Canadian Natural Resources Limited Announces 2013 Budget

Canadian Natural Resources Limited Announces 2013 Budget 
CALGARY, ALBERTA -- (Marketwire) -- 12/04/12 -- Canadian Natural
Resources Limited (TSX:CNQ) (NYSE:CNQ) 
In commenting on the Company's 2013 budget, John Langille,
Vice-Chairman, stated, "Canadian Natural's 2013 capital budget will
deliver near term production growth, enable continued development of
our long life, low decline asset base and provide unallocated free
cash flow. We target to generate approximately $7.6 billion of cash
flow and $0.7 billion of free cash flow, further strengthening our
financial position." 
Steve Laut, President, continued, "Our 2013 budget reflects the
strength and breadth of our assets. Our capital program is balanced
in allocation to near term growth and longer term growth that will
support and drive sustainable free cash flow in 2013 and beyond. We
have developed the largest reserve base in our peer group and this
provides us options to allocate capital to the highest return
projects. This is evident in our ability to grow crude oil and NGL
volumes in 2013 by 9% while spending only half our capital budget on
projects that add production in 2013. Heavy oil is a significant
contributor to the growth in 2013. As new conversion capacity and
infrastructure come online in 2013 we expect to benefit from stronger
Canadian heavy oil pricing. We continue to execute on our defined
plan that will provide value to shareholders over the near, mid and
long term." 
HIGHLIGHTS OF THE 2013 BUDGET 
- Canadian Natural's 2013 capital budget is targeted at $6.9 billion.
The 2013 capital budget delivers both near term crude oil and NGLs
production growth of approximately 9% and the effective development
of the Company's long life, low decline asset base, which will
provide greater and more sustainable free cash flow in 2014 and
beyond.  
- The Company's 2013 cash flow is targeted to be $7.6 billion at the
midpoint, providing approximately $0.7 billion of free cash flow to
allocate to dividends, share repurchases, opportunistic acquisitions
or debt repayment. 
- The Company's balanced asset base, and high working interest and
operatorship allows for significant flexibility and efficiency during
the capital allocation decision making process. Approximately 53% of
2013 total capital spending will be required to grow production in
2013 and the remaining capital will be allocated toward longer-life,
more sustainable assets that will generate significant incremental
free cash flow in the future. In addition, approximately $2.9 billion
of the 2013 capital budget represents capital flexibility which
allows the Company to reallocate capital over the course of 2013.  
- Canadian Natural has a vast and balanced asset base that contains
both near and long term growth potential. The Company's portfolio
contains in excess of 7.5 billion BOE of proved and probable
reserves, the largest in its peer group. 
- Canadian Natural's ability to allocate its free cash flow in a
balanced manner is evident in its return to shareholders. 
-- Over the last decade, the Company has delivered a 21% compound
average growth rate (CAGR) in dividends per share. 
-- Since the completion of construction at Horizon in 2008, total
dollars returned to shareholders in the form of dividends and share
repurchases have grown by a CAGR of 38% through 2012. 
--  To date, share repurchases in 2012 have accumulated to 9,712,700
common shares at a weighted average price of $29.01 per common share. 
Crude Oil and NGLs 
- Total crude oil and NGLs production target of 482,000 bbl/d to
513,000 bbl/d represents a midpoint increase of approximately 9% from
the midpoint of 2012 guidance.  
North America - Exploration and Production 
-- Primary heavy crude oil production is targeted to increase from
the 2012 midpoint guidance by 11% in 2013 to between 139,000 bbl/d
and 143,000 bbl/d as the Company high-grades its large (approx. 8,500
wells) inventory to effectively and efficiently execute an 890 net
well drilling program in 2013. The Company will drill over 120 net
horizontal wells that will target new play types. Primary heavy crude
oil currently generates the highest return on capital in Canadian
Natural's balanced portfolio.  
-- Pelican Lake crude oil production is targeted to increase from the
2012 midpoint guidance by 19% to between 46,000 bbl/d and 50,000
bbl/d as polymer response is now being realized from the Company's
2011 and 2012 polymer flood expansions. The development of Pelican
Lake will continue to focus on injection optimization, monitoring
polymer response and expanding the polymer flood across this long
life field. Canadian Natural targets to have 56% of the field
converted to polymer flood by year end 2013. Pelican Lake capital
spending in 2013 includes completion of a new battery with an initial
start-up facility capacity of 25,000 bbl/d at Pelican Lake.
Completion of the battery is targeted in mid-2013 and will handle the
additional targeted polymer driven production from Pelican Lake.  
-- North America light crude oil and NGLs production is a significant
part of Canadian Natural's balanced portfolio. Production volumes are
targeted to increase from the 2012 midpoint guidance by 6% to between
65,000 bbl/d and 69,000 bbl/d. North America light oil capital is
allocated to secondary and tertiary recovery projects, and 114 net
light oil wells, 41 of which are targeting new play developments that
were initiated in 2012. The Company continues to advance horizontal
well multi-frac technology in pools across its land base. In
addition, 70% of targeted total drilling will be focused on
horizontal wells.  
North America - Thermal In Situ Oil Sands and Horizon Oil Sands
Mining 
--  Canadian Natural continues to execute its defined, cost effective
plan of developing its oil sands projects providing longer life, low
decline assets which will generate significant shareholder value for
decades to come. Total oil sands production from Thermal In Situ Oil
Sands (Thermal In Situ) and Horizon Oil Sands (Horizon) is targeted
to range from 200,000 bbl/d to 215,000 bbl/d in 2013. 
--- The Company targets to grow Thermal in situ production to
approximately 510,000 bbl/d of capacity by delivering projects that
will add 40,000 bbl/d to 60,000 bbl/d of production every two to
three years over the next two decades. 
---- Thermal in situ production is targeted to increase from the 2012
midpoint guidance by 5% to between 100,000 bbl/d and 107,000 bbl/d as
a result of continued low cost Primrose pad developments (targeted at
$13,000 per flowing bbl/d).  
---- Kirby South Phase 1 continues to progress ahead of plan.  To
date, the Company has reached 74% completion and 89% commitment of
total Kirby South Phase 1 capital expenditures.  2013 budgeted
capital is approximately $315 million to support the completion of
construction and 3 additional pads. Kirby South Phase 1 is targeted
for first steam injection in late 2013 with facility capacity of
40,000 bbl/d, further driving thermal production growth in 2014. 
---- Budgeted capital for Kirby North Phase 1 is approximately $205
million to progress detailed engineering, order modules and construct
camp facilities. Project sanction is targeted for the first half of
2013. 
---- Thermal in situ project timing has been modified to accommodate
the potential inclusion of recently acquired lands adjacent to
Canadian Natural's greater Kirby area and provide a more balanced
capital expenditures profile going forward. As a result, Kirby North
Phase 1 and Grouse are now scheduled for first steam injection in
2016, and between 2017 and 2019 respectively. 
--- In 2013,Horizon production is targeted between 100,000 bbl/d to
108,000 bbl/d of synthetic crude oil (SCO). This range includes
production curtailment during an 18 day planned maintenance
turnaround that is scheduled for May 2013. 
---- Canadian Natural continues to execute its disciplined strategy
of staged expansion to 250,000 bbl/d of SCO facility capacity and
work remains on track. Projects currently under construction are
trending at or below cost estimates. For 2013, budgeted project
capital expenditures at Horizon reflect the Board of Directors
approval of approximately $2.1 billion in targeted strategic
expansion. 
---- Canadian Natural maintains a flexible schedule for Horizon
expansion construction to ensure capital efficiencies. To date, the
Company has reached 16% completion and 38% commitment of total
Horizon project capital expenditures and targets a 10,000 bbl/d
facility capacity increase in 2015, a 45,000 bbl/d facility capacity
increase in 2016 and an 80,000 bbl/d facility capacity increase in
2017. For the next 5 years, the Company targets to spend
approximately $2.0 billion to $2.5 billion per year on Horizon
project expansions to achieve a step-wise increase in production to
250,000 bbl/d of SCO.  
International - Exploration and Production 
-- International crude oil production is targeted to range between
32,000 bbl/d and 36,000 bbl/d. Q4/12 to Q4/13 production is targeted
to increase approximately 6%. International light oil activities in
2013 will include ramp up of drilling programs in the North Sea and
Espoir, Offshore Africa. 
--- In the North Sea, the Company is targeting a second drilling
operation to commence in the last half of 2013 at Ninian. 
--- Canadian Natural's eight well infill drilling program at the
Espoir
Field continues to progress. The drilling rig is in Cote d'Ivoire and
preparations are currently being undertaken to commence drilling
operations in 2013. The Company targets first oil in the first half
of 2013 ramping up to production of 6,500 BOE/d at the completion of
the Espoir drilling program, offsetting natural declines. The cost of
this program is targeted at $24,000 per flowing BOE/d. 
--- Canadian Natural continues to make significant progress on its
exploration project in South Africa. Long leads equipment has been
ordered for the earliest potential drilling window beginning in late
2013 or early 2014. This exploration project has significant billion
barrel type structures located on this 100% owned Canadian Natural
block. The Company is currently progressing the plan to bring in a
partner to drill this well. Interest has been very strong from a
select group of operators.  
Natural Gas 
- Total natural gas targeted production of 1,085 MMcf/d to 1,145
MMcf/d represents a midpoint decrease of 9% from the midpoint of 2012
forecasted annual guidance while Q4/12 to Q4/13 production is
targeted to decrease 2%. The annual decrease reflects low drilling
levels associated with the Company's strategic decision to allocate
capital to higher return crude oil projects. 
- Canadian Natural is the second largest producer of natural gas in
Canada and a significant owner and operator of natural gas
infrastructure in Western Canada. The Company's large North America
natural gas and NGLs reserve base of 6.6 Tcfe, gross proved and
probable reserves, generates operating free cash flow and presents
significant upside potential for natural gas production and growth in
operating free cash flow when natural  gas prices recover.  
- The Company will recommence in 2013 the expansion of its liquids
rich Montney play, Septimus, due to forecasted higher natural gas
pricing. In 2013, the Company will complete 10 wells that were
initially drilled in early 2012, and will drill and complete 14
additional wells. The plant expansion is targeted for completion in
late 2013 and will increase sales capacity to 125 MMcf/d, yielding
12,200 bbl/d of liquids following
processing through the plant and deep cut facilities. Canadian
Natural has the largest Montney land position in Western Canada of
approximately 1,043,800 net acres. In addition, other North America
natural gas activity includes drilling 16 net liquids rich natural
gas wells for strategic drilling and lease preservation.  
Overall 
- Total BOE production is targeted to range from 663,000 BOE/d to
704,000 BOE/d, representing a midpoint increase of 3% from the
midpoint of 2012 average production guidance. Q4/12 to Q4/13 average
production is targeted to increase approximately 6%.  
- Canadian Natural's 2013 production and capital guidance is based on
average annual WTI strip pricing of US$89.36/bbl, AECO strip pricing
of C$3.41/GJ, and Western Canadian Select heavy oil differential of
US$17.87/bbl.  Partly based on this forecast, the Company's focus
remains on growing higher return crude oil and NGLs projects. Heavy
oil differential volatility is expected to lessen over the next year
and a half as heavy oil conversion capacity is added in the first
half of 2013. PADD II heavy oil refining capacity is anticipated to
increase by 310,000 bbl/d, a 20% increase from existing capacity. In
late 2013 and into 2014, pipeline constraints should reduce as
pipelines from the US Midwest to the US Gulf Coast are expanded. 
- Work continues as scheduled on the North West Redwater 50,000 bbl/d
bitumen refinery (78,000 bbl/d of bitumen blend).  Completion of the
project is targeted for mid-2016 and is targeted to provide Canadian
Natural (50% owner) a minimum 10% after tax return on its equity
investment in the project.  The Company will also provide 12,500
bbl/d of bitumen feedstock to the refinery as a toll payer. 
PRODUCTION AND CAPITAL GUIDANCE  
Canadian Natural continues its strategy of maintaining a large
portfolio of varied projects. This enables the Company to provide
consistent growth in production and high shareholder returns over an
extended period of time. Annual budgets are developed, scrutinized
throughout the year and changed if necessary in the context of
project returns, product pricing expectations, and balance project
risks and time horizons. Canadian Natural maintains a high ownership
level and operatorship in its properties and can therefore control
the nature, timing and extent of expenditures in each of its project
areas.  
The production guidance for 2012F and 2013B are as follows: 


 
                                          ----------------------------------
Daily production volumes, before royalties    2012 Forecast      2013 Budget
----------------------------------------------------------------------------
Natural gas (MMcf/d)                          1,222 - 1,229    1,085 - 1,145
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Crude oil and NGLs (Mbbl/d)                                                 
  North America - Exploration and                                           
   Production                                     229 - 232  
      250 - 262
  North America - Thermal In Situ                  98 - 100        100 - 107
  North America - Oil Sands Mining                   87- 89        100 - 108
  International                                     38 - 39          32 - 36
----------------------------------------------------------------------------
                                                  452 - 460        482 - 513
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The capital expenditure guidance for 2012F and 2013B are as follows: 


 
                                              ------------------------------
($ millions)                                    2012 Forecast    2013 Budget
----------------------------------------------------------------------------
  North America natural gas                   $           470  $         445
  North America crude oil                               2,190          1,965
  International crude oil                                 420            605
----------------------------------------------------------------------------
Total Exploration and Production              $         3,080  $       3,015
----------------------------------------------------------------------------
Thermal In Situ Oil Sands                                                   
    Primrose and Future                                   970            770
    Kirby South Phase 1                                   540            315
    Kirby North Phase 1                                     -            205
----------------------------------------------------------------------------
Total Thermal In Situ Oil Sands               $          1,510  $      1,290
----------------------------------------------------------------------------
Property acquisitions, dispositions and                                     
 other                                        $            185  $         85
----------------------------------------------------------------------------
Horizon Oil Sands Mining
Project Capital
  Reliability - Tranche 2                     $            75  $         100
  Directive 74 and Technology                             135             60
  Phase 2A                                                240            180
  Phase 2B                                                505            940
  Phase 3                                                 240            535
  Phase 4                                                  15             20
  Owner's costs and other                                 170            245
----------------------------------------------------------------------------
  Total Capital Projects                                1,380          2,080
  Sustaining capital                                      200            180
  Turnarounds and reclamation                              25            105
  Capitalized interest and other                           70            190
----------------------------------------------------------------------------
Total Horizon Oil Sands Mining                $         1,675  $       2,555
----------------------------------------------------------------------------
Total Capital Expenditures                    $         6,450  $       6,945
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The above capital expenditure guidance for 2012F and 2013B
incorporate the following levels of drilling activity: 


 
                                                ----------------------------
Drilling activity (number of net wells)           2012 Forecast  2013 Budget
----------------------------------------------------------------------------
Targeting natural gas                                        35           30
Targeting crude oil                                       1,103        1,028
Targeting thermal in situ                                   165          132
Stratigraphic test / service wells - Exploration                            
 and Production                                              23           31
Stratigraphic test / service wells - Thermal In                             
Situ                                                        395          187
Stratigraphic test / service wells - Oil Sands Mining       311          353
----------------------------------------------------------------------------
Total                                                     2,032        1,761
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Forward-Looking Statements  
Certain statements relating to Canadian Natural Resources Limited
(the "Company") in this document or documents incorporated herein by
reference constitute forward-looking statements or information
(collectively referred to herein as "forward-looking statements")
within the meaning of applicable securities legislation.
Forward-looking statements can be identified by the words "believe",
"anticipate", "expect", "plan", "estimate", "target", "continue",
"could", "intend", "may", "potential", "predict", "should", "will",
"objective", "project", "forecast", "goal", "guidance", "outlook",
"effort", "seeks", "schedule" or expressions of a similar nature
suggesting future outcome or statements regarding an outlook.
Disclosure related to expected future commodity pricing, production
volumes, royalties, operating costs, capital expenditures and other
guidance provided throughout this Management's Discussion and
Analysis ("MD&A"), constitute forward-looking statements. Disclosure
of plans relating to and expected results of existing and future
developments, including but not limited to Horizon Oil Sands,
Primrose East, Pelican Lake, Olowi Field (Offshore Gabon), and the
Kirby Thermal Oil Sands Project also constitute forward-looking
statements. This forward-looking information is based on annual
budgets and multi-year forecasts, and is reviewed and revised
throughout the year if necessary in the context of targeted financial
ratios, project returns, product pricing expectations and balance in
project risk and time horizons. These statements are not guarantees
of future performance and are subject to certain risks. The reader
should not place undue reliance on these forward-looking statements
as there can be no assurances that the plans, initiatives or
expectations upon which they are based will occur.  
In addition, statements relating to "reserves" are deemed to be
forward-looking statements as they involve the implied assessment
based on certain estimates and assumptions that the reserves
described can be profitably produced in the future. There are
numerous uncertainties inherent in estimating quantities of proved
crude oil and natural gas reserves and in projecting future rates of
production and the timing of development expenditures. The total
amount or timing of actual future production may vary significantly
from reserve and production estimates.  
The forward-looking statements are based on current expectations,
estimates and projections about the Company and the industry in which
the Company operates, which speak only as of the date such statements
were made or as of the date of the report or document in which they
are contained, and are subject to known and unknown risks and
uncertainties that could cause the actual results, performance or
achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Such risks and uncertainties
include, among others: general economic and business conditions which
will, among other things, impact demand for and market prices of the
Company's products; volatility of and assumptions regarding crude oil
and natural gas prices; fluctuations in currency and interest rates;
assumptions on which the Company's current guidance is based;
economic conditions in the countries and regions in which the Company
conducts business; political uncertainty, including actions of or
against terrorists, insurgent groups or other conflict including
conflict between states; industry capacity; ability of the Company to
implement its business strategy, including exploration and
development activities; impact of competition; the Company's defense
of lawsuits; availability and cost of seismic, drilling and other
equipment; ability of the Company and its subsidiaries to complete
capital programs; the Company's and its subsidiaries' ability to
secure adequate transportation for its products; unexpected
difficulties in mining, extracting or upgrading the Company's bitumen
products; potential delays or changes in plans with respect to
exploration or development projects or capital expenditures; ability
of the Company to attract the necessary labour required to build its
thermal and oil sands mining projects; operating hazards and other
difficulties inherent in the exploration for and production and sale
of crude oil and natural gas; availability and cost of financing; the
Company's and its subsidiaries' success of exploration and
development activities and their ability to replace and expand crude
oil and natural gas reserves; timing and success of integrating the
business and operations of acquired companies; production levels;
imprecision of reserve estimates and estimates of recoverable
quantities of crude oil, bitumen, natural gas and natural gas liquids
("NGLs") not currently classified as proved; actions by governmental
authorities; government regulations and the expenditures required to
comply with them (especially safety and environmental laws and
regulations and the impact of climate change initiatives on capital
and operating costs); asset retirement obligations; the adequacy of
the Company's provision for taxes; and other circumstances affecting
revenues and expenses.  
The Company's operations have been, and in the future may be,
affected by political developments and by federal, provincial and
local laws and regulations such as restrictions on production,
changes in taxes, royalties and other amounts payable to governments
or governmental agencies, price or gathering rate controls and
environmental protection regulations. Should one or more of these
risks or uncertainties materialize, or should any of the Company's
assumptions prove incorrect, actual results may vary in material
respects from those projected in the forward-looking statements. The
impact of any one factor on a particular forward-looking statement is
not determinable with certainty as such factors are dependent upon
other factors, and the Company's course of action would depend upon
its assessment of the future considering all information then
available.  
Readers are cautioned that the foregoing list of factors is not
exhaustive. Unpredictable or unknown factors not discussed in this
report could also have material adverse effects on forward-looking
statements. Although the Company believes that the expectations
conveyed by the forward-looking statements are reasonable based on
information available to it on the date such forward-looking
statements are made, no assurances can be given as to future results,
levels of activity and achievements. All subsequent forward-looking
statements, whether written or oral, attributable to the Company or
persons acting on its behalf are expressly qualified in their
entirety by these cautionary statements. Except as required by law,
the Company assumes no obligation to update forward-looking
statements should circumstances or Management's estimates or opinions
change. 
CONFERENCE CALL  
A conference call will be held at 9:00 a.m. Mountain Time, 11:00 a.m.
Eastern Time on Tuesday, December 4, 2012. The North American
conference call number is 1-877-240-9772 and the outside North
American conference call number is 001-416-340-8527. Please call in
about 10 minutes before the starting time in order to be patched into
the call. The conference call will also be broadcast live on the
internet and may be accessed through the Canadian Natural website at
www.cnrl.com.  
WEBCAST  
This call is being webcast and can be accessed on Canadian Natural's
website at www.cnrl.com. Presentation slides will be available on
Canadian Natural's website in PDF format shortly before the live
conference call webcast.
Contacts:
John G. Langille
Vice-Chairman 
Steve W. Laut
President 
Corey B. Bieber
Vice-President, Finance & Investor Relations 
Canadian Natural Resources Limited
2500, 855 2nd Street S.W.
Calgary, Alberta, T2P 4J8 Canada
(403) 514-7777
(403) 514-7888 (FAX)
ir@cnrl.com
www.cnrl.com
 
 
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