Canadian Natural Resources Limited

Good morning. We would like to welcome everyone to the Canadian Natural Resources 2023 Third Quarter Earnings Conference Call and Webcast. After the presentation, we will conduct the question and answer session. Instructions will be given at that time. Please note that this call is being recorded today, November 2nd, 2023, at 9 a.m. Mountain Time. I would now like to turn the meeting over to your host for today's call, Lance Kasten, Manager of Investor Relations. Please go ahead.

Lance Kasten, Manager of Investor Relations Good morning, everyone. and thank you for joining Canadian Natural's third 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 we review our comments on non-GAAP disclosures in our financial statements. Speaking on today's call will be Tim McKay, our President, and Mark Stainthorpe, our Chief Financial Officer. Tim will first speak to how strong execution has resulted in record quarterly production, and he'll provide additional specifics on our safe, reliable, and world-class operations. Mark will then summarize our strong financial results, including significant free cash flow generation and increasing shareholder returns. To close, Tim will summarize our call prior to opening up the line for questions. With that, I'll turn it over to you, Tim.

Thank you, Lance. Good morning, everyone. In the third quarter, we achieved record quarterly production approximately 1.39 million bues per day which included both record liquids production at approximately 1 million 35 000 barrels a day and natural gas production at approximately 2.15 bcf a day as a result of effective and efficient operations across all our assets this combined with our diverse product myths we generated significant free cash flow resulting in more shareholder returns through our sustainable, growing dividends and significant share repurchases. As well, Canadian Natural continues to be a leader in environmental, social and governance and has made it a priority to work collaboratively with industry peers and governments to achieve meaningful GHG emission reduction in support of both Alberta and Canada's climate goals through our participation in the Pathways Alliance. As we move forward to lower our carbon emissions with our target to reduce the absolute Scope 1, Scope 2 emissions by 40% by 2035 from our 2020 baseline on our journey to achieve our goal of net zero GHG emissions in the oil sands by 2050. I'll now do a brief overview of the assets, starting with natural gas. Overall Q3 natural gas production was a record at 2.15 BCF a day, which was higher than Q3 2022 production. From North American operations, Q3 23 natural gas price was also a record at approximately 2.14 BCF a day versus Q3 2022. As well, we added volumes through our drill-to-fill strategy, adding low-cost, high-value liquids, rich production across the asset. During the quarter, the company drilled 10 net wells all meeting expectations. Our North American Q3 natural gas operating cost was $1.22 per MCF, a decrease of 8% compared to Q3 2022, an increase of 8% compared to Q3 2022 of $1.13, primarily due to higher service costs. Our teams will continue to focus on effective and efficient operations and cost control across all areas. For North American light, oil, and NGL Q3 production, was approximately 109,000 barrels a day, comparable to the Q3 2022 of 109,252 barrels a day. Q3 operating costs were $15.49 per barrel, a decrease of 7% from Q3 2022 operating costs of $16.68 per barrel, primarily due to lower power costs in the quarter. Our international assets in Q3 had a production of 24,000 barrels 719 barrels a day, which is comparable to Q3 2022 levels of 24,493 barrels a day. Our international assets continue to generate good cash flow as we progress towards decommissioning of the Indian assets. Moving to heavy oil, heavy oil production was 76,377 barrels a day in Q3 2023, up 11% from Q3 2020. 2022 production of 68,933 barrels a day, primarily due to increased drilling activity, strong drilling results, offsetting natural field declines. Operating costs in Q3 23 were at $19.68 per barrel, down 8% compared to our Q3 2022 operating costs of $21.30 per barrel, primarily reflecting higher volumes in the quarter. During the quarter, the company drilled 34 net heavy oil wells, which were multilateral across our land base from Bonneville, Lloyd Minister, to Clearwater area, with all meeting targeted results. A key component of our long-life flow decline assets is our world-class Pelican Lake pool, where our leading-edge polymer flood continues to deliver significant value. Q3 production was 46,897 barrels a day, down 6%, versus Q3 2022 average of 50,051 barrels per day. reflecting the low decline nature of the property. The polymer injection grates, which were reinstated in February of 23, have been successful in returning the field back to more historical decline rate, which was approximately 5%. The team continues to focus on operational excellence with Q3 operating costs of $8.02 per barrel, decreasing 10% from our Q3 2022 operating costs of $8.89, primarily reflecting effective and efficient operations, lower power costs, offsetting the lower production volumes. With Pelican Lake's low decline and very low operating costs, it continues to generate excellent MAPPAC. In our thermal in situ errors in Q3 2023, as a result of strong execution combined with effective and efficient operations, Q3 2023 thermal production was 287,085 barrels a day. up approximately 44,000 barrels a day from Q3 2022 production of 243,393 barrels a day. Q3 operating costs were $11.47 per barrel, down 27% when compared to Q3 2022 operating costs of $15.63, largely as a result of higher production and lower natural gas fuel costs. At Kirby, current production is approximately 65,000 barrels a day as the company has grown at by approximately 15,000 barrels a day from Q4 2022 level. This significant production growth is due to the development of four SAGD pads, the first which reached full capacity in Q3 2023. The remaining three targets are targeted to ramp up to full production over the next nine months of 2024 at a pace of one pad per quarter, maintaining this production level. At Jackfish, two SAGD pads were drilled in the first half of 23 with production from these pads targeted to ramp up to full production capacity in Q3-24 and Q4-24, supporting continued high utilization. Oil sands mining, at the company's world-class oil sands mining upgrading assets, we had Q3 production of averaging 490,853 barrels a day of SUO. versus production of 487,553 in Q3 2022, with Q3 operating costs that were $22.12 per barrel versus Q3 of $22.35 per barrel. The reliability enhancement project continues to move forward, targeting to add approximately 14,000 barrels a day of additional SUL capacity in 2025. as a result of shifting the maintenance schedule from once per year to once every two years, reducing downtime for maintenance activities and increasing overall reliability at our accident. Also here with me today as part of our succession plan, I have Scott Stealth, Trevor Cassidy, Jay Frock, and Robin Zavek. As part of my succession, Scott Stealth will be taking over the role of President effective February 28, 2024. Scott and I met a little over 26 years ago, and over the years, Scott has excelled in every role he has had with the company, and I know he will do a great job. Should anyone have any questions for Scott, feel free to ask when we move to the Q&A session. Jay Frock, currently our Senior Vice President of Oil Sands Mining, will replace Scott's previous role as CEO of Oil Sands as well. In Q4, Trevor Cassidy, after 24 years with Canadian Natural, will be retiring. We wish to thank Trevor for all his contribution over the many years, and Robert Sabeck, who has been with the company 20 years and who is currently our Senior VP of Exploitation, will assume the role of COO, Exploration and Production. I'll now turn it over to Mark for a financial review.