Investor Open House 2011 Corporate Summary
May 2011
Corporate Summary
Investor Open House May 2011
THE PREMIUM VALUE
DEFINED GROWTH
INDEPENDENT
Investor Open House 2011 Corporate Summary
May 2011
Forward Looking Statements
Certain statements in this document or documents incorporated herein by reference constitute forward-looking statements or information (collectively Certain statements relating to the Company in this document or documents incorporated herein by reference constitute forward-looking statements or information (collectively referred to herein as forward-looking statements) within the meaning of applicable securities legislation. Forward-looking statements can be identified by the words believe, anticipate, expect, plan, estimate, target, continue, could intend, may, potential, predict, should, will, objective, project, forecast, goal, guidance, outlook, effort seeks, schedule or expressions of a similar nature suggesting future outcome or statements regarding an outlook. Disclosure related to expected future commodity pricing, production volumes, royalties, operating costs, capital expenditures, and other guidance provided in the 2010 outlook section and throughout this document and the documents incorporated herein by reference constitute forward looking statements. Disclosure of plans relating to existing and future developments including but not limited to Horizon, Primrose East, Pelican Lake, Olowi Field (Offshore Gabon), and the Kirby Thermal Oil Sands Project also constitute forward-looking statements. This forward-looking information is based on annual budgets and multi-year forecasts and is reviewed and revised throughout the year if necessary in the context of targeted financial ratios, project returns, product pricing expectations and balance in project risk and time horizons. These statements are not guarantees of future performance and are subject to certain risks. The reader should not place undue reliance on these forward looking statements as there can be no assurances that the plans, initiatives or expectations upon which they are based will occur. In addition, statements relating to reserves are deemed to be forward-looking statements as they involve the implied assessment based on certain estimates and assumptions that the reserves described can be profitably produced in the future. There are numerous uncertainties inherent in estimating quantities of proved crude oil and natural gas reserves and in projecting future rates of production and the timing of development expenditures. The total amount or timing of actual future production may vary significantly from reserve and production estimates. The forward-looking statements are based on current expectations, estimates and projections about the Company and the industry in which the Company operates, which speak only as of the date such statements were made or as of the date of the report or document in which they are contained and are subject to known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others: general economic and business conditions which will, among other things, impact demand for and market prices of the Companys products; volatility of and assumptions regarding crude oil and natural gas prices; fluctuations in currency and interest rates; assumptions on which the Companys current guidance is based; economic conditions in the countries and regions in which the Company conducts business; political uncertainty, including actions of or against terrorists, insurgent groups or other conflict including conflict between states; industry capacity; ability of the Company to implement its business strategy, including exploration and development activities; impact of competition; the Companys defense of lawsuits; availability and cost of seismic, drilling and other equipment; ability of the Company and its subsidiaries to complete its capital programs; the Companys and its subsidiaries ability to secure adequate transportation for its products; unexpected difficulties in mining, extracting or upgrading the Companys bitumen products; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; ability of the Company to attract the necessary labour required to build its thermal and oil sands mining projects; operating hazards and other difficulties inherent in the exploration for and production and sale of crude oil and natural gas; availability and cost of financing; the Companys and its subsidiaries success of exploration and development activities and their ability to replace and expand crude oil and natural gas reserves; timing and success of integrating the business and operations of acquired companies; production levels; imprecision of reserve estimates and estimates of recoverable quantities of crude oil, bitumen, natural gas and liquids not currently classified as proved; actions by governmental authorities; government regulations and the expenditures required to comply with them (especially safety and environmental laws and regulations and the impact of climate change initiatives on capital and operating costs); asset retirement obligations; the adequacy of the Companys provision for taxes; and other circumstances affecting revenues and expenses. Certain of these factors are discussed in more detail under the heading Risk Factors. The Companys operations have been, and at times in the future may be affected by political developments and by federal, provincial and local laws and regulations such as restrictions on production, changes in taxes, royalties and other amounts payable to governments or governmental agencies, price or gathering rate controls and environmental protection regulations. Should one or more of these risks or uncertainties materialize, or should any of the Companys assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are dependent upon other factors, and the Companys course of action would depend upon its assessment of the future considering all information then available. Readers are cautioned that the foregoing list of important factors is not exhaustive. Unpredictable or unknown factors not discussed in this report could also have material adverse effects on forward-looking statements. Although the Company believes that the expectations conveyed by the forward-looking statements are reasonable based on information available to it on the date such forward-looking statements are made, no assurances can be given as to future results, levels of activity and achievements. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Except as required by law, the Company assumes no obligation to update forward-looking statements should circumstances or Managements estimates or opinions change.
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Reporting Disclosures
Special Note Regarding Currency, Production and Reserves In this document, all references to dollars refer to Canadian dollars unless otherwise stated. Production data is presented on a before royalties basis unless otherwise stated. In addition, reference is made to oil and gas in common units called barrel of oil equivalent (boe). A boe is derived by converting six thousand cubic feet of natural gas to one barrel of crude oil (6 mcf:1 bbl). This conversion may be misleading, particularly if used in isolation, since the 6mcf:1bbl ratio is based on an energy equivalency at the burner tip and does not represent the value equivalency at the well head. Reserves For the year ended December 31, 2010 the Company retained Independent Qualified Reserves Evaluators (Evaluators), Sproule Associates Limited and Sproule International Limited (together as Sproule) and GLJ Petroleum Consultants Ltd. (GLJ), to evaluate and review all of the Companys proved and proved plus probable reserves with an effective date of December 31, 2010 and a preparation date of February 14, 2011. Sproule evaluated the North America and International crude oil, NGL and natural gas reserves. GLJ evaluated the Horizon SCO reserves. The evaluation and review was conducted in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (COGE Handbook) and disclosed in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101) requirements. In previous years, Canadian Natural had been granted an exemption order from the securities regulators in Canada that allowed substitution of U.S. Securities Exchange Commission (SEC) requirements for certain NI 51-101 reserves disclosures. This exemption expired on December 31, 2010. As a result, the 2010 reserves disclosure is presented in accordance with Canadian reporting requirements using forecast prices and escalated costs. The recovery and reserves estimates of crude oil, NGL and natural gas reserves provided in this presentation are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, NGL and natural gas reserves may be greater than or less than the estimates provided. Reserves estimates provided in this presentation are company gross, before royalties. Resources Other Than Reserves The contingent resources other than reserves (resources) estimates provided in this presentation are internally evaluated by qualified reserves evaluators in accordance with the COGE Handbook as directed by NI 51-101. No independent third party evaluation or audit was completed. Resources provided are best estimates as of December 31, 2010. The resources are evaluated using deterministic methods which represent the expected outcome with no optimism or conservatism. Resources, as per the COGE Handbook definition, are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from know accumulations using established technology or technology under development, but are not currently considered commercially viable due to one or more contingencies. There is no certainty that it will be commercially viable to produce any portion of these resources. Due to the inherent differences in standards and requirements employed in the evaluation of reserves and contingent resources, the total volumes of reserves or resources are not to be considered indicative of total volumes that may actually be recovered and are provided for illustrative purposes only. Petroleum, bitumen or natural gas initially-in-place volumes provided are discovered resources which include: production, reserves, contingent resources and unrecoverable volumes. Special Note Regarding non-GAAP Financial Measures Management's discussion and analysis includes references to financial measures commonly used in the oil and gas industry, such as cash flow, cash flow per share and EBITDA (net earnings before interest, taxes, depreciation depletion and amortization, asset retirement obligation accretion, unrealized foreign exchange, stock-based compensation expense and unrealized risk management activity). These financial measures are not defined by generally accepted accounting principles (GAAP) and therefore are referred to as non-GAAP measures. The non-GAAP measures used by the Company may not be comparable to similar measures presented by other companies. The Company uses these non-GAAP measures to evaluate the performance of the Company and of its business segments. The non-GAAP measures should not be considered an alternative to or more meaningful than net earnings, as determined in accordance with Canadian GAAP, as an indication of the Company's performance. Volumes shown are Company share before royalties unless otherwise stated.
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Investor Open House 2011 Corporate Summary
May 2011
Why Invest in Canadian Naturals Future
Strong, low-risk asset base
Includes world class oil sands in situ and mining developments One of the largest producers of heavy crude oil in western Canada Significant core unproved property position Second largest producer of natural gas in western Canada
Balanced and large size reduces risk Track record of value creation Proven / committed management Winning exploitation-based strategy Defined plan for profitable growth Focused on value creation
Consistent History of Value Creation
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A History of Value Creation
Daily Production Per 10,000 Shares
(boe/d)
6
Gross Reserves Per Share*
(boe)
6
GR 6 % CA
CAGR 16 %
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Gas
Oil
Gas
Oil
Mining SCO
Cash Flow Per Share*
$8 $6 $4 $2 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Pretax Net Asset Value Per Share*
$60 $40 $20 $0
AG R 11 % C
AG R 20 % C
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201 0
*Refer to page 16 of the 2010 Canadian Natural Annual Report for a detailed description of notes. Per share values adjusted for 2004, 2005 and 2010 stock splits. Reserves include proved and probable. 2009 and 2010 oil reserves include Horizon SCO.
Consistent Growth
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Investor Open House 2011 Corporate Summary
May 2011
Consistent Value Creation
Consistent value creation through successful
Proved Reserves (MMBOE)
Production / Proved Reserves History
(before royalties)
5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000
Forecast
700
Exploitation Exploration Opportunistic acquisitions
Daily Production (MBOE/d)
600 500 400 300 200 100 0
100% of reserves subject to independent evaluation
500 0
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11*
*Subject to the final impact of the January 2011 Horizon incident. Note: 2009 and 2010 includes Horizon SCO reserves. Reserves prior to 2010 were calculated using constant prices and 2010 calculation based on escalating prices due to a change in disclosure requirements.
Production
Reserves
The Premium Value, Defined Growth Independent
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Committed Management
Substantial management and director wealth at stake
Strong motivation for management to perform Delivers clear alignment with shareholder interests
Management / Directors Stock Ownership
(US$ Million)
2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 CNQ EOG DVN PXD APA APC CVE NXY ECA TLM
Note: Peers based on share ownership data excluding options and priced at March 18, 2011. Source: SEDI and Thomson Financial.
$2,263
$245 $227
$172
$171
$76
$44
$36
$25
$11
Consistent History of Value Creation
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Investor Open House 2011 Corporate Summary
May 2011
Essential Elements to Our Defined Plan
1-2 years 3-5 years
Potential for 3-5% CAGR Potential for 5-7% CAGR High return projects
Beyond
>8,000 potential drilling locations >20 years of development Potential area for growth (acq)
Natural Gas NA Oil International Horizon
Optimize returns Pelican / Primary Primrose Free cash flow
Stabilize production Re-profile expansions
Expansion and 14.3 Billion barrels debottlenecking of bitumen initially in place
A Growing, Returns - Focused E&P Creating Significant Value
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Delivering on Our Defined Plan
Natural Gas NA Oil
Focus on resource plays with growth potential Septimus delivering Significant heavy oil exposure delivering near term growth Thermal assets deliver sustainable economic growth and free cash flow for decades Leverage technological advancement on large asset base Exploit opportunities while providing light oil balance and significant free cash flow Expand up to 250,000 bbl/d without being schedule driven Cash flow provides significant shareholder value A Growing, Returns - Focused E&P Creating Significant Value
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International Horizon
Investor Open House 2011 Corporate Summary
May 2011
Canadian Natural 2011 Budget Production
Production Crude oil (Mbbl/d) North America Light and NGLs Pelican Lake Heavy Thermal Total North America E&P crude oil International Horizon(1) Total crude BOE/d(1) oil(1) Natural gas (MMcf/d) 50 38 93 90 271 63 91 425 1,243 632 54-58 38-42 103-107 95-103 290-310 48-56 43-55 381-421 1,203-1,270 582-633 15% 6% 13% 9% 11% (17%) (46%) (6%) (1%) (4%) 2010 2011F % Change
(1) Subject to the final impact of the January 2011 Horizon incident.
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Canadian Natural 2011 Budget Capital
Capital ($ Million) Natural gas Crude oil Pelican Lake Heavy Thermal Light North America North Sea Offshore Africa Total crude oil Horizon(1) Sustaining and reclamation* Capital Projects Other Total Horizon(1) Acquisition and Midstream Redwater Upgrader and Refining Total(1)
(1) Subject to the final impact of the January 2011 Horizon incident. *2011 includes turnaround capital.
2010 697 468 650 555 289 154 246 2,362 128 319 88 535 1,912 5,506
2011F 750 531 950 1,315 544 285 135 3,760 275 715-820 120 1,110-1,215 550 345 6,515-6,620
% Change 8% 13% 46% 137% 88% 85% (45%) 59% 115% 124-157% 36% 107-127% 18-20%
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Investor Open House 2011 Corporate Summary
May 2011
Canadian Natural Going Forward
Continued focus on oil development Well defined yet flexible plan Greater proportion of capital allocated to mid and long term projects
Thermal projects Light oil EOR projects Horizon Oil Sands expansion
Develop extensive natural gas resource plays Focus on Execution Excellence - operational, technical, financial Preserve capital allocation flexibility Significant free cash flow
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Canadian Natural Free Cash Flow Uses
1) Opportunistic acquisitions 2) Pre invest in long term developments
EOR Strat wells Strategic play development
3) Dividends
Eleven consecutive years of dividend increases, 22% CAGR Must be sustainable
4) Pay down debt 5) Share buybacks
Target to eliminate dilution
Prudent Use of Free Cash Flow
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Investor Open House 2011 Corporate Summary
May 2011
Canadian Natural Advantage
Management, business philosophy, practice Strong, balanced assets
Vast opportunities
Balanced, proven, effective strategy Control over capital allocation Nimble
Capture opportunities Willingness to make tough decisions
Significant free cash flow Canadian Natural culture
Control of costs Execution focused Efficient operations
The Premium Value, Defined Growth Independent
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Questions and Answers
-You can find PDF versions of this and other publications from Canadian Natural at: www.cnrl.com -Documents can be requested by calling our Investor Relations department at: 403-514-7777 or by emailing us at: [email protected] THE PREMIUM VALUE DEFINED GROWTH INDEPENDENT
