Canadian Natural Resources Limited

Good morning, ladies and gentlemen, and welcome to the Canadian Natural Resources Earnings Results conference call webcast. After the presentation, we will conduct a question and answer session. Instructions will be given at that time. Please note that this call is being recorded today, August 6, 2020, at 9 a.m. Mountain Time. I would now like to turn the meeting over to your host for today's call, Corey Beaver, Executive Advisor. Please go ahead, Mr. Beaver.

Thank you, operator, and good morning, everyone, and thank you for joining our second quarter 2020 conference call. With me this morning are Tim McKay, our president, and Mark Steenthorpe, our chief financial officer. Before we begin, I would refer you to the special note regarding non-GAAP measures contained in our press release. These measures used to evaluate the company's performance should not be considered to be more meaningful than those determined in accordance with IFRS. I would also like to refer you to the comments regarding forward-looking statements contained in our press release and also note that all amounts are in Canadian dollars and production and reserves are expressed as before royalties unless otherwise noted. With that, I'll now pass the call over to Tim McKay.

Thank you, Corey. Good morning, everyone. Canadian Naturals delivered top-tier operational results in the second quarter as we have robust, long-life, low-decline assets, operational excellence, capital discipline, and the ability to enhance our margins, which delivers sustainable cash flow. The strengths of Canadian natural business model are also implied to environmental, social, and governance to deliver industry-leading performance across the board, a significant factor in our long-term sustainability. And when it comes to environmental performance, Canada leads the world. Canadian natural and indeed the Canadian oil and gas sector has delivered game-changing environmental performance. For instance, Canadian natural has already reduced our overall corporate emission intensity by 30% since 2012. And at Horizon, our intensity is down 38%. And we are a leading capture and sequester of CO2 in the oil and gas sector worldwide. In just these areas, Canadian Natural has taken the equivalent of over 2 million cars off the road, equivalent to 5% of the entire vehicles in Canada. And that is just what Canadian Natural has done. The entire industry has achieved similar, equally impressive results. In our oil sands operation, we can develop technologies, and by using Canadian ingenuity, we can even do better, moving closer to Canadian Natural's aspirational goals of reaching net zero emissions. Canadian Natural has multiple pathways to achieve net zero. With the actions identified in the near, mid, and long term, and the strength of the Canadian oil sands mining asset, with its long life, no decline, and its manufacturing-like operations, it can have one of the clearest, if not the clearest route to net zero of any global oil asset. Canadian Natural had a very strong operational results as we achieved quarterly production of 1.165 million BUEs per day, with natural gas production of 1.46 BCF per day, and liquids production of 922,000 barrels per day. During the quarter, we effectively and efficiently reacted to temporary curtail production, complete maintenance due to low prices, while prioritizing high margin production. Then, as prices improved, we quickly reinstated production cost effectively. Starting with natural gas, overall Q2 production was 1.462 BCF per day, an increase from our Q1 production of 1.44, with North American Q2 natural gas at 1.431 BCF per day, up from Q1 of 1.407 BCF per day, as we started to execute our plan to add 60 million cubic feet per day of natural gas volumes at less than $3,000 per BUED. We continue to focus on operational excellence and our Q2 North American natural gas operating cost was very strong at $1.11 per MCF versus Q1 of $1.24 per MCF. In the second quarter, Canadian Natural realized a corporate natural gas price of $2.03 per MCF as a result of our diversified natural gas sales portfolio, of which 49% is used within operations, 32% exported, and 19% is exposed vehicle pricing. Our Q2 North American light oil and NGL production was 82,422 barrels a day, down approximately 7%, primarily due to the company's decision to temporarily deter production and reduce well servicing activities in the second quarter. Q2 operating costs decreased to $14.41 per barrel versus Q1 operating costs of $15.99 per barrel. Overall, our international assets had a strong Q2, with oil production approximately 44,000 barrels a day, which is comparable to Q1. Offshore Africa production was 17,444 barrels up when compared to Q1 of approximately 16,000, as expected due to the planned maintenance program completed in Q1, offset by natural fuel declines. CDI operating costs in Q2 were strong at $7.67 US per barrel versus Q1 of $8.83 US per barrel. In the North Sea, production averaged 26,627 barrels a day in Q2, down from Q1 of 27,755, primarily due to natural field declines, with strong operating costs of 28.47 per barrel, a reduction compared to a Q1 operating cost of 29.73 per barrel. In South Africa, the operator is moving the rig and is targeted to spot the exploration well in Q3 of 2020, and contingent on results, An additional exploration well could be drilled on the block. Q2 heavy oil production was reduced to approximately 62,500 barrels per day in the quarter and versus 88,100 in Q1 as we temporarily curtailed production and reduced well servicing activities related to the low pricing in the quarter. Q2 operating costs decreased to $17.97 per barrel from the Q1 operating costs of $18.68 per barrel. reflecting the company's focus on cost control. A key component of our long-life low-decline assets is our world-class pelican pool, where leading-edge polymer flood continues to deliver significant value. Second quarter production was 55,731 barrels a day, down from the first quarter of 57,986, primarily as a result of reduced well-servicing activities in the quarter. Operating costs continue to be very strong at 631 per barrel versus Q1 operating costs of 618 per barrel. At Pelican, our team continues to drive operational excellence, and with our low decline and very low operating costs, Pelican continues to have an excellent setback. Our second quarter thermal production was 212,807 barrels per day, down from the Q1 of approximately 228,000. Operating costs in Q2 were 10.13 per barrel versus Q1 operating costs of 11.02. During the quarter, planned maintenance was conducted at Jackfish. As well, in our thermal production areas, we temporarily curtailed production in the quarter as a result of the low prices in May. In the second quarter, in the Kirby area, production was approximately 56,000 barrels a day, which includes both Kirby North and Kirby South. The Kirby North ramp-up is ahead of schedule, and for the month of July, averaging approximately 43,200 barrels a day, approximately 8% higher than the nameplate capacity of 40,000 barrels a day, a great result by our team. At our oil sands mining operations, we had an outstanding second quarter, with record production of 464,318 barrels a day, inclusive of the Horizon maintenance in May. With record low quarterly operating costs of $17.74 per barrel of SEO, our teams continue to capture synergies between the two sites, leveraging technical expertise, services, operating efficiencies, driving our costs down with consistency. With year-over-year hard dollar costs excluding fuel, down approximately $96 million in the first six months on an unadjusted basis as compared to 2019. Our teams are very focused on driving operational excellence. As well, as part of the company's overall strategy to maximize value and enhance margins, during June, we were able to test the Albion's mine capability, in which we had an average test rate of approximately 339,000 barrels a day in that period. With the Scotford Upgrader targeted to increase capacity to approximately 320,000 barrels a day in Q3 of this year, we are confident we can fill the extra capacity. This additional capacity at ASOP will allow us increased flexibility, margin improvements, and will be managed through the company's curtailment optimization strategy. Work on the commercial engineering for IPEP continues while the field pilot testing is temporarily delayed as we reduce people on our sites due to COVID-19. And we only will continue to pilot when it's safe to do so. I will now turn it over to Mark for the financial review. Thanks, Tim.