Calgary, Alberta – Canadian Natural’s (TSX: CNQ) (NYSE: CNQ) President, Tim McKay, commented on the Company’s 2023 Budget, “Our dedicated teams are focused on safe, reliable, effective and efficient operations throughout our high quality and diverse asset base. Our large, low risk, high value reserves provide us optionality and flexibility to allocate capital to our highest return projects. Our diversified and balanced production maximizes value for our shareholders, as we do not rely on any one commodity type. Our 2023 targeted production mix consists of approximately 44% light and synthetic crude oil (“SCO”), 29% heavy crude oil and 27% natural gas, based on the midpoint of our production guidance range. Our assets have low maintenance capital requirements, and combined with our effective and efficient operations, we drive substantial and sustainable free cash flow, maximizing returns to shareholders through our free cash flow allocation policy.
“Our 2023 budget is disciplined, targeted at approximately $5.2 billion, consisting of approximately $4.2 billion in base capital and approximately $1.0 billion in strategic growth capital. In 2023, we target to deliver strong year over year production growth of approximately 56,000 BOE/d, or 4%, over 2022 targeted levels, based on the midpoint of our 2023 production guidance range of approximately 1,330,000 BOE/d to 1,374,000 BOE/d. Our strategic growth capital targets to deliver additional production and capacity growth in years after 2023.
“We are committed to supporting Canada’s climate goals and continuing to reduce our environmental footprint with our aspirational goal of net zero greenhouse gas (“GHG”) emissions in the oil sands. We believe Canadian energy is one of the most responsibly produced sources of energy in the world and should be the preferred energy choice. We have received support from the federal and provincial governments in advancing the Pathways Alliance initiatives, giving Canadian Natural the confidence to progress with an aggressive new GHG emissions reduction target. The new target is to reduce total corporate absolute Scope 1 and Scope 2 GHG emissions by 40% by 2035 from a 2020 baseline. This is in addition to our other robust environmental targets. This aggressive target supports Canada’s overall environmental goals and demonstrates we are committed to reducing our overall carbon footprint.”
Canadian Natural’s Chief Financial Officer, Mark Stainthorpe, continued, “In 2022, the Company has effectively allocated capital to its four pillars and delivered significant returns to shareholders through our unique free cash flow policy, while continuing to strengthen our balance sheet throughout the year. With our prudent 2023 capital budget, low maintenance capital requirements and an asset base with long life low decline, high value production, we target to continue to deliver significant free cash flow in 2023 through increasing returns to shareholders and continued balance sheet strengthening.
“Our targeted production growth of approximately 56,000 BOE/d in 2023 over 2022 targeted levels delivers an approximate 8% per share growth rate as a result of executing on our free cash flow allocation policy. We will continue to target allocating 50% of free cash flow to share repurchases and 50% of free cash flow to the balance sheet, less strategic growth capital/acquisitions, as defined in our free cash flow allocation policy. Today, we are updating our commitment to provide incremental returns to shareholders when we reach $8 billion in net debt, by stating that when this stated milestone is achieved we intend to allocate 80% to 100% of the Company’s defined free cash flow as returns to shareholders.”
ESG HIGHLIGHTS
- Canadian Natural is pleased to see the Pathways Alliance (“Pathways”) progressing with government support and looks forward to continuing to work with the Government of Alberta on details of its carbon capture and storage (“CCS”) policy. Pathways is progressing with phase 1 of its goal to achieve net zero GHG emissions from the oil sands operations, which includes an interim target to reduce GHG emissions by 22 megatonnes per year by 2030 through carbon capture and storage technology as well as other emission reductions technologies such as solvents, energy efficiency, cogeneration and electrification. Members of Pathways have completed feasibility studies and are advancing engineering work and environment field programs.
- Canadian Natural is committed to supporting Canada’s climate goals and continuing to reduce its environmental footprint and progress with its aspirational goal of net zero GHG emissions in the oil sands. As a result of support from the federal and provincial governments and the progression of the Pathways Alliance, Canadian Natural now has the confidence to progress with an aggressive new GHG target to our existing robust environmental performance targets. Setting a target based on absolute emissions is important to support Canada’s overall environmental goals and demonstrates we are committed to reducing our overall carbon footprint.
-
- New target: 40% reduction in total corporate absolute Scope 1 and Scope 2 GHG emissions by 2035, from a 2020 baseline.
- This is in addition to the other environmental performance targets the Company already has set.
- 50% reduction in absolute methane emissions in the Company’s North America E&P operations by 2030, from a 2016 baseline.
- 40% reduction in fresh water intensity in the Company’s in situ operations by 2026, from a 2017 baseline.
- 40% reduction in fresh river water intensity in the Company’s Oil Sands Mining and Upgrading operations by 2026, from a 2017 baseline.
- Details of the Canadian Natural’s leading ESG performance can be found in the Company’s 2021 Stewardship Report to Stakeholders on the Company’s website at www.cnrl.com.
2023 BUDGET HIGHLIGHTS
Canadian Natural’s strategy of maintaining a large, diverse portfolio of high quality assets, including our long life low decline assets, enables the Company to maximize shareholder value through flexible capital allocation and optimized product mix. Canadian Natural maintains a high ownership level and operatorship in its properties and extensive infrastructure network and can therefore control the nature, timing and extent of development in each of its project areas.
The Company’s focus on effective and efficient operations drives high return on capital projects that deliver industry leading free cash flow. Our ability to be nimble and flexible with capital allocation decisions within our diverse asset base is a significant competitive advantage as we can allocate capital to the highest return projects without being reliant on any one commodity type, allowing us to maximize value for our shareholders.
2023 Capital Budget
- The Company’s 2023 budget is disciplined, targeted at approximately $5.2 billion, consisting of approximately $4.2 billion in base capital and approximately $1.0 billion in strategic growth capital.
- Canadian Natural’s 2023 base capital is disciplined at approximately $4.2 billion, which targets to provide near-term production growth within 2023.
- In addition, the Company has targeted incremental strategic growth capital of approximately $1.0 billion in 2023 for mid- and long-term strategic growth projects that target to add additional production and capacity growth beyond 2023. The following projects are included in the strategic growth capital:
- In Conventional E&P, the Company is progressing with long leads for future debottlenecking and expansion growth opportunities and is progressing work for the next phases of development at Espoir and Baobab.
- In thermal in situ, the Company continues to progress with the development of 5 steam assisted gravity drainage (“SAGD”) pads at Jackfish, Kirby and Pike and 2 cyclic steam stimulation (“CSS”) pads at Primrose, with 2023 budgeted strategic growth capital related to the drilling, completion, pipelines and facilities of these pads.
- In Oil Sands Mining and Upgrading, the Company is progressing with its reliability enhancement project that is targeted to extend the maintenance cycle from once per year to once every second year.— This project targets to increase the zero decline, high value SCO production capacity by approximately 5,000 bbl/d starting in 2023. In 2025, production capacity increases to approximately 14,000 bbl/d of SCO with no turnaround necessary.
2023 Production Guidance
- The Company is targeting strong year over year production growth of approximately 56,000 BOE/d, or 4%, over targeted 2022 levels, based on the midpoint of our 2023 production guidance range of approximately 1,330,000 BOE/d to 1,374,000 BOE/d.
- Our 2023 targeted production mix is balanced, consisting of approximately 44% of high value light and synthetic crude oil, 29% bitumen and heavy crude oil and 27% natural gas, based on the midpoint of our production guidance range.
- Liquids production, including SCO, is targeted to range from 969,000 bbl/d to 1,001,000 bbl/d. The Company’s long life low decline production represents approximately 78% of its total targeted liquids production.
- Thermal and Oil Sands Mining & Upgrading production is targeted to range between 705,000 bbl/d and 729,000 bbl/d, with the midpoint representing a 5% increase over 2022 targeted levels.
- Conventional E&P liquids production is targeted to range between 264,000 bbl/d and 272,000 bbl/d, with the midpoint representing a 4% increase over 2022 targeted levels.
- Natural gas production is targeted to range between 2,170 MMcf/d to 2,242 MMcf/d, with the midpoint representing a 5% increase over 2022 targeted levels.
- Based on the midpoint of the Company’s 2023 production guidance, Canadian Natural’s diversified natural gas sales points maximizes netbacks through the export of approximately 36% of its natural gas production to North American markets outside of AECO and sold internationally, the equivalent use of approximately 36% of its natural gas production in its operations and the remaining 28% sold at AECO/Station 2 pricing.
Daily Production Volumes
(before royalties) | 2022 Forecast |
2023 Budget |
|||
Natural gas (MMcf/d) | 2,112 | 2,170 – 2,242 | |||
Conventional E&P Crude Oil & NGLs (Mbbl/d) | 258 | 264 – 272 | |||
Thermal and Oil Sands Mining & Upgrading (Mbbl/d)(1) | 685 | 705 – 729 | |||
Total Liquids (Mbbl/d) | 943 | 969 – 1,001 | |||
Total MBOE/d | 1,296 | 1,330 – 1,374 |
(1) Reflects planned downtime for turnaround activities at Horizon, Scotford and Canadian Natural’s 70% ownership in the AOSP.
Note: Rounded to the nearest 1,000 bbl/d. See Advisory for cautionary statements, definitions, pricing assumptions and Non-GAAP and other financial measure disclosure.
2023 Net Capital Expenditures
($ millions) | Base | Strategic Growth | Total | |||||
Conventional E&P (excluding Thermal) | $ | 2,040 | $ | 75 | $ | 2,115 | ||
Thermal In Situ | $ | 375 | $ | 510 | $ | 885 | ||
Oil Sands Mining & Upgrading | $ | 1,345 | $ | 435 | $ | 1,780 | ||
Abandonment & Reclamation | $ | 430 | $ | – | $ | 430 | ||
Total | $ | 4,190 | $ | 1,020 | $ | 5,210 |
Webcast
This press release will be accompanied by a webcast of Canadian Natural’s Institutional Investor Open House, where the Company will discuss its strategy, ESG performance, asset overview, 2023 budget and financial strength that when combined maximizes shareholder value.
The webcast will take place on Wednesday, November 30, 2022 at 7:00MT/9:00ET with details available on the Company’s webpage, www.cnrl.com. The presentation will be available for download on Canadian Natural’s website shortly before the live presentations begin.
Canadian Natural is a senior oil and natural gas production company, with continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea and Offshore Africa.