Canadian Natural Resources Limited Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Production: Achieved record quarterly corporate production of approximately 1.62 million BOEs per day, including records for liquids (~1.18 million bbl/day) and natural gas (~2.7 Bcf/day). Production increased 19% from Q3 2024.
• Asset Swap: Closed AOSP swap with Shell Canada, now owns 100% of Albian oil sands mines and retains 80% working interest in Scotford Upgrader, adding ~31,000 bbl/day annual bitumen production.
• Financials: Q3 adjusted funds flow ~$3.9 billion, adjusted net earnings $1.8 billion. Returns to shareholders in the quarter: $1.5 billion (includes $1.2 billion dividends, $300 million share repurchase). Year-to-date shareholder returns in 2025 ~$6.2 billion. Dividend increased for 25 consecutive years with CAGR 21%.
• Balance Sheet: Strong, with quarter-end debt-to-EBITDA 0.9x, debt to book capital 29.8%, liquidity over $4.3 billion. Repaid USD 600 million U.S. dollar debt, received BBB+ credit rating from Fitch Ratings.

Segment Performance

• Oil Sands Mining and Upgrading: Q3 2025 production averaged approximately 581,000 barrels of SCO with 104% utilization and industry-leading operating costs of approximately $21 per barrel.
• Thermal In Situ Operations: Averaged 274,752 barrels per day in Q3, with operating costs averaging $10.35 per barrel (a 2% decrease from Q3 2024). Pad development plans progressing, e.g., Primrose CSS pad drilling started, Jackfish and Kirby pads on production, Pike SAGD pads tied in.
• Conventional (Primary Heavy Crude Oil): Production averaged 87,705 barrels during the quarter, an increase of 14% from Q3 2024, with operating costs averaging $16.46 per barrel (a 12% decrease). Pelican Lake production was approximately 42,100 barrels per day, a 7% decrease from Q3 2024, with operating costs at $9 per barrel.
• North American Light Crude Oil and Natural Gas: Production averaged 180,100 barrels per day, an increase of 69% from Q3 2024, with operating costs averaging $12.91 per barrel. Natural gas production averaged approximately 2.66 Bcf per day, an increase of 30% from Q3 2024, with operating costs averaging $1.14 per Mcf (a 7% decrease from Q3 2024).

Guidance

• Increased 2025 corporate production guidance range to 1,560-1,580 million BOEs per day.
• Operating capital forecast unchanged at approximately $5.9 billion.
• Board approved quarterly dividend of $0.5875 per common share, payable January 6, 2026.

Risks

• No specific risks explicitly detailed in the transcript, but general industry risks (e.g., market conditions, regulatory changes) could impact operations.

Question and Answer

• Q: Related to the recent Albian mine asset swap, potential upside beyond inventory consolidation?

A: Talked about equipment utilization, suggested listening to the open house tomorrow for more details on cost savings.

• Q: Development of Grouse near Kirby assets and efficiencies?

A: Similar to Jackfish and Kirby, details to be walked through in the open house tomorrow.

• Q: Open to participating in Energy Transfer's South Illinois Connector Pipeline project?

A: Review egress opportunities, positive for Canadian crude differentials, will look at such projects.

• Q: Federal government dialogue on pathways and working with government?

A: Encouraged by engagement, but need to work through details on carbon competitiveness for future growth.

• Q: Impact of T-Block decommissioning on 2026 CapEx?

A: 2026 CapEx to increase modestly, with net after tax recovery being fairly modest.

• Q: Operational setup into end of 2025 and asset performance?

A: All assets performing as expected, optimization utilization strong.

• Q: Turnarounds scheduled in 2026?

A: Horizon most significant in Q3 2026, with routine thermal facility turnarounds also planned.

• Q: Updated thoughts on M&A and capital allocation?

A: Look at accretive M&A, allocation policy unchanged, focusing on core areas.

• Q: Macro outlook on light heavy differentials?

A: Expect differentials to stay in $10-$13 per barrel range, supported by egress and Asian demand for Canadian heavy crude.