Canadian Natural Resources Ltd. press release
Canadian Natural Resources Limited Announces 2025 Second Quarter Results
TSX - Toronto Stock Exchange · Oil · Bitumen · Natural Gas Liquids · Natural Gas · Canada
Calgary, Alberta--(Newsfile Corp. - August 7, 2025) - Canadian Natural's (TSX: CNQ) (NYSE: CNQ) President, Scott Stauth, commented on the Company's second quarter results, "Our relentless focus on continuous improvement combined with effective and efficient operations drove strong performance year to date in 2025. Our ability to effectively allocate capital across our strong asset base provides us with a competitive advantage. This ability, combined with accretive acquisitions, creates significant long-term value for our shareholders. Our culture of accountability and the strength of our assets is a unique advantage that results in both capital and operating cost savings and maximizes value for our shareholders.
We successfully completed a planned turnaround at our Athabasca Oil Sands Project ("AOSP") in Q2/25, five days ahead of schedule and on budget. Production and upgrader utilization at Horizon and AOSP, before and after the turnaround, was high, driven by strong performance on our Reliability Enhancement and debottlenecking projects. In July 2025, Oil Sands Mining and Upgrading Synthetic Crude Oil ("SCO") production averaged approximately 602,000 bbl/d with upgrader utilization of 106%, and we expect the second half of 2025 to continue to deliver strong operating results.
In Q2/25, despite the turnaround at AOSP which reduced production levels in the quarter by approximately 120,000 bbl/d, we achieved quarterly production volumes totaling approximately 1,420 MBOE/d, including liquids production of 1,019 Mbbl/d and natural gas production of 2,407 MMcf/d. Total corporate production on a BOE basis in Q2/25 was up approximately 135,000 BOE/d from Q2/24 levels, reflecting opportunistic acquisitions and organic growth across our asset base achieved in the last 12 months.
We continue to achieve strong results from our drilling programs across our Conventional assets as we are realizing capital efficiencies, resulting in high levels of activity without increased capital. This includes our multilateral heavy crude oil program where we are targeting to drill 26 more wells in 2025 than originally budgeted. Importantly, the low operating costs on these multilateral wells drive strong returns on capital, adding significant value.
On our recently acquired Duvernay assets, we continue to see reductions on both capital and operating costs supporting execution of organic growth opportunities. We are realizing more value than we planned at the time of the acquisition. This is being achieved through our commitment to continuous improvement and a strong team culture that focuses on improving our operating costs. In Q2/25, we had strong operating costs in the Duvernay of $8.43/BOE, a decrease of 11% from Q1/25 levels of $9.52/BOE.
On June 26, 2025, we closed an acquisition of lands and production in the Palliser Block located in southern Alberta. We had budgeted to close the Palliser Block acquisition on March 1, 2025, which would have added production volumes of approximately 50,000 BOE/d, including 20,000 bbl/d of Mannville light crude oil and NGLs, in Q2/25. This acquisition and production was included in our original 2025 capital budget and production guidance, but due to this delayed closing in late June 2025, added only 2,000 BOE/d to our production levels for Q2/25. This acquisition also included approximately 1.1 million net acres of high quality land, with currently identified significant light crude oil inventory on the lands of approximately 850 locations.
Subsequent to quarter end, on July 2, 2025, we closed an acquisition of liquids-rich Montney assets located in the Grande Prairie area of northern Alberta for approximately $750 million with production from the acquisition of approximately 32,000 BOE/d, including 12,500 bbl/d of NGLs. Our original 2025 capital budget and production guidance did not include this acquisition. These assets are directly adjacent to our existing core Montney assets, providing opportunities for synergies while adding approximately 120,000 net acres of high quality land with currently identified significant liquids-rich inventory of approximately 150 locations."
Canadian Natural's Chief Financial Officer, Victor Darel, added "In Q2/25, we generated adjusted net earnings of $1.5 billion or $0.71 per share, and adjusted funds flow of $3.3 billion or $1.56 per share. We returned approximately $1.6 billion to our shareholders in the quarter, including $1.2 billion in dividends and $0.4 billion in share repurchases.
Our business model is robust and sustainable, resulting in a top tier WTI breakeven in the low to mid-US$40 per barrel range at which prices we generate the adjusted funds flow required to cover both maintenance capital levels and dividends. Our balance sheet remains strong with liquidity of approximately $4.8 billion as at June 30, 2025, providing significant flexibility.
Our leading financial results combined with our safe, reliable, effective and efficient operations provide us with unique competitive advantages, all of which drive material free cash flow generation and strong returns on capital, maximizing value for our shareholders."
HIGHLIGHTS
| | | Three Months Ended | | | Six Months Ended | | | | | | | | | | | | | ($ millions, except per common share amounts) | | Jun 30 2025 | | | Mar 31 2025 | | | Jun 30 2024 | | | Jun 30 2025 | | | Jun 30 2024 | | | | Net earnings | $ | 2,459 | | $ | 2,458 | | $ | 1,715 | | $ | 4,917 | | $ | 2,702 | | | | Per common share | - basic | $ | 1.17 | | $ | 1.17 | | $ | 0.80 | | $ | 2.34 | | $ | 1.26 | | | | - diluted | $ | 1.17 | | $ | 1.17 | | $ | 0.80 | | $ | 2.34 | | $ | 1.25 | | | Adjusted net earnings from operations(1) | $ | 1,496 | | $ | 2,436 | | $ | 1,892 | | $ | 3,932 | | $ | 3,366 | | | | Per common share | - basic(2) | $ | 0.71 | | $ | 1.16 | | $ | 0.89 | | $ | 1.88 | | $ | 1.57 | | | | - diluted(2) | $ | 0.71 | | $ | 1.16 | | $ | 0.88 | | $ | 1.87 | | $ | 1.56 | | | Cash flows from operating activities | $ | 3,114 | | $ | 4,284 | | $ | 4,084 | | $ | 7,398 | | $ | 6,952 | | | | Adjusted funds flow(1) | $ | 3,262 | | $ | 4,530 | | $ | 3,614 | | $ | 7,792 | | $ | 6,752 | | | | Per common share | - basic(2) | $ | 1.56 | | $ | 2.16 | | $ | 1.69 | | $ | 3.72 | | $ | 3.16 | | | | - diluted(2) | $ | 1.55 | | $ | 2.15 | | $ | 1.68 | | $ | 3.70 | | $ | 3.13 | | | Cash flows used in investing activities | $ | 1,941 | | $ | 1,312 | | $ | 1,015 | | $ | 3,253 | | $ | 2,407 | | | | Net capital expenditures(3) | $ | 1,915 | | $ | 1,303 | | $ | 1,621 | | $ | 3,218 | | $ | 2,734 | | | | Net capital expenditures(3), excluding net acquisition costs | $ | 1,691 | | $ | 1,303 | | $ | 1,621 | | $ | 2,994 | | $ | 2,734 | | | | Abandonment expenditures | $ | 193 | | $ | 188 | | $ | 129 | | $ | 381 | | $ | 291 | | | | Daily production, before royalties | | | | | | | | | | | | | | | | | | Natural gas (MMcf/d) | | 2,407 | | | 2,451 | | | 2,110 | | | 2,429 | | | 2,129 | | | | Crude oil and NGLs (bbl/d) | | 1,019,149 | | | 1,173,804 | | | 934,066 | | | 1,096,049 | | | 954,866 | | | | Equivalent production (BOE/d)(4) | | 1,420,358 | | | 1,582,348 | | | 1,285,798 | | | 1,500,905 | | | 1,309,649 | | | | (1) Non-GAAP Financial Measure. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three and six months ended June 30, 2025 dated August 6, 2025. (2) Non-GAAP Ratio. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three and six months ended June 30, 2025 dated August 6, 2025. (3) 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 and six months ended June 30, 2025 dated August 6, 2025. (4) 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, reliable, effective and efficient operations, makes our business unique, robust and sustainable. In Q2/25, 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 $1.5 billion.
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Cash flows from operating activities of approximately $3.1 billion.
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Adjusted funds flow of approximately $3.3 billion.
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Canadian Natural continues to maintain a strong balance sheet and financial flexibility, with approximately $4.8 billion in liquidity(1)as at June 30, 2025.
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Subsequent to quarter end, the Company repaid US$600 million of US dollar debt securities due in July 2025.
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Subsequent to quarter end, Canadian Natural received a new long-term investment grade credit rating of BBB+ from Fitch Ratings. Canadian Natural's existing long-term credit ratings are A (low) from DBRS, Baa1 from Moody's and BBB- from S&P.
(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 and six months ended June 30, 2025 dated August 6, 2025.
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Canadian Natural continues to focus on safe, reliable, effective and efficient operations, delivering strong quarterly average production of 1,420,358 BOE/d in Q2/25, consisting of total liquids production of 1,019,149 bbl/d and natural gas production of 2,407 MMcf/d. Total BOE production in Q2/25 is approximately 10% higher than Q2/24 levels, reflecting both opportunistic acquisitions and organic growth completed over the last 12 months.
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Oil Sands Mining and Upgrading production averaged 463,808 bbl/d of SCO in Q2/25, an increase of 13% from Q2/24 levels. The increase is a result of the Reliability Enhancement Project, eliminating the need for a turnaround at Horizon in 2025, and the Scotford Upgrader debottleneck which were completed in 2024, combined with the additional 20% working interest in AOSP acquired in December 2024, partially offset by the Q2/25 turnaround at AOSP completed successfully and five days ahead of schedule in the quarter.
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Subsequent to quarter end, July 2025 Oil Sands Mining and Upgrading production averaged approximately 602,000 bbl/d with upgrader utilization of 106%, and the Company expects the second half of 2025 to continue to deliver strong operating results.
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Canadian Natural's highly successful multilateral drilling program continues to unlock opportunity on the Company's extensive, high quality land throughout our primary heavy crude oil assets of approximately 3.0 million net acres.
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As a result of capital efficiencies achieved across the Company and our deep inventory of high return opportunities, Canadian Natural is now targeting to drill 182 net primary heavy crude oil multilateral wells in 2025, 26 more wells than in the original budget and an increase of approximately 60 wells or 50% from 2024 drilling levels.
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Increasing well counts and optimized well designs continue to deliver strong results with average peak rates of approximately 230 bbl/d per well achieved from these multilateral wells in the first six months of 2025.
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On the liquids-rich Duvernay assets, Canadian Natural continues to achieve strong performance as the Company applies to these assets its continuous improvement culture, effective and efficient operations and area expertise.
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Our extended well lengths, which on average are 20% longer than 2024 lengths and optimized completions designs, combined with strong execution continues to lower development costs. On a length normalized basis, combined drilling and completion costs for 2025 are now targeting an improvement of approximately 16% or $2.0 million per well lower compared to 2024 costs, a further improvement of $0.2 million per well compared to Q1/25 levels.
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As a result of operating synergies and our focus on continuous improvement, the Company achieved strong operating costs in our first six months of operating the Duvernay assets, averaging $8.43/BOE in Q2/25, a decrease of 11% compared to Q1/25 levels of $9.52/BOE.
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On June 26, 2025, Canadian Natural closed an acquisition of lands and production in the Palliser Block located in southern Alberta. The Company had budgeted to close the Palliser Block acquisition on March 1, 2025, which would have added production volumes of approximately 50,000 BOE/d, including 20,000 bbl/d of Mannville light crude oil and NGLs, in Q2/25. This acquisition and production was included in the Company's original 2025 capital budget and production guidance, but due to this delayed closing in late June 2025, added only 2,000 BOE/d to production levels in Q2/25. This acquisition also included approximately 1.1 million net acres of high quality land, with currently identified significant light crude oil inventory on the lands of approximately 850 locations.
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Subsequent to quarter end, on July 2, 2025, Canadian Natural closed an acquisition of liquids-rich Montney assets located in the Grande Prairie area of northern Alberta for approximately $750 million with production from the acquisition of approximately 32,000 BOE/d, including 12,500 bbl/d of NGLs. The Company's original 2025 capital budget and production guidance did not include this acquisition. These assets are directly adjacent to the Company's existing core Montney assets, providing opportunities for synergies while adding approximately 120,000 net acres of high quality land with currently identified significant liquids-rich inventory of approximately 150 locations.
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Canadian Natural plans to update our annual 2025 corporate production guidance and capital forecast upon closing of the AOSP swap, which is targeted for Q3/25.
RETURNS TO SHAREHOLDERS
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Concurrent with the closing of the Chevron acquisition in December 2024 the Company revised its free cash flow policy to be as follows:
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60% of free cash flow to shareholder returns and 40% to the balance sheet until net debt reaches $15 billion.
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When net debt is between $12 billion and $15 billion, free cash flow allocation will be 75% to shareholder returns and 25% to the balance sheet.
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When net debt is at or below $12 billion, up from the previous target of $10 billion, free cash flow allocation will be 100% to shareholder returns.
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Due to accretive acquisitions completed in late 2024 and 2025 year to date and strong operational results, Canadian Natural targets to provide similar shareholder returns in 2025 as compared to 2024. This is targeted to be achieved despite only allocating 60% of free cash flow in 2025 to shareholder returns as compared to allocating 100% of free cash flow in 2024 to shareholder returns. These shareholder returns in 2025 will be as a result of the previously announced dividend increase in Q1/25 and continuation of Canadian Natural's share buyback program throughout the year. In addition, Canadian Natural targets to reduce its year end 2025 net debt levels by approximately $2 billion from year end 2024 levels.
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Canadian Natural has a strong history of 25 consecutive years of growing its sustainable dividend with a CAGR of 21% over that time, demonstrating the sustainability of our business model, our strong balance sheet and the strength of our diverse, long life low decline reserves and asset base.
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Returns to shareholders in Q2/25 were strong, totaling approximately $1.6 billion, comprised of $1.2 billion of dividends and $0.4 billion through the repurchase and cancellation of approximately 8.6 million common shares at a weighted average price of $41.46 per share.
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Year to date in 2025, up to and including August 6, 2025, the Company has returned a total of approximately $4.6 billion directly to shareholders through $3.6 billion in dividends and $1.0 billion through the repurchase and cancellation of approximately 22.4 million common shares at a weighted average price of $42.76 per share.
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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 October 3, 2025 to shareholders of record at the close of business on September 19, 2025.
OPERATIONS REVIEW AND CAPITAL ALLOCATION
Canadian Natural has a balanced and diverse portfolio of assets, primarily Canadian-based, with international exposure in the UK portion 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 | | Six Months Ended | | | | | | | | | | | | | | June 30, 2025 | | | June 30, 2024 | | | | | | | | | (number of wells) | | Gross | | | Net | | | Gross | | | Net | | | Crude oil (1) | | 160 | | | 155 | | | 125 | | | 124 | | | Natural gas | | 50 | | | 41 | | | 49 | | | 40 | | | Dry | | 1 | | | 1 | | | 1 | | | 1 | | | Subtotal | | 211 | | | 197 | | | 175 | | | 165 | | | Stratigraphic test / service wells | | 513 | | | 490 | | | 457 | | | 391 | | | Total | | 724 | | | 687 | | | 632 | | | 556 | | | Success rate (excluding stratigraphic test / service wells) | | | | | 99% | | | | | | 99 % | | | (1) Includes bitumen wells. | | | | | | | | | | | | |
Canadian Natural drilled a total of 197 net crude oil and natural gas producer wells in the first six months of 2025, 32 more than in the first six months of 2024.
North America Exploration and Production
| Crude oil and NGLs - excluding Thermal In Situ Oil Sands | | | | | | | | | | | | | | | | | | | Three Months Ended | | | Six Months Ended | | | | | | | | | | | | | | Jun 30 2025 | | | Mar 31 2025 | | | Jun 30 2024 | | | Jun 30 2025 | | | Jun 30 2024 | | | Crude oil and NGLs production (bbl/d) | | 271,022 | | | 276,532 | | | 231,592 | | | 273,761 | | | 234,537 | | | Net wells targeting crude oil | | 57 | | | 57 | | | 33 | | | 114 | | | 71 | | | Net successful wells drilled | | 57 | | | 56 | | | 33 | | | 113 | | | 71 | | | Success rate | | 100% | | | 98 % | | | 100 % | | | 99% | | | 100 % | |