Canadian Natural Resources Limited

Good morning. We would like to welcome everyone to Canadian Natural's 2024 First Quarter Earnings Conference Call and Webcast. After the presentation, we will conduct a question and answer session. Instructions will be given at that time. Please note, this call is being recorded today, May 2, 2024, at 7 a.m. Mountain Time. I would now like to turn the meeting over to our host for today's call, Lance Kasson, Manager of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining Canadian Natural's first quarter 2024 earnings conference call. 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 reserves and production before royalties. Additionally, I would suggest reviewing our comments on non-GAAP disclosures in our financial statements. Speaking on today's call will be Scott Stealth, our president, and Mark Stainthorpe, our Chief Financial Officer. Scott will first provide highlights on our safe, reliable, and world-class operations and help through our defined plan, effective and efficient operations, and strong execution for targeting robust production in the second half of 2024. Mark will then summarize our financial results, including strong shareholder returns. To close, Scott will summarize prior to opening up the client for questions. With that, over to you, Scott.

Thank you, Lance, and good morning, everyone. Canadian Natural has been in operation for 35 years and has always been focused on returns on capital and creating value for shareholders. 2024 marks an important milestone as we are delivering 100% of free cash flow to shareholders this year. And with strong crude oil strip pricing for the remainder of the year, we are targeting to generate significant free cash flow. With our large diverse assets, we have plenty of growth opportunities to continue to create long-term shareholder value and have the flexibility to manage the pace and timing of these development opportunities. As we outlined with our 2024 budget, we have significant strategically weighted development in the first half of the year to our longer cycle assets, primarily on thermal pads and back-end weighted with our conventional growth development as this aligns with increased market access as well as improved forward strip pricing. As a result, we are targeting to finish the year with strong exit rates as the conventional, more shorter cycle growth activity rounds up in the second half of the year. We continue to find ways to be more effective and efficient, including optimizing our turnaround schedules. For example, we are well prepared for the upcoming turnaround at Horizon, where we will be tying in the final components of the Reliability Enhancement Project which sets us up for strong utilization and production in the second half of the year, and add 28,000 barrels a day in 2025 when we skip a turnaround. Through early turnaround work in Q1 during the unplanned maintenance activities, we reduced the outage duration of the planned Q2 horizon turnaround to 28 from 30 days. Additionally, we have optimized the commissioning schedule of the reliability enhancement project which will be brought online in June following the turnaround. We have a deep bottleneck project at the Scotford Upgrader that will be implemented during the turnaround this fall, which will add approximately 5,600 barrels per day net to Canadian Natural. It's the small incremental movements that add up and create additional value for our shareholders, as these targeted improvements will help drive stronger production in the second half of this year. Longer term, we have our other oil sands mining and upgrading optimization projects, including the NAFTA recovery treatment project, which is targeted to add approximately 6,300 barrels per day late 2027. And beyond that, combining our IPEP technology with paraffinic froth treatment has the potential to add approximately 195,000 barrels per day of additional annual bitumen production while improving environmental performance. Along with growth, we have a defined path to reduce our environmental footprint and continue delivering sustainable, responsible, produced energy that the world needs. We are committed to supporting Canada's and Alberta's climate goals and have robust environmental targets, including zero greenhouse gas emissions in the oil sands by 2050. We are uniquely positioned with diverse, long-life, low-decline assets which are ideal for applying greenhouse gas reduction technologies and providing industry-leading environmental performance. It is important to continue working together with the Canadian and Alberta governments to make sure the Pathways Alliance is a transformative industry collaboration and achieve meaningful greenhouse gas reductions in Canada. We believe Canadian energy is one of the most responsibly produced sources of energy in the world and should be the preferred energy choice. I will now run through our Q1 operational results. Total production in Q1 averaged approximately 1.33 million BOEs per day, including total liquid production of approximately 976,000 barrels per day and natural gas production of approximately 2.15 BCF per day. On the conventional side of the business, primary heavy oil production averaged approximately 78,400 barrels per day in the quarter, which is comparable to production volumes in the first quarter of 2023, reflecting strong results from our multilateral wells in the Manville and Clearwater fairways, which offsets natural field declines. Primary heavy oil operating costs averaged $19.16 in the first quarter, which is down 11% from the first quarter of 2023, reflecting lower energy costs. Our pelican production averaged just over 45,000 barrels per day in the first quarter, which is down 6% from the first quarter of 2023, reflecting low natural field declines from this long life asset. Operating costs at Pelican were $9.75 a barrel in the first quarter, comparable with costs in the first quarter of 2023. North American crude oil and natural gas production averaged approximately 114,000 barrels a day in the first quarter, which is up 5% from the first quarter of 2023. Operating costs in our light crude oil and NGL's operations averaged $15.25 in the first quarter, a decrease of 18% compared to the first quarter of 2023, reflecting higher production and lower energy costs. North American natural gas production averaged 2.14 BCF during the first quarter, which is comparable to the first quarter of 2023. Operating costs under North American natural gas averaged $1.27 in MCF in the first quarter, which is down 11% compared to the first quarter of 2023, primarily related to lower energy costs. In our thermal in situ operations, we achieved strong thermal production in the first quarter, averaging just over 268,000 barrels per day. This is up 10% from the first quarter of 2023 as a result of strong execution on CSS and SAG D-PAD developments during 2023. First quarter thermal in situ operating cost averaged $14.05 a barrel, which is down 12% compared to the first quarter of 2023, primarily reflecting higher production volumes and lower energy costs. In April, we successfully completed the planned turnaround at Jackfish a few days ahead of schedule, and we have upcoming turnarounds at Kirby North in May of 24. Due to the early completion of the turnaround at Jackfish, the total impact to Q2 2024 average production is now targeted to be approximately 15,300 barrels per day, an improvement of 1,800 barrels per day from the previous impact target of 17,100 barrels per day. At PERMOS, we are currently drilling two CSS pads, which are targeted command production in Q2 of 2025. We're also drilling a SAGD pad at Wolf Lake, which is targeted command production in Q1 of 2025. At Jackfish, we drilled two SAGD pads in 2023, the first of which ramped up to its full production capacity in April of this year, which is ahead of budget. The second pad is targeted to ramp up to full production capacity in Q4 of 2024. This will support continued high utilization rates at the Jackfish facilities. Additionally, we are targeting to drill one SAGD pad at Jackfish in the second half of 2024, with production from this pad targeted to come on in Q3 of 2025. The commercial-scale solvent SAGD pad development at Kirby North is approximately 90% complete, and we are targeting to begin solvent injection in July of 2024. The use of solvents is targeted to reduce our SORs, entered greenhouse gas emissions, intensities by 40 to 50%. And our oil sands mining and upgrading operations, the first quarter SCO production averaged just over 445,000 barrels per day, 45,000 barrels per day lower than our target for the first quarter, reflecting both planned and unplanned maintenance activities, including the advancement of the Scotford Upgrader plan turnaround from March to April, to March from April. Through improved turnaround and commissioning scheduling as well as optimization efforts, we are targeting to recover these daily production volumes in the last three quarters of the year. Our operating costs in our oil sands mining and upgrading assets are top tier, averaging $24.85 a barrel in the first quarter, comparable with the first quarter of 2023. Canadian Naturals has a proven effective capital allocation strategy. We have a balance of near medium and long-term growth opportunities, as I mentioned at the beginning of my call. Not only on our oil sands mining assets, but across our entire asset base. And with the strategic weighting of our capital program this year to add growth in the second half of the year and exit 2024 with strong rates, we are targeting strong free cash flow in the last nine months of this year. Now I will turn it over to Mark for a financial review.