2026 Third Quarter Results - CANADIAN NATURAL RESOURCES LTD

Financial Performance:

• Generated Adjusted Funds Flow (AFF) of approximately $5.5 billion ($2.68/share) and adjusted net earnings of $3.4 billion ($1.67/share) for Q3 2026.
• Achieved a significant reduction in net debt to $12.1 billion, successfully beating the $13 billion target ahead of schedule.
• Delivered strong free cash flow, enabling total shareholder returns of ~$10.6 billion year-to-date (2026), comprising $6.8 billion in direct returns (dividends/buybacks) and $3.8 billion in net debt reduction.
• Sulfur pricing contributed approximately $500 million in pre-tax revenue for the quarter and $900 million year-to-date.
• SCO pricing averaged a $6.65 per barrel premium to WTI, driven by strong diesel pricing.
• 100% of free cash flow is now directed toward share buybacks due to debt targets being met.

Guidance and Future Outlook:

• Q4 2026 guidance is positive, driven by the completion of the Horizon turnaround and continued strength in oil sands and thermal in-situ operations.
• Horizon turnaround completed 7 days ahead of schedule (28 days), adding ~23,000 bpd of incremental high-margin SCO production for Q4.
• Transitioned Horizon turnaround intervals from 2 years to 3 years, increasing average production capacity by ~5,000 bpd over the cycle.
• Announced monthly share purchases of $800 million for November and December 2026, with expectations to continue this pace into 2027 provided commodity pricing remains stable.
• Projected strong 2027 outlook with robust free cash flow generation and disciplined capital allocation.
• Expects future Horizon turnarounds to potentially extend to 4 or 5 years by 2029, contingent on continued online monitoring success.

Business Segments and Product Lines:

• Oil Sands: Total production at 640,000 bpd; mining and upgrading operations achieved record reliability following 2024 enhancement projects.
• Thermal In-Situ: Delivered record quarterly production of ~300,000 bpd (up 9% YoY); Jackfish facility exceeded nameplate capacity by ~23,000 bpd, supported by new SAGD pads at Pike One (46,500 bpd, 1.7 SOR).
• North American Conventional E&P: Excluding thermal in-situ, liquids production hit a record ~358,000 bpd (up 16% YoY), with light crude oil and NGLs at a record ~217,000 bpd.
• Strategic Projects: Continued reliance on recent acquisitions to drive conventional growth; Primrose-Wolf Lake asset focuses on "drill-to-fill" and potential solvent enhancement to mitigate steam capacity limits.

Market and Competitive Landscape:

• Management views the WCS differential as widening due to increased Venezuelan production and high shipping rates but believes the system is "close to full" rather than full, citing the Hardisty-Houston spread reflecting transportation costs.
• Trans Mountain Expansion (TMX) DRA is active, adding 90,000 bpd of egress to the system; company has secured firm capacity for this volume.
• Positive market tailwinds include the designation of the Pacific Loop pipeline as a project of national interest and progress on an Industry-Alberta-Federal Government MOU.
• Competitiveness is bolstered by the introduction of productivity mega-deductions and improved global investment conditions for Canadian energy.

Risks and Challenges:

• Regulatory/Political: Dependency on the finalization of the MOU by industry, Alberta, and the federal government to enable long-term growth commitments.
• Operational: Managing steam capacity constraints at the Primrose-Wolf Lake asset, requiring a shift toward solvent enhancement to maximize processing plant utilization.
• Commodity Prices: Reliance on high commodity pricing to maintain $800 million monthly buyback targets and significant shareholder returns.
• Logistics: Exposure to freight rate fluctuations and WCS differentials, though mitigated by long-term shipping contracts and TMX capacity.

Management Commentary and Tone:

• Tone is highly confident, emphasizing "world-class" asset base, "reliable" operations, and "disciplined" capital allocation.
• Management highlighted the extension of turnaround intervals and record production as proof of operational excellence and asset durability.
• CFO Victor Durrell expressed strong conviction in the balance sheet strength and the ability to sustain high dividend growth (26th consecutive year) and aggressive buybacks.
• President Scott Stealth emphasized a strategic focus on "getting it right" regarding the MOU rather than adhering to specific dates, signaling patience but optimism.

Analyst Questions and Answers:

• Doug Leggett (Wolf Research): Asked about WCS dynamics and MOU timing; Management noted system tightness but confidence in new egress, and stated the MOU focus is on outcomes rather than the November 15 deadline.
• Dennis Fong (CIBC): Inquired about Horizon reliability drivers and Primrose constraints; Management detailed specific equipment upgrades (furnace reliability, secondary unit redundancy) enabling 3-year turnarounds and highlighted solvent enhancement as the path forward for Primrose steam limits.
• Manon Holsoff (TD Securities): Questioned the rationale for monthly buybacks and TMX logistics; Management confirmed buybacks are not a trial but a policy shift contingent on strong FCF, and explained TMX capacity was secured via firm tolls.
• Greg Party (RBC): Asked about further turnaround extensions and 2027 tax impacts; Management indicated 4-5 year turnarounds are possible by 2029 but requires confirmation, and estimated cash tax payable in Q1 2027 at $230-$240 million.

Other Key Points:

• Board approved a new quarterly dividend of $0.625 per share, payable January 5, 2027.
• Sulfur remains a significant, high-margin revenue contributor distinct from crude oil pricing.
• The company has locked in shipping contracts for its mainline movements to manage deliverability.
• Record performance was achieved across thermal, oil sands, and conventional segments, underscoring portfolio diversification.