge Summary Q1/03 Q2/03 Q3/03 Oil collars (US $ - WTI) Volume (mbbl/d) 82.0 82.0 40.4 Avg. floor price (US $bbl) 21.79 21.79 23.00 Avg. ceiling price (US $bbl) 27.27 27.27 27.85 Protection from Downside for Base Production Major Natural Gas Hedge Summary Q1/03 Q2/03 Q3/03 Natural gas col
Slide 24: Northwest Alberta Cross Section
Northwest Alberta Cross Section Multizone Natural Gas Potential Cardium Schematic Map View Cross-Section View Cardium Cardium Faults Sand Line of Section 3-D View HORIZONTAL DRILL VERTICAL DRILL Cardium Fault Hanging Wall Foot Wall Corporate Presentation - January 2003 24
Slide 25: Pelican Lake Enhanced Recovery
Pelican Lake Enhanced Recovery § 2.8 billion barrels remaining after primary depletion § 1% recovery equal to 28 million barrels NA Liquids - Heavy Oil Perception § Heavy oil is a very profitable business throughout the Recycle Ratios cycle 8 7 6 5 4 3 2 1 0 Q1/99 Q2/99 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00
Slide 26: What's In A Barrel?
What’s In A Barrel? From Dirt & Rock to Light Sweet Crude Summary of Process New Technologies Are Less Energy Intensive Corporate Presentation - January 2003 26
Slide 27: Project Horizon Summary
Project Horizon Summary § Capital costs (full upgrading) § Cdn $4.9 billion capital exposure § No equity dilution planned § Operating costs (cash cost per bbl) § Mining $2.50 - $ 3.00 § Extraction $1.70 - $ 1.80 § Upgrading $3.70 - $ 4.00 § Other $0.80 - $ 0.90 $8.70 - $ 9.70 § Sustaining capital (y
Slide 28: Synthetic Light Oil Growth
Synthetic Light Oil Growth Horizon Schematic Lease Quality Benchmark CNRL Suncor Horizon Millennium TV/BIP 9.9 9.8 Ore Grade % 10.8 11.5 Strip Ratio 1.21 1.42 Best Lease Not Yet Developed - Similar to Millennium Corporate Presentation - January 2003 28
Slide 29: Capital Estimate Benchmark
Capital Estimate Benchmark Bitumen SCO Revised Production Production Latest Unit Cost Project per day Yield per day Forecast per BBL Delayed Coking Process Suncor Millennium 130,000 0.83 107,900 $ 3,600 $ 33,364 CNRL Horizon 270,000 0.86 232,000 $ 7,900 $ 34,022 LC Fining Process Shell/MR 155,000 0.
Slide 30: Project Execution Construction Craft Labor
Project Execution Construction Craft Labor 6,000 5,500 Maximum manpower utilized in recent oil sands projects 5,000 4,500 Number of Craft Persons on Site 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 CNRL manpower requirements - Jan-08 Jan-11 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-09 J
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