Q4 2020 Canadian Natural Resources Ltd Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the Canadian Natural resources fourth quarter, and 2020 earnings results Conference call and webcast. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session and ask a question. During this session and always press star one.
And your telephone please be advised that today's conference is being recorded if you require any further assistance. Please press star zero and I'd like to turn the conference call over to Mr. Corey Bieber 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 <unk>, 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 Cory and good morning, everyone.
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 natural we'd like to thank our employees and contractors suppliers and shareholders for their support through this challenging here.
Despite the challenges in 2020, Canadian natural delivered top tier operational and financial results.
As a result, and 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 and quickly lowering our capital with our long life low decline and high quality asset base, we still achieved record annual corporate BOE production of 1.1 dollars 6 million Boe's per day for approximately 65000 and the increase over 2019 level.
With a culture of continuous improvement, we continue to drive effective and efficient operations and as a result, we had record low annual operating cost of $20 46 per barrel and SCO and our oil sands mining upgrading group and.
Decrease of $2 10 per barrel as well and our North American E&P liquids, we achieved significant operating cost reduction for $1 20 per barrel or 10% floor and 92019 levels with.
We continue to apply the same drive to ESG, environmental social and governance to deliver industry, leading performance across the board.
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 perfect GHT intensity by 18% methane emissions by 28% for 2016 level.
And our safety record is top tier.
Corporate total recordable injury frequency improved point zero.
Two one and 2020 and reduction of 58% from 2016 levels.
We reached significant environmental milestones, including the 5 million ton of Sidoti captured at Quest and now plan to $2 5 million trees, and our oil sands mining operations.
And our oil sands operations, we can develop technologies used 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 that can have one of the clearest routes if not the clearest route to net zero on a <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 $1 for eight Bcf per day, which is comparable to our 2019 production of 149 with North American annual natural gas production of one for five versus one four for for 2019, which is up slightly as a result of the company's strategic decision to invest.
And low cost natural gas opportunities and the acquisition of painted Pony and Q4.
And our annual North American natural gas operating cost was $1 14, which was down 2% for compared to 2019 of <unk> 16 for the fourth quarter and 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 from a Buck 11 and impressive year over year operating cost performance as we continue to focus on operational excellence and.
Septimus the company's high value liquids rich Montney area and the second half of 2028 wells were drilled all came on production from 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 per day.
Delivering as expected.
Looking forward and annual script basis Baker prices for 'twenty, one look very strong.
$2 78 per GJ and increase of approximately 31% over 2020 levels, improving economics from natural gas projects in 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.
Resulting in a strong capital efficient efficiency of approximately $2200 per flowing Boe.
For North American light oil and Ngls annual production was 84000 and 658 barrels per day down 13% from 2019, primarily result.
Natural field declines annual operating costs were strong at $14 61 per barrel, which was 4% lower and the 2019 annual operating costs of $15 21 per barrel.
And for production was 88161 barrels per day down 6% when comparing to Q4 2019 with fourth quarter operating costs that were down 10% to $13 88 per barrel as compared to Q4 2019 operating cost of $15 41 per barrel.
And 21.
2021, the company continues to advance high value <unk>.
And the light crude oil development plan at Wembley targeting 18, net wells and a construction of a new crude oil battery.
And with a targeted on stream date of October 2021, with the crude oil battery and place New wells are targeted for you brought on stream had 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.
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.
Africa annual production was approximately 17000 and versus 2019 of 21400 barrels a 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 per day in 2020 versus 2019 from 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 were comparable to 2019 levels and the team did a great job managing costs.
Moving to heavy oil annual production for 70 279 barrels per day in 2020 versus 82189 barrels and 2019, reflecting natural declines limited investment due to commodity prices and the Alberta mandatory curtailment program annual operating costs were $17 59 per barrel.
Versus 2019 operating cost of $16 66 per barrel for.
Quarter 2020 production was 65 five years and 13 barrels versus Q4 2019 production of 94262 barrels per day, while operating costs were $17 61 per barrel versus Q4 2019 of $15. Three we continue to focus on effective and efficient Oscar.
Sure.
A key component of our long life low decline assets is our world class Pelican Lake pool, where our leading edge polymer flood continues to deliver significant value two.
2020 annual production was 56005 hundred 35 barrels per day versus 2019 average of 58855 barrels a day only a 4% decline, reflecting the very low decline of the property and the team continues to do a great job and we had very strong annual operating cost of $6 and <unk>.
Per barrel, 3% reduction versus 2019 operating cost of $6 22 per barrel.
Fourth quarter.
2020 production was approximately 56000.
<unk> for the fourth quarter of 2019 of 59000 and operating costs from Q4 2020 were very strong at $5 85 per barrel.
At Pelican, our team continues to drive for operational excellence and has been able to mitigate the impact of decline and 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 our 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 current.
Tillman optimization strategy, the strong annual performance and thermo reflects increased from volumes from pad adds at Primrose.
Production ramp up of Kirby, north and additional pad Thai and at Jackfish.
Annual operating costs were very strong at $9 44 per barrel a decrease of 13% for 2019 levels of $2 83.
<unk> of cost synergies cheap as we integrated and Chatfield, Jackfish and Caribbean field operations as well as continued to focus on effective and efficient operations.
<unk> Q4 production was approximately 266 200 barrels a day.
Talent from Q3 as part of our curtailment optimization strategy with operating costs of $9 17 per barrel and October our thermal team authorized optimized for ramp up for an additional pad at jackfish as we recorded a record monthly production.
Approximately 128600 barrels a day a 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% for 2019 levels, primarily as a result of high utilization rates and operational enhancements and record low annual operating costs were achieve.
And 2020, and we remain industry, leading averaging $2 46 per barrel of SCO and.
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 company increased annual net fuel production by approximately 22000 barrels a day with 2019 levels as well we reduced the total annual.
And cost by $183 million, excluding energy costs and our teams continued to do an excellent job here and they are focused on continuous improvement and effective and efficient operations.
And oil Sands mining operation production in Q4 was approximately 417100 barrels a day as planned maintenance was concluded at horizon, and <unk> ran well and expanded capacity in.
In the quarter operating costs were strong at 2020 per barrel of SCO as our teams drive for operational excellence as well and December.
Finding assets, we recorded a record monthly of approximate 490.
<unk> thousand 800 barrels a day as we had high utilization rates combined with enhanced capacity and operational excellence and part.
Part of our 2021 plant.
30 day turnaround is scheduled for the month of April during the shutdown new incremental operational packages and the upgrader is coordinated to be tied in.
I will now turn it over to Darren for 2020 preserves view.
Thank you Tim and good morning.
To start as in previous years, 100% net Canadian natural has reserves are externally evaluated and reviewed by independent qualified reserve evaluated.
Our 2020 reserves disclosure is presented in accordance with Canadian reporting requirements using forecast prices and escalated costs.
And 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 Companys 2020 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 comedy replaced 493% of the two.
2020 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.
Total proved reserves approximately 7 billion barrels are high value no decline.
<unk> reserves.
And it's also important to note that 71% of Canadian natural has 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.
Canadian natural delivered top tier results and and.
And 2020.
And our strong performance is reflected in our finding and development costs.
And corporate finding development and acquisition costs, excluding changes to future development costs are $1 91 per Boe for total proved and.
And $1 40 per BOE for total proved plus probable reserves.
Canadian natural is finding development and acquisition costs, including changes to future development costs are $4 46 per view.
For total proved and $3 46 per <unk> for total proved plus probable reserves.
The strength and depth of the company's 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 including the full company Arrow.
And is $87 billion for total proved reserves and $98 billion for total proved plus probable reserves.
In summary these.
Excellent results reflect the strength and depth of Canadian natural is asset base the.
And the value of the Companys long life, low decline reserves, and our ability <unk> ability to execute.
Now I will hand over to Mark for the financial highlights.
Thanks Darren.
And 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 contribute to us 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, and a half million of non revolving terminals.
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.
Including revolving bank facilities cash and short term investments liquidity at year end 2020 was approximately $5 4 billion and we had approximately half a billion and 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 our commitment to returning value to shareholders.
In addition, subsequent to year and the board of directors authorized management subject to acceptance by the <unk> to repurchase shares under our normal course issuer bid targeted to equal options exercised throughout the coming year.
In order to eliminate dilution to shareholders.
Given the increase in commodity prices since our budget release in December so for.
Forecast for free cash flow generation in 2021 is significantly higher.
And an average price of approximately U S 57, WTC, we now target to generate between 10, and three 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.
That I will turn it back to you Tim.
Thanks Mark.
Canadian natural advantage is our ability to effectively allocate cash flow to our four pillars.
We have 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.
Balanced our commodities in 2020 with approximately 47% of our 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 sustainable free cash flow and even in a challenging year as 2020.
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 and summary.
We continue to focus on safe reliable operations and enhancing our top tier operations and we will continue to drive for environmental performance.
We are in a very strong position being nimble enhances our capacity to create value for our shareholders.
Canadian natural and delivering top tier free cash flow generation, which is unique sustainable and robust and clearly demonstrates our ability to both grow 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 he would like to ask a question at this time. Please press Star then the number one on your telephone keypad. If you would like to withdraw your question press the pound.
Pete.
First question comes from Menno wholesale with TD Securities.
Good morning, everyone and thanks for taking my questions. So I'll just start with one on your ongoing two year solvent EUR pilot.
Kirby South and I.
I believe you have a second.
Pilot plan for our Primrose. So maybe you could just give us an update on how that's going and what is your best guess on when Youll have the confidence to roll out that.
Process commercially.
Sure.
Tim here at Kirby South.
And we got one more year, and which we need to see how much of our solid free recover.
To get that piece are comfortable with where our recoveries would be and then at primrose.
Initiating that pilot and again, it's kind of a two to three year period.
And and.
Based on Kirby South we feel very confident obviously to <unk>.
Try it down at premiums so.
And in general it's about a two to three year period for to get kind of a full cycle of results.
So do you think you would have to complete the the Primrose pilot first before you would consider the commercial rollout.
For the three months area absolutely for.
For Kirby South.
And to do that piece, we just need one more year.
Okay.
And then my.
Sorry go ahead, yes.
Yes, they are different process, obviously at Kirby south the Sag D. And then per most where were leveraging that technology is and on the steam flood area.
Okay. Thanks for that Jim and then I'll follow up with a question on.
CSS given all of the news flow that we've had on that front, including Exxon yesterday, obviously, Europe euro dominant and Ccs player already but is there any low hanging fruit in terms of a brownfield expansions on either the attached or for storage side of things that could.
Boost existing capacity over the midterm.
So.
Not quite sure and your question, but.
At Primrose.
We have extra steam capacity and so really all we would have to do is just get the okay to do more.
That adds and we can add approximately 80000 barrels a day right.
At Primrose itself. So obviously, that's not in our plan today, we're taking a conservative approach here this year.
Waiting on some enbridge to get <unk> 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 was referring to Ccs so more on the government capture for.
Yeah, Yeah, that's right any my specific question was is there any.
Low hanging fruit in terms of expansions on the capture or storage side of things that could take your existing capacity.
Within the next call it three to five years.
Well, we're just working through those details right now obviously.
Higher advantages having the.
The infrastructure in place.
So obviously.
To do that it's quite easily done.
The 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.
Tying into the infrastructure. So there's lots of options. 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 JP Morgan.
Hey, good morning.
First question.
Very helpful color on the free cash flow generation potential here.
<unk>.
Mark I guess is the goal here for 2021, just to ratchet the debt down towards that $15 billion.
Net debt target that you've talked about in the past us and get there as quickly as you can or.
I guess, what other considerations do you have in terms of.
Areas of potential uses of cash whether it's cash.
Capital or 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 as we mentioned the dividend has been increased by the board so.
That's been set.
Here, the $1 88, a share and.
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>.
Extra size 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 and then it goes to debt repayments. So youll see and my view significant reductions in debt as we go forward given that significant free cash flow profile.
Right, Okay, and as you Havent gone through the Covid and.
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 was part of our free cash flow allocation profile I think if you look at where we exited 2020.
We're able to keep that flat from.
And basically flat from 2019 levels.
Those that were going to decrease that debt level likely quite quickly here given the strip pricing.
So I think you will see that level get to achieve very quickly.
Okay and that would still be generally where your target here.
Long term target would be that that's where you're comfortable and them say a mid cycle or however, you want to look at it and.
Volatile oil price environment.
Yes, so I think when the free cash flow allocation policy was out there that was a target but that that was when we would revisit looking at different allocation and profiles. So we will just continue here to manage the four pillars as we have and the past.
Sure last one for me just on the Capex side of things and it seems like pretty clear that you.
I would prefer not to raise capital.
And this environment.
And I am guessing inflations, probably pretty tame as well. So is there just essentially no real scenario here in 2021, where you would think about.
Allocating more to growth capital is it 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 change very quickly.
If we look at.
Into 2021 day.
Volatility.
It can still be quite extreme obviously theres still.
Their capacity and OPEC. So I think we're very happy where we are today with our Capex and we'll just look to manage and our balance sheet to the end of the year.
Okay very clear thank you.
Our next question comes from Greg Pardy with RBC capital markets.
Yes. Thanks, good morning, I am going to come back to sales question, but maybe this guy 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.
And the context of how the rating agencies are going to are going to work with you guys versus in the past.
Hey, Thanks, Greg we always monitor and look at these things over the long term, so 2020, obviously and aberration and pricing given a global pandemic.
We have our four pillars of capital allocation that we've always been focused on being relatively balanced.
So you have to also look Greg at the source of the cash flow.
And 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 I think it was only two quarters ago that many other questioning the sustainability of your dividend you have proven that you are always right and you and you've got assets better than everybody else by raising the dividend. So I wanted to congratulate you on that.
Thanks, John and thank you Mike.
And my quick question here is I think by HUD debt in December you hit for nine <unk> and Oilsands I wanted to confirm if that was the right number and it wasn't for 19 and plus four nine and needle and then just wanted to understand and have you ever hit that level before I think you did very well in Q off grid PV and you hit for the quarter about for 60.
Five, but I don't think Pete for 90 day, even back then so if you could just help us understand how you got to for 90 in the month of December.
Sure so.
That was meet.
And with my words getting lost share, but it was 490800 barrels a day.
And for the month of December.
And.
Obviously December 1st the curtailments came off we.
We had the extra capacity here soapy gross capacity of 320000 barrels a day and then as well at horizon. They.
And it had an excellent month to around 260000 and so.
And both areas and.
You really have to look at how well our teams have done there in terms of enhancing our.
Reduction, it's been small increments, but.
Every year, they've been able to find a little more capacity and lower our costs and.
If they really Turner and excellent job.
They really look at what our sustainable changes that we can enhance our operating costs and increase our reliability and enhance our production volume. So it was 490800 barrels a day and it.
Tremendous.
Job by our team there.
Oh, congratulations great results I have a quick follow up you always have a very informed view on apportionment pipelines, we have had a little bit of a setback and with Keystone, but do you think and with 19 N P and mix can still make sure that just don't pull out and any comments you have on the apportionment that current times.
Sure right.
Now a portion of it obviously on the light side is zero and 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 for March and other.
This will change it will go down again, as we start into our turnaround season.
And ourselves and many others will be doing maintenance activities.
I guess on.
On the heavy side.
The interesting part, even though it's a 47% apportionment.
Differentials are quite low and about $11. So.
It's a kind of an interesting phenomenon and now obviously.
We feel very comfortable.
And line three will progress onward and.
We're going to sit here this year.
And through that and you will see.
That enbridge will get that on stream here in Q3.
Thank you for taking my questions and congrats on the dividend hike.
For the.
Once again to ask a question. Please press star one on your telephone keypad.
Question from Neil Mehta with Goldman Sachs.
Good morning team and congrats again on this free cash flow guidance I guess the first question is just really around the cash flow number that 10, three to $10 $8 billion.
And is predicated on $57 Debbie Ti obviously.
Post OPEC today, we are significantly above debt. So the question. The question is sort of and 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 and.
What the sensitivity is to every dollar change and WTS.
Yes.
Hey, Neil it's mark Thanks for that.
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.
The disk the WCS discount was $11 77 U S per barrel.
April was up 288, and <unk> and FX about 127, and so those were all just strip prices at the time that we ran in the forecast.
And the sensitivity to every dollar change.
So the sensitivity every dollar change obviously changes as the cash flow goes up.
And because you generate more U S dollar revenue.
And so a budget time it was probably in the neighborhood of $82 million.
It's probably above $100 million to $125 million now.
Out of about a penny change and so.
And that's cash flow after tax for your average.
Sorry, that's for FX right, but for every dollar change and WTS.
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 core do you view this as a time that you really wanted to just organically delever and return capital to shareholders with the strong recovery and valuations and the commodity price.
Well I think a real key focus is delever.
Work on our operations here.
But you know.
You never can say never we have always been optimistic.
Acquisitions and.
We look at a lot of opportunities.
We have synergies that we feel we can add a lot of value for our shareholders.
To me.
Today, we're looking to Delever very quickly.
We always look for.
In terms of optimistic.
Opportunities.
Yeah.
Thanks, guys.
Thanks Dale for last question comes from William Lacey with Adv capital markets.
Gentlemen, just real quick question and I apologize, if you've got and so at line somewhere.
Just your thoughts on taxes other than the fact that you hate them.
And on royalties and especially in terms of sort of post payout timing for projects.
You have any insights on that.
Sure William it's Mark I'll I'll leave some of the detail maybe to IR to go through with you after but if you look at.
Cash taxes, when we ran the budget 2000 and for.
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 our cash.
Cash taxes were and the $2 $50 million to $300 million range I would suggest that strip here and 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 you're right we have.
All sounds royalty projects that of course have a royalty regime that has a pre and post payout so as we generate more cash flow debt.
From those properties, we can we can get into payout. So another thing that I'll, let IR take off with you.
Right. 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 as 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 <unk>.
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 a show and thank.
Thank you and goodbye.
This concludes today's conference call you may now disconnect.
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