Mr. Tim McKay reports

CANADIAN NATURAL RESOURCES LIMITED ANNOUNCES 2023 THIRD QUARTER RESULTS

Commenting on Canadian Natural Resources Ltd.'s third quarter 2023 results, Tim McKay, president, stated: "Our quarterly results demonstrate how our effective and efficient operations, combined with our diverse product mix, generates significant free cash flow, resulting in strong shareholder returns through our sustainable and growing dividend and significant share repurchases.

"Our world-class assets delivered top-tier operational and financial results in Q3 2023 with average quarterly production volumes of approximately 1,394,000 boe/d [barrels of oil equivalent/day], which is the highest quarterly volumes in the history of the company, including record quarterly production volumes for both liquids and natural gas of approximately 1,035,000 bbl/d [barrels/day] and 2,151 mmcf/d [million cubic feet/day], respectively. Following the completion of planned turnarounds at our oil sands mining and upgrading assets, synthetic crude oil (SCO) production was strong, averaging approximately 491,000 bbl/d during Q3 2023, capturing robust SCO pricing at a premium to WTI. Additionally, as a result of strong execution in our thermal assets, production growth was ahead of plan, as Q3 2023 average thermal production volumes increased by approximately 44,000 bbl/d to 287,000 bbl/d from Q3 2022 levels. As a result of our focus on effective and efficient operations, the company had strong liquid netbacks in Q3 2023, similar to Q3 2022 netback levels when commodity prices were much higher. This resulted in significant free cash flow for the company.

"Environmental, social and governance (ESG) remains a priority for the company. Canadian Natural is an investment leader in research and development (R&D) and our strong track record of R&D investment will continue in 2024 and beyond and is targeted to grow with our participation in the Pathways Alliance. It is critical to work together with the government of Canada and the Alberta government to make the Pathways Alliance a transformative industry collaboration. Through the foundational carbon capture and storage (CCS) project, we have a significant opportunity to achieve meaningful GHG [greenhouse gas] emissions reductions in support of industry's, Alberta's and Canada's climate goals and to provide affordable, reliable, responsibly produced energy to the world."

Canadian Natural's chief financial officer, Mark Stainthorpe, added: "During the third quarter of 2023, our robust business model delivered strong net earnings of over $2.3-billion, adjusted net earnings of approximately $2.9-billion and strong quarterly adjusted funds flow of approximately $4.7-billion. After our base capital expenditures and dividend, the company generated significant quarterly free cash flow of approximately $2.7-billion in Q3 2023. Our diversified portfolio, including our long-life, low-decline assets, combined with our effective and efficient operations, allowed us to continue to deliver robust returns to shareholders by repurchasing shares and reducing debt. Year to date, up to and including Nov. 1, 2023, we have returned approximately $6.1-billion to shareholders through dividends and share repurchases.

"With current strong production volumes and expected free cash flow in Q4 2023 and beyond, based on current strip pricing, we are quickly approaching a 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 per cent of free cash flow.

"Subsequent to quarter-end, the board of directors has approved an 11-per-cent increase to our base quarterly dividend to $1 per common share, from 90 cents per common share, demonstrating the confidence that 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. With this increase announced today, the company has increased its dividend by 18 per cent in 2023 to $4 per share annually. As a result, the company's leading track record of dividend increases continues, as this increase will mark 2024 as the 24th consecutive year of dividend increases, with a CAGR [compound annual growth rate] of 21 per cent over that time."

Corporate update

One of Canadian Natural's many strengths is its strong and deep leadership team. The company takes a very pro-active and disciplined approach to succession, with well-planned and successful transitions, ensuring it maintains its strong corporate culture and top-tier performance.

As part of continuing management succession, at Canadian Natural's 2023 year-end board meeting on Feb. 28, 2024, Mr. McKay will assume the role of vice-chairman and Scott Stauth, currently chief operating officer, oil sands, will be promoted to president of Canadian Natural.

Mr. Stauth has been with Canadian Natural for 26 years in increasingly responsible management roles across all the company's operations in Canada. Mr. Stauth, as chief operating officer, oil sands, has played an integral role in delivering top-tier performance across all of the company's oil sands operations.

As vice-chairman, Mr. McKay will support the management transition until his retirement in summer 2024.

In addition, as part of the succession plan, Jay Froc, currently senior vice-president, oil sands mining and upgrading, will be promoted to chief operating officer, oil sands, on Jan. 1, 2024. Mr. Froc has been with Canadian Natural for 10 years.

Trevor Cassidy, chief operating officer, exploration and production, after over 23 years of contributing to the company's success will be retiring in Q4 2023, at which time Robin Zabek, currently senior vice-president, exploitation E&P, will be promoted to chief operating officer, E&P. Mr. Zabek has been with Canadian Natural for 20 years.

Murray Edwards, executive chairman of the company, commenting on the succession, stated: "Canadian Natural has a strong track record of successful succession at our senior leadership level, ensuring Canadian Natural continues to deliver top-tier performance. Mr. Stauth has been a significant contributor to Canadian Natural's top-tier performance over the last 26 years and we are very confident Scott will make even greater contributions as president. In addition, Tim as vice-chairman will continue to provide oversight and guidance on our operations to ensure a smooth transition."

Mr. McKay, commenting on the succession, stated: "Scott and I have worked closely together over the years and he has outstanding leadership, technical and operational skills and is an excellent role model for Canadian Natural's culture, one of our key competitive advantages. We are very confident in Scott's abilities."

• The strength of Canadian Natural's long-life, low-decline asset base, supported by its safe, effective and efficient operations, makes the company's business unique, robust and sustainable. In Q3 2023, the company generated strong financial results, including:
  • Net earnings of approximately $2.3-billion and adjusted net earnings from operations of approximately $2.9-billion;
  • Cash flows from operating activities of approximately $3.5-billion;
  • Adjusted funds flow of approximately $4.7-billion;
  • Free cash flow of approximately $2.7-billion after total dividend payments of approximately $1-billion and base capital expenditures of approximately $1-billion.

Dividend increase:

• Subsequent to quarter-end, the board of directors has approved an 11-per-cent increase to the company's quarterly dividend to $1 per common share, from 90 cents per common share, payable on Jan. 5, 2024, to shareholders of record on Dec. 8, 2023. This demonstrates the confidence that the board has in the sustainability of the company's business model, its strong balance sheet, and the strength of its diverse, long-life, low-decline reserves and asset base. The company's leading record of dividend increases continues, as this increase will mark the 24th consecutive year of dividend increases.
  • Canadian Natural increased its sustainable and growing dividend twice in 2023 for a total combined increase of 18 per cent to $4 per share annually.

Quarterly highlights:

• Returns to shareholders in Q3 2023 were strong, totalling approximately $1.6-billion, comprising approximately $1-billion of dividends and approximately $600-million of share repurchases.
  • In Q3 2023, the company repurchased approximately 7.2 million common shares for cancellation at a weighted average price of $82.57 per share for a total of approximately $600-million.
• Year to date, up to and including Nov. 1, 2023, the company has returned approximately $6.1-billion to shareholders through approximately $3.9-billion in dividends and $2.2-billion through the repurchase and cancellation of approximately 27.9 million common shares.
• Canadian Natural continues to maintain a strong balance sheet and financial flexibility, with net debt of approximately $11.5-billion and significant liquidity of approximately $6.1-billion at the end of Q3 2023.
  • In September, 2023, the company extended its $500-billion revolving credit facility by one year, now maturing February, 2025.
• With current strong production volumes and expected free cash flow in Q4 2023 and beyond, based on current strip pricing the company is quickly approaching a net debt level of $10-billion, which it forecasts to achieve in Q1 2024, at which time it targets to increase returns to shareholders to 100 per cent of free cash flow. At that time, the free cash flow definition will be adjusted funds flow less dividends and total capital expenditures for the year.
  • The company's current free cash flow allocation policy provides that when net debt is between $10-billion and $15-billion, 50 per cent of free cash flow will be allocated to share repurchases and 50 per cent of free cash flow will be allocated to the balance sheet, less strategic growth/acquisition opportunities. Free cash flow for the purpose of the policy is defined as adjusted funds flow less dividends, less base capital.
• In Q3 2023, Canadian Natural continued to focus on safe, effective and efficient operations, achieving record quarterly average production volumes of 1,393,614 boe/d, an increase of 4 per cent or approximately 55,000 boe/d compared with Q3 2022 levels.
  • The company achieved record quarterly average liquids production volumes in Q3 2023 of 1,035,153 bbl/d, an increase of 5 per cent over Q3 2022 levels of 983,678 bbl/d;
  • The company's focus on execution and effective and efficient operations drove strong liquids netbacks in Q3 2023, similar to Q3 2022 netback levels when commodity prices were much higher, generating significant free cash flow for the company.
    • Canadian Natural continues to focus on safe, effective and efficient operations of its world-class oil sands mining and upgrading assets to deliver high-value SCO, with strong quarterly production averaging 490,853 bbl/d in Q3 2023, comparable with Q3 2022 levels of 487,553 bbl/d;
    • Oil sands mining and upgrading operating costs were top tier, averaging $22.12/bbl ($16.49 (U.S.)/bbl) of SCO in Q3 2023, comparable with Q3 2022 costs of $22.35/bbl ($17.12 (U.S.)/bbl);
    • Based on the current forward strip as of Oct. 30, 2023, these high-margin SCO barrels will capture strong pricing with a strip average premium to WTI pricing of approximately $2.24 (U.S.)/bbl in Q4 2023, generating significant free cash flow for the company;
    • As a result of strong execution on the company's thermal growth plan, total thermal production averaged 287,085 bbl/d in Q3 2023, an increase of 43,692 bbl/d or 18 per cent compared with Q3 2022 levels of 243,393 bbl/d. The increase in production was primarily driven by strong execution and bringing production on earlier than originally planned on the new Primrose CSS and Kirby SAGD pads;
    • Thermal in situ operating costs averaged $11.47/bbl ($8.55 (U.S.)/bbl) in Q3 2023, a decrease of 27 per cent from Q3 2022 levels, primarily reflecting the impact of higher production volumes and lower natural gas fuel costs.
  • The company achieved record quarterly natural gas production volumes in Q3 2023, averaging 2,151 mmcf/d, comparable with Q3 2022 levels of 2,132 mmcf/d.
• The company's strategic growth plan includes increasing production from its long-life, no-decline oil sands mining and upgrading assets. At Horizon, after the planned turnaround in 2024, the reliability enhancement project is targeted to be completed which will increase SCO production capacity by approximately 14,000 bbl/d in 2025 as the company targets to shift maintenance to once every two years, reducing downtime and increasing overall reliability.

Operations review and capital allocation

Canadian Natural has a balanced and diverse portfolio of assets, primarily Canadian-based, with international exposure in the U.K. section of the North Sea and offshore Africa. Canadian Natural's production is well balanced between light crude oil, medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen (thermal oil) and SCO (herein collectively referred to as crude oil), and natural gas and NGLs (natural gas liquids). This balance provides optionality for capital investments, maximizing value for the company's shareholders.

Underpinning this asset base is the company's long-life, low-decline production, representing approximately 73 per cent of budgeted total liquids production in 2023, the majority of which is zero-decline, high-value SCO production from the company's world-class oil sands mining and upgrading assets. The remaining balance of the company's long-life ,low-decline production comes from its top-tier thermal in situ oil sands operations and its Pelican Lake heavy crude oil assets. The combination of these long-life, low-decline assets, low reserves replacement costs, and effective and efficient operations results in substantial and sustainable adjusted funds flow throughout the commodity price cycle.

In addition, Canadian Natural maintains a substantial inventory of low capital exposure projects within the company's conventional asset base. These projects can be executed quickly and, in the right economic conditions, provide excellent returns and maximize value for shareholders. Supporting these projects is the company's undeveloped land base which enables large, repeatable drilling programs that can be optimized over time. Additionally, by owning and operating most of the related infrastructure, Canadian Natural is able to control major components of the company's operating costs and minimize production commitments. Low-capital-exposure projects can be quickly stopped or started depending upon success, market conditions or corporate needs.

Canadian Natural's balanced portfolio, built with both long-life, low-decline assets and low-capital-exposure assets, enables effective capital allocation, production growth and value creation.

• The company drilled a total of 233 net crude oil and natural gas producer wells in the nine months ended Sept. 30, 2023, compared with 295 during the nine months ended Sept. 30, 2022, a decrease of 62 net wells over this time period.

Environmental, social and governance highlights

Canada and Canadian Natural are well positioned to deliver affordable, reliable, safe and responsibly produced energy that the world needs, through leading ESG performance. Canadian Natural's diverse portfolio is supported by a large amount of long-life, low-decline assets which have low-risk, high-value reserves that require low maintenance capital. This allows the company to remain flexible with its capital allocation and creates an ideal opportunity to pilot and apply technologies for GHG emissions reductions. Canadian Natural continues to invest in a range of technologies to reduce emissions, such as solvents for enhanced recovery and carbon capture, utilization and storage (CCUS) projects. The company's culture of continuous improvement provides a significant advantage to delivering on its strategy of investing in GHG technologies across its assets, including opportunities for methane emissions reduction, which will enhance the company's environmental performance and long-term sustainability.

Environmental targets

Canadian Natural is committed to reducing its environmental footprint and, as previously announced, has committed to the following environmental targets:

• 40-per-cent reduction in corporate scope 1 and scope 2 absolute GHG emissions by 2035, from a 2020 baseline;
• 50-per-cent reduction in North America E&P (including thermal in situ) methane emissions by 2030, from a 2016 baseline;
• 40-per-cent reduction in thermal in situ fresh water usage intensity by 2026, from a 2017 baseline;
• 40-per-cent reduction in mining fresh river water usage intensity by 2026, from a 2017 baseline.

Pathways Alliance

The six major oil sands companies in the Pathways Alliance, including Canadian Natural, operate approximately 95 per cent of Canada's oil sands production. The goal of this unique alliance is to support Canada in meeting its climate commitments and position Canada to be the preferred source of crude oil globally.

Working collectively with the federal and provincial governments, Pathways has a goal to achieve net-zero GHG emissions from oil sands operations by 2050 and is pursuing realistic and workable solutions to deliver significant emissions reductions. Pathways recognizes there are multiple technologies which contribute to achieving net-zero emissions in the oil sands, including the deployment of existing and emerging GHG reduction technologies such as direct air capture, clean hydrogen, process improvements, energy efficiency, fuel switching and electrification.

Pathways has a defined plan, including its foundational CCS project involving a carbon dioxide trunkline connecting Fort McMurray and Cold Lake to a carbon sequestration hub. In January, 2023, Pathways entered into a carbon sequestration evaluation agreement with the government of Alberta. During Q3 2023, technical teams continued to advance detailed evaluations for the proposed storage hub to enhance understanding of the geology in the hub region. The proposed carbon storage hub would be one of the world's largest carbon capture and storage projects and would be connected to a transportation line that would initially gather captured CO2 from an anticipated 14 oil sands facilities in the Fort McMurray, Christina Lake and Cold Lake regions. Future phases of the plan have the potential to grow the transportation network to include over 20 oil sands facilities, and to accommodate other industries in the region interested in CCS.

Members of Pathways continue to advance community engagement and environmental field programs to minimize the project's environmental disturbance. Project engineering and environmental field programs are on track for this anchor project to meet timelines set out, subject to government support on these efforts. Stakeholder engagement and consultation is continuing with indigenous and local communities in Northern Alberta related to the Pathways CCS project.

Government support for emissions reductions and carbon capture, utilization and storage

Canadian Natural is a leader in CCUS and GHG reduction projects and sees many opportunities to work collaboratively with industry peers and governments to advance investments in CCUS and to achieve meaningful GHG emissions reductions in support of Canada's climate goals.

The government of Canada has proposed an investment tax credit (ITC) for CCUS projects for all sectors across Canada. Updated draft legislation was released for consultation in Q3 2023. It will be important for government to work together with industry to ensure that the ITC implementation delivers required support to enable CCUS project development.

The government of Alberta's 2023 budget announcement on Feb. 28, 2023, included support for CCS projects and coordination with federal CCS initiatives. In addition, the government of Alberta released its emissions reduction and energy development plan (ERED) on April 19, 2023, which outlines the importance of ensuring a globally competitive oil and natural gas industry while reducing emissions and an aspiration to achieve net zero by 2050. By working together, industry and governments have the opportunity to help achieve climate goals, meet economic objectives and support Canada's role in energy security.

Conference call

A conference call will be held at 9 a.m. MDT/11 a.m. EDT on Thursday, Nov. 2, 2023.

Dial-in to the live event:

North America: 1-888-886-7786

International: 001-416-764-8658

Listen to the audio webcast:

Access the audio webcast on the home page of the company's website.

Conference call playback:

North America: 1-877-674-7070

International: 001-416-764-8692 (passcode: 113056 followed by pound key)

About Canadian Natural Resources Ltd.

Canadian Natural is a senior crude oil and natural gas production company, with continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea and offshore Africa.

We seek Safe Harbor.