Q3 2023 Canadian Natural Resources Ltd Earnings Call
Good morning, we would like to welcome everyone to the Canadian Natural resources 2023 third quarter earnings conference call and webcast after.
After the presentation, we will conduct a question and answer session.
<unk> will be given at that time.
Please note that this call is being recorded today November 2nd 'twenty to 'twenty three at nine a M Mountain time I would now like to turn the meeting over to your host for today's call Lance Cashman manager of Investor Relations. Please go ahead.
Good morning, everyone and thank you for joining Canadian Natural's third quarter 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 in Canadian dollars, unless otherwise stated annual report our reserves and production before royalties.
Additionally, I would suggest for your comments on non-GAAP disclosures in our financial statements.
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.
Mark will then summarize our strong financial results, including significant free cash flow generation and increasing shareholder returns.
Jim will summarize our call prior to opening up the line for questions.
I'll turn it over to you Tim.
Thank you Lance good morning, everyone in the third quarter, we achieved record quarterly production of approximately $1 three 9 million <unk> per day, which included both record liquids production at approximately $1 million 35000 barrels a day.
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.
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 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.
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.
Our 2020 baseline on our journey to achieve our goal of net zero GHT emissions and your 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 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 approximate.
Approximately $2, one four Bcf a day versus Q3 2022.
As well, we added volumes through our <unk>.
Drill to fill strategy, adding low cost high value liquids rich production across the asset during the quarter. The company drilled 10 net wells.
Meeting expectations, our North American Q3, natural gas operating cost was $1 22 per Mcf, a decrease of 8% compared to Q3 2022.
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, where north American light oil and NGL Q3 production was approximately 109000.
In barrels a day comparable to the Q3 2022.
109252 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.
Our international assets in Q3 at all production.
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 I've been Indianapolis.
Moving to have you all.
Have you all production was 76377 barrels a day in Q3 2023 up 11% from 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 dollars 23.
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. The company drilled 34 net heavy oil wells.
Which were multilateral across our land base from Bonneville like Minister 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 46897 barrels a day down 6% versus Q3, 2022 average of 50051 barrels per day, reflecting.
The low decline nature of the property.
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%. The team continues to focus on operational excellence and then.
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.
To generate excellent netback.
Our thermal in situ areas in Q3 2023, as a result of strong execution combined with effective efficient operations Q3, 'twenty three thermal production was 287085 barrels a day.
Ultimately 44000 barrels a day from Q3 2022 production of 243393 barrels a day.
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 has grown it by approximately 15000 barrels a day from Q4 2022 level.
The significant production growth is due to the development to forsake deep pads, the first which reached full capacity in Q3 23.
The remaining three target.
Targeted ramp up to full production over the next nine months or 24 at a pace of one pad per quarter, maintaining its production level.
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.
Oil sands mining.
The company has world class oil sands mining operation.
Upgrading assets, we had Q3 production 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.
Versus Q3 'twenty two.
$22 35 per barrel.
The reliability. It has been project continues to move toward targeting to add approximately 14000 barrels a day of additional capacity in 2025.
Results of shifting the maintenance schedule once per year to once every two years, reducing downtime for maintenance activities and increasing overall reliability at Iraq.
Also here with me today is part of our succession plan I have Scottsdale, Trevor Cassidy, J frock and Robin feedback.
As part of my 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 replaces Scott.
Previous role as CEO of <unk>.
As well in Q4, Trevor Cassidy after 24 years with Canadian natural will be retiring.
What's the 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 will assume the role of COO exploration and production I will now turn it over to Mark for a financial review.
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.
This was due to strong pricing and good cost control, which contributed to a robust net backs 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 and repurchasing shares and reducing debt.
Year to date up to and including November one 2023, we have returned approximately $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 $1 per common share from <unk> 90 per common share.
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% increased to $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 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.
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.
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.
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.
Our robust sustainable free cash flow.
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 reliable operations enhancing our top tier operations.
<unk> and we will continue to drive top tier environmental performance with that I will now open it up for questions.
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 Touchtone phone.
Actually Tom prompt acknowledging your request if you are using a speaker phone. Please go ahead of the handset before pressing any.
Your first question comes from Dennis Fong from CIBC World markets. Please go ahead.
Hi, Good morning, and I guess first off congrats Tim on your upcoming retirement and just Scott on the promotion.
My first question here just related to.
Obviously, where we're entering the winter can you give us 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.
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.
Yes, it does well in general every fall.
The teams start to make sure that all areas of potential frees up our insulated.
Heat traced.
<unk>.
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.
Covering all of the areas of potential frees up so.
And generally we monitor it.
Quite vigorously as we move towards the winter.
Great great. Thanks, I appreciate that.
And then my second question is just related to the <unk>.
Optimization that you're driving to at the oil sands mining.
Business unit.
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 already have a lineup that facility at an even higher level.
Yes, 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 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.
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 <unk>.
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.
And to me, it's all about making those extra barrels.
Each and every day.
Perfect I appreciate the color I'll turn it back and again congratulations.
Thank you.
Thank you. The next question comes from Neil Mehta with Goldman Sachs. Please go ahead.
Yeah. Thank you and congrats Scott and congrats Jim on your retirement to I guess, maybe thats, where well start which is over the last five years stock has done really well, it's 100 billion dollar Canadian.
The company at this point in terms of market cap.
Tim as you retire how do you think about the next five years, what's the next leg.
Value creation is it the same playbook, whereas there's any strategic change that you see.
Necessary to get to the next level.
Yeah.
Is that question for Scott There Bill sorry.
So both of you.
Oh.
Okay.
I'll start first.
Canadian natural is.
I'm very fortunate in that we have a huge.
We serve.
Base, so so I look at it going forward.
No.
We've got to continue to do what we do best.
Drive top tier operations high reliability.
We were very fortunate that we have that.
Huge.
Reserve base that.
We can basically grow production.
<unk> sure.
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.
There's also been the drillbit paraffinic dill bit that we could do there there's opportunities in the thermal side.
Gas from the Montney so to me.
We just have to keep.
Keep doing what we do well in.
And on top of that.
As always there.
We're always opportunistic acquisitions that can come our way and we're very good at doing those should.
Opportunity come that way, so I don't really see any real change to our to our business I think it's.
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 happened.
This is Scott Yeah, Yeah, Neill I agree with everything Tim said and.
The robust nature of our assets are free cash flow generation of the companies.
<unk> been able to develop over the years and continue to work on and improve and I.
I don't see our focus changing tammo lined everything that 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.
Great. Thanks, Tim.
All 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 and I'm just curious on your views on whether there is room for further consolidation in Canada and.
Perspectives on on seeing keys potential royalty.
Yes, I mean, so what I mean.
Consolidation.
Could happen here in Canada as well.
You know that the key is that for US anyway says we have a huge reserve base and so we don't have to.
Do any acquisitions to create.
Find more reserves, so we have that part in the peg.
To me, we can sit back do what we do.
Do best and that's just to exploit those opportunities.
<unk> <unk>.
Be methodical with our growth plan.
Should something opportunistic happened our way.
That may happen, but.
To me.
We've got one of the largest reserve.
Hum.
Opportunities.
So.
The key for us.
Okay. Thanks.
Thanks.
Yes.
Thank you. The next question comes from Greg Pardy with RBC capital markets. Please go ahead.
Yes, thanks, good morning, and thanks for the rundown.
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.
So I wanted to stay a little bit on the successor ship you know I was going through your infill circular recently in it and 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.
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 so to me.
It's never a surprise, it's a well thought out.
People are generally.
Move to different positions for grooming.
Her learning however, you want to call it and as people grow with the company.
And they perform.
Generally moved right along so it's to me.
The longevity of the people that come here.
I love the culture that we're.
Working with people and they loved the opportunities the company has before it so.
To me, it's just a great.
Great place to work in a great place that we can developer are holding people internally and promote within.
Okay got it thanks for that and then ill completely switch gears, maybe just.
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.
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.
Yeah sure Greg So I mean in Q4.
I kind of mentioned earlier, we're targeting 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.
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 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.
And then as far as T. M X, yes, there'll be a working capital build for <unk> line filled but that is not going to be significant to us at all.
And 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 at 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 WCF Gibson and such so.
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.
Okay got it thanks guys.
Yeah.
Thank you. The next question comes from Menno, how shocks TD Securities. Please go ahead.
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.
I 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 staging for deployment deployment of autonomous hauling look like at 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.
Sure I'll, just hop Scott because thats a perfect lead in for us.
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.
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.
So from our perspective, we'll continue to watch the technology as it improves over the years.
And stay abreast from the vendors of anything.
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.
Thanks, Scott and just to clarify is that pilot of Jacqueline still running or did you why not down.
There was a there wasn't a original pilot.
Years ago, and and but it was more from a collision avoidance.
Shell had carried on before our time that we took over in 2017.
Okay got.
Got it and then maybe just moving on to the to the heavy oil program and the Lloyd Mr. Mandel given the.
So re emergence 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.
How is the manville, a competing for capital with your other liquids growth opportunities.
Yes, I mean, that's the.
Multilateral is working out very well, obviously as you step out youll find areas where.
The viscosity is little bit too thick I would say are two viscous and the productivity is 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 basically very similar to whether you're drilling in the Clearwater, which is in my mind kind of the same thing.
It's all about.
Areas you pick.
Oh, you are drilling costs and how your access costs can be lower so joined the Bonneville.
Minister area, we see lower.
Cost of entrants because of the access and they compete very well against the Clearwater.
Perfect. Thanks, a lot Tim congratulations and I'll turn it back.
Okay.
Thank you. The next question comes from Patrick or Mark at <unk> Capital markets. Please go ahead.
Oh, Hey, guys. Thank you very much for taking my questions.
And 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 on the hospital mindful, whether it is in Q4 Q1, and maybe if you can give us some sort of view of how you think about extracting value through marketing barrels.
On the SaaS side, and maybe break down you've got a lot of synthetic barrels there you've got deal that.
How do you anticipate youll break that down when the pipe comes on.
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 five.
Barrels out of the market, so that'll be a positive for our differentials.
And you don't give us gives western Canada more egress. So I look at it that is very constructive for western Canada.
As far as the marketing of the barrels.
Yeah.
Just like.
Any any area.
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.
When it when it does come up and running or our marketing group has got some ideas in terms of the types of slate that will be.
Hum too 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 edvige tejas sports synthetic to move to that market.
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.
It's pretty early to say, but.
I would look at it that has TNX gets up and running we'll optimize our sleep to maximize netback of those barrels.
Okay and.
Just a second question kind of shifting gears, a little bit maybe a bit unrelated here just talking about the ebbs and flows of sort of working capital builds from quarter to quarter. Here. I was just wondering how that is impacting you know sort of projections and philosophies around the return of capital structure in particular with.
With share buybacks going forward over say the next 234 quarters.
Hey, Patrick it's Mark.
The impact to the share returns is minimal I mean, we've got a policy in place that are.
You know, 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.
Working capital moves in my view are just regular business that happened.
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.
Okay.
Thank you very much.
Thank you. The next question comes from John Royall at J P. Morgan. Please go ahead.
Hi, good morning, Thanks for taking my question.
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 you would get to get to that score more quickly.
Yeah.
Yeah, well, we'll evaluate as we go through the quarter here, we're gonna get 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 increased.
<unk> increased from the pace, we've gone through for the rest of the year, but yeah. So we will 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 100%.
Great and then just another one on capital allocation. This one is on the dividend hike can.
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 I think up 33% over the past five quarters should we think about this as kind of a gradual reset on on our view of structurally higher earnings or is it simply maybe youre 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.
I mean every quarter of course, the board reviews, the dividend and we evaluate the level based largely on sustainability through cycles.
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.
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.
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.
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 given the significant buyback program going on as well.
Thank you.
Thank you. Your next question comes from Manav Gupta from UBS. Please go ahead.
Good morning, guys. My question is on the oil Sands mining update volumes are very strong rebound versus TQ, whilst kind of expected, but seemed pretty strong number can you share some data around <unk>.
And then how should we think about the.
The fourth quarter versus the third quarter as it relates to oil sands volumes.
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.
And so that's always.
Our target is to be within that kind of range. Obviously, there is always a you know your turnarounds that you have to make sure you model in but.
You know that to me is it.
From my perspective, I'd like to see a number that's 490 plus.
Perfect and also if you could give us some of your views on the both near and medium term differentials that you had seen some widening on the WCS side and then I think synthetic is now below Ti close trading all with the eye. So in your view.
Devin the line activity desktop so should we expect these depths to narrow or when the line activity I mean, I'm trying to understand where the line will actually impact the differential or the line we'd have to flow through impact. The differential is what's your view on that.
Yeah, well Oh, it could be in 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 <unk> being up and running so.
I look at it as a short term pressure on the on the differentials.
Also the refineries were doing some maintenance those refinery.
Programs are pretty much wrapped up so available.
That pressure will come off and.
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.
Cracks and general crack spreads as strong and synthetic will probably stay there a little bit of a premium so.
I just think this is just a short term.
Pressure.
Because no other nominations were higher you've seen the portion of it the move up to about 24%.
And Oh really.
Once <unk> X is a cultural world and it starts moving it.
That pressure will come off the apportionment.
Thank you so much.
Hello.
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.
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 <unk> 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 T. Amex startup still looks fairly uncertain. So I'm wondering as youre going through that budgeting process. What is the scenario planning it looked like.
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 they were not.
97% done so.
To me, it's just a matter of which month.
It will start the <unk>.
The line fill and then start to ramp up its operations. So if you look at our Western Canada the storage levels are.
30% or whatever it is and pretty steady so.
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.
Much higher storage levels in Western Canada in the past and so I just look at it it's just a.
It's more of a timing issue and.
That it will not impact going forward in fact.
That all in my mind.
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 that LNG, Canada, starting out 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 moderate spring yet.
And how does that play into your views of gas M&A in the basin.
Yeah, that's that's a tough.
Tough question to say I mean.
I look at.
Western Canada. It does have egress issues in terms of.
Whether it's oil or natural gas.
And so it's very important that these incremental egress operations run.
Reliably.
And.
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.
Good opportunities in natural gas money primarily.
In Canada that.
Any egress set.
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 to.
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 side. So.
See that incremental egress will be filled.
In short time.
Got it I appreciate that and we look forward to continuing mark in Houston for a conflict that a couple of weeks take care guys.
Thank you. Thank you.
Thank you there are no further questions I will turn the call back over for closing comments.
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