Q4 2020 Canadian Natural Resources Ltd Earnings Call
[music].
Ladies and gentlemen, and thank you for standing by and welcome to the Canadian Natural resources fourth quarter, and 2020 earnings results Conference call and webcast at the time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session asked the question during the session and we used the press star one on your telephone please.
Be advised that today's conference is being recorded if you require any further assistance. Please press star zero and now I'd like to turn the conference call over to Mr. Cory Biggar Executive advisor. Please go ahead.
Thank you operator, good morning, everyone and thank you for joining our fourth quarter and year end 2020 conference call with me. This morning are Tim Mckay, our President Darren Fichter, Chief operating officer exploration and production and Mark Steyn tour of our 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 we'd also note that all amounts are in Canadian dollars and production and reserves are expressed as before royalties unless otherwise stated.
With that I'll now pass the call over to Tim Mckay.
Thank you Corey and good morning, everyone. The.
COVID-19 pandemic has impacted our lives and the way we operated our businesses and 2020, including the many precautions that we had to put in place to protect our stakeholders.
And the natural we'd like to thank our employees contractors and suppliers and shareholders for their support through this challenging year.
And the challenges in 2020 Canadian natural delivered top tier operational and financial results, which is the result of the strength of our low life low life low decline assets and operational excellence of our people, which maximize free cash flow and a challenging year.
And 2020, we were and nimble quickly lowering our capital with our long life low decline and high quality asset base, we still achieved record annual corporate BOE production of one $1 6 million Boe's per day for approximately 65000 Boe.
The increase over 2019 levels.
With our culture of continuous improvement, we continue to drive the effective and efficient operations and as a result, we had record low of annual operating cost of $20 46 per barrel of SCO and our oil sands mining upgrading group of decrease of $2 10 per barrel as well and our North American E&P.
<unk>, we achieved Steve.
And operating cost reduction of $1 20 per barrel or 10% lower for 2019 levels.
We continue to apply the same drive to ESG, environmental social and governance to deliver industry, leading performance across the board.
The second factor and our long term sustainability Canadian natural and the entire Canadian oil and gas sector leads the world and has delivered game changing environmental performance and 2020, we reduced our corporate GHT intensity by 18% methane emissions by 28% for 2016 led.
Our safety record is top tier as a corporate total recordable injury frequency improved point of zero to.
And two one and 2020 and a reduction of 58% for 2016 levels.
We reached significant environmental milestones, including the 5 million ton of Sidoti captured at Quest and now have planted $2 5 million trees, and our oil sands mining operations.
And our oil sands operations, we can develop technologies use and Canadian ingenuity to continue to move us closer to Canadian Natural's aspirational goal of reaching net zero emissions.
And natural has multiple pathways to achieve net zero with actions identified and the near mid and long term and the strength of the Canadian oil Sands mining assets. You said, it's with its long life no decline and with its net manufacturing like operation. It can have one of the clearest routes if not the clearest route to net zero on the <unk> of any global.
Assets I will now do a brief overview of our assets starting with natural gas.
Overall, 2020 annual North American natural and.
Natural gas production was one eight.
Pete.
Per day, which is comparable to our 2019 production of 149.
And with North American annual of natural gas production of one for five versus one four for for 2019, which is up slightly as the result of the company's strategic decision to invest and low cost natural gas opportunities and the acquisition of painted pony and Q4.
Our annual North American natural gas operating cost was $1 14, which was down 2% for compared to 2019 of about 16.
For the fourth quarter of North American natural gas production was approximately one six bcf per day versus 145% for Q4 2019 for.
And with strong operating cost of $1 seven per Mcf versus Q4, 2019 of the Buck 11, and impressive year over year operating cost performance as we continue to focus on operational excellence.
Septimus the company's high value of liquids rich Montney area and the second half of 2028 wells were drilled all came on production and Q4 2000.
This project was completed with strong capital efficiencies of approximately $4800 per <unk>.
With total current production rates from the new wells at approximately 46 million cubic feet per day, and 'twenty, one 'twenty 200 barrels a day of Ngls delivering as the.
As expected.
Looking forward on the annual strip basis Peco prices for 'twenty, one look very strong.
$2 78 per GJ and increase of approximately 31% over 2020 levels, improving the economics of natural gas projects and 2021.
Within our high quality Montney lands at Townsend six to seven wells were brought on production at strong rates totaling approximately 74 million cubic feet per day.
Compared to our target of 50.
The resulting in strong capital of fiction deficiency of approximately $2200 per flowing Boe.
For North American light oil and Ngls annual production was 84658 barrels per day down 13% for 2019, primarily result.
Of natural field declines annual operating costs were strong at $14 61 per barrel, which is 4% lower and the 2019 annual operating cost of five.
$15 21 per barrel.
Q4 production was 88161 barrels per day down 6% when comparing to Q4 2019 with fourth quarter operating costs that were down 10% to 13.
Dollars 88 per barrel as compared to Q4 2019 operating cost of $15 41 per barrel and 21.
<unk> 2021 of the company continues to advance high value on.
And the light crude oil development plan of Wimbley targeting 18, net wells and the construction of a new crude oil battery.
With a targeted on stream date of October 2021 with.
With the crude oil battery and place new wells targeted the brought on stream and strong capital efficiencies of approximately $9400 per flowing barrel.
This project is targeting to exit 2021 at coal production rates of approximately 8500 barrels a day of liquids and 28 million cubic feet of natural gas.
And.
For international assets, and 2020 had annual oil production of approximately 40200 barrels per day, a decrease of 19% versus 2019 levels, primarily due to natural declines for international assets continue to generate strong free cash flow and value for the company offshore Africa annual production.
Approximately 17000 and versus 2019 of $21 400 barrels per day, which is down due to natural field clients CDI operating costs were two for 2020 were $13 29 per barrel versus 2019 of $11 21 per barrel.
And the North Sea annual production averaged 23142 barrels a day and 2020 versus 2019 of approximately 28000 barrels per day, primarily down primarily due to natural field declines and the succession of production and the bounce field and 2020 annual operating costs were strong.
At $36 51 per barrel for and more comparable to 2019 levels and the team did a great job managing costs.
Moving to heavy oil annual production for 70, 279 barrels a day of 2020 versus 82189 barrels and 2019, reflecting natural decline limited investment through the commodity prices and the Alberta mandatory curtailment program annual operating costs for $17 59 per barrel.
Versus 2019 operating cost of $16 66 per barrel for.
Quarter 2020 production with 65513 barrels versus Q4 2019 production of 94262 barrels per day, while operating costs.
Were $17 61 per barrel versus Q4 2019 of <unk> III, we continue to focus on effective and efficient operations.
A key component of our long life low decline assets is our world class Pelican Lake pool for.
For our leading edge polymer flood continues to deliver significant value of.
2020 annual production was $56 535 barrels per day versus 2019 average of 58855 barrels a day only of 4% decline, reflecting the very low decline of the property. The team continues to do a great job and we had very strong annual operating cost of $6 and <unk>.
Per barrel of 3% reduction versus 2019 operating cost of $6 22 per barrel.
Fourth quarter of 2020 production is approximately 56000 down.
<unk> for the fourth quarter of 2019 of 59000 and operating costs and Q4 2020 were very strong at $5 85 per barrel of.
Pelican and our team continues to drive for operational excellence and has been able to mitigate the impact of the decline in production over the last five years, reducing the annual operating costs on a Boe basis and excellent accomplishment by them with our low decline and very low operating cost Pelican Lake continues to have excellence and FX.
We had a strong year and the thermal operations and 2020 as we continue to leverage of continuous improvement culture, and our expertise to deliver effective and efficient operations and 2020, our thermal production reached a record of approximately 249000 barrels a day as we optimized production throughout the year under our curtailment.
Optimization strategy.
The strong annual performance from Thermo.
<unk> increased and volumes from pad adds at Primrose.
Production ramp up of Kirby, north and additional pad Thai and at Jackfish.
Thermal annual operating costs were very strong at $9 44 per barrel of decrease of 13% for 2019 levels of $2 83 because of it.
Result of cost synergies achieved as we integrated and jackfish and Caribbean field operations as well as continued focus on effective and efficient operations.
<unk> Q4 production of approximately 266 200 barrels a day.
Alan from Q3, as part of our curtailment optimization strategy with operating costs of 917 per barrel and October our thermal team authorized and optimize the ramp up of additional pad at jackfish as we recorded a record monthly production of <unk>.
Approximately 128600 barrels a day of great result by our team.
And the company's World class oil sands mining and upgrading assets annual production average 417351 barrels a day of SCO and increase of 6% from 2019 levels, primarily as a result of high utilization rates and operational enhancements.
Record low annual operating costs were achieved in 2020, and we remain industry, leading averaging $2 46 per barrel of ex U.
A decrease of $2 10.
From 2019 levels driven by the Companys continued focus on high reliability and cost control as well as operational enhancements and summary, the comp.
The increased annual SCO production by approximately 22000 barrels a day of 2019 levels as well we reduced the total annual operating costs by $183 million excluding energy from.
Our teams continued to do an excellent job here and they're focused on continuous improvement and the effective and efficient operations.
Oil sands mining operation production in Q4 was approximately 417100 barrels a day as planned maintenance was concluded at horizon, and ESOP ran well and expanded capacity.
In the quarter operating costs were strong at $20 20 per barrel of SCO and their teams drive for operational excellence as well in December and our.
Finding assets, we recorded a record monthly of approximate 490 <unk>.
800 barrels a day as we had high utilization rates combined with enhanced capacity and operational excellence and <unk>.
Part of our 2021 budget and plan.
30 day turnaround is scheduled for the month of April during the shutdown new incremental operational package of the upgrader is cord coordinated to be tightened.
I will now turn it over to Darren for 2020 reserves review.
Thank you Dan and good morning.
To start as in previous years, 100% of Canadian Natural's reserves are externally evaluated and reviewed by independent qualified reserve evaluated.
2020 reserves disclosure is presented in accordance with Canadian reporting requirements using forecast prices and escalated costs.
The Canadian standards also require the disclosure of reserves on a company gross working interest share before royalties.
And 2020 Canadian natural had an excellent year.
Placing 361% of the company's 2020 of production on a total proved basis.
282% for crude oil Ngls bitumen and synthetic crude oil.
And 656% for natural gas.
On a total proved plus probable basis the company replaced 493% of the 2020 of production.
Total proved reserves increased 10% to $12 1 billion Boe.
And total proved plus probable reserves increased 12% to $15 9 billion Boe.
Of the $12 9 billion of total proved reserves of approximately 7 billion barrels are high value no decline.
Oil reserves.
And is also important to note that 71% of Canadian Natural's total proved reserves.
Our proved developed producing reserves at $8 6 billion Boe.
Finding and development costs are key indicators of the strength of our assets and the companys ability to execute.
Okay, and natural deliver top tier results and towards the end 2020.
And our strong performance is reflected in our finding and development costs.
The corporate finding development and acquisition costs, excluding changes to future development costs are $1 91 per Boe for total proved.
And $1 40 per BOE for total proved plus probable reserves.
Canadian Natural's, finding development and acquisition costs, including changes to future development costs are $4 46 per Boe.
For total proved and $3 46 per <unk> for total proved plus probable reserves.
The strength and depth of the Companys asset base is evident as approximately 80% of the total proved reserves our long life low decline <unk>.
<unk> and our top tier proved reserve life index of 29 eight years.
And total proved plus probable reserve life index of 39 two years.
The net present value of future net revenue before income taxes, using a 10% discount rate and the including the full company Arrow.
As 87 billion for total proved reserves and $98 billion.
For total proved plus probable reserves.
In summary.
The excellent results reflect the strength and depth of Canadian Natural's asset base.
The value of the Companys long life low decline reserves.
And our ability ability to execute.
Now I will hand over to Mark for the financial highlights.
Thanks Darren.
The fourth quarter was strong operationally and financially as the base business delivered significant adjusted funds flow of $1 85 billion and free cash flow of approximately $700 million after capital and dividends and the quarter. Excluding both the painted pony acquisition and the transportation provision taken in the quarter related to the Keystone XL pipeline project.
This was a very strong result, and contributor to us of exiting 2020, and a robust financial position.
Our net debt balance at the end of 2020 would have been down approximately $80 million from ending 2019 levels excluding costs related to the acquisition completed in Q4.
This includes over $2 2 billion returned to shareholders and 2020 through an increased dividend and share repurchases and the year.
Focusing on the second half of 2020, we reduced absolute net debt by over one 5 billion as free cash flow was allocated to debt reduction.
To date and 2021, we continue to generate significant and growing free cash flow, which has already been allocated to debt repayment, including retiring $362 5 million of non revolving term loans.
The robust free cash flow generation from our assets will continue to facilitate further balance allocation to our four pillars over the long term.
This clearly demonstrates the sustainability of our business model and the ability of our unique long life low decline asset base with low maintenance capital requirements and effective and efficient operations to generate significant free cash flow.
We continue to maintain significant liquidity and.
Including revolving bank facilities cash and short term investments liquidity at year end 2020 was approximately $5 4 billion and we had approximately half of 1 billion of commercial paper for which we reserved capacity under the revolving facilities.
Given the confidence and our long life low decline assets and sustainability of our free cash flow. The board of directors have increased the dividend by 11% to $1 88 per share annually with the first quarterly payment of 47 per share payable on April five 2021.
This represents the 20 <unk> consecutive year of dividend increases represents a 20% CAGR since inception, and further demonstrates the commitment to returning value to shareholders.
In addition, subsequent to year and the board of directors authorized management subject to acceptance by the <unk> ex to repurchase shares under our normal course issuer bid targeted to equal options exercised throughout the coming year and.
In order to eliminate dilution to shareholders.
Given the increase in commodity prices since our budget release in December the forecast for free cash flow generation in 2021 is significantly higher.
And on average price of approximately U S 57, WTO and we now target to generate between 10, 3% and $10 8 billion of adjusted funds flow.
Which equates to $4 nine to $5 4 billion of free cash flow after capital and the increased dividend.
This provides significant opportunity to optimize allocation to our four pillars, including further debt reductions and continued returns to shareholders.
With that I'll turn it back to you Tim.
Thanks Mark.
<unk> advantage is our ability to effectively allocate cash flow to a port pillars.
We are of a well balanced diverse and large asset base, which a significant portion is long life low decline assets, which requires less capital to maintain volumes.
We balanced our commodities in 2020 with approximately 47% of our Boe's light crude oil and SCO, 32% heavy and 21% natural gas, which lessens our exposure to the volatility and any one commodity as we move through 2021.
We will continue to allocate cash flow to our four pillars and a disciplined manner to maximize value for our shareholders, which is all driven by effective capital allocation effective and efficient operations and by our teams who delivered top tier results.
We have robust the.
Sustainable free cash flow and even in a challenging year as 2020.
The returns to shareholders were significant and approximately $2 billion and dividends.
$3 billion and share purchases for a total of $2 3 billion.
And today, our dividend was increased by 11% for the 20 <unk> consecutive year.
In summary.
We continue focus on safe reliable operations and enhancing our top tier operations and we will continue to drive for environmental performance.
We are and a very strong position being nimble enhances our capacity to create value for our shareholders.
Canadian natural delivering top tier free cash flow generation, which is unique sustainable and robust and clearly demonstrates our ability to post growth economically the business and deliver returns to shareholders by balancing our four pillars.
With that we will now open the call to questions. Thank you.
And if you would like to ask a question at this time, Please press star and the number one on your telephone keypad. If you would like to withdraw your question press the balance sheet.
The.
First question comes from Middle of wholesale with TD Securities.
Good morning, everyone and thanks for taking my questions I'll just start with one on your ongoing two year solvent EUR pilot.
And I believe you have a second.
Pilot plant for Primrose. So maybe you could just give us an update on how thats going and what is your best guess on when Youll have the confidence to roll out that <unk>.
<unk> commercially.
Sure.
I'm here at Kirby South.
We got one more year, and which we need to see how much of our solid free recover.
To get that piece.
Comfortable with where our recoveries would be.
And then at Primrose, we're just initiating that pilot and again its kind of of two to three year period.
And and.
And based on Kirby South we feel very confident obviously.
To tie it down at Primrose, so and.
Generally it's about a two to three year period for to get kind of on full cycle of the results.
So do you think you would have to complete the the promos pilot first before you would consider the <unk>.
<unk> rollout.
Yeah.
For the three months area, absolutely for Kirby South.
To do that piece, we just need one more year.
Okay.
And then my.
Sorry go ahead, yes.
Yes, they are different process, obviously kirby south of the Sag D. And then per most where were leveraging that technology is on the steam flood area.
Okay. Thanks for that Jim and then I'll follow up with the question on <unk>.
CSS given all of the the news flow that we've had on that front, including Exxon yesterday, obviously, Europe and dominant and Ccs player already but is there and.
The low hanging fruit in terms of a brownfield expansions on either of the capture for storage side of things that could.
Bruce the existing capacity over the midterm.
The so.
Not quite true and your question, but.
At Primrose, obviously, we have extra steam capacity. So really all we would have to do is just get the okay to do more.
Pat ads and we can add approximately 80000 barrels a day.
At Primrose itself. So obviously, that's not on our planned today, we're taking a conservative approach here this year.
Waiting on some enbridge to get line three approved and on stream.
So we.
We have that and our back pocket for future development.
And as Mark was your question on CSS our Ccs.
Yes, I might have I might have misspoken, yeah, I wish I wish.
Referring to Ccs so more on the government capture for.
Yes, yes, that's right any my specific question was is there any.
Low hanging fruit in terms of expansions on the capture of ore storage side of things that could take your existing capacity.
Within the next call it three to five years.
While we're just working through those details right now obviously.
Our advantages having the.
And the infrastructure in place so obviously.
To do that it's quite easily done the.
Our biggest issue is just trying to work through the technical changes. So if you look at something like.
And the thermal side, if we go towards solvents, we are going to cut our <unk> emissions and half so.
And then in certain areas there is areas, where you can do.
202 disposal quite cheaply with the.
Tying into the infrastructure. So there's lots of options and our teams are very focused on.
Going through those details and coming up with the best solution to reduce our greenhouse gases.
Excellent thanks for that Jim and Mark.
Next question comes from Phil Gresh with Jpmorgan.
Hey, good morning.
First question.
Very helpful color on the free cash flow generation potential here.
And Mark I guess is the goal here for 2021, just ratchet the debt down towards that.
$15 billion.
Net debt target that you've talked about in the past is to get there as quick.
Quickly and as you can or.
I guess, what other considerations do you have in terms of.
Areas of potential uses of cash whether it's <unk>.
Capital of our buybacks what are scenarios, where you might consider other options. Thank you.
Yes, Thanks, Phil and as you mentioned, we put some clarity around the free cash flow profile for 2021.
As we mentioned the dividend has been increased by the board so.
And thats been set.
Here, the $1 88 of share and.
And then we've instituted or we've been given the direction by the board that we can buy back shares equal to the amount that is <unk>.
Exercise from our option program. So so basically just to eliminate the dilution to shareholders.
Those are kind of the two free cash flow profiles right now for shareholder return and then it goes to the debt repayments. So youll see and on my view significant reductions and that as we go forward given that significant free cash flow profile.
Right, Okay, and as you Havent gone through the Covid.
The environment is $15 billion still roughly the right.
Target you are thinking about or has anything changed in that regard and in your view.
Yes, right now we're just we generate significant free cash flow that $15 billion as part of our free cash flow allocation profile I think if you look at where we exited 2020.
And you know able to keep that flat from basically flat from 2019 levels.
Shows that we're going to decrease that debt level likely quite quickly here given the strip pricing so.
So I think you will see that level of GAAP to achieve very quickly.
Okay, and that would still be generally where youre targeting.
And your long term target would be that that's where you're comfortable on them say of mid cycle or however, you want to look at it.
Volatile oil price environment.
Yes, so I think when the free cash flow allocation policy was out there that was of target, but that that was when we would revisit looking at different allocation of profiles and so we'll just continue here to manage the four pillars as we have and the past.
Sure Les.
And one for me just on on the Capex side of things I mean, it seems like pretty clear that you.
And with preferred not to raise capital.
And this environment.
And I'm guessing inflations, probably pretty tame as well so.
And essentially no real scenario here in 2021, where you think about <unk>.
Allocating more to growth capital is of more of a 2022 and beyond type of event or just any last thoughts there. Thanks a lot.
I think Tim here again, I think if you look at.
Let's say 2020.
That year started off very robust and.
And very quickly if.
And if we look at.
Into 2021 the.
A volatility.
Can still be quite extreme obviously there is still.
Their capacity and OPEC so.
I think we're very happy where we are today with our Capex and we will just look to manage our balance sheet to the end of the year.
Okay very clear thank you.
The next question comes from Greg Pardy with RBC capital markets.
Yes. Thanks, good morning, I am going to come back to Phil's question, but maybe the Scott asked it and a slightly different way.
When you go back to the minor downgrade from from S&P rate, which was sort of placing.
A greater industry risks or what have you around the oil sands business generally or energy generally I guess.
Marc does that cause you to think differently about what the appropriate level of.
Debt to cash flow or debt to cap is maybe in.
In the context of of how the rating agencies are going to are going to work with you guys versus in the past.
Hey, Thanks, Craig we always monitor and look at these things over the long term, so 2020, obviously and aberration and pricing given the global pandemic.
We have our four pillars of capital allocation that we've always been focused on on being relatively balanced.
So.
You have to also look Greg at the.
The source of the cash flow.
Certainly different compared to different E&P companies because of the sustainability of that cash flow because of the assets and reserves as Darin went over that underlying that free cash flow. So it's much more sustainable and different pricing environments and I think we saw that through 2020.
Okay terrific. That's it for me thank you.
Okay.
Next question comes from Manav Gupta with credit Suisse.
So first of all I wanted to congratulate you and I think it was only two quarters of all that.
Many of the questioning the sustainability of your dividend yield.
And Youll have for O&M that you will all of it right and you and yield assets better than everybody else by raising the dividend. So I wanted to congratulate you on that.
Thanks, John and thank you Mike.
Mike quick question.
Part of all of the debt in December you hit for nine zero at the Oilsands I wanted to confirm if that was the right number and welcomed for 19 and first of all of <unk> and then just wanted to understand and have enabled.
And that level of before I think you did very well and Q of Glenn given you hit the for the quarter of about 465, but I don't think Pete for 90, even back then so if you could just help us understand how you got the 490 in the month of December.
Sure so.
That was meat.
With my words, the getting lost there, but it was 490800 barrels a day.
For the month of December and.
And obviously December one of the curtailment came off we.
We had the extra capacity of the ASR P. Gross capacity of 320000 barrels a day and then as well at horizon the.
And it had an excellent month, the turnaround 260000 and so.
And both areas and really.
And really have to look at how all of our teams have done there in terms of enhancing our.
Production.
And small increments, but.
And every year <unk> been able to find a little more capacity and lower our costs and.
They've really done a and excellent job.
And they really look at what are sustainable changes that we can enhance our operating costs and.
Increase our reliability and.
And enhance our production volume so the Yahoo.
It was 490800 barrels a day and it's.
Tremendous.
Job by our team there.
Okay, well congratulations niches that the have a quick follow up you always have of any informed view on the apportionment pipeline, we have a little bit of a setback and with Keystone, but do you think and was 19 <unk> mix can still make sure that this don't blow out and any comments you have on the apportionment that head on and thanks.
Sure.
Now a portion of it of obviously on the right side is the zero. So thats very positive for the light oil side and then on the heavy side, we're still seeing I would say elevated.
<unk>, 47% for for March and the.
This will change and will go down again, as we start into our turnaround season.
And ourselves and many others will be doing maintenance activities.
I guess on the on.
On the heavy side.
The interesting part, even though it's a 47% portion of <unk> the.
Differentials are quite low from about $11. So.
It's the kind of an interesting phenomenon and now obviously.
Lee.
And we feel very comfortable.
The line three will progress onward and.
We're going to sit here this year.
Worked through that and you will see.
That enbridge will get that on stream here in Q3.
Thank you for taking my question and congrats on the dividend hike. Thank you.
For the.
Once again to ask the question. Please press star one on your telephone keypad and one.
The question from Neil Mehta with Goldman Sachs.
Good morning team and congrats again on this free cash flow guidance I guess the the.
The first question is just really around the cash flow number the 10 three to $10 $8 billion.
It's predicated on $57 of ATI obviously.
Post OPEC today, we are significantly above that so the question the question and sort of on the assumptions that go into that and three to 10 eight what are you assuming for crude differentials and then can you remind us.
What youre using for FX as well as <unk> and then and.
What the sensitivity is to every dollar change and WTS.
Okay.
Hey, Neil it's mark Thanks for that and.
Just just so everybody knows and the advisory at the back of the press release, you will find these numbers as far as the forecast that went into those numbers. So.
Of the disc the WCS discount was $11 77 U S per barrel.
April was up 288, and <unk> and FX of about $1 27, and so those were all just strip prices at the time that we ran and the forecast.
And the sensitivity to every dollar change.
So the sensitivity of $1 change, obviously changes the cash flow goes up.
Because you generate more U S dollar revenue.
So a bunch of time it was probably in the neighborhood of $82 million, it's probably above 100 to of 125 million now.
Out of the data Penny change.
And thats cash flow after tax for years on average.
Sorry, that's for FX rate, but for every dollar change and WTS.
For every dollar change and <unk> is about $330 million cash flow after tax Canadian.
That's perfect and then just the follow up is is your thoughts around M&A do you still.
Been opportunistic or able to tuck in painted pony last year, what do you think the market environment is for for bolt on acquisitions and.
And Canada or do you view this as the time that you really wanted to organically Delever and return capital to shareholders with the strong recovery and valuations and the commodity price.
But I think the real key focus is delever.
Work on our operations here.
But.
You never can say never we have always been optimistic in our acquisitions and we look at.
A lot of opportunities.
We have the synergies that we feel we can add a lot of value for our shareholders. So.
To me.
Today, we're looking to Delever very quickly.
But we always look for.
In terms of optimistic.
Opportunities.
Thanks, guys.
Thanks Bill for the next question comes from Lilly and Lindsay with <unk> capital markets.
General and just real quick question and I apologize, if you've gotten sort of line somewhere.
Just your thoughts on taxes other than the fact, the hate them.
And on royalties and especially in terms of sort of post payout.
Timing for projects.
Do you have any insights on that.
Sure volume, it's Mark I'll leave some of the detail maybe to the IR to go through with the after but if you look at <unk>.
Cash taxes, when we ran the budget.
And for 2021 and December when we had our budget press release, we were running at $45 <unk> just to give you some perspective at that time on.
Cash taxes were and the $2 $50 million to $300 million range I would suggest that strip here and the 57 and <unk> range, we'd be north of $1 billion, but again I'll, let you take that off with with IR and kind of go through the detailed modeling on it.
Same goes for royalties Youre right we have.
Oil sands royalty projects and of course of royalty regime that has a pre and post payout. So as we generate more cash flow on that.
From those properties, we can we can get into payout. So another thing that I'll, let IR take off with you.
Great. Thanks.
And at this time I will turn the call over to Mr. Bieber.
Thank you operator, and thank you everyone for attending this conference call. This morning, Canadian Natural's large well diverse asset base continues to drive significant shareholder value even through years of turbulent as 2020, the ability of our teams to deliver effective and efficient operations with top tier performance is contributing to proven resilience as well as.
Substantial and sustainable free cash flow. 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 the show.
Thank you and goodbye.
This concludes today's conference call you may now disconnect.