Canadian Natural Resources Ltd T.CNQ

Alternate Symbol(s): CNQ

Energy Oil & Gas E&P

Canadian Natural Resources Limited is a Canada-based independent crude oil and natural gas exploration, development and production company. The Company's segments include exploration and production, oil sands mining and upgrading, and midstream and refining. The exploration and production segment are focused on North America, specifically in Western Canada; the United Kingdom portion of the North Sea, and Cote d'Ivoire and South Africa in Offshore Africa. Its Oil Sands Mining and Upgrading segment produces synthetic crude oil through bitumen mining and upgrading operations at Horizon Oil Sands and through its direct and indirect interest in the Athabasca Oil Sands Project. Within Western Canada in the Midstream and Refining segment, the Company maintains certain activities that include pipeline operations, an electricity co-generation system and an investment in the Northwest Redwater Partnership, a general partnership formed to upgrade and refine bitumen in the Province of Alberta.

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Canadian Natural Resources Ltd

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Post by retiredcfon Nov 01, 2024 8:45am

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Post# 36291992

TD 2

Q3/24 CONFERENCE CALL HIGHLIGHTS AND UPDATED ESTIMATES

THE TD COWEN INSIGHT

There was little new information on the Q3/24 CC, although the commentary pointed to further SCO prod'n momentum and signs of commercial success and running room based on Kirby North solvent SAGD results. The sustainability/flexibility of its business model was again on full display, driven by asset optionality. Updated fin'l estimates within, takeaways below, and initial Q3 thoughts here.

Impact: NEUTRAL

Longer-dated potential to scale up solvent SAGD across thermal asset portfolio: All eight solvent SAGD wells at Kirby North are now receiving solvent and early results are considered promising. However, we suspect CNQ would like at least 12-months of data in hand prior to considering deployment of solvent SAGD at future pads.

Given we won't have 12-months of operating data until the mid-2025 timeframe, we expect any potential sanctioning of future pads to get reflected in the 2026 budget. To this end, CNQ has highlighted its Kirby and Jackfish assets as potential candidates for solvent SAGD development.
On a related note, peer IMO's Grand Rapids Phase 1 SA-SAGD project (same process, slightly different term) should also have 12-months of data towards mid-2025, and we similarly expect any sanctioning of future phases to tie into 2026 development plans.

Pike thermal development progressing as planned: The initial Pike resource will be developed utilizing Jackfish facilities, pipeline work has commenced, and drilling of initial pads is expected in 2025. Recall, Pike has the potential to add 28mbbl/d of capacity by 2026 at competitive capital efficiencies ($8,500/bbl/d-$10,000/bbl/d).

Expecting an uptick in SCO production in 2025: Recall, 2025 will mark Horizon's first 'non- turnaround' year following completion of the Reliability Enhancement Project. Production uplift is estimated at 28mbbl/d in the non-turnaround year (or 14mbbl/d annualized) with $75mm of associated cost savings.

Combined with CNQ's pro-forma 90% W.I. in the AOSP, we now model 2025E mining production of 539mbbl/d (+17% y/y).
In our view, the acquisition of CVX's AOSP W.I. points to the potential for additional synergies/efficiencies between the AOSP and Horizon over time. In addition, given fewer JV partners (SHEL remaining 10% W.I.), we believe it is now more likely that CNQ progresses turnaround optimization work at the AOSP, and note that turnaround optimizations are a growing industry focus.