Q4 2023 Canadian Natural Resources Ltd Earnings Call

Operator: Good morning. We would like to welcome everyone to Canadian Natural's 2023 fourth quarter and year-end earnings conference call and webcast. After the presentation, we will conduct a question and answer session, and instructions will be given at that time.

Good morning.

Speaker Change: Welcome everyone to Canadian Natural's, 2023, fourth quarter and year end earnings conference call and webcast.

Speaker Change: After the presentation, we will conduct a question and answer session.

Speaker Change: Instructions will be given at that time.

Operator: Please note that this call is being recorded today, February 29, 2024, at 9 a.m. Mountain Time. I would now like to turn the meeting over to your host for today's call, Lance Casson, Manager of Investor Relations. Please go ahead.

Speaker Change: Note that this call is being recorded today.

Speaker Change: It was 29 2024 at nine a M mountain time.

Speaker Change: I would now like to turn the meeting over to your host for today's call launch Catherine manager of Investor Relations. Please go ahead.

Lance Casson: Thank you, operator. Good morning, everyone, and thank you for joining Canadian Natural's fourth quarter and annual 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 is in Canadian dollars unless otherwise stated, and we report our reserves and production before royalties. Additionally, I would suggest you review our comments on non-GAAP disclosures in our Financial Statements. Speaking on today's call with me today are Tim McKay, Vice Chairman, Scott Steltz Tim will first speak to how our strategy and execution have resulted in strong corporate results.

Catherine: Thank you operator, good morning, everyone and thank you for joining Canadian Natural's fourth quarter and annual 2023 earnings Conference call.

Catherine: 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 is in Canadian dollars, unless otherwise stated and.

Catherine: And we report our reserves and production before royalties.

Catherine: Additionally, I would suggest to you we're in on a review of our comments on non-GAAP disclosures in our financial statements.

Timothy Shawn McKay: Speaking on today's call with me today are Tim Mckay base, Jeremy Scott Stealth President Robbins day back cheap Chief operating officer, conventional E&P and Mark <unk>, our Chief Financial Officer.

Timothy Shawn McKay: Tim will first speak to our strategy and execution has resulted in strong corporate results Scott will deliver specifics on our record production and additional details on our safe reliable and world class operations.

Lance Casson: Scott will deliver specifics on our record production and additional details on our safe, reliable, and world-class operations. Next, Robin will provide highlights of our growing high-value reserves. And then Mark will summarize our strong financial results, including increasing shareholder returns as we reached an important net debt milestone. To close, Scott will summarize prior to opening up the line for questions. With that, I'll turn it over to you, Tim. Thank you, Lance. Good morning, everyone.

Jeremy Scott: Next Robyn will provide highlights of our growing high valley reserves.

Jeremy Scott: And then Mark will summarize our strong financial results, including increasing shareholder returns as we reached an important net debt milestone.

Jeremy Scott: To close Scott will summarize prior to open up the line for questions.

Jeremy Scott: I'll turn it over to you Tim.

Timothy Shawn McKay: Thank you Lance good morning, everyone. Canadian natural has a proven effective strategy and as a result in 2023, we delivered on our capital allocation strategy.

Timothy Shawn McKay: Canadian Natural has a proven, effective strategy, and as a result, in 2023, we delivered on our capital allocation strategy. We strengthened our balance sheet, we provided significant returns to shareholders, and we were strategic in developing our assets, achieving record annual production, as well as growing our reserves organically on both a total proven and total proven plus probable basis, with reserve replacement ratios of 166% and 194%, respectively. The strong execution in 23 sets us up to continue to deliver on our capital allocation strategy through our disciplined 24 capital budget of approximately $5.4 billion. This budget is strategically weighted to longer cycle thermal development in the first half of 2024 and shorter growth in the second half, targeting a strong exit production level. As well, it provides us with the flexibility to adjust to changing market conditions and evolving market conditions, ensuring we are allocating capital effectively and maximizing value for our shareholders.

Timothy Shawn McKay: Strengthen our balance sheet, we provided significant returns to shareholders as well we were strategic in developing our assets achieving record annual production as well as growing our reserves organically on a both total proven and pull proven plus probable basis with reserve replacement ratios of 166.

Timothy Shawn McKay: 194% respectively.

Timothy Shawn McKay: Strong execution in 'twenty three sets us up to continue to deliver on our capital allocation strategy through our discipline 24 capital budget of approximately $5 4 billion.

Timothy Shawn McKay: This budget strategically weighted to longer cycle thermal development in the first half 'twenty four and shorter growth in the second half of the year targeting strong exit production levels.

Timothy Shawn McKay: As well it provides us the flexibility to adjust to changing market egress and evolving market conditions, ensuring we are allocating capital effectively and maximizing value for our shareholders.

Timothy Shawn McKay: Canadian Natural is committed to supporting Canada's and Alberta's climate goals, and we continue to reduce our environmental footprint with our robust environmental targets, including net zero GHG emissions in the oil sands by 2050. We are uniquely positioned with diverse, long-life, low-decline assets that are ideal to apply technologies to reduce GHG emissions and provide industry-leading environmental performance. We believe it's important to continue to work together with the Canadian and Alberta governments to make Pathways Alliance a transformative industry collaboration and achieve meaningful GHG reductions in Canada. We believe Canadian energy is one of the most responsibly produced sources of energy in the world and should be a preferred energy source. Technology, Gnancy Wright. Vice versa is always the best insurance. Thank you. I have to get back to him for more.

Timothy Shawn McKay: Canadian natural is committed to supporting Canada, and Alberta climate goals, and we continue to reduce our environmental footprint with a robust environmental targets, including net zero GHT emissions and you all times by 2050.

Timothy Shawn McKay: We are uniquely positioned with a diverse long life low decline assets, which are ideal to apply technologies to reduce G. H D emissions and provide industry, leading environmental performance.

We believe it's important to continue to work together with with the Canadian and Alberta government to make pathways alive, a transformative industry collaboration and achieve meaningful ghd reductions in Canada. We believe Canadian energy is one of the most responsibly produced sources of energy in the world and should be a pre.

Unnamed Speaker: There was a lot of conflict when we16 heard about this. Yes, it makes me sick.

Scott Steltz: I was in Philadelphia, going to the states, and felt greeted with a lot of respect. I may not have been supposed to be there. e at a Hawaiian family essentials session. He was maybe just 20 years old. I will now turn it over to Scott for a detailed review. Thank you, Tim, and good morning, everyone. 2023 was a solid year for us, with strong execution in our operations and record production levels across our diverse product mix generating significant free cash flow, resulting in strong shareholder returns through our sustainable and growing dividend and significant share repurchase. We achieved record annual production of approximately 1.33 million BOEs per day, which included both record liquids production of 973,500 barrels per day and record total natural gas production of approximately 2.15 BCF per day, as a result of effective and efficient operations across all assets.

Timothy Shawn McKay: <unk> energy.

Timothy Shawn McKay: Joyce I will now turn it over to Scott for a detailed review.

Scott: Thank you Tim and good morning, everyone 2023 was a solid year for us with strong execution in our operations and record production levels across our diverse product mix generated significant free cash flow, resulting in strong shareholder returns through our sustainable and growing dividend and.

Scott: Significant share repurchases.

Scott: We achieved record annual production of approximately 133 million Boe per day, which included both record liquids production of 973500 barrels per day and record total natural gas production of approximately $2 one five bcf per day.

Scott: As a result of effective and efficient operations across all assets.

Scott Steltz: Strong production in the second half of the year mitigated the impacts of wildfires and unplanned pipeline outages and natural field declines as annual production is up 4% from 2022 levels or up 7% on a production per share basis. I will now run through our asset highlights, starting with our robust natural gas asset. We had strong execution, including achieving record North American natural gas production. Averaging approximately 2.14 BCF in 2023, and while this is up 3% on an annual basis from 2022. The increase on a Q4 to Q4 basis is over 100 million MCF per day. Operating costs on our natural gas averaged $1.27 per MCF in 2023, which is up 7% from 2022, primarily as a result of higher service costs.

Scott: <unk> production in the second half of the year mitigated the impacts of wildfires and unplanned pipeline outage and natural field declines as annual production is up 4% from 2022 levels are up 7% on a production per share basis.

Scott: I will now run through our asset highlights starting with our robust natural gas assets.

We had strong execution, including achieving record North American natural gas production, averaging approximately $2. One four bcf in 2023 and while this is up 3% on an annual basis from 2022. The increase on a Q4 to Q4 basis is over 100 million Mcf per day.

Scott: Operating costs in our natural gas averaged $1 27 per Mcf in 2023, which is up 7% from 2022, primarily as a result of higher service cost. We continue to focus on cost control and effective and efficient operations to offset cost pressures.

Scott Steltz: We continue to focus on cost control and effective and efficient operations to offset cost per barrel. North American Light Crude Oil and NGL production averaged over 109,000 barrels per day in 2023, comparable to 2022 levels. Operating costs on our North American Light Crude Oil and NGL operations averaged $16.28 per barrel in 2023, an increase of 2% over 2022 levels, reflecting higher service costs. Our Lloyd Oil, NGL, and natural gas production was impacted by wildfires and a third-party pipeline outage in the early part of the year, which partially offset the growth from our capital-efficient drill-to-fill strategy on our liquids-rich money in deep-basin assets. Primary heavy oil production of approximately 77,700 barrels per day in 2023 is up 15% from 2022, reflecting strong results from our multilateral heavy oil wells The primary heavy oil operating cost averaged $19.85 per barrel in 2023, which is down 9% from 2022 levels, primarily reflecting lower energy costs.

Scott: North American light oil and NGL production averaged over 109000 barrels per day in 2023 comparable to 2022 levels.

Scott: Operating costs in our North American light crude oil and Ngls operations averaged $16 28 per barrel in 2023, an increase of 2% or 2022 levels, reflecting higher service cost.

Scott: Our light oil NGL and natural gas production was impacted by wildfires and a third party pipeline outage in the early part of the year, which partially offset the growth from our capital efficient drill to fill strategy on our liquids rich montney and deep basin assets.

Scott: Primary heavy oil production of approximately 77700 barrels per day in 2023, which is up 15% from 2022, reflecting strong results from our multilateral heavy oil wells in both the Manville and Clearwater fairways.

Scott: Primary heavy oil operating cost averaged $19 85 to barrel in 2023, which is down 9% from 2022 levels, primarily reflecting lower energy costs.

Scott: Our Pelican Lake production averaged just over 46000 barrels per day in 2023, which is down 5% from 2022, reflecting the long life low decline nature of this world class polymer flood house that our operating costs at Pelican Lake remains strong averaging $8 58 per barrel.

Scott Steltz: Our Pelican Lake production averaged just over 46,000 barrels per day in 2023, which is down 5% from 2022, reflecting the long life, low decline nature of this world-class polymer floodhouse. Our operating costs at Pelican Lake remain strong, averaging $8.58 per barrel in 2020. In our thermal operations, we achieved record thermal in-situ production in 2023, averaging 262,000 barrels per day, an increase of 4% from 2022. Thermal production also finished the year strong, averaging approximately 278,000 barrels per day in Q4. The growth in our thermal production was driven by strong execution on our thermal development plan, including capital efficient pad additions in Primrose and Kirby that came on production in 2023, partially offset by natural fielding. 2023 operating costs averaged $13.17 per barrel, which is down 20% compared to 2022, primarily due to lower energy costs.

In 2023.

Scott: And our thermal operations, we achieved record thermal in situ production in 2023, averaging 262000 barrels per day, an increase of 4% from 2022.

Scott: Thermal production also finished the year strong averaging approximately 278000 barrels per day in Q4.

Scott: The growth in our thermal production was driven by strong execution on our thermal development plan, including capital efficient pad editions in the Primrose and Kirby that came on production in 2023, partially offset by natural field declines.

Scott: 2023, operating cost averaged $13 17 per barrel, which is down 20% compared to 2022, primarily on lower energy costs.

At Primrose, we are drilling two cyclic steam pads this year, which are targeted to come on in production. In Q2 2025. We're also drilling a saggy patent Wolf Lake, which is targeted to come on production in Q1 of 2025.

Scott: At Kirby two of the four previously drilled safety pads have now reached their full production capacities with the two remaining pads targeted to wrap up the full production capacities in mid 2024.

Scott: At Jackfish.

Scott: <unk> pads that were drilled in 2023 are targeted to wrap up to their full production capacities in Q3 and Q4 of this year supporting continued high utilization rates at the jackfish facilities.

Scott Steltz: Primrose, we are drilling two cyclic steam paths this year, which are targeted to come on stream in Q2 2025. We're also drilling a SAG-D pad at Wolf Lake, which is targeted to come on production in Q1 of 2020. Kirby Two of the four previously drilled SAGD pads have now reached their full production capacity, with the two remaining paths targeted to wrap up their full production capacities in mid-2021; these are jackfish. Two SAG-D pads that were drilled in 2023 are targeted to wrap up to their full production capacities in Q3 and Q4 of this year, supporting continued high utilization rates at the Jackfish facility. We are targeting to drill an additional SAGD pad in Jackfish in the second half of this year, with production from this pad targeted to come on stream in Q3 of 2025.

Scott: Targeting to drill an additional safety patent jackfish in the second half of this year with production from this pad targeted come on production in Q3 of 2025.

Scott: We also have a commercial scale solvent Sag D pad development in Kirby North, which is approximately 80% complete now and we are targeting to begin solvent injection mid 2024.

Scott: We continue to use solve an enhanced recovery pilot and the steam flood area at Primrose, two optimize solve and efficiency and to further evaluate the commercial development opportunity.

Scott: We have planned turnarounds.

Scott: Jackfish and Kirby in the second quarter, which are targeted to impact Q2, 2024 production by approximately 17100 barrels per day, which is included in our production guidance disclosed with our 2020 for capital budget.

Scott: In our oil Sands mining operations, we achieved strong results in 2023 at our World class oil sands mining and upgrading assets hitting new production annual record production levels with SCO production, averaging approximately 451000 barrels per day in 2023 and just over.

Scott Steltz: We also have a commercial-scale solvent SAG-B pad development in Kirby North, which is approximately 80% complete now, and we are targeting to begin solvent injection mid-2024. We continue to use a solvent-enhanced recovery pilot in the steam flood area at Primrose to optimize solvent efficiency and to further evaluate the commercial development opportunity.

Scott: 500000 barrels per day in Q4.

Scott Steltz: We have planned turnarounds in Jackfish and Kirby in the second quarter, which are targeted to impact Q2 2024 production by approximately 17,100 barrels per day, which is included in our production guidance disclosed with our 2024 capital budget. In our oil sands mining operations, we achieved strong results in 2023 at a world-class oil sands mining and upgrading assets, getting new production annual record production levels, SCO production averaging approximately 451,000 barrels per day in 2023 and just over 500,000 barrels per day in Q4. We've been able to achieve these strong record production levels as we focus on continuous improvement and increased overall reliability through safe, reliable, and effective and efficient operations. Operating costs in Royal Sands' mining and upgrading assets are top tier and averaged $24.32 in 2023, which is down 7% from 2022, primarily reflecting higher production volume and Lower Energy Costs.

Scott: We've been able to achieve these strong record production levels as we focus on continuous improvement and increased overall reliability through safe reliable and effective and efficient operations.

Scott: Operating costs in our oil sands mining and upgrading assets are top tier and averaged $24 32 in 2023, which is down 7% from 2022, primarily reflecting higher production volumes and lower energy cost.

Scott: As previously noted in our 2020 for budget at Horizon, we have a turnaround planned in Q2 2024 with a full plant outage targeted for approximately 30 days.

Scott: The estimated impact to Q2 quarterly production average production is approximately 89000 barrels per day and remains unchanged from budget.

Scott: We will be completing the remainder of the tie ins on the reliability enhancement project during the planned turnaround at horizon in Q2 of this year. This project will allow us to skip a turnaround in 2025 as we shift the downtime related to maintenance activities to once every two years instead of once a year.

Scott: In 2025, we are targeting to increase capacity by approximately 28000 barrels per day or approximately 14000 barrels per day on a two year average basis of incremental high value SCO production.

Scott Steltz: Previously noted in our 2024 budget, at Horizon, we have a turnaround planned in Q2 2024 with a full plant outage targeted for approximately 30 days. The estimated impact on Q2 quarterly average production is approximately 89,000 barrels per day and remains unchanged from the budget. We will be completing the remainder of the tie-ins on the Reliability Enhancement Project during the planned turnaround at Horizon in Q2 of this year. This project will allow us to skip a turnaround in 2025 as we shift the downtime related to maintenance activities to once every two years instead of once every year. So, in 2025, we are targeting increased capacity by approximately 28,000 barrels per day, or approximately 14,000 barrels per day on a two-year average basis of incremental high-value SEO production. At AOSP, we have two turnarounds this year at the non-operated Scottford Upgrader, where the upgrader will operate at reduced rates.

Scott: At AOSP, we have two turnarounds this year at the non operated Scott product grade or for the upgrader will operate at reduced rates.

Scott: The first turnaround was originally targeted for 10 days in April 2024, but has now been moved into March.

Scott: Some additional scope has been added which will extend the duration of this maintenance period 17 days, but there is no change to the estimated production impact of approximately 10000 barrels per day as production rates are targeted to run higher with the addition of the scope additions compared to the original targeted 10 day production rate.

Scott: This change will now shift to production impact into Q1 'twenty four.

Scott: Instead of Q2.

Scott: The second turnaround at the sculptured upgrader is targeted to begin in September 2024, and progress for a duration of 49 days no change from what was previously announced with our budget.

Scott: Total combined annual impact from production from the turnarounds of Scott effort at AOSP will remain unchanged from the budget at approximately 12400 barrels per day.

Scott Steltz: The first turnaround was originally targeted for 10 days in April 2024, but it has now been moved into March. Some additional scope has been added, so we will extend the duration of this maintenance period to 17 days. There is no change to the estimated production impact of approximately 10,000 barrels per day.

We also have a deep bottlenecking projects at the <unk> Upgrader, which is planned to be completed during the Q4 2020 for turnaround and is targeted to add incremental capacity of approximately 5600 barrels per day net to Canadian natural.

Scott Steltz: The production rates are targeted to run higher with the scope additions compared to the original targeted 10-day production. This change will now shift the production impact into Q1 2024. Statute.

Scott: Beyond this as previously announced with our 2020 for budget.

Scott: We have the naphtha recovery unit tailings treatment project, which is targeted to add approximately 6300 barrels per day of SCO. In late 2027. This project also provides environmental benefits, including a 6% reduction in horizons scope, one emissions and lower reclamation costs over the life of the Horizon project.

Scott Steltz: The second turnaround at the Scotford Upgrader is targeted to begin in September 2024, progressing for a duration of 49 days. No change from what was previously announced with our Total combined annual impact from production from the turnarounds at Scotford and AOSP will remain unchanged from the budget at approximately 12,400 barrels. We also have a deep bottlenecking project at the Scotford Upgrader, which is planned to be completed during the Q4 2024 turnaround and is targeted to add incremental capacity of approximately 5,600 barrels per day net to Canadian Natural. Beyond this, as previously announced in our 2024 budget, we have the NAFTA Recovery Unit Tailings Treatment Project, which is targeted to add approximately 6,200 barrels per day of SEO in late 2027. This project also provides environmental benefits, including a 6% reduction in Horizons Scope 1 emissions and lower reclamation costs over the life of the Horizon project.

Scott: Now I will turn it over to Robyn to speak to our year end reserves.

Robyn: Thank you Scott and good morning, everyone.

Robyn: As in previous years, 100% of Canadian Natural's reserves are externally evaluated and reviewed by independent qualified reserve evaluators.

Robyn: Our 2023 reserves disclosure is presented in accordance with Canadian reporting requirements using forecast prices and escalated costs on a before royalties company working interest basis.

Speaker Change: As you've just heard from Scott Canadian natural had another strong year, which is also demonstrated by the Companys reserves.

Speaker Change: For 2023 total proved reserves increased by 2% to $13 9 billion Boe.

Speaker Change: Of which $8 8 billion Boe.

Speaker Change: Proved developed producing reserves.

Speaker Change: Total proved plus probable reserves increased by 3% to $18 5 billion Boe.

Speaker Change: The strength and depth of Canadian Natural's assets are a competitive advantage, which is evidenced by our reserves life.

Speaker Change: Notably approximately 75% of total proved reserves are from long life low decline assets with approximately 50% of total proved reserves consisting of high value synthetic crude oil with a zero decline and our reserve life index of 44 years.

Robin Zabek: Now I will turn it over to Robin to speak to our year-end results. Scott, and good. As in previous years, 100% of Canadian natural reserves are externally evaluated and reviewed by independent, qualified researchers.

Speaker Change: As a result of Canadian Natural's unique world class assets, our corporate total proved reserve life Index is 32 years and our total proved plus probable reserve life Index is 43 years.

Robin Zabek: Our 2023 Reserves Disclosure is presented in accordance with Canadian reporting requirements. For royalties, the Company Working Interest.

Speaker Change: In 2023, the strength of Canadian Natural's assets and results also continued to be reflected in the key indicators of finding and development costs and reserve replacement.

Robin Zabek: As you just heard from Scott, Canadian Natural had another strong year, which is also demonstrated by the company. 2023 total proved reserves increased by two percent. 13.9 billion viewers, of which 8.8 billion BOE are proved developed producers.

Speaker Change: Corporate finding development and acquisition costs, including changes changes in future development costs are $9 25 per BOE for total proved reserves at $8 and <unk> 28 per Boe for.

Robin Zabek: Total proved plus probable reserves increased by 3% to $18.5 billion. Strength and Depth of Canadian Natural Resources are a competitive advantage, which is evidenced by our results. Notably, approximately 75% of total proved reserves are from long-life, low-decline, with approximately

Speaker Change: Our total proved plus probable reserves.

Speaker Change: Additionally, as Tim noted in 2023 Canadian natural replaced production by 166% on a total proved basis and 194% on a total proved plus probable basis.

Speaker Change: The net present value of future net revenue before income tax using a 10% discount rate and including the full company asset retirement obligation is approximately 154 1 billion for.

Robin Zabek: Resources. High-Value Synthetic, bennington.com, Preserve Light Index, as a result of Canadian Natural's unique world-class assets. Corporate Total Proved Reserve Light Index is 32. Total Proved Plus Probable Reserve Light Index. In 2023, the strength of Canadian Natural's assets and results also contributed to Canada's Reflections. Investigators of Finding and Development Costs. Corporate Finding, Development, and Acquisition Costs. Engineers.

Speaker Change: Our total proved reserves and approximately 186 billion.

Speaker Change: For total proved plus probable reserves.

Speaker Change: In summary.

Speaker Change: Our 2023 reserves reflect the strength and depth of Canadian natural's assets the.

Speaker Change: The value of the Companys long life, low decline reserves and our proven ability to execute.

Speaker Change: I will now hand over to Mark.

Mark: For the financial highlights.

Mark: Thanks, Robin and good morning, everyone.

Mark: The fourth quarter of 2023 was a strong financial quarter as we generated adjusted funds flow of $4 4 billion and adjusted net earnings of operations of $2 5 billion.

Robin Zabek: Thank you. Development Code, $9.25 per person, Resources. Thank you. Thank you. Additionally, as Jim...

The fourth quarter contributed to what was a very strong year in 2023 with impressive results as we achieved record production with disciplined capital allocation and robust financial results.

Robin Zabek: Replaced Production by a hundred, Proof Bases, 1994, Resources, and the National Science Foundation. Thank you. Thank you. Net Present Value. Producer NET Rev. Foreign Income Tax.

Mark: For example in 2023, we grew our production by 7% per share.

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Mark: Grew our <unk> reserves by 7% per share.

Mark: Hey, just under 5% and dividend yield purchased $3 3 billion in shares under our <unk> program and reached $10 billion in net debt earlier than originally targeted.

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Mark A. Stainthorpe: 2023 Reserves reflect the strength and depth of natural resources. It is a natural asset. The, and our crew. Now I hand over to Mark. For more information, visit www.microsoft.com. Thanks, Robin, and good morning, everyone.

Mark: This shifts our free cash flow allocation to now target, 100% of free cash flow to 2024 in 2024 being returned to shareholders in the form of dividends and share buybacks.

Mark A. Stainthorpe: The fourth quarter of 2023 was a strong financial quarter as we generated an adjusted funds flow of $4.4 billion and adjusted net earnings of operations of $2.5 billion. The fourth quarter contributed to what was a very strong year in 2023 with impressive results as we achieved record production, disciplined capital allocation, and robust financial results. For example, in 2023, we grew our production by 7% per share, grew our 2P reserves by 7% per share, paid just under 5% in dividend yield, purchased $3.3 billion in shares under our NCIB program, and reached $10 billion in net debt earlier than originally targeted. This shifts our free cash flow allocation to now target 100% of free cash flow in 2024 being returned to shareholders in the form of dividends and share buybacks.

Mark: These results are driven by safe effective and efficient operations and a unique asset base to deliver significant free cash flow.

Mark: Subsequent to quarter end the board of directors has approved a 5% increase to our base quarterly dividend to $1 five 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.

Mark: We have increased our dividend for 24 consecutive years with a compound annual growth rate of 21% over that time.

Mark: Additionally, the board has approved subject to shareholder and regulatory approval at our May annual meeting I propose a proposal to split the company shares on a two for one basis.

Mark: Our financial position is very strong with debt to EBITDA at <unk> six times at the end of 2023, and we continue to make strong liquidity.

Mark A. Stainthorpe: These results are driven by safe, effective, and efficient operations and a unique asset base that delivers significant free cash flow. Subsequent to quarter end, the Board of Directors has approved a 5% increase to our base quarterly dividend to $1.05 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 assets. We have increased our dividend for 24 consecutive years, with a compound annual growth rate of 21% over that period. Additionally, the board has approved, subject to shareholder and regulatory approval at our May annual meeting, a proposal to split the company's shares on a two-for-one basis.

Mark: Including revolving bank facilities cash and short term investments liquidity at the end of 2023 was approximately $6 9 billion.

Mark: With our disciplined 2024 capital budget low maintenance capital requirements, and our long life low decline asset base, we target to deliver strong returns on capital with robust free cash flow, while continuing to provide significant returns to shareholders in 2024.

Mark: With that I'll turn it over to you Scott for some final comments.

Scott: Thanks, Mark in closing 2023 was a strong year for Canadian natural both operationally and financially providing significant returns to our shareholders.

Scott Steltz: Our financial position is very strong, with debt to EBITDA at 0.6 times at the end of 2023, and we continue to mainstream liquidity. Including revolving bank facilities, cash, and short-term investments, liquidity at the end of 2023 was approximately $6.9 billion. With our Discipline 2024 Capital Budget, low maintenance capital requirements, and a long life, low decline asset base, we target to deliver strong returns on capital with robust free cash flow while continuing to provide significant returns to shareholders in 2020. With that, I'll turn it over to you, Scott, for some final comments. Thanks, Mark. In closing, 2023 was a strong year for Canadian Natural, both operationally and financially, providing significant returns to our shareholders. We will continue to focus on safe, reliable operations, as well as enhancing our top-tier operations, and we will continue to drive top-tier environmental performance. I would also like to say a special thank you to Tim McKay for all his outstanding service and leadership at Canadian Natural. In his new role as Vice-Chairman, Tim will continue to support the management of Canadian Natural.

Scott: We will continue to focus on safe reliable operations as well as enhancing our top tier operations and we will continue to drive top tier environmental performance.

Scott: I would also like to say a special thank you to Tim Mckay for all his outstanding service and leadership at Canadian natural and in his new role as Vice Chairman, Tim will continue to support the management team.

Scott: As you all know Canadian natural has a history of well established leadership succession plan that ensures we are maintaining our culture and delivering top tier performance.

Scott: With that I will turn it over for questions.

Speaker Change: Thank you.

Speaker Change: 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 you touched on some you will get your hand has been great.

Speaker Change: To do this the decline from the coding process. Please press the star followed by the tail. If you are using a speaker phone. Please lift the handset before pressing <unk>.

Speaker Change: One moment. Please for your first question.

Speaker Change: Your first question is from Doug Leggate from Bank of America. Please ask your question.

Doug Leggate: Thanks, gentlemen, good morning, Thanks for taking my question and impressive by any measure.

Scott Steltz: As you all know, Canadian Natural has a history of well-established leadership succession plans that ensures we are maintaining our culture and delivering top-tier performance. With that, I will turn it over to 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 number on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline the polling process, please press the star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any key.

Doug Leggate: But I wonder if I could just poke a little bit on the capital budget.

Doug Leggate: $5 4 billion for the year, obviously that comes with growth not only for this year, but also for 2025, if I had to try and strip out back to growth versus sustaining capital what would that look like.

Doug Leggate: Hey, Doug it's Mark here.

Mark: Base capital or maintenance capital to growth capital, we're probably running in the neighborhood of that $1 billion of growth capital.

Mark: But.

Mark: It varies because of the nature of the asset base rate piece, because what Youre doing is for example in 2024 were drilling some of the.

Doug Legate: One moment, please, for your first question. Your first question is from Doug Legate from Bank of America. Please ask your question. Thanks, gentlemen. Good morning.

Mark: Longer life asset earlier.

Mark A. Stainthorpe: Thanks for taking my question. Impressive by any measure. But I wonder if I could just poke a little bit at the capital budget. So, 5.4 billion for the year. Obviously, that comes with growth, not only for this year but also for 2025. If I had to try and strip that back to growth versus sustaining capital, what would that look like? Hey, Doug, it's Mark here.

Mark: Earlier in the year. So we're doing the thermal production here and we're doing the <unk>.

Mark: Conventional tight lower slower capital exposure opportunities later in the in the year and that's really to match up with that egress opportunity. So year over year, it's going to change what you think of or how you classify I guess growth capital on that basis, because we are doing growth capital and thermal for example, but you don't see some of that production until next.

Mark: Karen.

Speaker Change: So very clear Mark I guess my follow up is kind of a related question on it.

Mark A. Stainthorpe: On a base capital or maintenance capital to growth capital, we're probably running in the neighborhood of a billion dollars of growth capital. But you know, it varies because of the nature of the asset base, because what you're doing is, For example, in 2024, we're drilling some of the earlier in the year, so we're doing thermal production here.

It goes to the issue of egress I mean, there's a lot of things obviously going on in Canada, <unk> is perhaps front of mind.

Mark: But there is also tied to LNG down the road on you've got 7% exit growth. This year on gas in your plan. So my question is.

Is there any I mean would you anticipate any flex in the.

Mark A. Stainthorpe: Conventional type lower capital exposure opportunities later in the year, and that's really to match up with that egress opportunity. So year over year, it's going to change what you think of or how you classify capital on that basis, because we are doing growth capital in thermal, for example, but you don't see some of that. It's a very clear mark.

Mark: And the growth plan, specifically as it relates to gas in the second half of the year, given where <unk> is trading I'm just curious if theres a risk of the Capex budget ends up being lighter.

Mark: Lower gas production growth for 2024.

Speaker Change: Yes, it's a good question I think Thats fair.

Speaker Change: The great part about the robust nature of our assets and so for US we're able to as we move forward here throughout the year continue to monitor the pricing and of course, we will allocate our capital to those areas that are going to provide us with the with the best returns so we ever have.

Scott Steltz: I guess my follow-up is kind of a related question, and it really goes to that issue of egress. I mean, there are a lot of things obviously going on in Canada. TMX is perhaps front of mind, but there's also Canada LNG down the road, and you've got 7% exit growth this year on gas in your plan. So my question is, is there any, I mean, would you anticipate any flex? In the growth plan, specifically as it relates to gas in the second half of the year, given where ECO is trading, I'm just curious if there's a risk that the CAPEX budget ends up being lighter with lower gas production growth for 2024. Yeah, it's a good question. I think that's the great part about the robust nature of our assets.

Speaker Change: All properties, yes, we ever gas properties, but we're just going to continue to monitor prices as we go forward and we'll react accordingly, but to your point the LNG, Canada project should being some.

Speaker Change: I'm relieved to the to the ecosystem and that's what we're thinking of it as well.

Speaker Change: Terrific great stuff. Thanks, so much guys.

Speaker Change: Thanks, Doug.

Speaker Change: Thank you.

Speaker Change: Our next question is from Greg Pardy from RBC capital markets. Please ask your question.

Greg Pardy: Yeah. Thanks, Thanks, Good morning, I guess, a big congrats to Tim and thanks, so much for the support over the over the year. So looking forward to your role as Vice Chairman.

There are not a lot of questions to ask I think with recent looks like this but.

Scott Steltz: And so for us, we're able to, as we move forward here throughout the year, continue to monitor prices, and, of course, allocate our capital to those areas that are going to provide us with the best returns. So we have our heavy oil properties, yes, we have our gas properties, but we're just going to continue to monitor the prices as we go forward, and we'll react accordingly. But to your point, the LNG Canada project should bring some relief to the eco-system, which is what we're thinking of as well. Terrific. Great stuff. Thanks so much, guys. Good afternoon.

Greg Pardy: One that might come up is just what your operating performance has looked like thus far in the first quarter.

Greg Pardy: There were one or two questions in terms of that cold snap you had I think back in January as to whether there was any impact on the business served by and large things are as expected.

Greg Pardy: Yes, Thanks, Greg It's Scott here so.

Scott: Yes, Youre right.

Scott: Those extreme cold weather stretches like what we saw in January there is always short term challenges in our conventional and oil sands mining assets are generally either.

Greg Pardy: Thank you. Your next question is from Greg Pardy from RBC Capital Markets. Please ask your question. Yeah, thanks. Good morning.

Scott: In this case their short lived and the teams did a great job of managing through them So no material impact.

Speaker Change: Okay, Great that was the question or the answer I was looking for.

Scott Steltz: And I guess, you know, big congratulations to Tim and thanks so much for the support over the last year. I'm so looking forward to your role as Vice Chairman. There are not a lot of questions to ask, I think, with results like this, but one that might come up is just what your operating performance has looked like thus far in the first quarter. And, you know, there were one or two questions in terms of that cold snap we had, I think, back in January as to whether there was any, you know, impact on the business, or, by and large, things are as expected. Yeah, thanks, Greg. It's Scott here.

Speaker Change: And maybe a question for Mark.

Mark: With respect to the shareholder returns of the framework you have now.

Mark: Given that you've effectively flipped over Jan first and I believe I think you mentioned in your buybacks are circa $350 million. So up until about now hopefully I've got that number right.

Mark: Can we sort of expect to catch up in March and to what extent might variables variable dividends kind of come into the mix and because typically you guys are super you.

Mark: You don't you adhere to your plan, but you're not super rigid so I'm, just trying to better understand that.

Scott Steltz: So yeah, you're right. You know, in those extreme cold weather stretches, like what we saw in January, there are always short-term challenges in our conventional and oil sands mining assets. But generally, in this case, they're short lived, and the teams did a great job of managing through them. So, no material impact.

Speaker Change: Yeah, Greg Good question. So let me try and explain how we're thinking about this so when you when we look at where we are today of course, we're now at a net debt of $10 billion, which means 100% of free cash flow to shareholders through dividends and share buybacks. So we have our base dividend that was just increased by the board this quarter here.

Speaker Change: But what we're doing here is we're looking at this on an annual forward looking basis, so it's not going to be a quarter to quarter basis.

Mark A. Stainthorpe: Okay, great. That was the question; that was the answer I was looking for. And maybe a question for Mark, you know, with respect to shareholder returns and the framework you have now. Given that you effectively flipped over Jan 1st, and I believe, I think you mentioned your buybacks are circa $350 million or so up until about now, hopefully I've got that number right. How can we sort of expect to catch up in March? And to what extent might variables, variable dividends kind of come into the mix? And because typically, you guys aren't super strict, you know, you don't adhere to your plan, but you're not super rigid. So I'm just trying to better understand that.

Speaker Change: The reason for that is to make sure you're managing working capital and those things. So what's going to happen is is that may fluctuate around the $10 billion on a quarter to quarter basis, but we're looking at this on a forward looking annual basis.

Speaker Change: To make sure we're managing those outcomes properly.

Speaker Change: So you will see like you saw in 2023 changes in how.

Speaker Change: Much buyback is happening at each quarter, but the plan is to manage that forward looking on what that free cash flow looks like.

Speaker Change: Okay, and then a special dividend I mean, I think today.

Speaker Change: Today, you know the lever is the buyback program, we see lots of value there still.

Speaker Change: And that's after the current base dividend that is currently the plan.

Speaker Change: And then go forward well always look at other opportunities with the board going forward on returns to shareholders.

Speaker Change: Okay. Thanks, Steve.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: From Goldman Sachs. Please ask your question.

Goldman Sachs: Yes, good morning team and congrats Tim and congrats Scott.

Goldman Sachs: Responsibilities.

Mark A. Stainthorpe: Yeah, Greg, good question. Let me try and explain how we're thinking about this. So when we look at where we are today, of course, we're now at a net debt of 10 billion. And we pay researchers, to shareholders through dividends and share buybacks by the board this quarter. But what we're doing here is we're looking at this on an annual forward basis. It's not going to be a quarter.

Goldman Sachs: First question is on Horizon, you got.

Speaker Change: Pretty decent Debottlenecking plan by 2025, and then also some at AOSP. So just love your perspective on how that's tracking and remind us.

Speaker Change: What you are looking to get out of both of those projects.

Mark A. Stainthorpe: You know, the reason for that is to make sure you're managing where you capture. So what's going to happen is debt may fluctuate around $10 billion on a quarter-to-quarter basis, but we're looking at this on a forward-looking scale to make sure we're managing. So, you know, like you saw in 2023, changes in how much buyback is happening each quarter, but the plan is... Foreman. And then on the special dividend, I mean, I think today... Today, you know, the lever is the buyback program. We see lots of value there still, that's, you know, I've, GoFORWARD will always look at other options. Okay, thanks to both. Thank you, from Goldman Sachs. Please ask your question. Yeah, good morning, team, and congratulations, Tim, and congratulations, Scott.

Speaker Change: Sure Scott.

Speaker Change: So it's Scott here and as you mentioned.

Scott: The horizon.

Scott: Bottleneck project.

Scott: Is nearing its end.

Scott: We have one more installation to do tie in the during the turnaround in Q2 and that will essentially wrap up that project. The results from that will allow us to go towards a non turnaround year in 2025, and then a turnaround year in 2026, and so youre after.

Scott: That's how to look good turnaround every second year.

Scott: I also talked earlier about the.

The not the tailings project, so that at 6300 barrels a day of SCO.

Scott: After 2027.

Scott: And that's in the early stages and you guys will hear more from that as we go on to get towards near the completion of that project.

Scott: As Scott talked.

Scott Steltz: My first question is on Horizon. You've got a pretty decent de-bottlenecking plan by 2025, and then also some at AOSP. So we'd love your perspective on how that's tracking, and remind us what you're looking to get out of both of those projects. Sure. Yeah. So it's Scott here. And as you mentioned, the Horizon.

Scott: <unk> talked about the debottleneck projects that will take place.

Scott: During it'll finish during the turnaround.

Scott: Later on this year at Scott Ford and so that'll be adding 5600 barrels per day net to Canadian natural.

Scott: And so those are the those are the assets.

Scott: The details on that production.

Speaker Change: That's helpful. Scott and then just follow up would just love your perspective on the macro are we've seen a lot of volatility in syncrude prices and WCS prices, hopefully things start to get better seasonally and also when <unk> comes online. So maybe you could talk about your thoughts on the timing of <unk> and how you think about both light and heavy crude desk as we work our way through.

Scott Steltz: Do you know the bottleneck project is nearing its end? We have one more installation to do, tie-in during the turnaround in Q2, and that'll essentially wrap up that project. Results from that will allow us to go towards a non-turnaround year in 2025 and a turnaround year in 2026. And so year after year, that's how it'll look, turn around every second year.

The year.

Scott: Yes, you bet and so as we go forward here with <unk>.

Scott Steltz: I also talked earlier about the... The Not the Tailings Project, so that adds 6,300 barrels a day of SCO after 2027, and that's in the early stages. You guys will hear more from that as we go on and get towards the near completion of that project at Scotford. We talked about the Bottleneck Project that will take place during the finish during the turnaround later this year at Scotford, and so that will be adding 5,600 barrels per day net to Canadian Natural. So those are the assets, and that's the details on that production. And then just follow up, I just love your perspective on the macro. We've seen a lot of volatility in syn crude prices and WCS prices. Hopefully, things will start to get better seasonally and also when TMX comes online.

Scott: We understand the timing of completion of the project and start up in Q2 of this year and so you will see that.

To help alleviate the differentials.

Scott: WCS will also help that see.

Scott: The SCO.

Scott: Premium go towards back towards more of a premium than it's been in the past few months. So both of those products will benefit from <unk> coming online.

Speaker Change: Thanks Scott.

Scott: Thank you.

Scott: Next question is from Minera Coosa from JD Cowen. Please ask your question.

Minera Coosa: Thanks, and good morning, everyone I'll start with a question on your thermal drilling program, which you talked about being front end loaded and just looking at your latest guidance you point to most of those pads coming online in the first three quarters of 2025 can you give us a sense of what the production ramp could look like for the middle.

Scott Steltz: So maybe you could talk about your thoughts on the timing of TMX and how you think about both light and heavy crude differentials as we work our way through. Yeah, you bet. And so, you know, as we go forward here with TMX, we understand the timing of completion of the project and start-up in Q2 of this year. And so you will see that help you alleviate the differentials on WCS. You'll also help that see...

Minera Coosa: 2025, and maybe more specifically could you give us a sense of what the production growth rate could look like on an exit 2025 over exit 2024 basis. Thanks.

Scott Steltz: The SCO premium goes back towards more of a premium than it's been in the past few months, so both those products will benefit from TMX. Thank you. Your next question is from Menno Hulshof from Kitty Cowan. Please ask your question. Thanks, and good morning, everyone.

Speaker Change: Yeah. Good question I don't have the exact profile or whatever to look like in 2025 on the thermal pads, but.

Speaker Change: We had base.

Speaker Change: Based on our discussions on the 2020 for budget, we had looked at 2025 over 2020 forward about 4%.

Speaker Change: Terrific. Thanks, Scott and then maybe I'll just follow up with a sort of a refresher question on the inflationary outlook I think it's.

Scott Steltz: I'll start with a question on your thermal drilling program, which you talked about being front-end loaded. And just looking at your latest guidance, you point to most of those pads coming online in the first three quarters of 2025. Can you give us a sense of what the production ramp could look like through the middle of 2025, and maybe more specifically, could you give us a sense of what the production growth rate could look like on an exit 2025 over exit 2024 basis? Thanks. Yeah, a good question.

Speaker Change: Seems to me like everything is largely moderated but are you seeing anything new or noteworthy as you look across the various line items within the cost structure and do you still think that there's something in the range of 3% to 5% is still a reasonable expectation for this year.

Speaker Change: Yes, I think largely the the the increases that we saw in the past have stabilized in a go forward basis and I believe we said this on the last call that we would expect 2024 to resemble mostly.

Scott Steltz: You know, I don't have the exact profile or whatever it'll look like in 2025 on the thermal pads, but, based on our discussions on the 2024 budget, we had looked at 2025 over 2024 at about, Terrific. Thanks, Scott. And then maybe I'll just follow up with a sort of a refresher question on the inflationary outlook. I think it seems to me like everything is largely moderated.

Speaker Change: Labor increases looking like in that three ish to 5% range. So you're bang on.

Speaker Change: Terrific. Thanks, Scott I'll turn it back.

Speaker Change: Thank you. Your next question is from Patrick from ATB Capital markets. Please ask your question.

Speaker Change: Okay.

Hey, good morning, guys and thank you for taking my question I guess.

Patrick: You've heard a lot of ground here, but my first question is really with respect to the primary heavy oil results, which have been.

Scott Steltz: But are you seeing anything new or noteworthy as you look across the various line items within the cost structure? And do you still think that something in the range of three to 5% is still a reasonable expectation for this year? Yeah, I think largely the increases that we saw in the past have stabilized and will go forward. And I believe we said this on the last call that we would expect 2024 to resemble mostly labor increases, looking like in that three to 5% range. So you're back, Terrific.

Patrick: Very very impressive to date and just wondering if you can speak to the potential.

Patrick: Scope of those assets and where it could go to and then I wonder about.

Potential with gas prices, you talked a little bit about flexibility here, but is this a specific asset where if gas prices remain low you do have the flexibility to sort of increase the capital allocation.

Scott Steltz: Thanks, Scott. I'll turn it back. Thank you. Your next question is from Patrick Bullrook from ATB Capital Markets. Please ask your question. Hey, good morning, guys. And thank you for taking my question. I guess, you know, you've covered a lot of ground here.

Speaker Change: Good question, Patrick and yes are bang on it it is an area, where we can focus our capital allocation as you as you know and have seen multilateral drilling programs have proven to be very effective.

Scott Steltz: But my first question is really with respect to the primary heavy oil results, which have been very, very impressive to date. And I was just wondering if you could speak to the potential scope of those assets and where they could go. And then I wonder about the potential, you know, with gas prices. You talked a little bit about flexibility here. But is this a specific asset where, if gas prices remain low, you do have the flexibility to sort of increase the capital allocation? Good question, Patrick.

Speaker Change: We have a very large land base and our primary heavy oil land.

Speaker Change: And.

Speaker Change: Multiple zones as well so we're able to.

Speaker Change: Really look at.

Adding.

Speaker Change: <unk> potential drilling in those areas. If again if gas prices are are not favorable.

Speaker Change: As we originally planned I could see us increasing potentially are multilateral primary heavy oil drilling program.

Speaker Change: Okay. Thank you and just a follow up it's sort of on the other side on the gas side of the equation because.

Scott Steltz: And yes, you're bang on it. It is an area where we can focus our capital allocation on, as you know and have seen, multilateral drilling programs have proven to be very effective. We have a very large land base in our primary heavy oil lands and multiple zones as well, so we're able to, really look at, adding, you know, potential drilling in those areas if, again, gas prices are not favorable. I could see us potentially increasing our multilateral primary heavy oil withdrawal. Okay, thank you. And just to follow up and sort of on the other side, on the gas side of the equation, because, you know, drought has become very topical. I've been on a number of your peers' conference calls recently, just wondering, because I would suspect that drought conditions would primarily impact the potential to operate in your Montagne assets, how things sit today, and sort of what the scope of your water reservoirs is relative to your 24 program. Yeah, a good question.

Speaker Change: It has become very topical.

It's been on a number of your peers conference calls recently, just wondering because I would suspect that Joe conditions would primarily impact the potential to operate in your montney assets, how things sit today and sort of what the scope of your water reservoirs are relative to your 24 program.

Speaker Change: Yeah. Good question I think we're in pretty good shape overall here, we continue to monitor.

Speaker Change: River levels draw levels, and all of our access to water. Our teams are continually monitoring that and being prepared but as it stands currently we see our program not affected at this point, we will just continue to moderate as it goes as it goes along throughout the year here.

Speaker Change: Okay. Thank you very much.

Speaker Change: Thank you. Your next question is from John <unk> from Jpmorgan. Please ask your question.

Scott Steltz: I think we're in pretty good shape overall here. We continue to monitor, you know, river levels, draw levels, and all of our access to water. Our teams are continually monitoring that and being prepared, but as it stands, currently, we see our program not affected at this point. We'll just continue to monitor it as it goes along throughout the year here. Okay, thank you very much.

John: Hi, good morning, Thanks for taking my question.

John: So my first question is a bit hypothetical and forgive me for that but I'm just trying to understand how should we think about the framework on return of capital.

John: And the goalposts around capital returns going forward now that you've hit the 100% level.

John Macalister Royall: Thank you. Your next question is from John Royall from J.P. Morgan. Please ask your question. Hi, good morning.

John: So, let's just say you did an acquisition in your net debt went above 10 billion as a result.

John Macalister Royall: Thanks for taking my question. So, my first question is a bit hypothetical, and forgive me for that, but I'm just trying to understand how we should think about the framework for the return of capital and the goal posts around capital returns going forward now that you've hit the 100% level? So, let's just say you did an acquisition and your net debt went above $10 billion as a result. Would you dial back to 50% here and keep your framework in place, or was the framework sort of a thing of the past, and you're at 100%, and it was just kind of a means to get you there? Just trying to understand if this framework is more long-term or just kind of how you got to that 100%. Yeah, I mean, well, looking back, we got to 100%.

John: Would you dial back to the 50 percents here and keep your framework in place or was the framework sort of a thing of the past and you're at 100% and it was just kind of a means to getting you there just trying to understand.

John: If this framework is more long term or just kind of how you got to that 100%.

Speaker Change: Yes, I mean, well looking back we got to the 100% when we looked at the net debt level of $10 billion was quite conservative when you think about the size of our company.

Speaker Change: Nature of the assets the long life reserves, the low decline low maintenance capital so to us it's.

Speaker Change: Quite a conservative.

Speaker Change: That level, but coming out of 2020.

Speaker Change: In those years it was prudent to make sure we had a strong strong balance sheet. So that's where we've got two now and in the 100% makes sense to us of course, we've had the base dividend, increasing and that's part of that returns to shareholders and we've had three increases over the last year over 20% returns there are additional.

Mark A. Stainthorpe: When we looked at, you know, the net debt level of 10 billion was quite conservative when you think about the Science Foundation. Thank you. The nature of the assets, the long-life reserves, the low decline, and low maintenance. So to us, it's quite a conservative debt level. But, you know, coming out of 2020 and those years, it was.

Speaker Change: Returns there so that gives us that opportunity and back to your question you know if something more material has to happen I don't like speculating on those things, but you know if.

Mark A. Stainthorpe: Produnt to make sure we had a strong, strong balance. That's where we've got to now. And 100% makes sense to us. Of course, we've had the base dividend and Geologists, and all of our listeners. All, for the last year. Resources, Lance Cassidy, Tim Hulshof, John Royall, Roger Read, Timothy McKay, Mark Stainthorpe. But, you know, if you have an acquisition that comes with cash flow and it comes with all those different things, we'd have to evaluate it. Today

Speaker Change: If you have an acquisition that comes with cash flow and it comes with all those different things we'd have to evaluate that but for today. We've hit our $10 billion. We're focused on the 100% returns to shareholders through dividends and share repurchases.

Speaker Change: So a pretty big milestone and that's been.

The reason for it has been a very strong safe reliable operations over the last couple of years.

Got it. Thank you and then my follow up is just on Opex.

Speaker Change: In mining <unk>.

Mark A. Stainthorpe: We've hit our 10 billion. We're focused on the Shariholders through dividends. The reason for it has been a very strong, safe, reliable operation.

Speaker Change: <unk> was was the lowest level I think in two years in both per barrel terms, but also in dollar millions can you talk about the opex side.

Unnamed Speaker: And then my follow-up question is just on OPEX in mining. 4Q was the lowest level, I think, in two years in both per barrel terms, but also in dollar millions. Can you talk about the OPEX side? Are gas prices a factor?

Speaker Change: Gas prices are factor or is there some other kind of sustainability to these lower numbers I know youre doing a lot of work too.

Speaker Change: The turnaround cycle and Thats, the general focus, but I'm just trying to understand if there are kind of structural opex dollars that have come out there.

Unnamed Speaker: Is there some other kind of sustainability to these lower numbers? I know you're doing a lot of work to extend the turnaround cycle. And that's the general focus. But I'm just trying to understand if there are any kind of structural OPEX dollars that have come out there. Yeah, as you know, on oil sands mining, the costs are largely fixed; the variables will be in natural gas and diesel prices, but they're largely fixed. So as you have. Obviously, as you have higher production levels, the cost remains about the same, so your cost per dollar will be lower as you have those higher volumes.

Speaker Change: Okay.

Speaker Change: Yes, as you know on oil sands mining.

Speaker Change: The costs are.

Speaker Change: Largely fixed.

Speaker Change: The variables will be.

Speaker Change: In natural gas and diesel pricing, but they're largely fixed so as you have.

Speaker Change: Obviously as you have higher production levels.

Speaker Change: <unk> remains about the same so your cost per dollar will be lower as you have those higher volumes.

Speaker Change: Yes. The question was on the absolute.

Speaker Change: Dollar millions.

Speaker Change: Went down but I think it's I think you answered it on the gas and diesel so thank you.

Michael Paul Dunn: Yeah, the question was on the absolute dollar; millions went down, but I think you answered it on gas and diesel, so thank you. Thank you. Your next question is from Mike Dunn from CFO. Please ask your question. Hi, thanks everyone. Just one question from me guys on Trans Mountain. You've got 94,000 barrels a day committed. Capacity, once that starts up, are you able to use some or even all that capacity for light crudes? I know the assumption has been that you would use it for heavy crudes, but I'm just wondering about your flexibility with that capacity.

Speaker Change: Sure.

Speaker Change: Thank you.

Speaker Change: Our next question is from Mike Jones from Stifel. Please ask your question.

Michael Paul Dunn: Alright. Thanks, everyone. Just one question from me guys on Trans Mountain, you've got 94000 barrels a day committed.

Michael Paul Dunn: Capacity once that starts up are you able to use <unk>.

Michael Paul Dunn: Some or even all of that capacity for light crudes I know the assumption has been that.

Michael Paul Dunn: You would use it for heavy crudes, but I'm just wondering about your flexibility without capacity. Thank you.

Speaker Change: You bet, Mike So really with to Amex will be looking to maximize the value of those committed barrels so whether that's through some of our light volumes. Our heavy volumes were just looking at the opportunities to maximize.

Scott Steltz: Yep, you bet Mike. So really, with TMX, we'll be looking to maximize the value of those committed barrels. So whether that's through some of our light volumes or heavy volumes, we're just looking at the opportunities to maximize, giving us the best value back there. So it could be a mixture of both, and I wouldn't lean for it to be all one way or the other way. So we're just going to look at our teams are reviewing what the best opportunities are and planning from there. Great, thanks. That's all for me.

Speaker Change:

Speaker Change: Give us the give us the best value back there so it could be a mixture of both and.

Speaker Change: I wouldn't lean for it to be all one way or the other way. So we're just going to look at our teams are reviewing what the best opportunities are in planning from there.

Speaker Change: Great. Thanks, that's all from me.

Dennis Fong: Thank you. Once again, ladies and gentlemen, should you wish to ask a question, please press star one on your telephone keypad. Your next question is from Dennis Fong from CIBC; please ask your question. Hi, good morning, and thanks for taking my question. My first one here is just related to buybacks. I just wanted to hopefully understand a little bit better in terms of how you judge the return on buying back a share of stock versus that of kind of investing in your own asset base.

Speaker Change: Thank you.

Speaker Change: Again, ladies and gentlemen should you wish to ask a question. Please press star one on your telephone keypad.

Speaker Change: Your next question is from Dennis Fong from CIBC. Please ask your question.

Hi, good morning, and thanks for taking my question.

Dennis Fong: My first one here is just related to the buybacks I just wanted to hopefully understand a little bit better in terms of how you judge the return of buying back.

Dennis Fong: A share of stock versus that kind of investment in your own asset base I understand the desire to remain strategic and disciplined on capital deployment. I know you just updated or provided kind of lumpy net asset value from a third party.

Mark A. Stainthorpe: I understand the desire to remain strategic and disciplined on capital deployment. And I know you just updated or provided some kind of 1P net asset value from a third-party evaluator at $139.07 a share. So how do you balance the return on or the allocation of capital between buybacks and reinvesting in the asset base? Hey, Dennis, it's Mark.

Dennis Fong: Evaluated with just under $39.07 a share so how do you balance the return of.

Dennis Fong: For the allocation of capital between buybacks and reinvesting in the asset base.

Mark: Hey, Dennis it's Mark.

Mark A. Stainthorpe: You know, when we look at, you know, reinvesting in our asset base versus the returns to shareholders, it is kind of what you said. It's a little bit of looking at the balance. We want to make sure we have a capital program, but we also want to provide for her share, and, you know.

Mark: When we look at.

Mark: Reinvesting in our asset base versus the returns to shareholders. It is kind of what you said, it's a little bit of looking at the balance we want to make sure we have a prudent capital program that.

Mark: Can deliver growth in a prudent stage, but we also want to provide that on a per share basis.

Mark A. Stainthorpe: Historically, we've been very, you know, in my view, very good at that capital allocation. Delivering Value. It's a matter of, you know, balance. What is efficient in any one year from a capital program perspective?

Mark: And we've historically been very in my view very good at that capital allocation and being prudent and making sure it's delivering value not just production growth. So we're really looking at value growth. So it's a matter of balancing what is efficient in any one year from a capital program perspective, what the advantage for Canadian natural.

Mark A. Stainthorpe: The advantage for Canadian Natural, of course, is the diversity of the asset base. So, as Scott talked a little bit about, we've got a lot of opportunities. No gaps in the portfolio, so it's all right there. Allocate. It's just a matter of, Inc., Game Creators, Film Critic, Relative Day JACKIE FAITH, Wildlife HISTORICAL METEOROLOGIST, X-ray glass www.xrayswar.org New Year, We now have the ability to balance our dividend that's been ever-increasing and... Now Share Buyback Program, where we see a lot of value still for some of... I appreciate that context. Switching gears for my second question, it's really focusing on Kirby and the continuation of the solvent project there. Can you discuss a little bit about the applicability to some of your other in-situ assets in the region and maybe how you think about it with respect to, I know, kind of early stage, but the development of pike as well?

Mark: Of course as the diversity of the asset base, so as Scott talked a little bit about you got a lot of opportunity no gaps in the portfolio. So it's all right there to allocate its just a matter of driving the best value in a year.

Mark: And.

Mark: Given where we are today, that's going to leave a lot of free cash flow.

Mark: In the year and we have now the ability to balance out between our dividend that's been ever increasing and now share buyback program, where we see a lot of value still for some of the reasons you mentioned.

Great Great I appreciate that context switching gears for my second question.

Mark: And it's really focusing on on Kirby.

Mark: <unk>.

Mark: Continuation of the.

Mark: The solid project there can you discuss a little bit about the applicability to some of your other indices you have assets in the region.

Mark: Maybe how you think about it with respect to I know kind of early stage, but the development of Pike as well.

Scott Steltz: Yeah, you betcha, Dennis. So, from a solvent opportunity perspective, essentially, what you're doing is reducing your steam requirements by about half. So, as we go through this project, and we see the results that we're expecting, and again, we're going to monitor that, and it's just going to be starting up in terms of the solvent injection, and Q2 here, but we'll monitor as we go forward. But it gives us, if it's successful, like we believe it will be, then it gives us success, gives us the opportunity in the Jackfish and Kirby areas to continue with more pad development when and not necessarily have to increase the capital to build more steam facilities. So the advantage there is lower overall capital and better capital efficiency for drill to fill opportunities.

Speaker Change: Yes, you bet you Dennis so.

Speaker Change: From a solvent opportunity perspective.

Speaker Change: Essentially what youre doing is reducing.

Dennis Fong: Steam requirements by about half or so.

Dennis Fong: As you look and we go through this project and we see the results that we're expecting and again, we're going to monitor that and it's just going to be starting up in terms of the solvent injection.

Dennis Fong: In Q2 here, but we'll monitor as we go forward, but it gives us if it's successful like we believe it will be then it gives us success and it gives us the opportunity.

Dennis Fong: In the Jackfish and Kirby areas to.

Dennis Fong: Continue with more pad development.

Dennis Fong: And not having the necessarily having to increase the capital to build more steam facilities. So so the advantage there is lower overall capital and better capital efficiency for drill to fill opportunities.

Scott Steltz: Great. So, maybe the thought process behind that then is that it could be leveraged to showcase additional growth or redeploy this team to other regions within that project or those specific projects.

Dennis Fong: Great.

Dennis Fong: And maybe just cyclical.

Dennis Fong: Sure.

Dennis Fong: So maybe the thought process behind that thing as that could be leveraged to showcase initial growth are redeployed into other regions within that project.

Dennis Fong: Jay.

Scott Steltz: That's right, yeah. Great. Thanks. I'll turn it back.

Jay: That's right.

Great. Thanks, I'll turn it back.

Jay: Yeah.

Lance Casson: Thank you. There are no further questions at this time. I will now hand the call back to Lance Casson for the closing remarks. 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. Ladies and gentlemen, the conference has ended. Thank you all for joining. You may all disconnect. I'm, Researcher, Michael Dunn, Greg Pardy, Mark Stainthorpe, Dennis Fong, John Royall, Roger Read, Timothy McKay, Mark Stainthorpe, Lance Casson, Trevor Cassidy, Canadian Natural Researcher, Michael Dunn, John Royall, Roger Read, Timothy McKay, Mark Stainthorpe, Lance Cassidy, John Royall, Roger Read, Timothy McKay, Mark Stainthorpe, John Royall, Roger Read, John Royall, Roger Read, Timothy McKay, Mark Stainthorpe, Lance Cassidy, Canadian Natural Researcher, Michael Dunn, John Royall, Roger Read, Timothy McKay, Mark Stainthorpe, John Royall, Roger Read, Michael Dunn, John Royall, Roger Read, John Royall, Roger Read, Timothy McKay, Mark Stainthorpe, John Royall, Roger Read, John Royall, John Roayll, John

Jay: Thank you there are no further questions at this time I will now hand, the call back to Ross for any closing remarks.

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

Ross: Thank you ladies and gentlemen, the conference has ended.

Speaker Change: You all for joining you may all disconnect.

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