Canadian Natural Resources Ltd. press release
Canadian Natural Resources Limited Announces 2025 First Quarter Results
TSX - Toronto Stock Exchange · Oil · Bitumen · Natural Gas Liquids · Natural Gas · Canada
Calgary, Alberta--(Newsfile Corp. - May 8, 2025) - Canadian Natural's (TSX: CNQ) (NYSE: CNQ) President, Scott Stauth, commented on the Company's Q1/25 results, "We have a long track record of being an industry leading effective and efficient producer while consistently delivering top tier operational and financial performance. All our employees are shareholders, with a strong focus on continuous improvement, consistently driving strong results. In Q1/25 we achieved record quarterly production of approximately 1,582,000 BOE/d, which included record quarterly liquids production of approximately 1,174,000 bbl/d, 79% of which was long life low decline production and record quarterly natural gas production of 2,451 MMcf/d.
At our world class Oil Sands Mining and Upgrading assets, we achieved record quarterly Synthetic Crude Oil ("SCO") production of approximately 595,000 bbl/d resulting from a high utilization rate of 106% in Q1/25, anchored by industry leading SCO operating costs of $21.88/bbl (US$15.25/bbl), which drove significant free cash flow in the quarter. Importantly, in 2024 our annual Oil Sands Mining and Upgrading operating costs were in the range of $7.00/bbl to $10.00/bbl lower than our peer average. This equates to incremental annual margin of approximately $1.2 billion to $1.7 billion, based on our 2024 annual production.
Following our first few months of operating the Duvernay assets acquired in December 2024, we are achieving strong production results and cost reductions. We are confident we will add more value than we planned for at the time of the acquisition. This is made possible through our commitment to continuous improvement and a strong team culture that focuses on improving our already top tier operating costs, driving execution of organic growth opportunities and maximizing value to shareholders.
Canadian Natural's constant focus on continuous improvement has resulted in capturing cost efficiencies throughout our operations year to date. As a result of these efficiencies, we are in a position to reduce our 2025 capital budget by $100 million, resulting in an updated total capital forecast of $6.05 billion, excluding abandonment expenditures. This reduction in our 2025 capital will have no impact on our planned operating activities or targeted production levels for 2025."
Canadian Natural's Chief Financial Officer, Victor Darel, added "In Q1/25, we achieved strong financial results, including adjusted net earnings of $2.4 billion or $1.16 per share and adjusted funds flow of $4.5 billion, or $2.16 per share. We returned approximately $1.7 billion to our shareholders in Q1/25, including $1.2 billion in dividends and $0.5 billion in share repurchases. At the same time we strengthened our balance sheet by reducing net debt in the quarter by approximately $1.4 billion from December 31, 2024 levels.
We are committed to maximizing shareholder value and increasing sustainable returns to shareholders. As previously announced, in March 2025 the Board of Directors approved a 4% increase to our quarterly dividend to $0.5875 per common share or $2.35 per common share annualized, with 2025 being the 25thconsecutive year of dividend increases by Canadian Natural, with a compound annual growth rate ("CAGR") of 21% over that time.
Our business model is robust and sustainable as our top tier US$ WTI breakeven, defined as the adjusted funds flow required to cover maintenance capital and dividends, remains in the low to mid-US$40 per barrel range. Our balance sheet is already very strong and we improved it further by reducing net debt by approximately $1.4 billion in Q1/25 as mentioned above, and maintained liquidity of approximately $5.1 billion as at March 31, 2025, providing significant flexibility.
Our leading financial results combined with our top tier, safe, reliable, effective and efficient operations provide us with unique competitive advantages, all of which drive material free cash flow generation and strong returns on capital."
HIGHLIGHTS
| | | Three Months Ended | | | | | | | | | | ($ millions, except per common share amounts) | | Mar 31 2025 | | | Dec 31 2024 | | | Mar 31 2024 | | | | Net earnings | $ | 2,458 | | $ | 1,138 | | $ | 987 | | | | Per common share(1) | - basic | $ | 1.17 | | $ | 0.54 | | $ | 0.46 | | | | - diluted | $ | 1.17 | | $ | 0.54 | | $ | 0.46 | | | Adjusted net earnings from operations(2) | $ | 2,436 | | $ | 1,977 | | $ | 1,474 | | | | Per common share(1) | - basic(3) | $ | 1.16 | | $ | 0.94 | | $ | 0.69 | | | | - diluted(3) | $ | 1.16 | | $ | 0.93 | | $ | 0.68 | | | Cash flows from operating activities | $ | 4,284 | | $ | 3,432 | | $ | 2,868 | | | | Adjusted funds flow(2) | $ | 4,530 | | $ | 4,186 | | $ | 3,138 | | | | Per common share(1) | - basic(3) | $ | 2.16 | | $ | 1.99 | | $ | 1.47 | | | | - diluted(3) | $ | 2.15 | | $ | 1.97 | | $ | 1.45 | | | Cash flows used in investing activities | $ | 1,312 | | $ | 10,414 | | $ | 1,392 | | | | Net capital expenditures(4) | $ | 1,303 | | $ | 10,348 | | $ | 1,113 | | | | Net capital expenditures, excluding net acquisition costs(5) | $ | 1,303 | | $ | 1,290 | | $ | 1,113 | | | | Abandonment expenditures | $ | 188 | | $ | 151 | | $ | 162 | | | | Daily production, before royalties | | | | | | | | | | | | Natural gas (MMcf/d) | | 2,451 | | | 2,283 | | | 2,147 | | | | Crude oil and NGLs (bbl/d) | | 1,173,804 | | | 1,090,002 | | | 975,668 | | | | Equivalent production (BOE/d)(6) | | 1,582,348 | | | 1,470,428 | | | 1,333,502 | | | | (1) Per common share and dividend amounts have been updated to reflect the two for one common share split. Further details are disclosed in the Advisory section of the Company's MD&A and in the financial statements for the three months ended March 31, 2025 dated May 7, 2025. (2) Non-GAAP Financial Measure. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2025 dated May 7, 2025. (3) Non-GAAP Ratio. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2025 dated May 7, 2025. (4) Non-GAAP Financial Measure. The composition of this measure was updated in the fourth quarter of 2024. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2025 dated May 7, 2025. (5) Excludes net acquisition costs of $9,058 million for the three months ended December 31, 2024 related to the acquisition of assets in the period. (6) A barrel of oil equivalent ("BOE") is derived by converting six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of crude oil (6 Mcf:1 bbl). This conversion may be misleading, particularly if used in isolation, or to compare the value ratio using current crude oil and natural gas prices since the 6 Mcf:1 bbl ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. | | | | | | | | | | |
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The strength of Canadian Natural's long life low decline asset base, supported by safe, effective and efficient operations, makes our business unique, robust and sustainable. In Q1/25, the Company generated strong financial results, including:
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Net earnings of approximately $2.5 billion and adjusted net earnings from operations of approximately $2.4 billion.
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Cash flows from operating activities of approximately $4.3 billion.
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Adjusted funds flow of approximately $4.5 billion.
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Canadian Natural continues to maintain a strong balance sheet and financial flexibility, with approximately $5.1 billion in liquidity(1)as at March 31, 2025.
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In Q1/25, the Company completed the following:
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Repaid US$600 million of 3.90% US dollar debt securities due February 2025.
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Extended its $500 million revolving credit facility originally maturing February 2026 to June 2027.
(1)Non-GAAP Financial Measure. Refer to the "Non-GAAP and Other Financial Measures" section of this press release and the Company's MD&A for the three months ended March 31, 2025 dated May 7, 2025.
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Canadian Natural continues to focus on safe, effective and efficient operations delivering record quarterly average production in Q1/25 of 1,582,348 BOE/d, consisting of record total liquids production of 1,173,804 bbl/d and record natural gas production of 2,451 MMcf/d.
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Canadian Natural's world class Oil Sands Mining and Upgrading assets delivered record quarterly production of 595,116 bbl/d of SCO in Q1/25, an increase of 34% or approximately 150,000 bbl/d from Q1/24 levels.
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Gross production of approximately 630,000 bbl/d in Q1/25, with upgrader utilization of 106%, was the highest quarterly Oil Sands Mining and Upgrading gross production in the Company's history, achieved through successes from the recently completed Reliability Enhancement Project and Scotford Upgrader debottleneck work, driving strong performance.
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When comparing utilization over the last 5 years Canadian Natural's was approximately 8% higher versus a comparable peer average. This equates to approximately 40,000 bbl/d of incremental annual production based on 2024 capacity.
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Industry leading quarterly Oil Sands Mining and Upgrading operating costs of $21.88/bbl (US$15.25/bbl) of SCO were achieved in Q1/25, a decrease of 12% from Q1/24 levels.
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Canadian Natural's high value SCO represented approximately 51% of the Company's total liquids volumes in Q1/25 and captured strong quarterly realized SCO pricing of $95.52/bbl, generating significant free cash flow.
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Thermal in situ quarterly production averaged 284,706 bbl/d in Q1/25, an increase of 6% or approximately 16,500 bbl/d from Q1/24 levels as a result of the Company's capital efficient thermal pad add development program. Results have been strong from the two Cyclic Steam Stimulation ("CSS") pads that came on production ahead of schedule at Primrose in Q4/24 and Q1/25.
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Quarterly thermal in situ operating costs were strong, averaging $11.23/bbl (US$7.83/bbl) in Q1/25, a decrease of 20% from Q1/24 levels, primarily reflecting higher production volumes and lower energy costs.
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On the recently acquired Duvernay assets, Canadian Natural's effective and efficient operations, area synergies and expertise in similar plays, such as the Montney, have resulted in both capital and operating cost efficiencies. Additionally, we are on track to achieve 2025 budget production of approximately 60,000 BOE/d.
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By optimizing well length and completions design combined with top tier execution, we are drilling longer wells with improved reservoir access at lower costs. On a length normalized basis, combined drilling and completion costs for 2025 are targeting an improvement of approximately 14% or $1.8 million per well compared to 2024 costs.
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The Company is targeting to drill 43 gross wells in the Duvernay as part of the 2025 capital development program.
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Operating costs in Q1/25 were strong, averaging approximately $9.52/BOE.
RETURNS TO SHAREHOLDERS
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Canadian Natural has a strong history of growing its sustainable dividend with 2025 being the 25thconsecutive year of dividend increases with a CAGR of 21% over that time.
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Returns to shareholders in Q1/25 were strong, totaling approximately $1.7 billion, comprised of $1.2 billion of dividends and $0.5 billion through the repurchase and cancellation of approximately 11.2 million common shares at a weighted average price of $43.66 per share.
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Year to date in 2025, up to and including May 7, 2025, the Company has returned a total of approximately $3.1 billion directly to shareholders through $2.4 billion in dividends and $0.7 billion through the repurchase and cancellation of approximately 15.8 million common shares.
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Subsequent to quarter end, Canadian Natural declared a quarterly cash dividend on its common shares of $0.5875 per common share. The quarterly dividend will be payable on July 3, 2025 to shareholders of record at the close of business on June 13, 2025.
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As previously announced, on March 6, 2025 the Board of Directors increased the quarterly dividend by 4% to $0.5875 per common share. This demonstrates the confidence that the Board of Directors 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.
OPERATIONS REVIEW AND CAPITAL ALLOCATION
Canadian Natural has a balanced and diverse portfolio of assets, primarily Canadian-based, with international exposure in the UK 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. 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 77% of total budgeted liquids production in 2025, 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 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 our shareholders. Supporting these projects is the Company's undeveloped landbase which enables large, repeatable drilling programs that can be optimized over time. Additionally, Canadian Natural maximizes long-term value by maintaining high ownership and operatorship of its assets, allowing the Company to control the nature, timing and extent of development. Low capital exposure projects can be stopped or started relatively quickly 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.
| Drilling Activity | | Three Months Ended | | | | | | | | | | | | | | March 31, 2025 | | | March 31, 2024 | | | | | | | | | (number of wells) | | Gross | | | Net | | | Gross | | | Net | | | Crude oil (1) | | 75 | | | 74 | | | 62 | | | 61 | | | Natural gas | | 23 | | | 19 | | | 23 | | | 16 | | | Dry | | 1 | | | 1 | | | - | | | - | | | Subtotal | | 99 | | | 94 | | | 85 | | | 77 | | | Stratigraphic test / service wells | | 484 | | | 462 | | | 452 | | | 386 | | | Total | | 583 | | | 556 | | | 537 | | | 463 | | | Success rate (excluding stratigraphic test / service wells) | | | | | 99% | | | | | | 100 % | | | (1) Includes bitumen wells. | | | | | | | | | | | | |
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Canadian Natural drilled a total of 94 net crude oil and natural gas producer wells in Q1/25, 17 more than in Q1/24.
North America Exploration and Production
| Crude oil and NGLs - excluding Thermal In Situ Oil Sands | | | | | | | | | | | | | Three Months Ended | | | | | | | | | | | Mar 31 2025 | | | Dec 31 2024 | | | Mar 31 2024 | | | Crude oil and NGLs production (bbl/d) | | 276,532 | | | 255,729 | | | 237,481 | | | Net wells targeting crude oil | | 57 | | | 84 | | | 38 | | | Net successful wells drilled | | 56 | | | 84 | | | 38 | | | Success rate | | 98% | | | 100 % | | | 100 % | |
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North America E&P liquids production, excluding thermal in situ, averaged 276,532 bbl/d in Q1/25, a 16% increase from Q1/24 levels, reflecting production volumes from the Duvernay assets acquired in December 2024, along with strong organic growth from our liquids-rich natural gas and primary heavy crude oil assets.
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Primary heavy crude oil production averaged 85,604 bbl/d in Q1/25, a 9% increase from Q1/24 levels, reflecting strong drilling results from the Company's multilateral wells, partially offset by natural field declines.
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Continuing to build on the Company's highly successful multilateral drilling program, Canadian Natural targets to drill 156 net primary heavy crude oil multilateral wells in 2025.
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Operating costs in the Company's primary heavy crude oil operations averaged $18.13/bbl (US$12.63/bbl) in Q1/25, a decrease of 5% from Q1/24 levels, primarily reflecting higher production volumes and lower energy costs.
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Pelican Lake production averaged 43,175 bbl/d in Q1/25 a decrease of 4% from Q1/24 levels, reflecting low natural field declines from this long life low decline asset.
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Operating costs at Pelican Lake averaged $9.77/bbl (US$6.81/bbl) in Q1/25, comparable to Q1/24 levels.
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North America light crude oil and NGLs production averaged 147,753 bbl/d in Q1/25, an increase of 30% or approximately 34,000 bbl/d compared to Q1/24 levels, primarily driven by the recently acquired Duvernay assets and strong drilling results in our liquids-rich natural gas assets.
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Operating costs in the Company's North America light crude oil and NGLs operations averaged $13.15/bbl (US$9.16/bbl) in Q1/25, a decrease of 14% from Q1/24 levels, primarily reflecting higher production volumes and lower energy costs.
| North America Natural Gas | | | | | | | | | | | | | Three Months Ended | | | | | | | | | | | Mar 31 2025 | | | Dec 31 2024 | | | Mar 31 2024 | | | Natural gas production (MMcf/d) | | 2,436 | | | 2,273 | | | 2,135 | | | Net wells targeting natural gas | | 19 | | | 14 | | | 16 | | | Net successful wells drilled | | 19 | | | 14 | | | 16 | | | Success rate | | 100% | | | 100 % | | | 100 % | |
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North America natural gas production averaged 2,436 MMcf/d in Q1/25, an increase of 14% from Q1/24 levels, driven by the recently acquired Duvernay assets and strong drilling results in the Company's liquids-rich natural gas assets. The Company remains focused on delivering strong returns on organic growth with our liquids-rich natural gas activity in the Duvernay, Montney and Deep Basin.
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North America natural gas operating costs averaged $1.16/Mcf in Q1/25, a decrease of 9% from Q1/24 levels, primarily reflecting higher production volumes.
| Thermal In Situ Oil Sands | | | | | | | | | | | | | Three Months Ended | | | | | | | | | | | Mar 31 2025 | | | Dec 31 2024 | | | Mar 31 2024 | | | Bitumen production (bbl/d) | | 284,706 | | | 276,231 | | | 268,155 | | | Net wells targeting bitumen | | 18 | | | 16 | | | 23 | | | Net successful wells drilled | | 18 | | | 16 | | | 23 | | | Success rate | | 100% | | | 100 % | | | 100 % | |
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Thermal in situ production averaged 284,706 bbl/d in Q1/25, an increase of 6% or approximately 16,500 bbl/d from Q1/24 levels as a result of the Company's capital efficient thermal pad add development program. Results have been strong from the two CSS pads that came on production ahead of schedule at Primrose in Q4/24 and Q1/25.
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Quarterly thermal in situ operating costs were strong, averaging $11.23/bbl (US$7.83/bbl) in Q1/25, a decrease of 20% from Q1/24 levels, primarily reflecting higher production volumes and lower energy costs.
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Canadian Natural has significant thermal in situ facility processing capacity of approximately 340,000 bbl/d, resulting in 70,000 bbl/d of available capacity. The Company has decades of strong capital efficient drill to fill growth opportunities on its long life low decline thermal in situ assets, which we continue to develop in a disciplined manner to deliver safe and reliable thermal in situ production.
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At Primrose, following strong results from the recently drilled CSS pads, the Company is planning to reallocate a portion of pad add capital in 2025 to Primrose from Kirby to maximize returns. The Company now targets to drill a CSS pad in Q4/25 with production targeted to come on in 2026.