Canadian Natural Resources Limited Announces 2017 Third Quarter Results

Canadian Natural (TSX:CNQ)(NYSE:CNQ) generated funds flow from operations of $1,675 million in Q3/17, comparable to Q2/17 and an increase of $654 million over Q3/16 levels.

▪ The Company has generated significant free cash flow year to date of approximately $1.2 billion after net capital expenditures, including the Company’s Pelican Lake acquisition expenditures, and excluding the AOSP acquisition expenditures.

▪ The Company’s strong financial performance in the quarter resulted in Q3/17 ending debt being reduced by approximately $350 million from Q2/17 levels. Additionally, liquidity increased by approximately $300 million over the same period, after capital expenditures relating to the Pelican Lake acquisition. Debt to book capitalization decreased to 42% and debt to adjusted EBITDA strengthened to 3.0x.

▪ For Q3/17, the Company had net earnings of $684 million compared to net earnings of $1,072 million in Q2/17 and a net loss of $326 million in Q3/16. Adjusted net earnings from operations was $229 million in Q3/17

Commenting on Company results, Steve Laut, President of Canadian Natural stated,

“Canadian Natural has reached a major milestone with the successful completion of the Phase 3 expansion at our world class Horizon Oil Sands Mining and Upgrading asset, a significant event. The completion of the Phase 3 expansion also marks the final step of our transition to a long life low decline asset base. High value upgraded products will represent approximately 45% of total corporate liquids production in the fourth quarter of 2017 and approximately 70% of our liquids production volumes are from long life low decline assets, and will increase going into 2018.

Our long life low decline assets combined with our strong portfolio of conventional E&P assets will drive significant sustainable free cash flow providing flexibility for continued balanced capital allocation to our four pillars; economic resource development, returns to shareholders, opportunistic acquisitions and balance sheet strength, with continued focus on increasing return on equity and capital employed.”

    Canadian Natural’s Chief Operating Officer, Tim McKay,


“The Horizon Phase 3 expansion and the turnaround and tie-in activities are complete and were on budget, strong results for this large scale, world class project. Optimization and reliability work on the fractionation tower, the vacuum distillate unit and diluent recovery unit furnaces were also successfully completed during the turnaround on time and on budget. With completion of the Horizon turnaround, startup activities are underway and are going as expected, with production ramping up through November and December.

In the third quarter, operations across our balanced asset base were strong as quarterly production reached record levels for the second straight quarter at just under 1,040,000 BOE/d, up 14% from the second quarter of 2017. Production increases were achieved as a result of strong utilization and high reliability at the Athabasca Oil Sands Project for a full quarter and drilling programs that delivered as expected at Pelican Lake, primary heavy crude oil and light crude oil. Our continued focus on effectiveness and efficiencies delivered strong quarterly operating costs at AOSP of $24.60/bbl of synthetic crude oil.”

    Canadian Natural’s Chief Financial Officer, Corey Bieber,


“The Company was able to achieve funds flow from operations of approximately $1.7 billion in the quarter, contributing to absolute debt reduction of $350 million when compared to second quarter 2017 debt levels, even as we funded the Pelican Lake acquisition in the quarter. Liquidity improved to $3.9 billion and debt metrics strengthened at the end of the quarter. Debt to EBITDA decreased to 3.0x at quarter end, while debt to book capital remains in the Company’s targeted range at 42%. With completion of the Horizon Phase 3 expansion, strong reliability at AOSP and continued focus on effective operations across our asset base, the Company will generate significant growing sustainable free cash flow, allowing for balanced capital allocation that includes a focus on continued strengthening of our balance sheet.”

The Company forecasts annual 2017 production levels to average between 663,000 and 717,000 bbl/d of crude oil and NGLs and between 1,655 and 1,705 MMcf/d of natural gas, before royalties. Q4/17 production guidance before royalties is forecast to average between 736,000 and 772,000 bbl/d of crude oil and NGLs and between 1,700 and 1,750 MMcf/d of natural gas.

Canadian Natural’s annual 2017 capital expenditures are targeted to be approximately $4.9 billion.


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