Canadian Natural Resources Limited

Good morning. We would like to welcome everyone to the Canadian Naturals 2025 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 7, 2025, 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.

Good morning everyone, and thank you for joining Canadian Naturals 2025 Second Quarter Earnings Commerce Call. As always, I would like to remind you of our forward-looking statements, and it should be noted that in our reporting disclosure, everything is in Canadian dollars unless otherwise stated, and we report our reserves and production before royalties. Also, I would suggest reviewing the advisory section in our financial statements, and it includes comments on non-GAAP disclosures. Speaking on today's call will be Scott Seltzer, our President, and Victor Durrell, our Chief Financial Officer. Additionally, in the room with us this morning is Robin Zabek, CEO of EMP, and Jay Frock, CEO of Oil Sounds. Scott will start off by providing details on how strong operational performance, the completion of turnarounds, and our recent Decretive Acquisition set Canadian Natural up for a strong second half of the year. Victor will then summarize our financial results, liquidity, and our significant returns to shareholders -to-date. To close, Scott will summarize prior to opening up the line for questions. With that, over to you, Scott.

Thank you, Lance, and good morning everyone. Our relentless focus on continuous improvement combined with effective and efficient operations drove strong performance -to-date in 2025. Our ability to effectively allocate capital across our strong asset base provides us with a competitive advantage. This ability, combined with Decretive Acquisitions, creates significant long-term value for our shareholders. Our culture of accountability and the strength of our assets is a unique advantage that results in both capital and operating cost savings and maximizes value for our shareholders. We successfully completed a planned turnaround at AOSP in the second quarter of 2025, five days ahead of schedule and on budget. Production and upgrade utilization at Horizon and AOSP before and after the turnaround was high, driven by strong performance from our reliability enhancement and debottlenecking projects. In July 2025, oil sands mining and upgrading production averaged approximately 602,000 barrels per day, with upgrade utilization of 106% and we expect the second half of 2025 to continue to deliver strong operating results. In the second quarter of 2025, despite the planned turnaround at AOSP, which reduced production levels in the quarter by approximately 120,000 barrels per day, we achieved quarterly production volumes totaling approximately 1.420 million BOEs per day, including liquids production of 1.019 million barrels per day and natural gas production of 2.4 BCF per day. Total corporate production on a BOE basis in the second quarter of 2025 was up approximately 135,000 BOEs per day from the second quarter of 2024, reflecting opportunistic acquisitions and organic growth across our asset base achieved in the last 12 months. On the acquisition front, we closed the pallet block on June 26th. Originally, we budgeted to close this acquisition on March 1st, 2025, which would have added production of approximately 50,000 BOEs per day, including 20,000 barrels per day of Manville Lake crude oil and NGLs in the second quarter of 2025. This acquisition and production were included in our original 2025 capital budget and production guidance, but due to the delayed closing in late June, it added only 2,000 barrels per day to our production levels for the second quarter. This acquisition also included approximately 1.1 million net acres of high quality land, with currently identified significant light crude oil inventory of approximately 850 locations. Subsequent quarter end on July 2nd, we closed an acquisition of liquid rich Monteney assets located in the Grand Prairie area for approximately $750 million, with production from the acquisition of approximately 32,000 BOEs per day, including 12,500 barrels per day of NGLs. Our original 2025 capital budget and production guidance did not include this acquisition. These assets are directly adjacent to our existing Monteney assets, providing opportunities for synergies while adding approximately 120,000 net acres of high quality land, with currently identified significant liquid rich inventory of approximately 150 locations. To summarize, our combined recently closed accretive acquisitions have added approximately 82,000 BOEs per day of production, which includes approximately 32,500 barrels per day of liquids, and total inventory of roughly 1,000 light oil and liquid rich drilling locations. Further related to these acquisitions, our full year capital budget will essentially remain unchanged from guidance provided in the first quarter, excluding the purchase price of the Grand Prairie acquisition, which closed on July 2nd. All maintenance capital related to the Grand Prairie asset and other acquisitions we've noted will be covered by our 2025 budget. In Q1, Canadian Natural was one of the first in industry to reduce 2025 capital spending due to efficiencies, and we are now executing development on the Grand Prairie asset while maintaining our capital guidance we provided in the first quarter for the year. We're also targeting to close the AOSP swap in the third quarter, and we plan to update our annual 2025 cork frit production guidance after that swap closes. I will now run through the second quarter operational results. On the conventional side of the business, primary heavy oil production averaged approximately 87,300 barrels per day in the second quarter, an increase of 10 percent over the second quarter of 2024, reflecting strong drilling results from our multilateral well program. We continue to achieve strong results from our drilling programs across our conventional E&P assets as we are realizing capital efficiencies resulting in high levels of activity without increasing capital. This includes our multilateral heavy oil program where we are targeting to drill 26 more wells in 2025 than originally budgeted. Importantly, the low operating costs on these multilateral wells drive strong results on capital adding significant value. Heavy oil operating costs averaged $17.44 per barrel in the second quarter of 2025, comparable with the second quarter of 2024. Pelican Lake production averaged approximately 143,100 barrels per day in the second quarter, a decrease of 4 percent from the second quarter of 2024, reflecting low natural field declines from this long-life low-decline asset. Operating costs at Pelican Lake averaged $9.01 per barrel in the quarter, comparable to the second quarter of last year. North American Lake crude oil and NGL production averaged approximately 140,700 barrels per day in the second quarter, which is up 31 percent from the second quarter of 2024, primarily driven by production from our Duvernay assets in addition to strong drilling results in our liquid-rich natural gas assets. Operating costs on our light oil and NGL operations averaged $10.94 per barrel, a decrease of 24 percent compared to the second quarter of 2024, level of $13.75 per barrel, reflecting higher production volumes. On our Duvernay assets, we are continuing to achieve strong production results and further cost reductions on these assets in the short time that we have owned them. Through our culture of continuous improvement, we remain confident we will continue to realize more value for shareholders than what was originally planned for at the time of the acquisition. Our team's efforts have resulted in strong operating costs during the first six months of operating these assets, averaging $8.43 per barrel in the second quarter of 2025, a decrease of more than 11 percent compared to the first quarter of 2025 when operating costs were $9.52 per BUE. This results in annual operating cost savings of approximately $60 million as compared to our original target of $40 million. Our extended well lengths in the Duvernay, which are on average 20 percent longer than our 2024 well lengths, and optimized completion designs combined with strong execution, continue to lower development costs. On a length normalized basis, combined drilling and completion costs for 2025 are now targeting an improvement of approximately 16 percent, or $2 million per well lower than compared to 2024 costs. That's a further improvement of $200,000 per well compared to the first quarter of 2025. We remain on track to achieve 2025 budget production of approximately 60,000 barrels per day in the Duvernay, BUEs per day in the Duvernay. North American natural gas production for the second quarter averaged approximately 2.4 BCF per day, an increase of 14 percent over the second quarter of 2024. Operating costs on our North American natural gas averaged $1.7 per MCF, which is 10 percent lower compared to the second quarter of 2024 of $1.19 per MCF, primarily the result of higher production volumes. In our thermal in situ operations, we achieve strong thermal production in the second quarter, averaging approximately 274,800 barrels per day. This is up three percent from the second quarter of 2024, resulting from our capital efficient thermal pad add development program. Second quarter thermal in situ operating costs averaged $11.05 per barrel, which is comparable to the second quarter of 2024. At Primrose, we target to drill a CSS pad in the third quarter of this year, with production targeted to come on in 2026. At Jackfish, during the month of July, we brought on production a recently drilled saggy pad. At Kirby, we are targeting to bring the recently drilled five well-paired saggy pad on production in the fourth quarter of 2025. At Pike, we completed drilling two saggy pads, which will be tied into the existing Jackfish facilities and targets to keep the Jackfish plants at full capacity. The first of these two pads is targeted to come on production in the first quarter of 2026, and the second pad will be on production in the second quarter. At our commercial scale solvent saggy pad in Kirby North, we began solvent injection in June of 2024. In the second quarter of 2025, we executed workovers on two well pairs to enhance SORs, solvent recovery, and production trends will continue to be monitored over the coming months. In our oil sands mining and upgrading, during the second quarter of 2025, our world-class oil sands mining and upgrading production averaged approximately 463,800 barrels per day of SCO, an increase of 13% from the second quarter of 2024. The increase is a result of the reliability enhancement project eliminating the need for a turnaround at Horizon in 2025 and the Scottford Upgrader D-Bottleneck, which were both completed in 2024, combined with the additional 20% working interest in AOSP acquired in December of 2024. Oil sands mining and upgrading cost averaged $26.53 per barrel of SCO in the second quarter of 2025, an increase of 2% from second quarter of 2024, reflecting the AOSP turnaround in the second quarter of 2025. Our growing world-class asset base is strategically balanced across commodity types so that we can be flexible and capture opportunities throughout the commodity price cycle, maximizing value for our shareholders. A substantial portion of our unique and diverse asset base consists of long-life, low-decline assets which have significant low-risk, high-value reserves that require low-maintenance capital than most other reserves, making Canadian Natural a truly robust and resilient energy company. I will now turn it over to Victor for our second quarter