Q2 2020 Canadian Natural Resources Ltd Earnings Call
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The Canadian natural Resources' earnings results conference call 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 August six 2020, Ninee Mountain time I.
I would now like to turn the meeting over to your host for todays call Corey Bieber Executive advisor. Please go ahead Mr. paper.
Thank you operator, and good morning, everyone and thank you for joining our second quarter 2020 conference call.
With me. This morning are Tim Mckay, our President and Merck's thing Darfur Chief Financial Officer.
Before we begin I would refer you to the special note regarding non-GAAP measures contained in our press release.
These measures used to evaluate the company's performance should not be considered to be more meaningful than those determined in accordance with I have for us.
I would also like to refer you to the comments regarding forward looking statements contained in our press release and also note that all amounts are in Canadian dollars and production and reserves are expressed since before royalties.
That's otherwise noted.
With that I'll now pass call over to Jim King.
Thank you Corey good morning, everyone Canadian Natural's deliberate top tier operational growth dissolved in the second quarter as we have robust long life low decline assets operational excellence.
Capital discipline, and the ability to enhance our margin, which delivers sustainable cash flow.
The strength of Canadian Natural's business small Russell implied to environmental social and governance to deliver industry, leading performance across the board.
That's significant factor in our long term sustainability.
When it comes to environmental performance, Canada leads the world.
Canadian natural and indeed, the Canadian oil and gas sector has delivered game changing environment performance.
For instance, Canadian natural has already reduced our overall corporate mission intensity by 30% since 2012.
And at Horizon or intensity is down 38%.
And with our leading we are at leading capture and sequentially Seo too in the oil and gas sector worldwide and just these areas you natural has taken the equivalent of over 2 million cars off the road equivalent to 5% for the entire vehicles in Canada.
And that is just what Canadian natural has done that entire industry has achieved similar equally impressive results.
And we're all sounds operation, we can't developed technologies and by using Canadian engine Intuity.
I can't even do better moving closer to Canadian Natural's operational goal of reaching net zero emissions Canadian natural has multiple pathways to cheap netseer.
With the actions identified in the near mid and long term and the strength of the Canadian oil sands mining assets with its long life no decline and its manufacturing like operations. He can have one of the clearest if not the clearest fruit natural of any global oil asset.
Yeah natural at a very strong operational results as we achieved quarterly production of 1.165 million Boe per day with natural gas production at 1.46 Bcf per day and liquids production at 922000 barrels per day during the quarter, we effectively and efficiently reacted to temporary could.
Option complete maintenance due to low prices, while prioritizing high margin production.
And as prices improve we quickly reinstated production cost effectively.
Starting with natural gas overall Q2 production was 1.462 Bcf per day, an increase from Q1 production of 1.44 with North American Q2, natural gas that 1.431 Bcf per day up from Q1 of 1.407 Bcf per day as we started to execute our plan.
CAD 60 million cubic feet per day of natural gas volumes at less than $3000 per be ready.
We continue to focus on operational excellence, and our Q2, North American natural gas operating cost because very strong at $1.11 per Mcf versus Q1 of the call. It 24 per Mcf in the second quarter can you an actual realized corporate natural gas price of $2.03 per Mcf.
As a result to make diversified natural gas sales portfolio, which 49% is used within operations, 32% export it and 19% is exposed take a pressing.
Our Q2, North American light oil and NGL production was 82422 barrels a day down probably seven approximately 7% primarily due to the company's decision to temporary carat production and reduced well servicing activities in the second quarter.
Q2 operating costs decreased to 14 41 per barrel versus Q1 operating costs, a 15 99 per barrel.
Overall, our international assets had a strong Q2 with all production approximately 44000 barrels a day, which is comparable to Q1.
Offshore Africa production was 17444 barrels up when compared to Q1 of approximately 16000 as expected due to planned maintenance program completed in Q1, offset a natural field decline.
CDAI operating costs in Q2 were strong at $7.67 U.S. per barrel versus Q1 of 883 U.S. per barrel in the North Sea production averaged 26627 barrels a day in Q2 down from Q1 of 27755, primarily due to natural.
Field declines.
With strong operating costs of 28 47 per barrel reduction compared to Q1 operating costs of 29 73 per barrel.
South Africa. The operator is moving the rig and is targeted to the exploration well in Q3 of 2020 contingent on results and additional exploration well could be drilled on the block.
Q2, heavy oil production was reduced to approximately 62500 barrels per day.
In the quarter and versus 88100 in Q1, as we temporary killed production reduced well servicing activities related to the low pricing in the quarter Q2 operating costs decreased to 17 97 per barrel from the Q1 operating costs of 18 68 per barrel.
In the company's focus on cost control.
A key component of our long life low to client assets is a world class Pelican pool were leading edge polymer flood continues to deliver significant value.
Second quarter production was 55731 barrels a day down from the first.
Quarter, a 57986, primarily as a result of reduced well servicing activities in the quarter.
Operating costs continued to be very strong at 631 per barrel versus Q1 operating costs of 618 per barrel at Pelican. Our team continues to drive operational excellence and with our low decline and very low operating costs Pelican continues to have an excellent setback.
Our second quarter thermal production was 212 807 barrels per day down from the Q1 of approximately 228000 operating costs. In Q2 were 10 13 per barrel versus Q1 operating cost of 11 or too.
During the quarter planned maintenance was conducted jackfish as well in our thermal production areas, we temporary curtailed production in the quarter as a result to the low prices in may.
In the second quarter in the Kirby area.
Production was approximately 56000 barrels a day, which includes both Kirby North Kirby South.
Kirby North ramp up is ahead of schedule and for the month of July averaging approximately 43200 barrels a day approximately 8% higher than nameplate capacity of 40000 barrels at.
Great result by our team.
At our all sense mining operations, we had an outstanding second quarter with record production of 464318 barrels a day inclusive of the rise in maintenance in May.
With record low quarterly operating costs of 17 74 per barrel.
Seal for teams continue to capture synergies between the two sites leveraging technical expertise services operating efficiencies driving a cost down with consistency with year over year hard dollar cost excluding fuel down approximately $96 million in the first six months on an unadjusted basis it.
Fair to 2019, our teams are very focused on driving operational excellence.
As well as part of the company's overall strategy to maximize value and enhanced Mike margins. During June we were able to test Albion spine capability, which we had an average test rate of approximately 339000 barrels a day in that period.
With this scotford upgrader targeted to increase capacity to approximately 320000 barrels a day in Q3 of this year. We're confident we can feel the extra capacity.
This additional capacity so Pete.
I will allow us increased flexibility margin improvements and will be managed through the companys curtailment optimization strategy.
Work on the commercial engineering Fry Pep continues while the field pilot testing is temporarily to date has reduced people on our sites due to Corbett 19.
And we only will continue to pilot when it's safe to do so.
I'll now turn it over to Mark for the financial review.
Thanks, Tim the second quarter demonstrated the advantages of having a low cost structure and a unique portfolio of assets with low decline when navigating the low commodity price cycle.
Adjusted funds flow was 415 million in the quarter effectively covering capital expenditures, which were 50% below Q1 20 levels at 421 million in the second quarter.
In addition, we start a higher portion of our oil sands mining as CEO and international light crude oil in the low commodity price quarter.
Yes, we did increase in adjusted funds from would've been approximately 60 million in the quarter had those barrels been sold in June.
Liquidity remained strong at the end of Q2 with total availability on our bank lines and cash of 4.1 billion in.
In the quarter, we increased our 750 million turn facility to a billion and extended the maturity to 2022, and we retired as scheduled 163 million of our 3.25 billion facility and a 900 million dollar Canadian medium term note.
Because of our operational excellence and solid financial position, we were able to be patient and prudent and obtained attractive pricing when raising a total of 1.1 U.S. million of notes in the quarter, consisting of U.S. 600 million, a five year 2.05, coupon and Usfive hundred million of 10 year 2.95 coupon bonds.
Net debt at the end of the quarter was 22.8 billion with debt to book capital of just over 41% well below our bank covenant and within the company target range of 25% to 45%.
With our low maintenance capital program of 2.7 billion and the ability to keep production flat, we target significant free cash flow in the second half of the year at current strip pricing, which result, which would result in ending 2020 debt being flat to down from ending 2019 levels.
Our long life low decline assets and effective and efficient operations gives us the ability to sustain returns to shareholders over the long term.
In March we increased the dividend 13%.
Which is the twentyth consecutive year of dividend increases and due to our ability to generate sustainable cash flow, we maintain the dividend through the low commodity price cycle.
Our culture of continuous improvement our ability to be effective and efficient and the relentless focus a Canadian natural in controlling our costs led to the solid financial results in a very challenging and volatile commodity price environment.
With that I'll turn it back to you Tim. Thank you Mark can naturals ability to deliver sustainable cash flow is driven by our effective and efficient operation.
Our high quality long life low decline assets that have low maintenance capital and significant reserves that are resilient in a volatile pricing environment.
As W. CCI prices improve there is even more upside for our shareholders as at strip pricing, we're targeting significant free cash in the second half for 2020.
Hey, natural is focused on continuous improvement and we continue to find opportunities to drive a cost down and are working with our service providers and for 2020 targeting significant savings of approximately $745 million.
As a result of our effective and efficient operation the quality of our assets, we have a low pre cash breakeven, including all capital expenditures plus current dividend of approximately 30 to 31 U.S. per barrel.
Canadian natural continues to take a proactive in effect to steps to ensure the health and safety the people working for US and we will continue to enhance our Colby Nypro program across the company as well as our safety performance.
As I talked earlier can natural is on track to achieve our environmental targets lowering our GHG intensity and as we achieved that target. We will set a net target and we will continue to lower intensity as we work towards our aspirational goal of net zero and you also.
In summary, we will continue to focus on safe reliable operations, reducing our GHG intensity and enhancing our talk to your operation.
And natural his delivering top tier cash flow generation and with our 2.7 billion dollar capital forecast, we're keeping production stable.
We are unique sustainable robust and clearly demonstrated ability to deliver returns to shareholders by balancing our four pillars.
That concludes our Q2 call I will now open line for questions.
At this time, we will now take questions.
You asked a question you only two press star one on your telephone to withdraw your question press the pound or hash key please standby what we compile the kuni roster.
Your first question comes from Greg Pardy from RBC capital markets.
Yes. Thanks, Thanks, good morning.
Couple of questions, but maybe the first one is just on horizon Aeolus key.
You mentioned 320000 with greater.
In the third quarter is that capacity, so should we be sorry, how should we be thinking maybe.
The ongoing capacity on the Upgrader and then just the mirror image of that is are we now talking maybe.
17, 18 dollar kind of Opex run rate at Horizon Hsp.
Yes, so the first question with the tier so piece so that the expansion.
Really for the front end, obviously, we're not the operator of the operator.
When they are completing their complete their turnaround.
The capacity is going to be at 320000 range. So.
I will do is.
Ramp it up and see how how well it runs in terms of 320000 so.
The good part is we have excess capacity to be able to.
Phil let and keep that full.
On Horizon, I would say sub 19 is not bad number.
Our teams are really doing an excellent job in terms of.
Apple.
Finding enhancements to the operation so that we can increase reliability get a little extra capacity from time to time as well as.
Finding operating cost improvements.
Okay, and just related to that a lot of turnaround activity.
Since this year does that really negated big turnaround next year.
No actually.
Part of it we have the east tank.
Expansion that we are doing horizon is still on track.
So when we do that work, we will be taken an outage in early spring.
Complete that works so.
We're doing what I would call a relatively small one this year with a little bit bigger one into next year when the expansion pieces ready.
Okay and last one for me just shifting gears is.
Pretty large working capital draw for about a billion dollars Im just wondering mark can you.
Yes give us an idea maybe of of the components of that and then.
Reversal end or how much does that really figure into the to the debt kelk as you're thinking about it.
Yes, sure Greg and as you know the working capital generally as a timing thing theres two kind of bigger components. One of course is the receivables when you come out of margin into June.
Certainly different forecast pricing. So when you get paid the next months you have.
I have that draw or an increase in receivables. The other notable one though as they are drawn payables. So that I think reflects a little bit about how the costs are coming down and the capitals come down. So you may not see that reversal there as we continue to control costs.
I guess last thing to consider going into Q3, though is turned around so we are doing turnaround. So there will be more.
Capital and things like that to go along with that.
Terrific, Thanks very much.
Your next question comes from Neil Mehta from Goldman Sachs.
Thanks, Thanks team and strong operational quarter here I just wanted you guys to expand a little bit more on the comments the release, where you said your your net debt will be flat at 2019.
Year end levels by the end the year forward strip can you talk a little bit about sort of the assumptions that are going into that pricing.
As thoughts on capital capital and yes, I think you talked a little bit about the working capital side, because it would imply a very robust free cash flow ramp up in the back half the here.
Yeah, I mean, that's that's kind of a forecast at strip pricing to so taking strip WT I end and it's hard to do strip differential so we're taking sort of normalized differential overtime.
Just because it's fairly liquid in the back half.
To really get a strip differential on and same with us strip FX. So how do you actually have an FX.
Drawn that compared to 2019 ending levels, but I think it really Neil just speaks to the sustainability the free cash from capability of the assets because of that low decline in little capital requirements and.
You know as Tim mentioned, we're on track for the 2.7 billion of capital in 2020, so that makes its way through in the second half, but really it's it's about prices here stabilizing a little bit higher and Wi Fi in the sort of $41 range that gives us that free cash flow in the second half.
Hi, there very clear the follow up is just on 2021 capital spending I think over the last call. You indicated in early look if prices stay depressed it would be plus minus $3 billion. Obviously the curve has firmed up nicely here for 21.
Any flavor or how we should think about spend and what do you define.
As as sustaining Capex now that we've gone through a couple more months of this down cycle.
Yes, thats the Mckay here.
Really what we're seeing this last year is that theres, a huge volatility a huge.
Change shall we say with demand.
And so I think right now it's really too early to.
Really speculate in the fall here, we'll go through our process going through all the different projects, we have as well as.
Decide kind of what our Capex is.
Do I see it changes significantly based on the strip pricing today, maybe not.
But it's really too early I think we'll go through our process.
Yes.
Make that decision later on.
With the board.
But when it just doesnt clarification, when you see see changing significantly mean changing significantly from.
When the 20 level.
Yes, exactly like get tougher in the the 3 billion range.
Probably be a boat that a number in there, but it's just really too early to say it's.
We'll just go through our process and.
Look at a chair in because its such as we've seen this last year, obviously, we started off with a $4 billion pride.
Budget.
And that reduced too.
2.7, very quickly and we were able to do that keeping our production flat.
And so when we look into next year will go through our normal process and.
Evaluate.
What opportunities we have ahead of us and what makes best for the company at that time.
Will you be doing an open house than November again, I guess that will be have to be virtual please.
Yes.
We really havent talked about that at this time, but I would suspect we went.
Okay. Thanks, guys.
Thank you.
Your next question comes from is it Sen from Bank of America.
Thanks, Good morning.
Looks like you have committed 10000 barrels a day.
With targeted 50000 barrels a day Keystone optimization expansion that becomes available in 2021, just wondering if you could talk about similar opportunities that might become available it looks like.
Stone has received us permits to increase exports just wondering.
If you could.
Talk about your thoughts on that.
Well all I can say is that that approximately 10000 barrels a day, obviously, we're looking forward to getting access to that as soon as possible.
Our understanding is that they are trying to do that as quickly and prudently as possible.
Incremental barrels I suspect it will go to some kind of open season, but to.
Really that would be a question for TC two to answer.
Got it and Tim just a follow up on that.
Hi plans have been in the news lately running into all kinds of regulatory issues. How are you thinking about broadly your risk peak of the risk mitigation strategy any thoughts on that given the new enrollment.
Well can actually has been very supportive to all different pipeline projects, so whether its keystone base expansion the Keystone expansion.
We've committed 200000 barrels a day to their TMX, we've got 94000 barrels a day there so.
We have.
Numerous for a number of opportunities there for four diversifying our pipeline piece.
My understanding with.
Trans Mountain. It does construction is going very well and they are on track for that December 2022. So today I feel pretty positive TMX will be a good stepping stone it looks like very strong to be completed and.
Completed essentially on time, so that part I feel very comfortable with both on the Keystone.
So obviously.
Very.
Interesting and in that it is changing almost daily so I really couldn't comment really on the Keystone one.
Great and Mark just a follow up on your earlier.
Answer a net debt.
Iran, 20, Tony being flat year over year is unique among global energy peers, you've always talked about the four pillars is this now when you strategic goal in this environment led net debt crisis in any scenario.
Well I think when we'd look at the four pillars those are still sort of fundamental to how we allocate capital and cash flow. What you have seen in that in 2020 of course is the suspension of the buyback program for now.
As the free cash flow is going to the balance sheet and and that has been sort of the case.
Also of course, when you look at the return to shareholder pillar.
We've been able to maintain our dividend through the price cycle. We increased sit here in March 13% and again I think that's a reflection of the low cost structure of the asset base slow decline nature that is able to sustain cash flow in free cash flow through the commodity price cycles.
Thank you.
Your next question comes from Joe do you mean from Morningstar.
Thank you how how are you thinking about dapple and.
Eastlake it might participate.
Really too so the gross capacity for your production. Thank you.
Yes, the Gulf.
Pipelines are always.
Interesting in the news, obviously that Apple.
And.
The line five bar.
Changing.
Very.
Rapidly day to day month to month.
Obviously.
They are in service they are very reliable.
So we don't we feel comfortable.
We don't believe there will be felt the Apple has very little impact on us.
When you look at the declines that are happening in the basin, whether it's in that in North Dakota or in Canada, I don't think of that Apple will be really any.
Significance by the time.
If something was to go there but.
The line five again, we feel very comfortable with.
Enriches doing there and.
Everything we've heard from Enbridge is all who is very positive.
Thank you.
Your next question comes from Phil Gresh from JP Morgan.
Yes.
Yes, hi, good morning.
Hi, good follow on questions for you first is just on.
Oil Sands mining segment.
Those are the asked about.
In this key but just overall the oil sands mining business that 464000 barrels a day.
Production this quarter, so taking into account that performance and the capacity.
Increase.
Needless to say just in general as you look ahead to say 2021 on annualized basis, how do you think about the total.
Passenger your production potential across both assets with that kind of performance.
Yeah.
It is increasing incrementally.
But.
For I look at looking at AAC head into next year.
We got a bigger outage on on horizon. So you know that piece could be relatively flat year over year in terms of volumes is so Pete.
With to work through doing this year they've delayed the further piece to to the plant until Twentytwenty too. So I suspect so people will actually be up year over year to.
You know.
These are great assets.
Teams are very focused on finding those opportunities to.
Two small increment gains across the there. So you know our capability is increasing and reliability. I think is is quite high and very top tier so.
There is a little bit of opportunity there, but to our teams are really.
Really doing great job in terms of finding those.
Opportunities.
Well I guess, it's hard to say does kikuyu as a new run rate when there is when there is not maintenance.
Is that reasonable way to look at things.
Yeah. When you really look at the Q2, it really what really showed is how well our teams can run run the facilities. We did do the picking maintenance at horizon in May So when you account for that it was fantastic quarter.
Obviously once you do have once you will do it again and that's that's when our goal would be is to to make.
Take a closer to that.
When we don't have maintenance every quarter.
Right Okay.
Just one more on that question.
Sometimes you guys will give the leverage ratio target as well.
Per year ends and those have you seen get the net debt aspect of that I'm. Just curious if theres a specific ratio just thinking that that would imply.
Well I think you know we it would imply it would imply a higher leverage ratio than 2019, just based on commodity prices in 2020. So.
Yes, it seems like sub four times, but yes, yes, yes for sure for shrewd be some four times.
Yeah, Okay, alright, thank you.
Thanks.
Your next question comes from Manav Gupta from Credit Suisse.
Hey, guys wanted to outlook Spartanburg WCS function, it's been lightning a little here.
Just wanted your thoughts on into Ian and I think last conference call I just talked about.
Motion Lynn's being many new and Youre spot on so if you could add that and give us. He got yeah I'll look on the portion month on the pipelines also.
Sure as Tim Mchugh here.
So push meant to when we look ahead here.
Between.
The maintenance and.
What's come off the market here.
We believe that apportionment 12 will be relatively low.
Going into third quarter.
Fourth quarter again, it will probably depend on mostly on the pricing situation at that time, but Q4 could be similar maybe a little higher in terms of apportionment as the turnarounds are completed in the various areas. So.
As far as WCS I mean, it's 22% today.
Hello.
This.
Always it's an illiquid market.
We think that anywhere from the 22 to 30 is probably the right range for the third fourth quarter to again part of its going to really depend on on the pricing.
And what comes back on in the market here to.
We feel very confident that portion at least for third quarter will be quite low and towards the end of your might increase of it.
Quick follow up you idling some done alone on the horizon in which you cite should we assume that pellet quarter, we should see an increase from jackfish and somewhat yet although any production to offset.
Mhm provides an analyst enlistee.
Yes, exactly you'll see that will flex our thermo muscle in terms of increasing production and.
Wrapping up the Primrose Jackfish and.
And then obviously become talk to turnarounds at both the soupy and horizon They will decrease.
Thank you sell for taking my questions.
Yes.
Your next question comes from a mere every from Cormark securities.
The around here.
Yeah. So it can you hear me.
Yes, we can.
Okay.
Thanks, just couple of quick questions for you just on the gas side, just given the strength, we're seeking the trying to want to strip just curious how much more.
Productive ads you could do you have in your inventory in terms of low.
Capital efficiencies that you're talking about in terms of 3000 performing.
Well that.
Obviously, the $3000 greedy were the kind of the that cream opportunities. Obviously, we have more opportunities probably between that 3000 5000.
Dollars preview Rudy.
And we always find other opportunities within our portfolio.
Our teams.
When they look through the properties by in those other opportunities so.
It's kind of a continuous improvement process.
There will be more we always find more.
I would not to I wouldn't I wouldn't want to say how much more today, but.
They are always working and improving so.
I can say is it's always more not less.
Okay sounds good and then could you give us an update on the on the Septimus Gaslog how differentiated.
Yes legs. So lakes, we finished off last year, we moved the compressor into in Alberta area, where we were looking to do.
That pilot in their.
Right now we just got it on hold.
Great now with the stronger gas pricing.
And lower liquids prices, just didn't make sense to carry on with that pilot in that area at this time.
As well as we pursue preserving capital so.
Part of our budget process will look ahead on that one.
In terms of Septimus it worked exactly as we felt what and so it is another lever we can pull.
In our case for our company here in the future.
Okay and then just a quick question on the LSB side, just with the expansion is there any meaningful change or any change on the on the quality of the upgraded product coming out.
They are too low.
Yes, so it's actually in two steps. So the first step is just.
Increasing the front end, so there will be a little more heavy oil.
Coming out of the upgrader.
After the expansion and then in 2022 they do another.
Part of expansion on that I would say the back side of the plant, which will give you more STL. So it's just a two step process.
Of course, we're not the operator, and but well get the first step.
Front end up and see what where we can take that end and then when they do that next piece in 2022.
We will get more quality of sale.
Okay and just final question on the international So just if we if you look at the start of the five year strip just if you take a lot of 45 to $50.
Environment, how does the international segment, just given that it's sort of spread around three different areas, how does that fit in to the corporate profile.
Well very well, it's a free cash generator.
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That's we've cut exploration opportunities and CDAI, where we could increase production so.
I look at as just another.
Opportunity that sits in our portfolio that we can exercise when the timing is right and.
If you look at the international operations I believe the number last saw which is almost $5 billion of free cash flow.
I'm those properties over time here since owning it so I look at it.
It's just a nice.
Pat or to our company.
Sounds great and just finally when can we expect the results from that.
African exploration well just starting next quarter.
Well the operator.
It's moving the rig and I would expect maybe in Q4 sometime.
Your end cap.
Thank you.
Yep.
As a reminder to ask a question press star one on your telephone.
Your next question comes from Mike Dunn from Stifel first energy.
Thanks, Good morning folks just wondering gentlemen.
I didn't see any.
2020 production guidance in your disclosures today.
I'm I'm, assuming it's still the case that.
Your press release three months ago, you still.
Would be expecting to meet.
At least the low end of your original.
2020 production guidance just wanted to clarify if that included.
Specifically for the oil and Ngls.
So as well, we're not just Toby always.
Yes, the when we did their annual guidance back in December It just included all production.
So liquids production and.
Gas production so on the liquid production at that time, we had to.
910 to 970000 barrels a day as a range and the gas is 13 60 to 14 20 so.
Theres really.
The weight today.
Stability of everything.
I would say, yes, albeit with the guidance.
Probably.
Maybe a little over guidance over on the gas side.
But.
It's a as we've seen here over the last few months with may to minus.
Negative pricing to where we are today, which looks pretty stable it looks.
Fairly on track.
Thanks, Tim that's all from me.
Thank you might expect.
Your next question comes from Menno Hulshof from TD Securities.
Good morning, everyone. I just have one follow up question on next year's Horizon turnaround can you just remind us of the scope of the expansion work at the outages outages tied you.
Sure Theres couple of items that we had done but to.
The biggest pieces the east tank.
Farm. So so what this does it just gives us extra tankage, so that when we go into.
Outage or have a outage and one of the plants that were able to store.
Product and then make that product backup so that's probably the biggest scope that's happening out there. There is additional work that we're doing on some piping. Obviously, we have a very proactive integrity program and we see some some piping that we'd like to replace and really that's that.
Really the major scope of it.
And what is capacity of the at the new package.
Oh I don't have that number 10, there okay sorry.
Thanks, Jim.
There are no further questions at this time I will turn the call back over to the presenters.
Thank you operator, and thank you everyone for attending our conference call. This morning, Canadian Natural's large well diverse asset base continues to drive significant shareholder value the ability of our teams to deliver effective and efficient operations with top tier performance is contributing to substantial and sustainable free cash flow throughout the business cycle.
This together with effective capital allocation contributes to achieving our goal of maximizing shareholder value. If you do have any further questions. Please don't hesitate to give us call. Thanks and good bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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