Canadian Natural Resources Limited

Good morning, ladies and gentlemen, and welcome to the Canadian Natural Resources Earnings Results conference call and 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, November 5, 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. Good morning, everyone, and thanks for joining our third quarter 2020 conference call. With me this morning is our President, Tim McKay, and Mark Steenthorpe, our Chief Financial Officer. Before we begin, I'd refer you to the special note regarding non-GAAP measures contained within 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 stated. With that, I'll now pass the call over to Tim.

Thank you, Corey. Good morning, everyone. Canadian Natural delivered top-tier operational results in the third quarter. 79% of our liquids production from our high-quality, long-life, low-decline assets, which were resilient in volatile pricing, and as a result of our operational excellence, ability to enhance margin, and capital discipline, we delivered significant substantial cash flow in the quarter. The strengths of Canadian natural business model are also applied to environmental, social, and governance to deliver industry-leading performance across the board, a significant factor in our long-term sustainability. Canadian natural and the entire Canadian oil and gas sector leads the world and has delivered game-changing environmental performance. In the third quarter, we published our 2019 stewardship report to stakeholders, and highlights from the report are total recordable injury frequency at 0.28, down 51% since 2015, awarded approximately $550 million in contracts to 150 indigenous businesses, three out of eight are female of our independent directors, corporate GHG emissions, down 16% from 2015. Oil science, mining, and in situ GHG intensity down 36% from 2016. At Quest, our 70% owned carbon capture facility, we reached the milestone in the third quarter with a cumulative 5 million tons of CO2 injected, equivalent to taking 1.25 million cars off the road annually. And we are a leading capture and sequester of CO2 in the oil and gas sector worldwide. These are just a few examples of our ESG excellence. In our oil sands operations, we can develop technologies using Canadian engineering to continue to move us closer to Canadian Natural's aspirational goal of reaching net zero emissions. Canadian Natural has multiple pathways to achieve net zero, with actions identified in the near, mid, and long term. And the strength of Canadian Natural's Canadian oil sands mining assets is that its long life, no decline, And with its manufacturing-like operations, it can have one of the clearest routes, if not the clearest route, the net zero of any global asset. Operationally, Canada Natural's third quarter results are quarterly production of 1.11 million BUEs with natural gas production of 1.36 BCF and liquids production of approximately 884,000 barrels a day as we maximize production as per our curtailment optimization strategy and effectively and efficiently conducted maintenance. Starting with natural gas, Q3 overall production was 1.36 BCF, a decrease from Q2 of 1.46, with North America Q3 natural gas at 1.34, as expected, down from Q2 of 1.43. We continued to focus on operational excellence, and our Q3 North American natural gas operating cost was strong at $1.14 per MCF versus Q2 of $1.11. We continue to add low-cost natural gas volumes, which has resulted in adding approximately 58 million cubic feet per day for approximately $2,000 per VOED, much less than our target of 3,000 per VOED. We remain on track to add 35 million cubic feet per day of natural gas volumes annually. In the third quarter, Canadian Natural realized the North American natural gas price of $2.25 per MCF, approximately 49% higher in Q3 2019. With the strong natural gas pricing, the company has reallocated capital within its existing budget to both septas and towns and areas, with the total program targeting at approximately 95 million cubic feet of natural gas and 2,900 barrels of NGL for less than $5,000 per BWE. Our Q3 North American light oil and NGL production was 79,600 barrels, down by approximately 3%, primarily as a result of natural declines and maintenance activities in the quarter. Q3 operating costs decreased to 1413 per barrel versus QT of 1441 per barrel. Overall, our international asset has Q3 production of 38,800 barrels a day, as expected. Offshore Africa was 17,500, which is comparable to Q2 at 17,400. Operating costs in Q3 were $12.32 U.S. per barrel versus Q2 $7.67 per barrel as a result of lifting schedule. In the North Sea, production averaged approximately 21,200 barrels a day in Q3 down from Q2 of approximately 26.6 primarily due to plant maintenance activities, cessation of balanced kyle field and natural field declines with operating costs of approximately $42.10 per barrel. Subsequent to the quarter end, we announced that the operator of the South African Block 11B and 12B made a second significant gas condensate discovery. The exploration well was drilled and counted 73 meters of net pay and is currently being tested, with deliverability results targeted by year-end 2020. Canada Natural has a 20% working interest and expects the cost of the wells to be fully carried per the farm-out agreements. Heavy oil production increased in Q3 to approximately 71,000 barrels a day versus second quarter of approximately 62,500 as we reinstated temporary control production related to low pricing. Q3 operating costs decreased to $15.96 per barrel from Q2 operating costs of $17.97, reflecting our focus on cost control. A key component of our long-life low-decline assets is our world-class Pelican Lake pool, where our leading-edge polymer flex continues to deliver significant value. Third quarter production was approximately 56,400 barrels a day, up from the second quarter of 55,700, primarily a result of reinstating well-servicing activities in the quarter, offsetting natural decline. Operating costs continue to be very strong at 576 per barrel versus Q2 of 631 per barrel. At Pelican, our team continues to drive operational excellence, and with our low decline and very low operating costs, Pelican Lake continues to have excellent netbacks. Our thermal team had a great third quarter with the thermal production record of 287,978 barrels a day, up from Q2 of approximately 213,000 barrels a day. Operating costs in Q3 were near our record low at 785 per barrel, down 23% versus Q2 operating costs of 1013. Some of the highlights from the third quarter, Kirby North's production was very strong at 42,400 barrels above our main plate capacity of 40,000. Jackfish was a record for Canadian natural at 122,346 barrels a day. These are just a couple examples of the great work done by our team. At our oil sands mining operations, Q3 was approximately 350,600 barrels as planned maintenance was conducted. with strong operating costs of $23.81 per barrel of SEO, as our teams are very focused on driving operational excellence. As part of the company overall strategy to maximize value and enhance margins, work at the Scotford Upgrader was completed and increased to capacity approximately 320,000 barrels a day. In late October, the Albin mine ran at rates of approximately 345,000 barrels a day of bitumen, and Scotford processed at approximately 323,000 barrels a day. As a result of mandatory curtailments, ASOP targets to resume full expanded capacity in December 2020. This additional capacity of ASOP will allow for increased margin enhancement in our oil sands mining upgrading segment, as well as substantive quarter-end plant maintenance with completed horizon, and it is currently at 260,000 barrels a day. I will now turn it over to Mark for a financial review.