Canadian Natural Resources Limited

Good morning. We would like to welcome everyone to the Canadian Natural Resources 2023 First Quarter Earnings Conference Call and Webcast. After the presentation, we'll conduct a question and answer session. Instruction will be given at that time. Please note that this call is being recorded today, May 4th, 2023 at 8 a.m. Mountain Time. I would like to turn your meeting over to your host for today's call, Lance Casson, Manager of Investor Relations. Please go ahead.

Lance Casson Thank you, Operator. Good morning, everyone, and welcome to Canadian Actual's first quarter 2023 earnings conference call. As always, before we begin, I'd like to remind you of our forward-looking statements, and it should be noted that in our reporting disclosures, everything is in Canadian dollars unless otherwise stated, and we report our reserves and production before royalties. Additionally, I would suggest you review our comments on non-GAAP disclosures in our financial statements. With me this morning is Tim McKay, our President, and Mark Stainthorpe, our Chief Financial Officer. Tim will first speak to how Canadian Natural is a leader on environmental, social, and governance, followed by specifics on our safe, reliable, world-class operations, including details on targeted production growth from our long-life, low-declined assets that generate strong returns on capital and maximize shareholder value. Mark will then summarize our solid financial results, including significant returns to shareholders so far this year and our strong financial position. To close, Tim will summarize our call prior to opening up the call for questions. With that, I'll turn it over to you, Tim.

Good morning, everyone. In the first quarter, we achieved strong quarterly production of approximately 1.32 million BOEs per day, including record natural gas production at approximately 2.14 BCF per day, and liquids production of approximately 963,000 barrels a day, reflecting strong operational performance across our assets, including our long-life, zero-decline, well sands, mining, and upgrading assets, comprising approximately 50% of the total company's liquids production this quarter. Our hard-valued SCO captured approximately a $2 premium to WTI in the quarter, driving strong SCO pricing and generating significant free cash for the company. Canadian Natural is a leader in environmental social governance and has made it a priority to work collaboratively with industry peers and governments to achieve meaningful GHG emission reductions in support of both Alberta and Canada's climate goals. The Alberta government's recently announced Emission Reduction and Energy Development Plan builds upon the province's longstanding climate leadership and achievements in emissions reduction. We look forward to supporting the province in continuing to provide affordable, reliable, responsibly produced energy while reducing emissions and aspiring towards a net zero economy in 2050. Canada Natural's current GHG goals support Alberta's climate plan where large-scale carbon capture and storage projects like Pathways have a significant role in reducing GHG emissions. Moving to the assets, I'll now do a brief overview. Overall, in Q1 2023, natural gas production was approximately 2.14 BCF, which was a record for the company, a 7% increase over Q1 2022. For North American operations, Q1 2023, natural gas production was strong at approximately 2.13 BCF per day, an increase of approximately 139 million cubic feet over Q1 2022. Primarily as a result of the company's strategic decision to invest in our drill-to-fill strategy, adding low-cost, high-value, liquids-rich natural gas production volumes. During the quarter, the company drilled 21 net wells, of which 19 were brought on in the quarter. meeting targeted rates. As well during the quarter, a third-party pipeline impacted both natural gas by about 33 million a day and associated liquids of approximately 3,500 barrels per day. For Q1, North American natural gas operating cost was $1.43, which is up 12% compared to Q1 2022 of $1.28. Our teams continue to focus on operational excellence and cost control. For North American light oil and NGLs, Q1 production was 108,531 barrels per day, comparable to Q1 2022, primarily a result of strong drilling results. Q1 operating costs were $18.62 per barrel, up from Q1 2022 operating costs of $15.24 a barrel, primarily due to increased power and service costs in the quarter. During the quarter, we drilled 16 net wells as part of our light oil development plan, which target to come on production in both Q2 and Q3 of this year. At Wembley, the company finished drilling a five-well light oil pad late in Q1, which is targeted to come on May 15th, with initial production rates of approximately 4,000 barrels a day of liquid and 14 million cubic feet per day of natural gas. This pad is part of the company's budgeted 11-well program in the greater Wembley area. Our international assets in Q1-23 had oil production of 27,331 barrels a day, which is down from Q1-22 levels of approximately 31,000 barrels a day, primarily due to the decline in maintenance in North Sea and offshore Africa. Our international assets continue to generate good free cash flow and value for the company. Moving to heavy oil, production was 77,690 barrels a day in Q1-2023. up 23% from Q1 2022, primarily due to strong drilling results in 2022. Operating costs in Q1 23 were $21.47 per barrel, comparable to our Q1 2022 operating costs of $22 per barrel. During the quarter, the company drilled 42 net heavy oil wells, of which 26 wells were multi-lap wells across our land base from Bonneville, Lloyd Minister, to the Clearwater area. with production results on target to budget. A key component of our long life, low decline assets is our world-class pelican pool, where our leading edge polymer flood continues to deliver significant value. Q1 production was 48,244 barrels a day, down 7% from Q1 2022, average of 51,991 barrels a day, reflecting the decline nature of the property. Polymer injection rates were reinstated in February 2023, and the field is targeted to return to its historical decline rate of approximately 5% in the second half of 2023. The team continues to focus on mitigating cost pressures, and we had a good Q123 operating costs of $9.63 per barrel, an increase from our Q2 2022 operating costs of $7.48 per barrel, primarily due to high power costs in the quarter. With our low decline and very low operating costs, Pelican Lake continues to have excellent netbacks. In our thermal in situ operations in Q1, we continue to leverage our continuous improvement culture and our expertise to deliver effective and efficient operations. Q1 2023 production was 242,884 barrels a day, down from Q1 2022 production of 261,743 barrels as forecasted as a result of natural decline. Q1 23 operating costs were $15.94 per barrel, up when comparing to Q1 2022 operating costs of $14.35 per barrel, primarily a result of higher power costs and service costs, offset by lower natural gas costs. I'll now update on our thermal growth plan. At Primrose, the company is targeting the growth production by approximately 25,000 barrels a day from Q4 2022 to Q4 2023 levels. primarily from its results of the two CCF pads drilled in 2022. The first production cycle from these pads is targeted to begin in Q3 2023, which targets strong quarterly production at primrose of approximately 100,000 barrels a day in the fourth quarter of this year. At Kirby, the company is targeting to grow production by approximately 15,000 barrels a day from Q4 2022 levels to approximately 65,000 barrels a day in Q4 2023. As the company progressed its development of four safety paths in 2023. Production from the first pad drilled in 2022 is targeted ramp up to full production capacity in Q3 2023. The three remaining pads are targeted to ramp up to full production capacity over the first nine months of 2024 at a pace of one pad per quarter. At Jackfish, the production has been very strong averaging approximately 115,000 barrels a day with minimal capital since acquiring the asset, representing its long-life, low-declined nature. The company is currently drilling two SAGD pads. Production from these pads is targeted to ramp up to full production capacities in Q3 of 2024 and Q4 of 2024, respectively, supporting our continued high utilizations at that facility. Subsequent to the quarter end, the company commenced planned turnarounds at Primrose East and Wolf Lake which target to impact Q2 2023 production grounds by approximately 15,000 barrels a day and are reflected in the company's previous announced annual production guidance. The thermal institute production is targeted to increase in the second half of 2023 into 2024 with new pads that were drilled in 2022 and pads targeted to finish drilling in the first half of 2023. Production is targeted to grow by approximately 30,000 barrels a day from Q4 to Q5. Q4 2022 to Q4 2023, averaging approximately 280,000 barrels a day. And with the strip of WCS differential tightening, this could add incremental cash flow. In the company's world-class oil sands mining and upgrading assets, we had a Q1 production of approximately exactly of 458,228 barrels a day of SUO, with Q1 2023 operating costs that were $25.06 per barrel. During the quarter, SEO prices were strong, resulting in premium pricing for SEO at approximately $2 per barrel U.S. above WTI, adding additional cash flows. Substant to Q1 2023, as previously announced, the planned turnaround activities of the non-operated Scottford sub-grader began April 10th with the mines targeted to operate at reduced rates for approximately 73 days, impacting the 2023 annual production by approximately 8,300 barrels a day. For Horizon, the plant turnaround is targeted to begin May 16th with a full plant outreach, targeting for approximately 28 days, impacting the 2023 annual production by approximately 21,600 barrels a day. At Horizon, the 14-4 reliability enhancement project is progressing as planned and tie-ins are targeted to be complete during the turnaround. This project targets to extend major turnaround maintenance cycles from one per year to one every second year, increasing SCO production capacity by approximately 5,000 barrels a day in 2023, increasing to approximately 14,000 barrels a day in 2025. I will now turn it over to Mark for a financial review.