Canadian Natural Resources Limited

Good morning. We would like to welcome everyone to Canadian Nationals 2024 Second 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, August 1, 2024, at 9 a.m. Mountain Time. I would now like to turn the meeting over to your host for today's call, Lance Cassin, Manager of Investor Relations.

Thank you. Good morning, everyone, and thank you for joining Canadian Natural's second quarter 2024 earnings conference call. As always, I'd like to remind you of our forward-looking statements. 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 advisory section in our financial statements, That includes comments on non-GAAP disclosures. Speaking on today's call, we used Scott Stelter, President, and Mark Stainthorpe, our Chief Financial Officer. Scott will provide highlights on our strong operational quarter that included completion of planned turnarounds, setting us up for robust targeted production in the second half of the year. Mark will then summarize our excellent financial results, including significant liquidity and returns to shareholders. To close, Scott will summarize prior to opening up the line for questions. With that, I'll pass it to you, Scott.

Thank you, Lance, and good morning, everyone. The strength of our well-balanced and diverse portfolio combined with our ability to execute safe, effective, and efficient operations delivered an excellent second quarter for Canadian Natural. Our team managed our planned maintenance activities very well and optimized production, resulting in a strong second quarter with production of 1.29 million BOEs per day, which is an increase of 8% compared to Q2 of 2023. Our thermal assets delivered strong production during the second quarter, primarily due to better-than-expected performance from the new pads, combined with early completion of planned turnarounds at Jackfish and Kirby. At Horizon, we successfully completed the final tie-ins related to the reliability enhancement project, as well as planned turnaround activities. Through optimization efforts, our team completed the turnaround at Horizon in 28 days, two days earlier than budgeted. Subsequent to the quarter end, we achieved significant milestones at Horizon in July 2024 with production of the one billionth barrel of bitumen since operations began in 2009. Supporting this milestone is the company's significant total approved SEO reserves of approximately 6.9 billion barrels with a reserve life index of 44 years as at year end 2023. Also during July, SCO production of approximately 500,000 barrels per day was achieved, driven by strong production at horizon benefiting from the final tie-ins and commissioning of the reliability enhancement project. The commissioning of TMX pipeline during the second quarter and the positive impact this incremental egress has had on the Canadian economy represents a significant achievement for Canada. The impact on the energy industry has been and will continue to be positive through the narrowing heavy oil differentials, improved realized pricing along with the development of a more diverse market for Western Canadian crude oil. TMX is a significant accomplishment, adding much needed egress capacity and increasing exposure to global market pricing for crude oil products. Canadian Natural's strong execution, effective and efficient operations combined but stronger realized prices drove significant free cash flow during the quarter, despite planned turnarounds. I will now run through our Q2 operational results. Liquids production in the second quarter averaged approximately 934,000 barrels per day, and natural gas production averaged approximately 2.1 BCF per day. On the conventional side of the business, Primary heavy oil production averaged approximately 79,100 barrels per day in the second quarter, which is a 3% increase compared to the production volumes in the second quarter of 2023, reflecting strong results from multilateral wells on our extensive heavy oil land base, which is the largest in Canada and includes the Manville and Clearwater fairways. Primary heavy oil operating costs averaged $17.59 per barrel in the second quarter, which is down 12% from the second quarter of 2023, primarily reflecting lower energy costs. We are seeing excellent results on our multilateral wells, driven by our culture of continuous improvement and strong execution from the team. In 2024, we increased the average length of our multilateral heavy oil wells by 16% to approximately 9,900 meters compared to an average budgeted well length of approximately 8,500 meters. This has lowered our cost per meter and increased our reservoir capture. As a result of our optimized longer well designs and the technical expertise of our teams, average initial peak rates of multilateral on-stream in the first half of 2024 have increased 30% to 230 barrels per day per well, compared to our average initial peak rates of 175 barrels per day per well. Our Pelican Lake production averaged approximately 45,000 barrels per day in the second quarter, which is down 5% from the second quarter of 2023, reflecting low natural field declines from this long-life world-class asset. Operating costs at Pelican Lake were $8.92 per barrel in the second quarter, an increase of 4% compared to the second quarter of 2023, which was primarily due to lower production volumes, partially offset by lower energy costs. North American light crude oil and natural gas production averaged 108,000 barrels per day in the second quarter, which is up 5% from the second quarter of 23. The increase was a result of strong drilling results over the past year and lower production in the second quarter of 2023 caused by wildfires and third-party pipeline outage. Operating costs in our light crude oil and NGLs Operations averaged $13.75 per barrel in the second quarter, a decrease of 24% compared to the second quarter of 2023 due to higher production and lower energy costs. North American natural gas production averaged 2.1 BCF during the second quarter, which is comparable to the second quarter of 2023, reflecting strong results from a monotony and deep basin wells, offset by natural field declines. Operating costs on our North American natural gas averaged $1.19 per MCF in the second quarter, which is down 12% compared to the second quarter of 2023, primarily a result of lower energy costs. As we outlined in our first quarter, we shifted certain natural gas development activity in 2024 to high-return multilateral heavy oil wells due to lower natural gas prices. Concurrently, approximately 20% of our remaining 2024 planned natural gas wells will be drilled with production curtailed until the trend in natural gas prices improve. We maintain optionality to bring these natural gas wells on production in late 2024 or early 2025 to align with improved natural gas prices, maximizing value for shareholders. Our 2024 corporate natural gas production guidance of 2.12 BCF to 2.23 BCF remains unchanged. In our thermal in situ operations, we achieved strong thermal production in the second quarter, averaging just over 260,000 barrels per day. This is up 12% from our second quarter of 2023, driven by strong results from Jackfish, Kirby North, and Primrose Tad developments. Second quarter thermal in situ operating cost averaged 1095 per barrel, which is down 25% compared to the second quarter of 2023, primarily reflecting higher production volumes and lower energy costs. Plant turnaround to Jackfish and Kirby North facilities were successfully completed ahead of schedule in Q2 of 24. At Jackfish, the first of two SAGD pads drilled in 2023 reached full production capacity in Q2 of 2024, which is ahead of schedule. The second pad is currently producing at full production capacity and is also ahead of schedule, originally budgeted for Q4 of 2024. The teams executed both of these Jackfish pads very well from drilling to on stream and both exceeded our previous production type curves. 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. At Permos, we finished drilling one CSS pad, which is targeted to come on production ahead of schedule in late Q4 of 2024. This pad was originally targeted for Q2 of 2025. Again, the teams have done a good job of optimizing execution, advancing the first pad through decoupling construction schedules. The second pad is currently being drilled and is targeted to come on in production in Q2 of 2025. At Wolf Lake, we recently drilled one sag deep pad, which is targeted to come on full production in Q1 of 2025. At Kirby North, we started injecting solvent in late June 2024. Currently, all eight wells at our commercial scale solvent sag deep pad are receiving solvent, and we target to increase solvent injection with subsequent reduction in steam injection over the coming months. We will monitor solvent recoveries and production trends as we evaluate ongoing results. In our oil sands mining and upgrading operations, second quarter SCO production averaged approximately 411,000 barrels per day, an increase of 16% compared to the second quarter of 2023. The increase in production reflected planned maintenance at Horizon that was successfully completed ahead of schedule compared to Q2 of 2023, which included planned turnarounds at both Verizon and AOSP. Operating costs on our oil sands mining and upgrading assets are top tier, averaging $25.95 per barrel in the second quarter, a 17% decrease compared to the second quarter of 2023. This reflects higher production volumes from reduced planned maintenance activities and lower energy costs. At AOSP, due to the schedule optimization of the Scotford Upgrader in Q2, the planned September turnaround is now targeted to last 39 days compared to the previous 49-day schedule. During this turnaround, Scotford Upgrader is expected to run at reduced rates with the impact to annual production targeted to be approximately 9,000 barrels per day, a 2,000 barrel per day improvement compared to budget. Our significant SCO reserves are world-class. We are executing near- and medium-term projects, evaluating longer-term projects to potentially bring value forward, including near-term production growth of the Scotford Upgrader, includes de-bottlenecking project, which is targeted to be completed during the planned turnaround, and targets to add incremental capacity at AOSP of approximately 5,600 barrels per day net to Canadian natural. Medium-term production growth includes Other oil sands mining and upgrading optimization projects, such as the NAPTA Recovered Tailings Treatment Project, which targeted to add approximately 6,300 barrels per day of production in late 2027. Longer term, combining our IPEP technology with paraffinic fraud treatment has the potential to add approximately 195,000 barrels per day of annual bitumen production. Our world-class assets are strategically balanced across commodity types so we can be flexible and capture opportunities throughout the commodity cycle to maximize value for shareholders. Our unique and diverse portfolio of assets is supported by long-life low-decline assets which have large, low-risk, high-value reserves with low-maintenance capital, making Canadian Natural truly a unique and resilient energy company. The strategic weighting of our capital program this year, adding growth in the second half of the year and exiting 2024 with strong production rates positions us well moving into 2025 while we target strong production and free cash flow in the last six months of this year. Now with that, I'll turn it over to Mark for a financial review.