Canadian Natural Resources Limited

Good morning. We would like to welcome everyone to Canadian Naturals 2024 fourth quarter and year-end 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 that this call is being recorded today, March 6, 2025, at 9 a.m. Mountain Time. I would now like to turn the meeting over to your host for today's call, Lance Kasson, Manager of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Thank you this morning for joining Canadian Natural's 2024 fourth quarter and year-end 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. Also, I would suggest that you review our advisory section in our financial statements that includes comments on non-GAAP disclosures. Speaking on today's call will be Scott Stealth, our president, Robin Zabeck, our Chief Operating Officer of E&P, and Mark Stainthorpe, our Chief Financial Officer. Additionally in the room with us this morning is Jay Frock, CEO of OilSense, and Victor Durrell, Senior Vice President of Finance and Principal Accounting Officer. Scott will first provide some examples of our top-tier performance and strong execution over recent years before getting into the numerous operational records achieved in 2024. Next, Robin will provide highlights of our growing high-value reserves that compete on a global scale. Mark will then summarize our financial results that includes robust adjusted funds flow, earnings, and returns to shareholders. To close, Scott will summarize prior to opening up the call for questions. With that, over to you, Scott.

Thank you, Lance, and good morning, everyone. Before I get into our 2024 results, I'd like to run through some key factors that highlight our top tier performance over the past three years in execution, effective and efficient operations, returns to shareholders, resource value growth and opportunistic acquisitions. Our unique and diverse asset base provides us with a competitive advantage as we have ample organic growth opportunities and can allocate capital to the highest return projects without being reliant on any one commodity. Our strong culture of continuous improvement is about doing it right and it is driven by teams in the organization that believe ownership and accountability deliver consistently strong results. All employees are shareholders, and we firmly see the value in having our employees as owners. And importantly, we've been able to keep the team together, which is important for our long-term sustainability and business continuity. Over the past three years, we have achieved the following successes. Absolute production growth of approximately 82,100 BOEs per day the vast majority of which was liquids growth. We have delivered annual production per share CAGR of 7%. We improved liquids margin significantly by reducing operating costs by more than $3 per barrel, or 15%, equating to an incremental margin of approximately $1.2 billion based on 2024 production. We returned over $11 per share to shareholders through dividends and share repurchases. We increased our annualized quarterly dividend by 59% to $2.25 per share from $1.42 per share, and the Board has subsequently increased the dividend by another 4%. Our share count reduced by approximately 234,000 shares, or 11% in closest of shares issued upon exercise of stock options. Adding more value at AOSP through the acquisition that closed in Q4 of 24 and a swap transaction targeted to close by the end of Q2 this year, consolidating our working interest in the Albion mines to 100%. In the Albion mines, these transactions will add approximately 93,500 barrels per day of long-life, zero-decline production to our world-class oil sands mining and upgrading assets. Additionally, we acquired Chevron's 70% operator working interest of light crude oil and liquid-rich assets in the Duvernay. These assets are targeted to average approximately 60,000 VOEs per day in 2025 and provide the opportunity for meaningful near-term growth while contributing additional free cash flow. Expanding even further on AOSP and going back to 2017, we unlocked significant long-term values since we first acquired an interest in this world-class asset. We've increased production and reduced operating costs through process improvements and optimization projects that improved reliability and increased utilization. Since 2017, we've increased gross production at Albion Mines by 30% or over 70,000 barrels per day. Upgrader capacity was also increased to match the increased production from the mines. We've decreased AOSP per unit operating costs by more than 30% or approximately $10 per barrel. This equates to an incremental margin of approximately $800 million based on 2024 production. With 100% working interest in the mines, once the swap transaction closes, we are targeted to unlock further value with our effective and efficient operations and relentless continuous improvement culture. Adding even more value to our world-class oil sands mining and upgrading assets, when you combine that increased ownership interest with the recently completed debottlenecking and reliability projects, our total oil sands mining production capacity increases to approximately 592,000 barrels per day. And further to that, when you combine our top-tier conventional crude oil and liquid-rich natural gas assets, with our leading oil sands mining and upgrading assets, you get a significant and sustainable free cash flow and the ability to organically grow production, if it makes sense to you so. I will now run through our strong 2024 operational results and highlights. We hit several new records across our assets in 2024, including record annual total production of approximately 1.36 million BOEs per day, including record liquids production of over 1 million barrels per day. Record annual oil sands mining and upgrading production of 472,245 barrels per day and record quarterly production of 534,631 barrels per day. These record production rates resulted in higher upgrader utilization of 99% in 2024, including planned turnarounds and 105% utilization in the fourth quarter. Our low oil sands mining and upgraded operating costs are industry leading, averaging $22.88 per barrel in 2024 and $20.97 per barrel in the fourth quarter. Our oil sands mining and upgrading assets continue to achieve strong production and high utilization in January 2025 and February 2025 averaging on a gross basis approximately 634,000 barrels per day over the two months. February 25 was the highest monthly gross production in our history at approximately 640,000 barrels per day as we focused on continuous improvement initiatives combined with the strong performance from the Reliability Enhancement Project at Horizon and the De-Bottleneck Project at Scotford. Additionally, further value has been unlocked from piping modifications completed during the recent e-bottleneck project at Scottford Upgrader. These modifications unlock approximately 5,000 barrels per day of annual gross production from the Albion Mines, resulting in higher utilization during planned Upgrader turnarounds. This increased zero-declined production will continue to benefit Canadian Naturals for decades, including our increased ownership in the Albion Mines. In our thermal in situ operations, we've achieved record production in 2024, averaging just over 271,000 barrels per day, a 3% increase over 2023, which was driven by our capital efficient thermal pad development program. 2024 thermal in situ operating costs were strong, averaging 11.04 per barrel, which is down 16% compared to 2023, primarily reflecting lower energy costs and higher production volumes. We have significant available processing capacity of approximately 70,000 barrels per day in our thermal operations. We continue to utilize this available capacity through our strong execution on our drill-to-fill pad additions and have been able to bring these pads on production ahead of schedule. For example, at Wolf Lake, we brought a SAGD pad on production ahead of schedule in Q4 of 24, which was originally targeted for Q1 of 25. At Primrose, We brought a CSS pad on production ahead of schedule in Q4 of 24, originally targeted for Q2 of 25. A second CSS pad had been drilled and is targeted to come on production ahead of schedule in late Q1 of 25, originally budgeted for the second quarter of 2025. At Jackfish, we drilled a SEGD pad in Q4 of 24 with production targeted to come on in Q3 of 25. At Pike, we are drilling two SAGD pads in the first half of 2025, which will be tied into the existing jackfish facilities. These two pads are targeted to come on production in 2026 and keep the jackfish plants at full capacity. At Kirby, we are currently drilling a SAGD pad targeted to come on production in Q4 of 2025, with a second SAGD pad targeted to be drilled in Q4 of 2025 and come on production in Q4 of 2026. On the conventional side of the business, primary heavy oil production averaged approximately 79,100 barrels per day, a 2% increase over 2023, reflecting strong results from multilateral wells on our extensive heavy oil land base. We drilled 121 net horizontal multilateral primary heavy oil wells in 2024, compared to 104 in 2023. Multilateral wells combine increased reservoir capture and higher production with reduced servicing requirements, which lowers operating costs. As we shift more of our primary heavy oil assets to multilateral development, we are seeing overall operating costs coming down as these wells are more efficient and require less servicing activity. In 2024, primary heavy oil operating costs averaged $18.11 per barrel down 9% from 2023. We continue to optimize well design and length in our highly successful multilateral program, achieving top tier average initial peak rates of approximately 250 barrels per day per well, which is 43% higher than the budgeted initial peak rate of 175 barrels per day per well, and a further 9% higher than a previously disclosed rate of 230 barrels per day. North American light crude oil and NGL production averaged approximately 114,400 barrels per day in 2024, an increase of 5% compared to 2023. Half of this increase is driven by strong organic growth and liquid-rich natural gas, with the remainder related to recently acquired DuVernay assets. We achieved a 17% reduction in operating costs on light crude oil and NGLs, averaging $13.55 per barrel in 2024 compared to North American natural gas production averaged 2.14 BCF in 2024, which is comparable to 2023. In 2024, we remained focused on liquid rich natural gas activity in the Montney and Deep Basin, while certain dry natural gas activity in 2024 was deferred due to lower natural gas prices. Operating costs in our North American natural gas averaged $1.19 per MCF in 2024, 6% lower than 2023. Complementing the opportunistic acquisitions completed in 2024, as well as those announced but not yet closed in 2025, we have plenty of organic growth opportunities within our large, diverse asset base. We will leverage this expanded portfolio of organic growth opportunities to continue creating long-term shareholder value into the future while maintaining the flexibility to manage the pace of these development opportunities to deliver strong returns. We have a long track record of consistently delivering strong industry-leading results driven by our safe, reliable operations and relentless focus on continuous improvement, which maximizes long-term shareholder value. Now I will turn it over to Robin to speak to our 2024 year-end reserves.