Q3 2023 Canadian Natural Resources Ltd Earnings Call

November 2, 2023

Speaker 1: Good morning. We would like to welcome everyone to the Canadian Natural Resources 2020 3rd Quarter Earnings Conference Call and Webcast.

Good morning, we would like to welcome everyone to the Canadian natural resources 2002.

<unk> third quarter earnings conference call and webcast.

Speaker 1: After the presentation, we will conduct the question and answer session. Instructions will be given at that time.

After the presentation, we will conduct a question and answer session and instructions will be given at that time.

Speaker 1: Please note that this call is being recorded today, November 2nd, 2023 at 9 a.m. mountain time. I would now like to turn the meeting over to your host for today's call, Lance Castan, Manager of Investor Relations. Please go ahead.

Please note that this call is being recorded today November 2nd 'twenty to 'twenty three at nine a M Mountain time.

Now, let's turn the meeting over to your host for today's call Lance Cashman manager of Investor Relations. Please go ahead.

Lance Casson: Good morning, everyone, and thank you for joining Canadian Natural's Q3 2023 Earnings Conference Call. As always, before we begin, I'd like to remind you of our forward-looking statements, and it should be noted that in our reporting disclosures, everything's in Canadian dollars unless otherwise stated, and we report our reserves and production before royalties. Additionally, I would suggest review our comments on non-GAAP disclosures in our financial statements. Speaking on today's call will be Tim McKay, our President, and Mark Stainthorpe, our Chief Financial Officer. Tim will first speak to how strong execution has resulted in record quarterly production, and he'll provide additional specifics on our safe, reliable, and world-class operations. Mark will then summarize our strong financial results, including significant free cash flow generation and increasing shareholder returns. To close, Tim will summarize our call prior to opening up the line for questions.

Speaker 2: Good morning, everyone. And thank you for joining Canadian Naturals' Third Corps 2023 earnings conference call.

Good morning, everyone and thank you for joining Canadian Natural's third quarter 2023 earnings conference call.

Speaker 2: As always, before we begin, I'd like to remind you our forward-looking statements. And it should be noted that in our reporting disclosures, everything in Canadian dollars, unless otherwise stated, and report reserves and production before we're all...

As always before we begin I'd like to remind you of our forward looking statements and it should be noted that in our reporting disclosures everything in Canadian dollars, unless otherwise stated and report our reserves and production before royalties. Additionally.

Additionally, I would suggest for your comments on non-GAAP disclosures in our financial statements.

Speaker 2: Speaking on today's call, we Tim McKay, our president, Mark Stanton, our chief finance officer.

Speaking on today's call will be Tim Mckay, our president and Mark <unk>, Our Chief Financial Officer, Tim will first speak to how strong execution has resulted in record quarterly production and he'll provide additional specifics on our safe reliable and world class operations.

Speaker 2: Tim will first speak to how strong execution has resulted in record quarterly production and he'll provide additional specifics on our save for libel and world-class operation.

Speaker 2: Markovent summarize those strong financial results, including significant free-gasso generation, and increasing shareholder return.

Mark will then summarize our strong financial results, including significant free cash flow generation and increasing shareholder returns.

Speaker 2: To close, Tim will summarize our call prior to opening up the line for questions. With that, I'll turn it over to you, Tim.

To close Jim will summarize our call prior to opening up the line for questions.

Lance Casson: With that, I'll turn it over to you, Tim.

Turn it over to you Tim.

Tim McKay: Thank you, Lance. Good morning, everyone. In Q3, we achieved record quarterly production of approximately 1.39 million BOE per day, which included both record liquids production at approximately 1,035,000 barrels a day and natural gas production at approximately 2.15 Bcf a day as a result of effective and efficient operations across all our assets. This, combined with our diverse product mix, we generated significant free cash flow, resulting in more shareholder returns through our sustainable growing dividend and significant share repurchases. As well, Canadian Natural continues to be a leader in environmental, social, and governance and has made it a priority to work collaboratively with industry peers and governments to achieve meaningful GHG emission reductions in support of both Alberta and Canada's climate goals through our participation in the Pathways Alliance.

Speaker 3: Thank you, Lance. Good morning, everyone. In the third quarter, we achieved record quarterly production of approximately 1.39 million BUE's per day, which included both record liquids production at approximately 1 million 35,000 barrels a day.

Thank you Lance good morning, everyone in the third quarter, we achieved record quarterly production of approximately $1 three 9 million Boe per day, which included both record liquids production at approximately $1 million 35000 barrels a day.

Speaker 3: a natural gas production that approximates 2.15 BCF a day as a result of effective and efficient operations across all our <expletive> .

And natural gas production at approximately $2, one five Bcf a day as a result of effective and efficient operations across all our assets. This combined with our diverse product mix, we generated significant free cash flow, resulting in more shareholder returns through our sustainable growing dividend.

Speaker 3: This, combined with our diverse product mix, we generated significant free cash flow, resulting in more shareholder returns through our sustainable growing dividends and significant share repurchase.

And significant share repurchases.

Speaker 3: as well Canadian natural continues to be a leader in environmental, social and governance and has made it a priority to work collaboratively with industry peers and governments to achieve meaningful GHG mission with us.

As well Canadian natural continues to be a leader in environmental social and governance and has made it a priority to work collaboratively with industry peers and government to achieve meaningful ghd with Michigan reductions and support both Alberta, and Canada climate goals to our participation in the past like pathway clients.

Speaker 3: support of both Alberta and Canada's climate goals through our participation in the Pathways Alliance. As we move forward to...

Tim McKay: As we move forward to lower our carbon emissions with our target to reduce the absolute Scope 1, Scope 2 emissions by 40% by 2035 from our 2020 baseline on our journey to achieve our goal of net zero GHG emissions in the Oil Sands by 2050. I'll now do a brief overview of the assets, starting with natural gas. Overall, Q3 natural gas production was a record at 2.15 Bcf a day, which was higher than Q3 2022 production. From North American operations, Q3 2023 natural gas production was also a record at approximately 2.14 Bcf a day versus Q3 2022. As well, we added volumes through our drill to fill strategy, adding low cost, high-value liquids-rich production across the asset.

As we move forward to lower our carbon emissions with our target to reduce the absolute scope one scope two emissions by 40% by 2035 from our 'twenty 'twenty baseline on our journey to achieve our goal of net zero GHT emissions in the oil sands by 2050.

Speaker 3: with our target to reduce the absolute scope one, scope two emissions by 40% by 2035 from our 2020 baseline on our journey to achieve our goal of net zero GHG emissions in the oil sands by 2050.

Speaker 3: I'll now do a brief overview of the assets, starting with natural gas.

I'll now do a brief overview of the asset.

Starting with natural gas.

Speaker 3: Overall Q3 natural gas production was a record at 2.15 bcf a day which was higher than Q3 2022 production. From North American operations Q3 23 natural gas was also a record at approximately 2.14 bcf a day versus Q3 2022. As well we added volumes through our

Overall Q3 natural gas production was a record at $2 one five Bcf a day, which was higher than Q3 2022 production from North American operations Q3, 23 natural gas price was also a record at approximately $2. One four Bcf a day versus Q3 2022.

As well we added volumes through art.

Speaker 3: Drill Perfille strategy adding low cost, high value liquids, rich production across the asset. During the quarter the company drove 10 net wells, all meeting expectations.

Drill to fill strategy, adding low cost high value liquids rich production across the asset during the quarter. The company drilled 10 net wells all meeting expectations, our North American Q3, natural gas operating cost was $1 22 per Mcf, a decrease of 8% compared to Q3.

Tim McKay: During the quarter, the company drilled 10 net wells, all meeting expectations. Our North American Q3 natural gas operating cost was CAD 1.22 per Mcf, a decrease of 8% compared to Q3 2022. An increase of 8% compared to Q3 2022 of CAD 1.13, primarily due to higher service costs. Our teams will continue to focus on effective and efficient operations and cost control across all areas. For North American light oil and NGL, Q3 production was approximately 109,000 barrels a day, comparable to the Q3 2022 of 109,252 barrels a day. Q3 operating costs were CAD 15.49 per barrel, a decrease of 7% from Q3 2022 operating costs of CAD 16.68 per barrel, primarily due to lower power costs in the quarter.

Speaker 3: Our North American Q3 natural gas operating cost was $1.22 per MCF, a decrease of 8% compared to Q3 2022.

Speaker 3: increase of 8% compared to Q3 2022 have a dollar 13. Primarily do the higher service costs. Our teens will continue to focus on effective and efficient operations and cost control across all areas.

'twenty two.

An increase of 8% compared to Q3 2020 to $1 13, primarily due to higher service costs. Our teams will continue to focus on effective and efficient operations and cost control across all areas for North American light oil and NGL Q3 production was approximately 109.

Speaker 3: For North American life, oil and NGL Q3 production was approximately 109,000 barrels a day, comparable to the Q3 2022 of 109,252 barrels.

<unk> thousand barrels a day comparable to the Q3 2022.

<unk> 9252 barrels a day Q3 operating costs were $15 49 per barrel a decrease of 7% from Q3 2022 operating cost of $16 68 per barrel, primarily due to lower power costs in the quarter.

Speaker 3: Q3 operating costs were $15.49 per barrel, a decrease of 7% from Q3 2022 operating costs of $16.68 per barrel, primarily due to lower power costs.

Speaker 3: Our International Assets in Q3 had all production of 24,719 barrels a day, which is comparable to Q3 2022 levels of 24,493 barrels.

Tim McKay: Our international assets in Q3 had oil production of 24,719 barrels a day, which is comparable to Q3 2022 levels of 24,493 barrels a day. Our international assets continued to generate good cash flow as we progress towards decommissioning of an Indian asset. Moving to heavy oil. Heavy oil production was 76,377 barrels a day in Q3 2023, up 11% from Q3 2022 production of 68,933 barrels a day, primarily due to increased drilling activity, strong drilling results, offsetting natural field declines. Operating costs in Q3 2023 were at CAD 1,968 per barrel, down 8% compared to our Q3 2022 operating cost of CAD 2,130 per barrel, primarily reflecting higher volumes in the quarter.

International assets in Q3 at all production of IL.

24719 barrels a day, which is comparable to Q3 2022 levels of 24493 barrels a day, our international assets continue to generate good cash flow as we progressed towards decommissioning of an Indian assets.

Speaker 3: Our international assets continue to generate good cash flow as we progress towards decommissioning of the NINIA NAFTA.

Moving to heavy oil.

Speaker 3: Every old production was 76,377 barrels a day in Q3 2023 up 11% from Q3 2022 production of 6,933 barrels a day. Primarily due to increased drilling activity, strong drilling results, offsetting natural field declines. Operating costs in Q3.

Have you all production was 76377 barrels a day in Q3 2023 up 11%.

Q3, 2022 production of 68933 barrels a day, primarily due to increased drilling activity strong drilling results offsetting natural field declines operating costs in Q3 23.

Speaker 3: We're at 1968 per barrel, down 8% compared to our Q3 2022 operating costs of 2130 per barrel. Primarily reflecting higher volumes in the quarter. During the quarter, we company drilled 34 net heavy oil wells, which were multilateral across our land base from Bonneville, Lloyd Minister, to Clearwater area, with all leading target results.

We're at $19 68 per barrel down 8% compared to our Q3 2022 operating cost of $21 30 per barrel, primarily reflecting higher volumes in the quarter during the quarter with the company drilled 34 net heavy oil wells.

Tim McKay: During the quarter, the company drilled 34 net heavy oil wells, which were multilateral across our land base from Bonnyville, Lloydminster, to Clearwater area, with all meeting targeted results. 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. Q3 production was 46,897 barrels a day, down 6% versus Q3 2022 average of 50,051 barrels per day, reflecting the low decline nature of the property. The polymer injection rates, which were reinstated in February 2023, have been successful in returning the field back to more historical decline rate, which was approximately 5%.

Which were multilateral.

So Ron base from Bonneville like Minister to Clearwater area with all meeting targeted results.

Speaker 3: 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. Q3 production was 46,897 barrels a day, down 6%, versus Q3 2022 average of 50,051 barrels per day, reflecting the low-decline nature of the property.

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 Q3 production was 46897 barrels a day down 6% versus Q3, 2022 average of 50051 barrels per day, reflecting.

The low decline nature of the property.

Speaker 3: The polymer injection crates, which were reinstated in February of 23, have been successful in returning the field back to a more historical decline rate, which was approximately 5%. The team continues to focus on operational excellence.

The polymer injection grades which were reinstated in February of 23 have been successful in returning the field back to more historical decline rate, which was approximately 5%.

Tim McKay: The team continues to focus on operational excellence with Q3 operating costs of 802 per barrel, decreasing 10% from our Q3 2022 operating cost of 889, primarily reflecting effective and efficient operations, lower power costs offsetting the lower production volumes. With Pelican Lake's low decline and very low operating costs, it continues to generate excellent netback. In our thermal in situ areas in Q3 2023, as a result of strong execution combined with effective and efficient operations, Q3 2023 thermal production was 287,085 barrels a day, up approximately 44,000 barrels a day from Q3 2022 production of 243,393 barrels a day.

The team continues to focus on operational excellence and then.

Speaker 3: with Q3 operating costs of 802 per barrel, decreasing 10% from our Q3 2022 operating costs of 889, primarily reflecting effective and efficient operations, lower power costs, offsetting the lower production.

Q3 operating cost of 802 per barrel decreasing 10% from Q3 2022 operating cost of 89, primarily reflecting effective and efficient operations lower power costs offsetting the lower production volumes with Pelican Lake slow decline and very low operating cost it continues.

Speaker 3: With palikin-like slow decline and very low operating cost, it continues to generate excellent

To generate excellent netback.

Speaker 3: In our thermal and situ errors in Q3 2023, as a result of strong execution combined with effective and efficient operation.

And our thermal in situ errors in Q3 2023 as a result of strong execution combined with effective efficient operations Q3, 'twenty three thermal production was 287085 barrels a day.

Speaker 3: Q3 2023 Serbial Production was 287,000 and 85 barrels a day. Hop approximately 44,000 barrels a day from Q3 2022 production. Of 243,393 barrels.

<unk> 44000 barrels a day from Q3 2022 production of 243393 barrels a day.

Speaker 3: Q3 operating costs were 1147 per barrel down 27% when compared to Q3 2022 operating cost of 1563. Larger days result of higher production and lower natural gas fuel.

Tim McKay: Q3 operating costs were CAD 11.47 per barrel, down 27% when compared to Q3 2022 operating costs of CAD 15.63, largely as a result of higher production and lower natural gas fuel costs. At Kirby, current production is approximately 65,000 barrels a day, as the company has grown it by approximately 15,000 barrels a day from Q4 2022 levels. The significant production growth is due to the development of four SAGD pads, the first which reached full capacity in Q3 2023. The remaining three targets are targeted to ramp up to full production over the next nine months of 2024 at a pace of one pad per quarter, maintaining this production level.

Q3 operating costs were $11 47 per barrel down 27% when compared to Q3 2022 operating cost of $15 63, largely as a result of higher production and lower natural gas fuel costs at Kirby current production is approximately 65000 barrels a day as a company is <unk>.

Speaker 3: At Kirby, current production is approximately 65,000 barrels a day as the company has grown by approximately 15,000 barrels a day from Q4 2022 level.

Rone it by approximately 15000 barrels a day from Q4 2022 level.

Speaker 3: The significant production growth is due to the development of 4-SIG D-Pads, the first which reached full capacity in Q320.

The significant production growth is due to the development of <unk> deep pads, the first which reached full capacity in Q3 23.

Speaker 3: The remaining three targets are targeted to ramp up to full production over the next nine months of 24 at a pace of one pad per quarter maintaining this production.

The remaining three targets are targeted to ramp up to full production over the next nine months or 24 at a pace of one pad per quarter, maintaining its production level.

Tim McKay: At Jackfish, two SAGD pads were drilled in H1 2023, with production from these pads targeted to ramp up to full production capacity in Q3 2024 and Q4 2024, supporting continued high utilization. Oil sands mining at the company's world-class oil sands mining and upgrading assets, we had Q3 production averaging 490,853 bbl/d of SCO versus production of 487,553 in Q3 2022. With Q3 operating costs that were CAD 22.12 per barrel versus Q3 2022 of CAD 22.35 per barrel.

Speaker 3: Jackfish, two-sake peg, sagdey pads were drilled, and the first half of 23 with production from these pads targeted around pop to full production capacity in Q3, 24 and Q4, 24. Support and continued.

At Jackfish, two site segment pads, we drilled in the first half of 'twenty three with production from these pads targeted ramp up to full production capacity in Q3 24 in Q4 of 24 supporting continued high utilization.

Speaker 3: oil sands mining. As the company's world class, oil sands mining operating assets, we had Q3 production of averaging 490,853 barrels a day of SEO versus production of 487,553 in Q3, 2022. With Q2, with Q3 operating costs that were 22,12 per barrel versus Q2.

Oil sands mining.

The company has world class oil sands mining and upgrading assets, we had Q3 production of averaging.

490253 barrels a day of SCO versus production of 487553 in Q3 2022 with Q2 with Q3 operating costs that were $22 12 per barrel versus Q2.

Speaker 3: versus Q3, 22 of 2235 per barrel.

Versus Q3 'twenty two.

$22 35 per barrel.

Speaker 3: The reliability and enhancement project continues to move forward targeting to add approximately 14,000 dollars a day of additional SEO capacity in 2025. As a result of shifting the maintenance schedule from once per year to once every two years, reducing downtime for maintenance activities and increasing overall reliability at Iraq.

Tim McKay: The reliability enhancement project continues to move forward, targeting to add approximately 14,000 barrels a day of additional SCO capacity in 2025 as a result of shifting the maintenance schedule from once per year to once every two years, reducing downtime for maintenance activities and increasing overall reliability at Athabasca. Also here with me today as part of our succession plan, I have Scott Stauth, Trevor Cassidy, Jay Froc, and Robin Zabek. As part of my succession, Scott Stauth will be taking over the role of pre-president effective 28 February 2024. Scott and I met a little over 26 years ago, and over the years, Scott has excelled in every role he has had with the company, and I know he will do a great job. Should anyone have any questions for Scott, feel free to ask when we move to the Q&A session.

The reliability enhancement project continues to move forward targeting to add approximately 14000 barrels a day of additional capacity in 2025.

Result of shifting the maintenance schedule once per year to once every two years, reducing downtime for maintenance activities and increasing overall reliability at Iraq.

Speaker 3: Also here with me today is part of our succession plan. I have Scott Stealth, Trevor Cassidy, Jay Frock, and Robin Z.

Also here with me today is part of our succession plan I have Scott itself, Trevor Cassidy, J frock and Robyn feedback.

Speaker 3: As part of my succession, Scott Speltz will be taking over the role of President, effective February 28, 2024. Scott and I met a little over 26 years ago, and over the years, Scott has excelled in every role he has had had with the company, and I know he will do a great job. Should anyone have any questions for Scott, feel free to ask when we move to the Q&A section.

As part of our succession, Scott Scott will be taking over the role of President effective February 28, 2024, Scott and I met a little over 26 years ago and over the year as Scott has excelled in every role he has had.

<unk> had had with the company.

He will do a great job should anyone have any questions for Scott feel free to ask when we move to the Q&A session. J Park currently our senior Vice President oil Sands mining, who will place Scott.

Speaker 3: Jay Frock, currently our Senior Vice President of Bullshands Mining, who will place Scott.

Tim McKay: Jay Froc, currently our Senior Vice President of Oil Sands Mining, will replace Scott, previous role as CEO of Oil Sands. As well, in Q4, Trevor Cassidy, after 24 years with Canadian Natural, will be retiring. We wish to thank Trevor for all his contribution over the many years. Robin Zabek, who has been with the company 20 years and who is currently our Senior VP of Exploitation, will assume the role of COO, Exploration and Production. I'll now turn it over to Mark for a financial review.

Speaker 3: previous role as CEO of oil sounds as well in Q4 Trevor Cassidy after 24 years of Canadian natural will be retiring We wish the tank Trevor for all his contribution over the many years and Robert Sabeck who has been with the company 20 years and who is currently our senior VP of exploitation will assume the role of COO Expiration and production. I'll now turn it over to Mark for a financial

Previous role as CEO of <unk>.

As well in Q4, Trevor Cassidy after 24 years with Canadian natural will be retiring.

Wish to thank Trevor for all his contribution over the many years and Robert say back who has been with the company 20 years and who is currently our senior VP of exportation.

Soon the role of COO exploration and production I will now turn it turn it over to Mark for a financial review.

Speaker 4: Thanks, Tim, and good morning, everyone. The third quarter of 2023 was a strong financial quarter as we generated adjusted funds flow of $4.7 billion and adjusted debt earnings from operations of $2.9 billion.

Mark Stainthorpe: Thanks, Tim, and good morning, everyone. Q3 2023 was a strong financial quarter as we generated adjusted funds flow of CAD 4.7 billion and adjusted net earnings from operations of CAD 2.9 billion. This was due to strong pricing and good cost control, which contributed to robust netbacks on record quarterly production. Our diversified portfolio, including our long life, low decline assets, combined with effective and efficient operations, allowed us to continue to deliver robust returns to shareholders through dividends, repurchasing shares, and reducing debt. Year to date, up to and including 1 November 2023, we have returned approximately CAD 6.1 billion to shareholders through dividends and share repurchases. Subsequent to quarter end, the board of directors has approved an 11% increase to our base quarterly dividend to CAD 1 per common share from CAD 0.90 per common share.

Thanks, Dan and good morning, everyone. The third quarter of 2023 was a strong financial quarter as we generated adjusted funds flow of $4 7 billion and adjusted net earnings from operations of $2 9 billion.

Speaker 4: This was due to strong pricing and good cost control, which contributed to robust netbacks on record quarterly production.

This was due to strong pricing and good cost control, which contributed to a robust net backs on record quarterly production.

Speaker 4: Our diversified portfolio, including our long-life low-declined assets combined with effective and efficient operations, allowed us to continue to deliver robust returns to shareholders through dividends, repurchasing shares, and reducing debt.

Our diversified portfolio, including our long life low decline assets combined with effective and efficient operations allowed us to continue to deliver robust returns to shareholders through dividends repurchasing shares and reducing debt.

Speaker 4: Year to date up to an including November 1st, 2023, we have returned approximately 6.1 billion to shareholders through dividends and share.

Year to date up to and including November one 2023, we have returned approximately $6 1 billion to shareholders through dividends and share repurchases.

Speaker 4: Subsequent to quarter-end, the Board of Directors has approved an 11% increase to our base quarterly dividend, to $1 per common share from $0.90 per common.

Subsequent to quarter end the board of directors has approved an 11% increase to our base quarterly dividend to $1 per common share from <unk> 90 per common share.

Speaker 4: demonstrating the confidence the board has in the sustainability of our business model, our strong balance sheet and the strength of our diverse long-life flow decline reserves and asks.

Mark Stainthorpe: Demonstrating the confidence the board has in the sustainability of our business model, our strong balance sheet, and the strength of our diverse long life, low decline reserves and asset base. This dividend increase, combined with the increase in March 2023, results in an 18% increase to CAD 4 per share annually, meaning 2024 will be the 24th consecutive year of dividend increases with a compound annual growth rate of 21% over that time. Our financial position is very strong today, with debt to EBITDA at 0.7 times at the end of Q3, and we continue to maintain strong liquidity, including revolving bank facilities, cash and short-term investments. Liquidity at the end of the quarter was approximately CAD 6.1 billion.

Demonstrating the confidence of the board has in the sustainability of our business model, our strong balance sheet and the strength of our diverse long life low decline reserves and asset base.

Speaker 4: This dividend increase, combined with the increase in March 2023, results in an 18% increase to $4 per share annually, meaning 2024 will be the 24th consecutive year of dividend.

This dividend increase combined with the increase in March 2023 results in an 18% increased to $4 per share annually, meaning 2024 will be the 24th consecutive year of dividend increases with a.

Speaker 4: with a compound annual growth rate of 21% over that.

Compound annual growth rate of 21% over that time.

Speaker 4: Our financial position is very strong today with debt to EBITDA at 0.7 times at the end of Q3 and we continue to maintain strong liquidity, including revolving bank facilities, cash and short-term investments, liquidity at the end of the quarter was approximately 6.1 billion.

Our financial position is very strong today with debt to EBITDA at two seven times at the end of Q3, and we continue to maintain strong liquidity, including revolving bank facilities cash and short term investments liquidity at the end of the quarter was approximately $6 1 billion.

Mark Stainthorpe: We target to continue strong operational performance in Q4 2023 and beyond, and based on current strip pricing, we are quickly approaching our net debt level of CAD 10 billion, which we forecast to achieve in Q1 2024. At which time, we target to increase returns to shareholders to 100% of free cash flow. When you combine our leading execution with our large, balanced, low risk, high value reserves and production, effective and efficient operations and flexible capital allocation, we are able to generate material free cash flow and deliver strong returns on capital. With that, I'll return it back to you, Tim, for some final comments.

Speaker 4: We target to continue strong operational performance in Q423M beyond, and based on current strip pricing, we are quickly approaching our net debt level of 10 billion, which we forecast to achieve in Q1 2024. At which time, we target to increase returns to shareholders to 100% of free cash flow.

We target to continued strong operational performance in Q4, 'twenty, three and beyond and based on current strip pricing. We are quickly approaching our net debt level of 10 billion, which we forecast to achieve in Q1 2024 at which time, we target to increase returns to shareholders to 100% of free cash flow.

Speaker 4: When you combine our leading execution with our large, balanced, low-risk, high-value reserves and production, effective and efficient operations, and flexible capital allocation, we are able to generate material-free cash flow and deliver strong returns on capital. With that, I'll return to you.

When you combine our leading execution with our large balanced low risk high value reserves and production effective and efficient operations and flexible capital allocation, we're able to generate material free cash flow and deliver strong returns on capital.

With that I'll return it back to you Tim for some final comments. Thanks, Bart Canadian natural is about 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 require less capital to.

Speaker 3: Canada Natural's 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 require less capital to maintain volume.

Tim McKay: Thanks, Mark. Canadian Natural's 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 require less capital to maintain volumes. We are delivering top-tier free cash flow generation, which is unique, sustainable, robust, and clearly demonstrates our ability to both economically grow the business and deliver returns to shareholders by balancing our four pillars. With our robust, sustainable free cash flow through our free cash flow allocation policy, returns to shareholders continue to be significant, which includes our growing dividend that will be increased for 24 consecutive years in 2024. In summary, we continue to focus on safe, reliable operations, enhancing our top-tier operations, and we will continue to drive top-tier environmental performance. With that, I will now open it up for questions.

To maintain volumes.

Speaker 3: We are delivering top tier free cash flow generation, which is unique, sustainable, robust and clearly demonstrates our ability to both economically grow the business and deliver returns to shareholders by balancing our four pillars. With our robust, sustainable.

We are delivering top tier free cash flow generation, which is unique sustainable.

Robust and clearly demonstrates our ability to both economically grow the business and deliver returns to shareholders by balancing our four pillars.

Our robust sustainable free cash flow.

Speaker 3: through our free-tasual allocation policy returns to Cheryl as continued to be significant, which includes our growing dividends that will be increased for 24 consecutive years in 2024. In summary, we continue to focus on safe, reliable operations, enhancing our top-tier operations, and we will continue to drive top-tier environmental performance. With that, I will now open it up.

Through our free cash flow allocation policy returns to shareholders continues to be significant which includes our growing dividend that will be increased for 24 consecutive years in 2024 in summary, we continue to focus on safe <unk>.

<unk> operations enhancing our top tier operations, and we will continue to drive top tier environmental performance with that I will now open it up for questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Dennis Fong from CIBC World Markets. Please go ahead.

Thank you Lady.

Speaker 1: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. If you are using your speaker phone, please load the handset before pressing any...

Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone you will show actually Tom prompt acknowledging your request. If you are using a speaker phone. Please go ahead of the handset before pressing any.

Speaker 1: Your first question comes from Dennis Fong from CIGC World Markets. Please go ahead.

Your first question comes from Dennis Fong from CIBC World markets. Please go ahead.

Dennis Fong: Hi, good morning. I guess first off, congrats, Tim, on your upcoming retirement and to Scott on the promotion. My first question here just is related to, obviously we're entering the winter here. There's a little bit of cooler weather. I know that there's been a focus on remediating some of the potential impacts of harsher operating environment, given the cooler weather. Can you just remind us about what has been changed or completed in operations as well as equipment to show kind of strong uptime through January and February?

Speaker 5: Hi, good morning, and I guess first off, congrats to him on your upcoming retirement and to Scott on the promotion.

Hi, Good morning, and I guess first off congrats Tim on your upcoming retirement and just Scott on the promotion.

Speaker 5: My first question here just is really to, obviously we're entering the winter here. There's a little bit of cooler weather. I know that there's been a focus on remediating some of the potential impacts of harsher operating environment given the cooler weather. Can you just remind us about what has been changed or completed in operations as well as equipment to show kind of strong up times through January and February ? This Ciao.

My first question here just is really shoe.

Obviously, where we're entering the winter heating areas, a little bit of cooler weather I know that theres been a focus on remediated and some of the potential impacts of harsher operating.

Environments.

Given the cooler weather can you just remind us about what had been changed or completed in operations as well as equipment to show kind of strong uptime through January and February.

Tim McKay: Yeah. Well, in general, every fall, the teams start to make sure that all areas of potential freeze up are insulated. Heat trace is checked. As you can appreciate, in a lot of areas, the heat tracing basically gets turned off during the summer months, so we gotta make sure that all works. Generally, it's just what I would consider routine business to make sure that we have methanol heat tracing and insulation covering all the areas of potential freeze up. Generally, we monitor it quite rigorously as we move towards winter.

Yes, it does well in general every fall.

Speaker 3: The teams start to make sure that all areas of

The teams start to make sure that all areas.

Speaker 3: The potential freeze up are insulated. Heat trays is checked. As you can appreciate in a lot of areas, the heat tracing basically gets turned off during the summer months.

Potential frees up our insulated.

Tracy.

As you can appreciate in a lot of areas.

The heat tracing basically gets turned off during the summer months. So we got to make sure that all works. So generally it's just what I would consider routine business to make sure that we have methanol heat tracing and installation.

Speaker 3: So we got to make sure that all works. So generally it's just what I would consider routine business to make sure that we have methanol, heat tracing, and insulation covering all the areas of potential freezaps.

Covering all of the areas of potential frees up so.

Speaker 3: And generally we monitor it quite rigorously as we move towards the winter.

And generally we monitor it.

Rigorously as we move towards the winter.

Speaker 5: Great, thanks. Appreciate that. And then my second question is just related to the optimization that you're driving to at the oil fans mining business unit. As you see higher and higher production levels, how should we be thinking about the ability to kind of lower unit off-ex and what's maybe your target once you are able to line up so that you hadn't even hired.

Dennis Fong: Great. Thanks. I appreciate that. Then my second question is just related to the optimization that you're driving to at the Oil Sands mining business unit. As you see higher and higher production levels, how should we be thinking about the ability to kind of lower unit OpEx? What's maybe your target once you are able to line up the facility at an even higher level?

Great great. Thanks, I appreciate that.

And then my second question is just related to the optimization that you're driving to at the oil sands mining.

Business unit as you see higher and higher production levels, how should we be thinking about the ability to kind of.

Lower unit Opex and what's maybe your targets. Once you are able to a lineup that facility at an even higher level.

Tim McKay: Yeah, that's a very good question. So, obviously, through the reliability project, the key there is that you're not taking a shutdown. Typically in the Oil Sands, the shutdowns are usually about a month per year. As you can appreciate, during that one month that we're down, all the fixed costs are still, shall we say, adding to the account. That includes your mining trucks and such. To me, the way to think of it is, by keeping it running, you basically get that one month of same cost per se, but you're getting all that extra volume.

Speaker 3: Yeah, that's a very good question. So obviously, with through the reliability project, the key there is that you're not taking a shutdown. And so typically in the old fans, the shutdowns are usually about a month per year. So as you can appreciate during that one month that we're down, all the fixed costs are still...

Yes, that's a very good question so.

Obviously with through the reliability project are the key there is that youre not taking a shutdown and so typically in the oil sands. The shutdowns are usually about a month per year. So as you can appreciate during that one month that were down all the fixed costs are still.

So we say.

Speaker 3: adding to the account. So that includes your mining trucks and such. So to me, the way to think of it is by keeping it running, you basically get that one month of same cost per se, but you're getting all that extra volume. So that's the way I would look at it, because the mines, as you're seeing with the operating costs, are pretty steady in terms of overall costs. And to me, it's all about...

Adding to the account. So so so that includes your mining trucks and such so so to me the way to think of it is.

By keeping it running.

You basically.

Get that one month of the same cost per se, but youre getting all that extra volume. So so that's the way I would look at it because the mines as you're seeing with the operating costs are pretty steady in terms of the overall costs.

Tim McKay: That's the way I would look at it, because the mines, as you're seeing with the operating costs, are pretty steady in terms of overall costs. To me, it's all about making those extra barrels each and every day.

And to me, it's all about making those extra barrels.

Speaker 3: making those extra barrels huge and every day.

Each and every day.

Speaker 5: Perfect. Appreciate the color. I'll turn it back. They gain congratulations.

Greg Pardy: Perfect. Appreciate that color. I'll turn it back. Again, congratulations. Thanks.

Dennis Fong: Perfect. Appreciate that color. I'll turn it back. Again, congratulations. Thanks.

Perfect I appreciate the color I'll turn it back and again congratulations.

Scott Stauth: Thank you.

Tim McKay: Thank you.

Thank you.

Speaker 6: Thank you. The next question comes from Neil Mehta at Goldman Sachs. Please go ahead. Thank you and congrats, Scott, and congrats, Tim, on your retirement too. I guess maybe that's where we'll start, which is over the last five years, stock's done really well. It's a $100 billion Canadian company at this point in terms of market cap.

Operator: Thank you. The next question comes from Neil Mehta at Goldman Sachs. Please go ahead.

Thank you. The next question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Neil Mehta: Yeah, thank you, and congrats, Scott, and congrats Tim, on your retirement too. I guess maybe that's where I'll start, which is over the last 5 years, stock's done really well. It's a CAD 100 billion Canadian company at this point in terms of market cap. As Scott, as you transition into this new role and as Tim, as you retire, how do you think about the next 5 years? What's the next leg of value creation? Is it the same playbook or is there any strategic change that you see as necessary to get to the next level?

Yeah, Thank you and congrats Scott and congrats on your retirement too.

So maybe that's where it will start which is over the last five years tax doesn't really well, it's $100 billion Canadian a company at this point in terms of market cap It's Scott.

Speaker 6: Scott has you transitioned into this new role and as Kim has you retired, how do you think about the next five years? What's the next leg of a value creation? Is it the same playbook or is there any strategic change that you see as necessary to get to the next?

Scott as he transitioned into this new role.

As Tim as you retire how do you think about the next five years, what's the next leg of value creation is it the same playbook, whereas there's any strategic change that you see.

Necessary to get to the next level.

Yeah.

Speaker 3: Is that question for Scott there? No, sorry.

Tim McKay: Is that question for Scott there, Neil? Sorry.

Is that question for Scott There Bill sorry.

Neil Mehta: For both of you.

So both of you.

Speaker 3: Oh, you know what? What you can, I'll start first. You know, Kenia natural is very fortunate in that we have a huge reserve.

Tim McKay: Oh. You know what? I'll start first. You know, Canadian Natural is very fortunate in that we have a huge reserve base. So I look at it, you know, going forward, you know, we've got to continue to do what we do best. You know, drive top-tier operations, high reliability, controlling our cost, be disciplined. You know, we're very fortunate in that we have that huge reserve base that we can basically grow production methodically, should we decide to grow over time. You know, if you look at something like Horizon, you know, we've talked about that we could easily double Horizon at some point.

Oh, you know what.

Yes.

Yeah I'll start first.

Canadian natural is.

Very fortunate that we have a huge.

We serve.

Speaker 3: So I look at it, you know, going forward, you know, we've got to continue to do what we do best. You know, drive top tier operations, high reliability, controlling our costs.

Base, so so I look at it going forward.

No.

Got it continue to do what we do best.

You know.

Drive top tier operations high reliability.

Controlling our costs be disciplined and.

Speaker 3: And, you know, we, we're very fortunate that we have that huge...

We were very fortunate that we have that.

Speaker 3: reserve base that we can basically grow production methodically, should we decide to grow over over time and You know if you look at something like horizon, you know, we've talked about that we could easily double horizon at some point

Huge.

Reserve base that.

We can basically grow production.

Vertically.

Should we decide to grow overtime and.

If you look at something like Horizon, we've talked about that we could easily double horizon at some point.

Tim McKay: There's also been, you know, the Dilbit, paraffinic Dilbit that we could do there. There's opportunities in the thermal side, gas in the Montney. You know, to me, you know, we just have to keep doing what we do well. You know, and on top of that, you know, as always, you know, there always is opportunistic acquisitions that can come our way. You know, we're very good at doing those should that opportunity come that way. I don't really see any real change to our business.

Speaker 3: There's also been, you know, the periphnic deal bit that we could do there. There's opportunities in the thermal side.

There's also been the drill bit to paraffinic dill bit that we could do there there's opportunities in the thermal side.

Speaker 3: gas money so you know to me

Gas from the Montney. So you know what to me.

Speaker 6: We just have to keep doing what we do well, and on top of that, as always, there always is opportunistic acquisitions that can come our way, and we're very good at doing those should that opportunity come that way. So I don't really see any real change to our business. I think it's...

We just have to keep the.

Keep doing what we do well and.

On top of that.

It has always.

As opportunistic acquisitions that can come our way and you know we're very good at doing those should.

That opportunity come that way, so I don't really see any real change to our to our business I think it's.

Tim McKay: I think it's, you know, if you look at our succession, everybody's well ingrained in the company and understands all the opportunities that we have, and we constantly work on those opportunities to make sure we're ready to exercise those opportunities should that time happen. Scott?

Speaker 6: If you look at our succession, everybody's well and drained in the company and understands all the opportunities that we have and we constantly work on those opportunities to make sure we're ready to exercise those opportunities should that time happen.

If you look at our succession everybody's well ingrained in the company and understand all the opportunities that we have and we constantly work on those opportunities to make sure we're ready to exercise those opportunities.

Should that time happen.

Speaker 7: Scott? Yeah. Yeah. Neil, I agree with everything Tim said. And with just the robust nature of our assets, free cash flow generation of the companies.

Scott Stauth: Yeah. Neil, I agree with everything Tim said. You know, with just the robust nature of our assets, free cash flow generation that the company's been able to develop over the years and continue to work on and improve. You know, I don't see our focus changing. Tim outlined everything that we've done in the past, and we're gonna continue to work on in the future. I think that you should see much the same in the future as what you've seen in the past.

Scott Yep Yep.

I agree with everything Tim said and.

The robust nature of our assets are free cash flow generation of the companies.

Speaker 7: been able to develop over the years and continue to work on and improve and you know I don't see our focus changing. Tim outlined everything that we've done in the past that we're going to continue to work on in the future so I think that you should see much the same in the future as what you've seen in the past.

Been able to develop over the years and continue to work on and improve and you know I don't see our focus changing Tim outlined everything that we've done in the past and we're going to continue to work on in the future. So.

That you should see much the same for in the future as what you've seen in the past.

Speaker 8: Thanks, thanks to the follow up is just on consolidation. South of the border. We've seen some really big deals here on the last couple of weeks in the EMP space by the majors and I just curious on your views on whether there's room for further consolidation in Canada perspectives on on on seeing keys potential world.

Neil Mehta: Thanks. Thanks, Tim. Scott, the follow-up is just on consolidation. South of the border, we've seen some really big deals here over the last couple of weeks in the E&P space by the majors. I'm just curious on your views on whether there's room for further consolidation in Canada and perspectives on CNQ's potential role there.

Right, Thanks, Tim and Scott as a follow up is just on consolidation south of the border. We've seen some really big deals here over the last couple of weeks in the E&P space by the majors.

Just curious on your views on whether there is room for further consolidation in Canada and.

Perspectives on on seeing keys potential or okay.

Tim McKay: Yeah, I mean, consolidation could happen here in Canada as well. You know, the key is that for us anyways is we have a huge reserve base. You know, we don't have to do any acquisitions to create or find more reserves. We have that part in the bag. To me, we can sit back, do what we do best, and that's just exploit those opportunities, be methodical with our growth plan. You know, should something opportunistic happen our way, you know, that may happen. To me, you know, we've got you know one of the largest reserve opportunities in the world. That's the key for us.

Yes, I mean, so what I mean.

Speaker 6: The consolidation could happen here in Canada as well. But you know, the key is that for us anyways, is we have a huge reserve base. And so, you know, we don't have to do any acquisitions to create or find more reserves. So we have that part in the peg. To me, we can sit back.

Consolidation.

Could happen here in Canada as well.

You know that the key is that for us anyway. So as we have a huge reserve base and so we don't have to.

Do any acquisitions to create.

Or find more reserves, so we have that part in the peg.

To me, we can sit back do what we do best and that's just to exploit those opportunities.

Speaker 6: do what we do best, and that's just exploit those opportunities, be methodical with our growth plan, and should something opportunistic happen our way, that may happen. But to me, we've got one of the largest reserves.

Methodical with our growth plan.

And should something opportunistic happened our way.

That may happen, but.

To me.

We've got one of the largest reserve.

Hum.

Speaker 6: opportunities in the world. So that's the key for us.

Opportunities.

World So.

That's the key for us.

Neil Mehta: Okay. Thanks.

Okay.

Yes.

Yeah.

Speaker 8: Thank you. The next question comes from Greg Party at RBC Capital Markets. Please go ahead. Yeah, thanks. Good morning and thanks for the run down.

Operator: Thank you. The next question comes from Greg Pardy at RBC Capital Markets. Please go ahead.

Thank you. The next question comes from Greg Pardy with RBC capital markets. Please go ahead.

Greg Pardy: Yeah. Thanks. Good morning, and thanks for the rundown. So first up, Tim, you know, congratulations. You've been great to work with, and we're glad you're not going until the summer, and absolutely welcome Scott and others as well. So I want to stay a little bit on the successorship. You know, I was going through your info circular recently, and it looks as though there's a very I mean, A, there's a strong culture of promoting within, but there's also almost like a defined game plan for folks on the management committee in terms of how successorship works and so forth. Could you talk about that a little bit?

Thanks, Good morning, and thanks for the rundown.

Speaker 8: So first up, Tim, congratulations, you've been great to work with and we're glad you're not going that until the summer and absolutely welcome Scott and others as well.

So first off Tim.

Congratulations you've been great to work with and were glad youre not going until the summer ends and absolutely welcome Scott and others as well.

Speaker 8: So I wanted to stay a little bit on the successorship. You know, I was going through your info circular recently in it. It looks as though there's a very, I mean, a, there's a strong culture of promoting within, but there's also, almost like, a defined game plan for folks on the management committee in terms of how successorship works and so forth. Could you talk about that a little bit?

So I wanted to stay a little bit on the successor ship you know I was going through your infill circular recently and it it looks as though there is a very <unk>.

There's a strong culture of promoting within but Theres also almost like a defined game plan for folks on the management Committee in terms of how successor ship works and so forth could you could you talk about that a little bit.

Tim McKay: Well, I don't know really how I could talk more to it. You know, every year, we do a very thorough job of our succession plan. To me, you know, it's never a surprise. It's well thought out. People are generally moved to different positions for grooming or learning, however you wanna call it. As people grow with the company, and they perform, they generally move right along. To me, you know, the longevity of the people that come here, they love the culture, they love working with people, and they love the opportunities the company has before it.

Speaker 6: Well, I don't know really what I could talk more to it. You know, every year we do a very thorough job of our succession plan. And so to me, you know, it's never a surprise. It's well thought out. People are generally moved to different positions to...

Well I don't know really what how I could talk more to it.

Every year, we do a very thorough job of.

Although our succession plan and and.

And so to me.

It's never a surprise, it's a well thought out.

People are generally.

Move to different positions for grooming.

Speaker 6: or her learning, however you want to call it. And as people grow at the company and they perform, they generally move right along. So to me, the longevity of the people that come here.

We're learning however, you want to call it and as people grow with the company.

And they perform a day generally moved right along so it's to me.

The longevity of the people that come here.

Speaker 6: They love the culture. They love working with people and they love the opportunities the company has before it so

The culture that we're.

Working with people and they loved the opportunities the company has before it so.

Tim McKay: To me, it's just a great place to work and a great place that we can develop our own people internally and promote within.

Speaker 6: To me it's just a great place to work and a great place that we can develop our home people internally and promote within.

Tim McKay: To me, it's just a great place to work and a great place that we can develop our own people internally and promote within.

To me, it's just a great.

Great place to work in a great place that we can develop our home people internally and promote within.

Greg Pardy: Okay. Got it, Tim. Thanks for that. Then I'll completely switch gears maybe and just fire one at Mark. In terms, I mean, you know, huge cash flow generation, you know, working capital impacts obviously in the quarter. I'm curious how you sort of see the balance of the year going or Q4 going in terms of net working capital changes. Then just with respect to Trans Mountain, I know you've got just under 100,000 barrels a day on that. When you go into line pack, is that going to materially increase working capital as you go into Q1? Something that Cenovus just flagged on their call. I was just curious how much it impacted you guys.

Speaker 8: You got it, Tim. Thanks for that. And then I'll completely switch gears maybe and just.

Okay got it thanks for that and then I'll completely switch gears, maybe just.

Speaker 8: Fire went at mark, but in terms, I mean, you know, huge cash flow generation, you know, working capital impacts obviously in the quarter. I'm curious how you sort of see the balance of the year going or the fourth quarter going in terms of work, networking capital changes.

Fire when it mark but in terms I mean, you know.

Huge cash flow generation working capital impacts obviously in the quarter I'm curious, how you sort of see the balance of the year going into the fourth quarter going in terms of work networking capital changes and then.

Speaker 8: And then just with respect to Trans Mountain, I know you've got just under 100,000 barrels a day on that, when you go into line pack, is that going to materially increase working capital as you go into the first quarter, something that's just lagged on their call and just curious how much it impact you.

Just with respect to Trans Mountain I know, you've got just under 100000 barrels a day on that when you go into line pack is that going to.

Materially increased working capital as you go into the first quarter, but something that let's just flagged on their call I was just curious how much it impacted you guys.

Speaker 4: Yeah, sure Greg, so I mean, in Q4, like I kind of mentioned earlier, we're targeting strong operational performance. So given this pricing environment and our netbacks, we're looking at strong cash flow generation and free cash flow generation in the quarter. When you look at working capital, I mean to me the biggest thing is look, think about receivables. So in September , very strong operation, a month pricing month, but we don't get paid for that until I'm...

Scott Stauth: Yeah, sure, Greg. I mean, in Q4, like I kinda mentioned earlier, we're targeting, you know, strong operational performance. Given this pricing environment and our netbacks, we're looking at, you know, strong cash flow generation and free cash flow generation in the quarter. You know, when you look at working capital, I mean, to me the biggest thing is, think about receivables. In September, very strong operational month, pricing month, but we don't get paid for that until October. That's really, you know, one of the main drivers of the working capital. The other being of course, when you have turnaround activity in one quarter, you tend to have the payables happen in the following quarter. Those are just natural ways the business runs.

Mark Stainthorpe: Yeah, sure, Greg. I mean, in Q4, like I kinda mentioned earlier, we're targeting, you know, strong operational performance. Given this pricing environment and our netbacks, we're looking at, you know, strong cash flow generation and free cash flow generation in the quarter. You know, when you look at working capital, I mean, to me the biggest thing is, think about receivables. In September, very strong operational month, pricing month, but we don't get paid for that until October. That's really, you know, one of the main drivers of the working capital. The other being of course, when you have turnaround activity in one quarter, you tend to have the payables happen in the following quarter. Those are just natural ways the business runs.

Yeah sure Greg So I mean in Q4.

I kind of mentioned earlier, we're targeting you know strong operational performance. So given this pricing environment and our our net backs, where we're looking at you know strong cash flow generation and free cash flow generation in the quarter. When you look at working capital I mean to me. The biggest thing is look to think about receivables. So in September very strong operational month pricing.

But we don't get paid for that until October.

Speaker 4: So that's really one of the main drivers of the working capital. The other being, of course, when you have turnaround activity in one quarter, you tend to have the payables happen in the following quarter. So those are just natural ways the business runs.

So that's really one of the main drivers of the working capital.

The other being of course, when you have turnaround activity in one quarter you tend to have the payables happened in the following quarter. So those are just natural ways the business runs.

Scott Stauth: To comment on exactly what working capital will be like in Q4 is somewhat difficult, but you can just kind of take that away that the receivables are one of the big things. Then as far as TMX, yes, there'll be a working capital build for TMX line fill, but that is not gonna be significant to us at all.

Speaker 4: So to comment on exactly what work you have will be like in the fourth quarter is somewhat difficult, but you can just kind of take that away that the receivables are.

So to comment on exactly what working capital would be like into the fourth quarter is somewhat difficult, but you can just kind of take that away that the receivables are one of the big things.

Mark Stainthorpe: To comment on exactly what working capital will be like in Q4 is somewhat difficult, but you can just kind of take that away that the receivables are one of the big things. Then as far as TMX, yes, there'll be a working capital build for TMX line fill, but that is not gonna be significant to us at all.

Speaker 4: And then as far as TMX, yes, they'll be a working capital bill for TMX LineField, but that is not.

And then as far as T. M X, yes, there'll be a working capital build for Tms landfilled, but that is not going to be significant to us at all.

Greg Pardy: Okay. Got it. Yeah.

Speaker 6: And of course, right now, we don't know if that'll happen here in the fourth quarter or early into next year. Obviously, you know, if it happens earlier this year, between now and the end of the year, that's actually very positive in the sense that that should start to, you know, tighten in the

Tim McKay: Of course, you know, right now, we don't know if that'll happen here in the Q4 or early into next year. Obviously, you know, if it happens earlier this year, between now and the end of the year, that's actually very positive in the sense that that should start to, you know, tighten the WCS dips and such. But we haven't yet to be getting any information that they would be doing that, but we hope that, you know, we'll hear from them soon on that.

Okay.

Right now we don't know if that will happen here in the fourth quarter or early into next year. Obviously, if it happens earlier. This here in between now and the end of the year, that's actually very positive in the sense that that should start to.

<unk> tightened in the.

The WCF gifts.

Speaker 6: So, but we haven't yet to be getting information that we'd be doing that, but we hope that we'll hear from them soon on that.

And such so.

But we haven't yet to be.

Getting the information that they would be doing that but.

We hope that you will hear from them soon on that.

Greg Pardy: Okay. Got it. Thanks, guys.

Okay got it thanks guys.

Scott Stauth: Thanks, Greg.

Mark Stainthorpe: Thanks, Greg.

Thanks, Craig.

Speaker 1: Thank you. The next question comes from Menow Halshawth as TV Securities. Please go ahead.

Operator: Thank you. The next question comes from Menno Hulshof at TD Securities. Please go ahead.

Thank you. The next question comes from Menno, how shocked at TD Securities. Please go ahead.

Menno Hulshof: Thanks, good morning, everyone. I'll start with a question on autonomous haul trucking. One of your peers just achieved full fleet conversion with reasonable cost savings. You know, just going through the transcripts, I understand that you haven't shown much of an interest in the past, but has your thinking changed at all? If so, what could the staging for deployment of autonomous hauling look like at Horizon or even the AOSP? I believe you had a pilot going there at Jackpine a number of years ago. Any color there would be helpful.

Speaker 4: Thanks, and good morning, everyone. I'll start with a question on autonomous whole trucking. One of your peers just that you've fully conversion with reasonable cause savings. And just going through the transcripts, I understand that you haven't shown much of an interest in the past. But as you're thinking changed at all, and if so, what could be?

Thanks, and good morning, everyone I'll start with a question on autonomous haul trucking one of your peers just achieved full fleet conversion with.

Reasonable cost savings and just going through the transcripts.

Understand that you haven't shown much of an interest in the past.

But has your thinking changed at all and if so what could be stay.

Speaker 9: staging for deployment deployment of autonomous hauling look like at horizon or even the AOSB. I believe you had a pilot going there at Jack Pine. A number of years ago, any car there would be, it would be helpful.

Staging for deployment deployment of autonomous hauling look like its horizon or even the AOSP I believe you had a pilot going there Jack point, a number of years ago any color there would be would be helpful.

Speaker 6: Sure, I'll just have Scott because that's a perfect lead in for, you know, that's his area of expertise. So, Scott.

Tim McKay: Sure. I'll just have Scott, 'cause that's a perfect lead in for, you know, that's his area of expertise. I'll have Scott talk to that.

Sure I'll tell just help Scott because thats a perfect lead in for.

His area of expertise so Scott talked to that thanks, Tim. So so we continue to reevaluate the opportunities for autonomous haul on our equipment in the mines are we we have looked at it in the past number of years, we pay close attention to what our peers are doing and what's going on in the rest of the hard rock mining world.

Speaker 7: Thanks, Dempso. So we continually evaluate the opportunities for autonomous haul on our equipment and the mines. We have looked at it in the past number of years. We pay close attention to what appears are doing and what's going on in the rest of the hard rock mining world. But at this time, we've looked through it and reviewed it. And with a lot of the efficiencies that we've been able to achieve in our mining office,

Scott Stauth: Yeah. Thanks, Tim. We continue to evaluate the opportunities for autonomous haul on our equipment in the mines. We have looked at it in the past number of years. We pay close attention to what our peers are doing and what's going on in the rest of the hard rock mining world. At this time, you know, we've looked through it and reviewed it. With a lot of the efficiencies that we've been able to achieve in our mining operation, we have very close to the equivalent of autonomous haul. In fact, we believe we're at the equivalency of autonomous haul efficiencies.

But at this at this time, we've looked through it and reviewed it and with a lot of the efficiencies that we've been able to achieve in her mining operation. We have a very close to the equivalent of AV autonomous haul in fact, we believe Iraq, the equivalency of autonomous haul efficiencies.

Speaker 7: we have very close to the equivalent of autonomous haul, in fact we believe we're at the equivalency of autonomous haul efficiencies. So from our perspective, we'll continue to watch the technology as it improves over the years and stay abreast from the vendors of

Scott Stauth: From our perspective, we'll continue to watch the technology as it improves over the years and stay abreast from the vendors of anything breaking through from news from that perspective. Really, we're quite strong in terms of our efficiencies that our folks in the mining operations have been able to deliver. We like what we see from that perspective.

So from our perspective, we'll continue to watch the technology as it improves over the years.

And stay abreast from the vendors of any.

Speaker 7: anything breaking through from news from that perspective, but really we're quite strong in terms of our efficiencies that are folks in the mining operations have been able to deliver so we like what we see from that perspective.

Anything breaking through from news from that perspective, but really were quite strong in terms of our efficiencies that our folks in the mining operations have been able to deliver so so we like what we see from that perspective.

Speaker 9: Thanks, Scott. And just to clarify, is that pilot a jackpine still running? Or did you wind that down?

Menno Hulshof: Thanks, Scott. Just to clarify, is that pilot at Jackpine still running or did you wind that down?

Thanks, Scott and just to clarify is that pilot a jagged line still running or did you why not down.

Scott Stauth: There was an original pilot years ago, but it was more for collision avoidance that Shell had carried on before our time that we took over in 2017.

Speaker 7: There was an original pilot years ago, but it was more from collision avoidance that Shell had carried on before our time that we took over in 2017.

Scott Stauth: There was an original pilot years ago, but it was more for collision avoidance that Shell had carried on before our time that we took over in 2017.

There was a there wasn't a original pilot.

Years ago, and end up but it was more from a collision avoidance Ah at that shell had carried on before our time that we took over in 2017.

Menno Hulshof: Okay. Got it. Maybe just moving on to the heavy oil program in the Lloydminster Mannville, given the reemergence of that play, what is old is new. It looks like you drilled 34 multilaterals in the quarter. Can you just update us on what you're seeing in terms of performance and

Speaker 9: Okay, got it. And then maybe just moving on to the heavy oil program in the Lloyd-Mister Mandel given the...

Okay got.

Got it and then maybe just moving on to the to the heavy oil program and the Lloyd Mr. Mandel given the.

Speaker 9: The re-emergence of that play, what is old is new. It looks like you drilled 34 multilaterals in the quarter. Can you just update us on what you're seeing in terms of performance? And how is the manville competing for capital with your other liquids growth opportunities?

So reemergence of that that Playboy is what is the oldest new you'll look it looks like you drilled 34 multi laterals in the quarter can you just update us on what Youre seeing in terms of performance and.

Mark Stainthorpe: How is the Mannville competing for capital with your other liquids growth opportunities?

How is the manville, a competing for capital with your other liquids growth opportunities.

Speaker 6: Yeah, I mean the multilateral is working out very well. Obviously, as you step out, you'll find areas where the viscosity is a little bit...

Tim McKay: Yeah. I mean, multilaterals is working out very well. Obviously, as you step out, you'll find areas where the viscosity is a little bit too thick, I would say, or too viscous, and the productivities aren't as good. But generally, we're in the generally lower viscosity areas, and the productivities have been excellent. You know, from a capital perspective, when we look overall, they're basically very similar to whether you're drilling in the Clearwater, which is, in my mind, kind of the same thing. To me, it's all about the areas you pick, how your drilling costs and how your access costs can be lower.

Yes, I mean, they see.

The multilateral is working out very well, obviously as you step out youll find areas where the.

Coffee is a little bit too.

Speaker 6: thick I would say or too viscous and the productivities aren't as good, but generally we're in the generally lower viscosity areas and the productivities have been excellent and you know from a capital perspective when we look overall it's

I would say are two viscous and the productivity just aren't as good.

But generally we're in the the generally lower viscosity areas and the productivity have been excellent and from.

From a capital perspective.

When we look overall at the.

Speaker 6: They're basically very similar to whether you're drilling in the clear water, which is in my mind kind of the same thing. To me, it's all about the areas you pick, how your drilling costs and how your access costs can be lower. So you're in the Bonneville Lloyd-Minister area, we see lower.

Basically very similar to whether you're drilling in the Clearwater.

In my mind kind of the same thing.

To me, it's all about the areas you pick how you're drilling costs and how your access costs can be lower so join the Bonneville like Minister area, we see lower.

Tim McKay: you know, in the Bonnyville, Lloydminster area, we see lower costs of entry because of the access, and they compete very well against the Clearwater.

Tim McKay: You know, in the Bonnyville, Lloydminster area, we see lower costs of entry because of the access, and they compete very well against the Clearwater.

Speaker 6: cost of entrance because of the access and they compete very well against the Clearwater.

Cost of entrants because of the access and they compete very well against the Clearwater.

Mark Stainthorpe: Perfect. Thanks a lot, Tim. Congratulations, and I'll turn it back.

Menno Hulshof: Perfect. Thanks a lot, Tim. Congratulations, and I'll turn it back.

Speaker 9: Perfect. Thanks a lot Tim. Congratulations and I'll turn it back.

Perfect. Thanks, a lot Tim congratulations and I'll turn it back.

Tim McKay: Thank you.

Okay.

Speaker 1: Thank you. The next question comes from Patrick O'Vorick at ATB Capital Markets. Please go ahead.

Operator: Thank you. The next question comes from Patrick O'Rourke at ATB Capital Markets. Please go ahead.

Thank you. The next question comes from Patrick or Mark at <unk> Capital markets. Please go ahead.

Speaker 10: Okay guys, thank you very much for taking my questions. And first of all, obviously, congratulations to Tim and Scott on everything that's gone on here with the transition. Just first question with respect to KMX here on the Cusp of Line Fill, whether it's in Q4, Q1. And maybe if you can give us some sort of view of how you think about extracting value through marketing barrels.

Patrick O'Rourke: Okay, guys. Thank you very much for taking my questions. You know, first off, obviously congratulations to Tim McKay and Scott Stauth on everything that's gone on here with the transition. Just, you know, first question with respect to TMX here, on the initial line fill, whether it's in Q4 or Q1, and maybe if you can give us some sort of view of how you think about extracting value through marketing barrels on this asset and maybe a breakdown of, you know, you've got a lot of synthetic barrels there, you've got Dilbit. How do you anticipate you'll break that down when that pipe comes on?

Okay guys. Thank you very much for taking my questions.

And you know first off obviously, congratulations to Tim and Scott on everything that's gone on here with the transition.

Just.

First question with respect to <unk> here are on the cusp of mindful, whether it's in Q4 Q1, and maybe if you can give us some sort of view of how you think about extracting value through marketing barrels.

Speaker 10: on this asset and maybe you break down, you know, you've got a lot of synthetic barrels there, you've got a little bit, how you anticipate, you'll break that down when that pipe comes on.

On the SaaS side, and maybe break down you know you've got a lot of synthetic barrels there you've got deal debt.

How do you anticipate youll break that down when the pipe comes on.

Speaker 6: Yeah, well, you know, when TMX does call for oil and it's operational, well, you know, first of all, it's going to take roughly about four and a half.

Tim McKay: Yeah. Well, you know, when TMX does call for oil and is operational, well, you know, first of all, it's gonna take roughly about 4.5 million barrels out of the market. So that'll be a positive for differentials and, you know, gives Western Canada more egress. So, I look at that as very constructive for Western Canada. You know, as far as the marketing of the barrels, you know, just like, you know, any area, what will happen is, and you allude to, we have quite a slate of different varieties of oil that we can supply to that market.

Yeah.

<unk> does call for oil and and his operational well you know first of all it's going to take a roughly about four and a half.

Speaker 3: million barrels out of the market, so I'll be a positive for differentials and give Western Canada more egress. So I look at that as very constructive for Western Canada. As far as the marketing of the barrels, just like any area.

Barrels out of the market, so that'll be a positive for our differentials.

And you don't give us gifts western Canada more egress. So I look at it that is very constructive for Western Canada.

As far as the marketing of the barrels.

You know it.

Just like any.

Any area.

Speaker 6: What will happen is that you've looted to, we have quite a slate of different

What will happen is and you've alluded to we have quite a slate of different varieties of the oil that we can supply to the to that market. So.

Speaker 6: varieties of oil that we can supply to that to that market.

Tim McKay: You know, when it does come up and running, our marketing group has got some ideas in terms of the types of slate that will be opportune in those areas. You know, as the market develops, there may be certain markets that want certain types of crudes. Like, let's say, it may be more advantageous for synthetic to move to that market versus where it's going today. You know, part of that is gonna be how the market develops and how different customers want or would like certain slates that we have available.

Speaker 6: When it does come up and running, our marketing group has got some ideas in terms of the types of slate that will be opportune in those areas. But as the market develops, there may be certain markets that want certain types of crudes. Like, let's say, it may be more ad-vigages for synthetic to move to that market.

You know when it when it does come up and running and our marketing group has got some ideas in terms of the types of slate that will be.

Hum too in those areas, but.

You know as the market develops there may be.

Certain markets that want certain types of.

Crudes like let's say it may be more edvige pages for synthetic to move to that market.

Speaker 6: versus where it's going today. So you know part of that is going to be how the market develops and how different customers want or would like certain states that we have available. So it's it's it's pretty early to say but you know, I would look at it that as TMX gets up and running will optimize our slate to maximize the netback of those barrels.

Where it's going today. So you know part of that it's going to be how the market develops and how different customers.

What are we like certain slate that we have available. So it's a it's pretty early to say, but you.

Tim McKay: It's pretty early to say, but you know, I would look at it that as TMX gets up and running, we'll optimize our slates to maximize the netback of those barrels.

I would look at it that AR has TNX gets up and running we'll optimize our slate to maximize netback of those barrels.

Patrick O'Rourke: Okay. Just a second question, kind of shifting gears a little bit, but maybe a bit interrelated here. You talked about the ebbs and flows of sort of working capital builds from quarter to quarter here. I'm just wondering how that is impacting, you know, sort of the projections and philosophies around the return of capital structure, in particular, with share buybacks going, you know, forward over, say, the next two, three, four quarters.

Speaker 10: Okay, and just second question, kind of shifting gears a little bit, but maybe a bit interrelated here. You talk about the ebbs and flows of sort of working capital builds from quarter quarter here. I'm just wondering how that is impacting, you know, sort of the projections and philosophies around the return of capital structure in particular with share buybacks going, you know, forward over state of the next two, three, four quarters.

Okay and.

Just a second question kind of shifting gears, a little bit, but maybe a bit unrelated here I'm just talking about the ebbs and flows of sort of working capital builds from quarter to quarter here and I'm. Just wondering how that is impacting some of the projections and philosophies around the return of capital structure in particular.

With share buybacks going forward over say the next 234 quarters.

Mark Stainthorpe: Hey, Patrick, it's Mark. You know, the impact to the shareholder returns is minimal. I mean, we've got a policy in place that, you know, we have our free funds flow less dividend, and currently, until we get to the CAD 10 billion, 50% is going to buybacks and 50% to the balance sheet. That will turn to 100% here as we, you know, forecast currently to get to that CAD 10 billion in Q1. The working capital moves, in my view, are just regular business that happen, because you have accounting closes on certain months. To me, there's very little impact for that going forward as we, you know, as we manage that, increasing returns to shareholders.

Hey, Patrick it's Mark.

Speaker 4: You know, the impact to the share returns is minimal. We've got a policy in place that...

You know the impact to the share returns is minimal I mean, we've got a policy in place that.

Speaker 4: You know, we have our funds full lesser dividend and currently until we get to the 10 billion 50% is going to buy backs and 50% to the balance sheet and that will turn to 100% here as

We have our funds' full lesser dividend and currently until we get to the $10 billion and 50% is going to buybacks and 50% to the balance sheet and that will turn to a 100% here as we forecast currently to get to that $10 billion in Q1.

Speaker 4: forecast currently to get to that 10 billion in Q1. The working capital moves in my view are just regular business that happen because you have accounting closes on certain months. So to me there's very little impact for that going forward as we you know as we manage that increasing returns to shareholders.

Working capital moves in my view are just regular business that happened.

Because you have accounting closes on certain a certain months. So to me, there's very little impact for that going forward. As we you know as we manage that increasing returns to shareholders.

Patrick O'Rourke: Okay. Thank you very much.

Okay.

Thank you very much.

Yeah.

Operator: Thank you. The next question comes from John Royall at J.P. Morgan. Please go ahead.

Speaker 1: Thank you. The next question comes from John Royale at JP Morgan. Please go ahead.

Thank you. The next question comes from John Royale at J P. Morgan. Please go ahead.

Speaker 11: Hi, good morning. Thanks for taking my question. So I have a question on capital allocation. I think you're tracking a little under your 50% allocation year to date. If I did the math right, it's about 40%. Should we expect to catch up in 4Q or conversely to make more sense to pull back a little in 4Q and get the that explore more quickly?

John Royall: Hi, good morning. Thanks for taking my question. I have a question on capital allocation. I think you're tracking a little under your 50% allocation year to date. If I did the math right, it's about 40%. Should we expect a catch-up in Q4? Or conversely, does it make more sense to pull back a little in Q4 and get to that floor more quickly?

Hi, good morning, Thanks for taking my question.

So.

I have a question on capital allocation I think you're you're tracking a little under 50% allocation year to date, if I did the math right. Its about 40% should we expect to catch up and for Q or Conversely does it make more sense to pull back a little and pork you would get to get to that score more quickly.

Speaker 4: Yeah, we'll evaluate as we go through the quarter here. We're going to get close. We try and manage as close as we can to the policy. Of course, you've seen, based on the numbers, a reporter here this morning that in October , the buyback program has increased from the pace we've gone through for the rest of the year. But yeah, so we'll manage as best we can to close to that 50% for now until again, we get to that $10 billion.

Mark Stainthorpe: Yeah. We'll evaluate as we go through the quarter here. We're gonna get, you know, close. We try and manage as close as we can to the policy. Of course, you've seen, you know, based on the numbers reported here this morning, that in October, the buyback program has, you know, increased from the pace we've gone through for the rest of the year. We'll manage as best we can to, you know, close to that 50% for now until again we get to that CAD 10 billion, and then it moves to 100%.

Yeah, well, we'll evaluate as we go through the quarter here, we're gonna get close we try and manage it as close as we can to the policy of course, you've seen you know based on the numbers reported here. This morning that in October the buyback program has.

Creased from the pace, we've gone through for the rest of the year, but yeah. So we'll manage as best we can to closer to that 50% for now until again, we get to that $10 billion and then it moves to a 100%.

John Royall: Great. Just another on capital allocation. This one's on the dividend hike. Can you talk about why the 11% is the right level for the hike and also the frequency? I think it's been three hikes now, I think up 33% over the past 5 quarters. Should we think about this as kind of a gradual reset on a view of structurally higher earnings? Or is it simply maybe that your policy was a little bit more conservative than it needed to be before, and you're catching that up or some combination? Just any color there would be helpful.

Speaker 11: Great. And then just another on capital allocation. This one's on the dividend hike. Can you talk about why the 11% is the right level for the hike? And also the frequency, I think it's been three hikes now, I think up 33% over the past five quarters. Should we think about this as kind of a gradual reset on a view of structural, we hire earnings or is it simply maybe your policy was a little bit more conservative than it needed to be before and you're catching that up or some combination, just any color there would be helpful.

Great and then just another one on capital allocation and this one is on the dividend hike.

Can you talk about why the 11% is the right level for the hike and also the frequency I think it's been three.

Three hikes now pick up 33% over the past five quarters, how should we think about this as kind of a gradual reset on our view of structurally higher earnings or is it simply maybe your policy was a little bit more conservative than it needed to be before.

And you're catching that up or some combination just any color there would be helpful.

Speaker 4: Yeah, I mean, every quarter, of course, the board reviews the dividend and we evaluate the level based, you know, largely on sustainability through cycles. You know, when we look at the significant free cash flow generation, how well, you know, the effect of operations, the sustainable dividend is there at lower commodity price.

Tim McKay: Yeah, I mean, every quarter, of course, the board reviews the dividend and we evaluate the level based, you know, largely on sustainability through cycles. You know, when we look at the significant free cash flow generation, how well, you know, the effect of operations, the sustainable dividend is there at lower commodity prices. We take that look at the balance sheet and how we're approaching that, you know, CAD 10 billion of net debt, you know, along with the ongoing buyback program, the dividend increase made sense at this time and at that level. You know, I can't necessarily speak for the board on cadence and when those happen, but, you know, I know the dividend level will be reviewed at every meeting, like I said.

Mark Stainthorpe: Yeah, I mean, every quarter, of course, the board reviews the dividend and we evaluate the level based, you know, largely on sustainability through cycles. You know, when we look at the significant free cash flow generation, how well, you know, the effect of operations, the sustainable dividend is there at lower commodity prices. We take that look at the balance sheet and how we're approaching that, you know, CAD 10 billion of net debt, you know, along with the ongoing buyback program, the dividend increase made sense at this time and at that level. You know, I can't necessarily speak for the board on cadence and when those happen, but, you know, I know the dividend level will be reviewed at every meeting, like I said.

I mean every quarter of course, the board reviews, the dividend and we evaluate the level based largely on sustainability through cycles. You know when we look at the significant free cash flow generation, how well you know the effective operations the sustainable dividend is there at lower commodity prices.

Speaker 4: And we take that, look at the balance sheet and how we're approaching that 10 billion of net debt.

And when you take that and look at the balance sheet and how we're approaching that $10 billion of net debt along with our ongoing buyback program. The dividend increase made sense at this time and at that level.

Speaker 4: along with the ongoing buyback program. The dividend increase made sense at this time and at that level. I can't necessarily speak for the board on cadence and when those happen, but I know the dividend level will be reviewed at every meeting, like I said. And with low-break evens, low decline production, our business can support further dividend increases. So it's gotta just be taken in context with all the shareholder term profile given the significant buyback program going on.

I can't necessarily speak for the board on on cadence and when those happen, but I know the dividend level will be reviewed at every meeting like I said.

Tim McKay: With low breakevens, low decline production, our business can, you know, support further dividend increases. It's got to just be taken in context with all the shareholder return profile, you know, given the significant buyback program going on as well.

Mark Stainthorpe: With low breakevens, low decline production, our business can, you know, support further dividend increases. It's got to just be taken in context with all the shareholder return profile, you know, given the significant buyback program going on as well.

And with low breakeven is low decline production our business can support further dividend increases. So it's got to just be taken in context with all the shareholder term profile you know given the significant buyback program going on as well.

John Royall: Thank you.

Thank you.

Speaker 1: Thank you. Next question comes from Manav Gupta from UBS. Please go ahead.

Operator: Thank you. Next question comes from Manav Gupta from UBS. Please go ahead.

Thank you. Your next question comes from Manav Gupta from UBS. Please go ahead.

Manav Gupta: Good morning, guys. My question is on the Oil Sands mining and upgrading volumes. A very strong rebound versus Q3 was kind of expected, but still pretty strong number. Can you share some data around October? And then how should we think about Q4 versus Q3 as it relates to Oil Sands volumes?

Speaker 12: Good morning, guys. My question is on the oil science mining upgrade volumes. Very strong rebound versus 3Q. What's coming up expected? But so a pretty strong number. Can you share some data around October and then how should we think about the fourth quarter versus the third quarter as it leads to oil science volume?

Good morning, guys. So my question is on the oil sands mining how big volumes are very strong rebound versus Q, whilst going off expected, but seemed pretty strong number can you share some data around October and then how should we think about the.

The fourth quarter versus the third quarter as it relates to oil sands volumes.

Tim McKay: Yeah. Sorry. In terms of. Well, I would say that after the turnaround, we should be pretty steady. To me, you know, I feel a good run is between the kind of that 490 to 500 range, what I would call top-tier runs. That's always our target, to be within that kind of range. Obviously there's always, you know, your turnarounds that you have to make sure you model in. You know, that to me is, from my perspective, I like to see a number that's 490+.

Speaker 6: That's sorry, in terms of, well, I would say that after the turnaround we should be pretty steady. So to me, you know, I feel a good run is between the kind of that 490 to 500 range is what I would call top tier run.

Sorry in terms of well I would say that after the turnaround we should be pretty steady so to me.

I feel a good run is between the kind of that 490 to 500 range is what I would call top tier runs.

Speaker 6: And so that's always our target is to be within that kind of range. Obviously, there's always, you know, your turn around, so you have to make sure you model in. But, you know, that to me is...

And so that's always our target is to be within that kind of range. Obviously, there is always a yo yo.

Turnarounds that you have to make sure you model in but.

So that to me is.

Speaker 6: from my perspective, but I like to see a number that's 490 plus.

From my perspective, I'd like to see a number that's Florida 90, plus.

Speaker 12: Perfect. And also if you could give us some of your views on the both near and medium term the differentials we have seen some widening on the WCS side and then I think synthetic is now below TI it was trading over TI. So in your view, when the line actually does start to fill should we expect this to narrow or when the line actually I mean I'm trying to understand well the line will actually impact the differentials or the line would have to flow to impact the differentials what you view over there.

Manav Gupta: Perfect. Also, if you could give us some of your views on both the near and medium term differentials. We have seen some widening on the WCS side, and then I think synthetic is now below WTI. It was trading over WTI. In your view, when the line actually does start to fill, should we expect these diffs to narrow? Or when the line actually, I mean, I'm trying to understand, will the line fill actually impact the differentials, or the line would have to flow to impact the differentials? What's your view over there?

Perfect and also if you could give us some of your views on the both near and medium term differentials. We have seen some widening on the WCS side and then I think synthetic is now below Ti close trading all with the eye.

In your view.

When the line actually desktop so should we expect these dip to narrow or when the line activity I mean, I'm trying to understand where the line then actually impact the differential or the line we'd have to flow through impact of the differential was what you have you are there.

Speaker 6: Yeah, well, I'll give you my opinion on it. To me, when TMX calls, the differentials will shrink again. I think this is a short-term lift. Obviously, many companies, including themselves, had incremental volumes coming on in the fall here, based on TMX being up and running. So I look at it as a short-term pressure on the differentials.

Tim McKay: Yeah. Well, I'll give you my opinion on it. To me, when TMX comes, the differentials will shrink again. I think this is a short-term blip. Obviously, many companies, including ourselves, had incremental volumes coming on in the fall here, based on TMX being up and running. So, I look at it as a short-term pressure on the differentials. Also, you know, the refineries were doing some maintenance. Those refinery programs are pretty much wrapped up, so that pressure will come off. You know, as far as crack spreads, you know, again, the differential is kind of wide, so I see that putting a little pressure on synthetic in the short term.

Yeah, well I'll give you my opinion on it to me.

<unk> coals.

Differentials will will shrink again I think this is a short term blip obviously.

Many companies, including ourselves had incremental volumes coming on in the fall here based on T X are being up and running so.

I look at it as a short term pressure on the on the differentials.

Speaker 6: Also, you know, there are fineries. We're doing some maintenance. Those were finery programs.

Also the refineries were doing.

Some maintenance those refinery.

Programs are pretty much wrapped up so available.

Speaker 6: so that pressure will come off and

That pressure will come off and.

Speaker 6: You know as far as cracks, you know, again, the differential is kind of wide, so I see that putting a little pressure on the synthetic in the short term, but cracks.

You know what as far as crack spreads.

Again, the differential is kind of wide so I see that.

Putting a little pressure on the synthetic in the short term, but to cracks and general crack spreads are strong and synthetic.

Tim McKay: Cracks in general, crack spreads are strong, and synthetic will probably stay at a little bit of a premium. I just think this is just a short-term pressure, you know, 'cause, you know, the nominations were higher. You've seen the apportionment move up to about 24%. You know, really, once TMX calls for oil and starts moving it, that pressure will come off the apportionment.

Speaker 6: general cracks spread is strong and synthetic will probably stay there's a little bit of a premium. So I guess this is just a short term pressure, you know, because the nominations were higher. You've seen the porcimates move up to about 24%. And you know, really once TMX calls for the world and it starts moving it, that pressure will come off the apportionment.

It will probably stay there a little bit of a premium so.

I just think this is just a short term.

Pressure.

Because the.

The nominations were higher you've seen the portion of it move up to about 24%.

And Oh really.

Once T M X as a cultural and it starts moving it.

That pressure will come off the apportionment.

Manav Gupta: Thank you so much.

Thank you so much.

Tim McKay: You're welcome.

Speaker 13: blo.

Hello.

Operator: Thank you, ladies and gentlemen. As a reminder, should you have any questions, please press star one now. Next question comes from Doug Leggate from Bank of America. Please go ahead.

Speaker 1: Thank you ladies and gentlemen. As a reminder, should you have any questions? Please press star one now.

Thank you, ladies and gentlemen, as a reminder, should you have any questions. Please press star one now.

Speaker 1: Next question comes from Doug Luget from Bank of America. Please go ahead.

Next question comes from Doug Leggate from Bank of America. Please go ahead.

John Royall: Hey, guys. Good morning. This is Kalei for Doug. Thanks very much for taking my question. I guess this one is a follow-up to Manav's question. You've addressed some of the tension between the volumes and the WCS pricing, but I guess I'm thinking about this more in the context of 2024 planning, because it looks like the industry is trying to ramp up into TMX, but startup still looks fairly uncertain. I'm wondering, as you're going through that budgeting process, what does the scenario planning look like?

Kalei Akamine: Hey, guys. Good morning. This is Kalei for Doug. Thanks very much for taking my question. I guess this one is a follow-up to Manav's question. You've addressed some of the tension between the volumes and the WCS pricing, but I guess I'm thinking about this more in the context of 2024 planning, because it looks like the industry is trying to ramp up into TMX, but startup still looks fairly uncertain. I'm wondering, as you're going through that budgeting process, what does the scenario planning look like?

Speaker 14: Hey, guys, good morning. This is Kaleon for Doug. So, thanks very much for taking my questions. I guess this one is a follow-up to Manab's question. You've addressed some of the tension between the volumes and the WCS pricing, but I guess I'm thinking about this more in the context of 24 planning, because it looks like the industry is trying to ramp up into TMX, but startup still looks fairly uncertain. So, I'm wondering, as you're going through that budgeting process, what does the scenario planning look like?

Hey, guys. Good morning. This is clay on for Doug. So thanks very much for taking my question I guess this one is a follow up to my knowledge question.

You've addressed some of the tension between the volumes and the WCS pricing, but I guess I'm thinking about this more in the context of 24 planning because it looks like the industry is trying to ramp up into Tms startup still looks fairly uncertain. So I'm wondering as youre going through that budgeting process. What is the scenario planning look like.

Speaker 6: Yeah, you know what? For me, it doesn't change our 24 plan. You know, when I look at it, the TMX is coming very quickly. Last reports, there were...

Tim McKay: Yeah. You know what? I, it, for me, it doesn't change our 2024 plan. You know, when I look at it, the TMX is coming very quickly. Last reports, they were, you know, 90-some percent done. So, to me, it's just a matter of which month, you know, it'll start the line fill and then start to ramp up its operations. So if you look at Western Canada, the storage levels are, you know, 30% or whatever it is and pretty steady. So, you know, as long as, you know, the egress pipelines are run reasonably well, the storage piece is not climbing that high. I mean, we've had much higher storage levels in Western Canada in the past.

Yeah, you know what.

Oh, it's for me it doesn't change our 24 plan.

When I look at it the Tms is coming very quickly last reports there were 90.

Speaker 3: 97% done so to me it's just a matter of which month the you know, it'll start

<unk> 90, some percent done so.

To me, it's just a matter of which month.

It will start the <unk>.

Speaker 6: line pill and then start to ramp up this operation. So if you look at the western cat, the storage levels are...

The line fill and then start to ramp up its operations. So if you look at our Western Canada the storage levels are.

Speaker 6: 30% or whatever it is and pretty steady. So, you know, as long as, you know, the FDA-aggress pipelines are run reasonably well, eaggress is the historic piece is not climbing that high. I mean, we've had much higher storage levels in Western Canada in the past. And so I just look at it. It's just a more of a timing issue and you know, it will not impact 24. ?

30% or whatever it is and pretty steady so.

You know as long as you.

You know the FDA gras pipelines or run reasonably well.

The pipe the storage piece is not climbing.

That that high I mean, we've had a much higher storage levels in western Canada in the past and so I just look at it it's just to have more of a timing issue and.

Tim McKay: I just look at it's just more of a timing issue, you know, that it will not impact 2024 at all in my mind.

You know that it will not impact going forward in fact.

That all in my mind.

Kalei Akamine: Got it. I appreciate that. Maybe for the next one, I'm hoping that I can get you to comment on your long-term outlook for natural gas pricing. It's really in the context of LNG Canada starting up sometime in the near future. As that comes up, do you see a new dynamic for Canadian natural gas emerging? Do you think that the scale of the Canadian gas resource sort of keeps returns for gas at a more modest premium? How does that play into your views of gas M&A in the basin?

Speaker 14: Got it. I appreciate that. Maybe for the next one, I'm hoping that I can get you to comment on your long-term outlook for natural gas pricing. And it's really in the context of Bollinger Canada starting up sometime in the near future. So as that comes up, do you see a new dynamic for Canadian natural gas emerging? Or do you think that the scale of the Canadian gas resource sort of keeps returns for gas at a more modest premium? And how does that play into your views of gas M&A and the basin?

Got it I appreciate that.

Maybe for the next one I'm, hoping that I can get you to comment on your long term outlook for natural gas pricing.

And it's really in the context that LNG, Canada, starting up sometime in the near future. So as that comes up do you see a new dynamic for Canadian natural gas emerging or do you think that the scale of the Canadian gas resource.

Keeps returns for gas at a more moderate spring, yet and how does that play into your views of gas M&A in the basin.

Tim McKay: Yeah, that's a tough question to say. I mean, you know, I look at Western Canada. You know, it does have egress issues in terms of whether it's oil or natural gas. You know, it's very important that these incremental egress operations run reliably and consistently. You know, I really do not know the timing of LNG Canada. I've heard it looks like into next year, mid-next year. You know, I think it'll still.

Speaker 6: Yeah, that's a tough question to say. I mean, I look at the question, Canada. It does have heat graphs issues in terms of whether it's oil or natural gas. And so it's very important that these incremental heat graphs operations run reliably.

Yeah, that's that's a tough.

Tough question to say I mean.

I look at the.

Western Canada. It does have a egress issues in terms of.

Whether it's oil or natural gas in and so it's very important that these incremental egress operations run.

Reliably and.

Speaker 6: So, you know, I really, you know, do not know the timing of Allen G. Cata. It looks like into next year, mid-next year, but so, you know, I think it will still...

Consistently so.

I really do.

I do not know the timing of LNG, Canada crude it looks like into next year mid next year, but.

So I think you'll still.

Tim McKay: You know, because there are so many good opportunities in natural gas, Montney primarily in Western Canada that any egress that does open up, I think that the companies here in Western Canada are very efficient in terms of filling that space, so provided that the pricing is right. Difficult to say, you know, where it will all level out. I do know that the Montney in all areas is quite prolific. You know, we've had very good results in our Montney operations, both on the oil side and natural gas side. I just see that incremental egress will be filled in short time.

Speaker 6: You know, because there are so many good opportunities for natural gas mining.

Because there's so many.

Good opportunities in natural gas Montney, primarily in.

Speaker 6: primarily in Western Canada, that any egress that does

In Western Canada that are.

Any egress set.

Speaker 6: Open up. I think that the company here in Western Canada are very efficient in terms of filling that space. So provided that the pricing is right. So difficult to say, you know, where will I level out? But I do know that the Montenegro in all areas is quite prolific and you know, we've had very good results in our Montenegro operations both on the oil side and.

It does.

Open up I think that the companies here in Western Canada are very efficient in terms of.

Filling that space so.

Provided that the pricing is right so difficult.

Difficult to say, where it will level out.

I do know that the montney in all areas is quite prolific and we've had very good results in our Montney operations, both on the oil side and natural gas sites. So.

Speaker 6: natural gas sites, so I just see that incremental egress will be filled in.

I, just see that to incremental egress will be filled.

In short time.

Speaker 14: Got it. I appreciate that. And we look forward to seeing Mark and Houston for a conference in a couple of weeks. Take care, guys.

Kalei Akamine: Got it. I appreciate that. We look forward to seeing Mark in Houston for our conference in a couple of weeks. Take care, guys.

Got it I appreciate that and we look forward to seeing Mark in Houston for a conflict that a couple of weeks take care guys.

Tim McKay: Thank you.

Thank you.

Speaker 1: Thank you there no further questions I'll try to call back over for closing comments.

Lance Casson: Thank you.

Mark Stainthorpe: Thank you.

Operator: Thank you. There are no further questions. I'll turn the call back over for closing comments.

Thank you there are no further questions I will turn the call back over for closing comments.

Lance Casson: Thank you, operator. Thanks everyone for joining us this morning. If you have any follow-up questions, please give us a call. Thanks, and have a great day.

Speaker 2: Thank you, operator, and thanks everyone for joining us this morning. If you have any follow-up questions, please give us a call. Thanks, and have a great day.

Thank you operator, and thanks, everyone for joining us. This morning, if you have any follow up questions. Please give us a call thanks and have a great day.

Speaker 1: Ladies and gentlemen, this concludes your conference call for today. Well, we thank you for participating and we ask that you please disconnect your lines.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and we ask that you. Please disconnect your lines.

Yeah.

Q3 2023 Canadian Natural Resources Ltd Earnings Call

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