Earnings call transcript: Canadian Natural Q2 2025 beats expectations

Canadian Natural Resources Limited (CNQ) reported its Q2 2025 earnings, showcasing robust financial performance with an earnings per share (EPS) of $0.71, surpassing analyst forecasts of $0.63. This 12.7% surprise was accompanied by actual revenue of $8.7 billion, slightly above the expected $8.68 billion. The company maintains strong fundamentals with a P/E ratio of 10.4x and an impressive 25-year track record of consistent dividend payments, according to InvestingPro data. Despite these positive results, the stock experienced a pre-market decline of 3.29%, closing at $30.31 from a prior $31.34. The stock later showed resilience, rising 1.09% to $29.55 in aftermarket trading.

Key Takeaways

• Canadian Natural Resources reported a 12.7% EPS surprise in Q2 2025.
• Revenue slightly exceeded expectations, reaching $8.7 billion.
• The stock saw a pre-market decline of 3.29% despite positive earnings.
• Company maintained strong production growth in oil sands and thermal in situ.
• Net debt was reduced below $17 billion with a liquidity of over $4.8 billion.

Company Performance

Canadian Natural Resources demonstrated a strong performance in Q2 2025, driven by increased oil sands and thermal in situ production. The company reported 463,800 barrels per day of oil sands mining and upgrading production, a 13% increase from the previous year, alongside a 3% rise in thermal in situ production. The adjusted fund flow was CAD 3.3 billion, while adjusted net earnings reached CAD 1.5 billion. With a robust EBITDA of nearly $13 billion and an attractive dividend yield of 5.72%, the company returned CAD 1.6 billion to shareholders through dividends and share repurchases. InvestingPro analysis suggests the stock is currently undervalued, with 8 additional exclusive insights available to subscribers.

Financial Highlights

• Revenue: $8.7 billion (slightly above forecast)
• Earnings per share: $0.71 (12.7% above forecast)
• Adjusted fund flow: CAD 3.3 billion
• Adjusted net earnings: CAD 1.5 billion
• Net debt: Below CAD 17 billion
• Liquidity: Over CAD 4.8 billion

Earnings vs. Forecast

Canadian Natural Resources exceeded analyst expectations with an EPS of $0.71 compared to the forecasted $0.63, marking a 12.7% surprise. Revenue also slightly surpassed projections at $8.7 billion against the expected $8.68 billion. This positive earnings performance represents a continuation of the company’s trend of surpassing market expectations.

Market Reaction

Despite the positive earnings surprise, Canadian Natural Resources’ stock declined by 3.29% in pre-market trading, closing at $30.31. However, the stock rebounded in aftermarket trading, increasing by 1.09% to $29.55. This movement places the stock within its 52-week range of $24.65 to $37.91, reflecting a cautious yet optimistic investor sentiment.

Outlook & Guidance

Looking ahead, Canadian Natural Resources aims to maintain oil sands mining production around 600,000 barrels per day and plans to close the AOSP swap in Q3 2025. The company anticipates continued dividend growth and is targeting a net debt reduction to $15 billion by 2026. Operating with a moderate debt-to-equity ratio of 0.45 and maintaining a strong financial health score of 2.82 (GOOD) according to InvestingPro, the company appears well-positioned for future growth. The EPS forecast for the upcoming quarters suggests a gradual decrease, with the FY2025 EPS expected at $2.3 and FY2026 at $2.38. For detailed analysis and comprehensive insights, investors can access the exclusive Pro Research Report, available for over 1,400 top US stocks.

Executive Commentary

"Our relentless focus on continuous improvement, combined with effective and efficient operations, drove strong performance year to date in 2025," stated Scott Seltz, President. He emphasized the strategic value of recent acquisitions, noting, "These assets do bring significant cash flow for us... we’re buying something that adds cash flow, that adds inventory for development programs and ultimately adds additional value for our shareholders."

Risks and Challenges

• Potential fluctuations in oil prices could impact profitability.
• Market saturation in oil production may limit growth opportunities.
• Macroeconomic pressures, including exchange rate volatility, could affect financial performance.
• Regulatory changes in environmental policies may increase operational costs.
• Supply chain disruptions could hinder production efficiency.

Q&A

During the earnings call, analysts inquired about liquidity management for 2026-2027 maturities, the potential for secondary recovery and waterflood projects, and the benefits of the AOSP transaction. The company addressed concerns about WCS differential and SCO pricing expectations, highlighting strategic measures to mitigate these challenges.

Full transcript - Canadian Natural Resources Ltd (CNQ) Q2 2025:

Conference Operator: Good morning. We would like to welcome everyone to the Canadian Natural’s twenty twenty five Second Quarter Earnings Conference Call and Webcast. After the presentation, we will conduct a question and answer session. Instructions will be given at that time. Please note this call is being recorded today, 08/07/2025 at nine a.

M. Mountain Time. I would now like to turn the meeting over to your host for today’s call, Lance Casson, Manager of Investor Relations.

Lance Casson, Manager of Investor Relations, Canadian Natural Resources: Good morning, everyone, and thank you for joining Canadian Natural’s twenty twenty five second quarter earnings conference call. As always, I’d like to remind you of our forward looking statements, and it should be noted that in our reporting disclosure, everything is in Canadian dollars unless otherwise stated, and we report our reserves and production before royalties. Also, I would suggest you review our advisory section in our financial statements that includes comments on non GAAP disclosures. Speaking on today’s call will be Scott Seltz, our President and Victor Durell, our Chief Financial Officer. Additionally, the room with us this morning is Robin Zabec, CEO of E and P and Jay Frock, CEO of Oil Sands.

Scott will start off by providing details on how strong operational performance, the completion of turnarounds and our recent accretive acquisitions set Canadian Natural up for a strong second half of the year. Victor will then summarize our financial results, liquidity and our significant returns to shareholders year to date. To close, Scott will summarize prior to opening up the line for questions. With that, over to you, Scott.

Scott Seltz, President, Canadian Natural Resources: Thank you, Lance, good morning, everyone. 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 AOSP in the 2025, 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 from our reliability enhancement and debottlenecking projects. In July 2025, oil sands mining and upgrading production averaged approximately 602,000 barrels per day with upgrader utilization of 106%, and we expect the 2025 to continue to deliver strong operating results. In the 2025, despite the plant turnaround at AOSP, which reduced production levels in the quarter by approximately 120,000 barrels per day, we achieved quarterly production volumes totaling approximately 1,420,000 BOEs per day, including liquids production of 1,019,000 barrels per day and natural gas production of 2.4 Bcf per day. Total corporate production on a BOE basis in the 2025 was up approximately 135,000 BOEs per day from the 2024, reflecting opportunistic acquisitions and organic growth across our asset base achieved in the last twelve months.

On the acquisition front, we closed the Palliser block on June 26. Originally, we budgeted to close this acquisition on 03/01/2025, which would have added production of approximately 50,000 BOEs per day, including 20,000 barrels per day of Mannville Lake crude oil and NGLs in the 2025. This acquisition and production were included in our original 2025 capital budget and production guidance, but due to the delayed closing in late June, it added only 2,000 barrels per day to our production levels for the second quarter. This acquisition also included approximately 1,100,000 net acres of high quality land with currently identified significant light crude oil inventory of approximately eight fifty locations. Subsequent to quarter end, on July 2, we closed an acquisition of liquid rich Montney assets located in the Grand Prairie area for approximately $750,000,000 with production from the acquisition of approximately 32,000 BOEs per day, including 12,500 barrels per day of NGLs.

Our original 2025 capital budget and production guidance did not include this acquisition. These assets are directly adjacent to our existing Montney assets, providing opportunities for synergies while adding approximately 120,000 net acres of high quality land with currently identified significant liquid rich inventory of approximately 150 locations. To summarize, our combined recently closed accretive acquisitions have added approximately 82,000 BOEs per day of production, which includes approximately 32,005 barrels per day of liquids and total inventory of roughly 1,000 light oil and liquid rich drilling locations. Further related to these acquisitions, our full year capital budget will essentially remain unchanged from guidance provided in the first quarter. Excluding the purchase price of the Grand Prairie acquisition, which closed on July 2.

All maintenance capital related to the Grand Prairie asset and other acquisitions we’ve noted will be covered by our 2025 budget. In Q1, Canadian Natural was one of the first in the industry to reduce 2025 capital spending due to efficiencies, and we are now executing development on the Grand Prairie asset while maintaining our capital guidance we provided in the first quarter for the year. We’re also targeting to close the AOSP swap in the third quarter and we plan to update our annual 2025 core Fritz production guidance after that swap closes. I will now run through the second quarter operational results. On the conventional side of the business, primary heavy oil production averaged approximately 87,300 barrels per day in the second quarter, an increase of 10% over the 2024, reflecting strong drilling results from our multilateral well program.

We continue to achieve strong results from our drilling programs across our conventional E and P assets as we are realizing capital efficiencies resulting in high levels of activity without increasing capital. This includes our multilateral heavy 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 results on capital adding significant value. Heavy well operating costs averaged $17.44 per barrel in the 2025, comparable with the 2024. Pelican Lake production averaged approximately 43,100 barrels per day in the second quarter, a decrease of 4% from the 2024, reflecting low natural field declines from this long life low decline asset.

Operating costs at Pelican Lake averaged $9.1 per barrel in the quarter comparable to the second quarter of last year. North American light crude oil and NGL production averaged approximately 140,700 barrels per day in the second quarter, which is up 31% from the 2024, primarily driven by production from our Duvernay assets in addition to strong deal drilling results and our liquidity rich natural gas assets. Operating costs on our light oil and NGL operations averaged $10.94 per barrel, a decrease of 24% compared to the 2024 level of $13.75 per barrel, reflecting higher production volumes. On our Duvernay assets, we are continuing to achieve strong production results and further cost reductions on these assets in the short time that we’ve owned them. Through our culture of continuous improvement, we remain confident we will continue to realize more value for shareholders than what was originally planned for at the time of the acquisition.

Our team’s efforts have resulted in strong operating costs during the first six months of these operating these assets averaging $8.43 per barrel in the 2025, a decrease of more than 11% compared to the 2025 when operating costs were $9.52 per BOE. This results in annual operating cost savings of approximately $60,000,000 as compared to our original target of $40,000,000 Our extended well lengths in the Duvernay, which are on average 20% longer than our twenty twenty four well lengths and optimized completion designs combined with strong execution, continue 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 $2,000,000 per well lower than compared to 2024 costs. That’s a further improvement of $200,000 per well compared to the 2025. We remain on track to achieve 2025 budget production of approximately 60,000 barrels per day in the Duvernay BOEs per day in the Duvernay.

North American natural gas production for the second quarter averaged approximately 2.4 Bcf per day, an increase of 14% over the 2024. Operating costs on our North American natural gas averaged 1.07 per Mcf, which is 10% lower compared to the 2024 dollars $1.19 per Mcf, primarily the result of higher production volumes. In our thermal in situ operations, we achieved strong thermal production in the second quarter, averaging approximately 274,800 barrels per day. This is up 3% from the 2024, resulting from our capital efficient thermal pad add development program. Second quarter thermal in situ operating costs averaged $11.5 per barrel, which is comparable to the 2024.

At Primrose, we target to drill a CSS pad in the third quarter of this year with production targeted to come on in 2026. At Jackfish during the month of July, we brought on production a recently drilled SAGD pad. At Kirby, we are targeting to bring the recently drilled five well per SAGD pad on production in the 2025. At Pike, we completed drilling two SAGD pads, which will be tied into the existing Jackfish facilities and targets to keep the Jackfish plants at full capacity. The first of these two pads is targeted to come on production in the 2026 and second pad will be on production in the second quarter.

At our commercial scale solvent SAG D pad in Kirby North, we began solvent injection in June 2024. In the 2025, we executed workovers on two well pairs to enhance SORs, solvent recovery and production trends will continue to be monitored over the coming months. In our oil sands mining and upgrading, during the 2025, our world class oil sands mining and upgrading production averaged approximately 463,800 barrels per day of SCO, an increase of 13% from the 2024. The increase is a result of the reliability enhancement project eliminating the need for a turnaround at Horizon in 2025 and the Scottford Upgrader debottleneck, which were both completed in 2024 combined with the additional 20% working interest in AOSP acquired in December 2024. Oil sands mining upgrading costs averaged $26.53 per barrel of SCO in the 2025, an increase of 2% from 2024, reflecting the AOSP turnaround in the 2025.

Our growing world class asset base is a strategic balanced strategically balanced across commodity types so that we can be flexible and capture opportunities throughout the commodity price cycle, maximizing value for our shareholders. A substantial portion of our unique and diverse asset base consists of long life, low decline assets, which have significant low risk, high value reserves that require low maintenance capital than most other reserves, making Canadian Natural a truly robust and resilient energy company. I will now turn it over to Victor for our second quarter financial review.

Victor Durell, Chief Financial Officer, Canadian Natural Resources: Thanks, Scott, and good morning, everyone. In the 2025, we delivered excellent financial results on the strong operational performance that Scott just discussed. And this is highlighted by adjusted fund flow in the quarter of approximately CAD3.3 billion and adjusted net earnings of 1,500,000,000 These results also reflect the turnaround activities at AOSP that were completed in the quarter. Results in Q2 clearly reflect our disciplined approach to capital allocation and where Canadian Natural focused and executed on our four pillars, where balance sheet strength and returns to shareholders went hand in hand with resource value growth and opportunistic acquisitions. Returns to shareholders in the quarter were CAD1.6 billion, including CAD1.2 billion of dividends and an additional CAD400 million of share repurchases.

These returns, including dividend payments and buybacks up to and including August 6, bring shareholder returns for the year to date to CAD4.6 billion. Additionally, subsequent to quarter end, the Board has approved a quarterly dividend of $0.05 $8.07 $5 per common share, payable on 10/03/2025 to shareholders of record at the close of business on 09/19/2025. Net debt levels were below $17,000,000,000 at quarter end, while having completed the acquisitions that were included in our 2025 budget. Our balance sheet remains strong, where debt to EBITDA was at 0.9 times and debt to book capital came in at 29.1. Liquidity of over $4,800,000,000 was also strong and reflects undrawn revolving bank facilities and cash on hand.

The accretive acquisitions that were completed in late twenty twenty four and year to date in 2025 immediately contribute to incremental production and additional free cash flow generation. Taken together with the strong operational results in 2025, 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 shareholder returns as compared to allocating 100% in 2024. Our industry leading cost structure, predictable long life low decline assets and reserve base, combined with a consistent commitment to continuous improvement and ability to execute on opportunistic acquisitions in our core areas continues to drive significant value at Canadian Natural. We maintain our disciplined approach that contributes to our top tier U.

S. Dollar WTI breakeven that remains in the low to mid $40 WTI per barrel range, which we define as the WTI price required to generate the adjusted fund flow, cover both maintenance capital and dividends. Returns to shareholders remain a top priority for our focused and dedicated teams, where our culture and drive to do things right every day continues to enable material free cash flow generation and returns on capital. And those are my comments and I’ll turn

Scott Seltz, President, Canadian Natural Resources: it back to you, Scott. Thanks, Victor. In summary, 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 our 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. And with that, I will turn it over for questions.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question is from Patrick O’Rourke from ATB Capital Markets. Please go ahead.

Patrick O’Rourke, Analyst, ATB Capital Markets: Hi, guys. Good morning and thank you for taking my question. I guess first question here is just with respect to liquidity management. As we look out 2027 is a bit of a heavier maturity year between the term loan and one of your larger nominal debt notes that’s outstanding here. Just thinking about sort of the interplay of tight credit spreads and a sticky end of the long curve, how are you sort of approaching this maturity as we head into 2026?

Victor Durell, Chief Financial Officer, Canadian Natural Resources: Yes. Thanks, Patrick. It’s Victor here. Good question. I appreciate where you’re coming at it from.

When we look at our balance sheet now coming out of 2025 and forecast into 2026, cash flow generation in the period looks strong. So I think our refinancing needs will probably be a little bit lower than what you might be anticipating. But that said, we’ll look to 2026 here and to your point, look at our refinancing requirements and try to pick an opportune time to do so as we see fit.

Patrick O’Rourke, Analyst, ATB Capital Markets: Okay, thanks. And the second question is sort of more on the operational side. Obviously, it’s probably a smaller asset within the portfolio, but conventional multilateral drilling success here added 26 wells to the program. A lot of smaller peers that are out there talking about secondary recovery waterflood. We hear a lot on the primary side from Canadian Natural.

Can you maybe talk to potential opportunity set for secondary recovery and waterflooding your portfolio there?

Scott Seltz, President, Canadian Natural Resources: Yes. Thanks, Patrick. It’s Scott here. So we do look at those opportunities as well. Some of the ones you’re mentioning, both on the Palmer and the waterflood side.

We are commencing testing of a Palmer flood currently in the Clearwater, and we’ll look to see how those results work out down the road here, but it looks very promising. And we also looked at our Smith Waterflood and have that implemented as well in that area. That’s the first area that we were the Clearwater as well, Patrick. So yes, we are undertaking those activities along with the multi labs.

Lance Casson, Manager of Investor Relations, Canadian Natural Resources: Okay. Thank you very much.

Conference Operator: Your next question is from Dennis Fong from CIBC. Please go ahead.

Dennis Fong, Analyst, CIBC: Hi, good morning and thanks for taking my question. My first one is obviously the company has completed a few number of acquisitions over the course of the last several months. Can you talk towards your view of the A and D or M and A environment right now? Obviously, completing some of these acquisitions, how do you and do you mind touching also as well on your comfort level around the policy environment, how comfortable you feel about adding these assets to your portfolio as well as the opportunity to improve operations, bolster inventory and any other opportunity sets from the acquired assets?

Scott Seltz, President, Canadian Natural Resources: Thanks, Vince. I’d like to speak to the acquisitions that we just recently completed here in June and July. We’ve already talked significantly about the AOSP and the Duvernay acquisition. So we know a lot about that already. But recently with the two acquisitions, they’ve come at very accretive for us.

They add cash flow for us immediately. I think that’s really important when you look at returns to shareholders. These assets do bring significant cash flow for us. So that’s really how we look at it in terms of on the M and A side. We’re not buying something just to grow, we’re buying something that adds cash flow, that adds inventory for development programs and ultimately adds additional value for our shareholders.

So it’s a balance between the organic growth opportunities and the accretive acquisition opportunities, Dennis.

Dennis Fong, Analyst, CIBC: Great. Thanks for that, Scott. My second question moves towards the oil sands mining and upgrading business unit. I guess on the Albion tour, you guys showcased obviously your ability to be quite nimble in terms of opportunities to develop other areas of the mine and kind of optimize mine progression, specifically referring to the Sharkbite asset. I was curious as to how you think about Horizon, obviously, as you’ve layered on incremental land adjacent to existing producing projects?

And how you’re thinking about mine progression over the next few years, especially as you added again incremental land or developable opportunities in and around your existing operations?

Scott Seltz, President, Canadian Natural Resources: Sure. So in terms of Horizon, Dennis, I think if you look at where we’re at now and for the next, call it, seven to eight years, we’ll be progressing our way through the southern portion of the Horizon mine, which was acquired from Total several years back. Following that, we’ll be moving up to the North Pit extension area, and that’s where we’ll be moving in the next phase of development there to maintain the greater production levels to currently what they’re at. In reference to your comments about the additional assets, whether that’s Pure River or the North Pit 6, Those assets would have or are not booked in terms of reserves or resource for us, they have significant bitumen in place. And they potentially would be assets that could be developed sometime down the road that would support significant oil sands mining development opportunities.

Dennis Fong, Analyst, CIBC: Thanks, Scott. I’ll turn it back.

Conference Operator: Your next question is from Greg Pardy from RBC Capital Markets. Please go ahead.

Manav Gupta, Analyst, UBS Financial: Yes,

Greg Pardy, Analyst, RBC Capital Markets: thanks. Scott, has there been a pronounced shift in your mind in terms of how Canada’s Competition Bureau either assesses or processes acquisitions? I mean, obviously, when you’re spending 10% of your press release just indicating that you’ve got these deferrals on deals and you guys do deals all the time, This feels like something’s different that might not have been there a year or two ago.

Scott Seltz, President, Canadian Natural Resources: Yes. Thanks, Greg. No, I don’t believe there’s a significant difference there, Greg. The particular one that we have in the Palliser Block, it was unique to a certain extent just in terms of the amount of the facilities in the area, various different competitors in the area. I would call it a unique circumstance.

I do agree with you. It took a longer process than it should have, longer than we would have anticipated. In the end, we were able to close the deal and move along. If we look forward, I don’t anticipate we will see the same type of situation going forward.

Greg Pardy, Analyst, RBC Capital Markets: Okay. Terrific. I’ll shift gears maybe, Victor and Scott, but I mean, obviously, the limited buybacks in Q2 obviously stand out as you’re deleveraging. So Victor, I just want to make sure I’ve kind of got the number. The targeted net debt number is around $17,000,000,000 I guess, so at year end.

Does that then put you in pretty good stead to achieve that $15,000,000,000 net debt target in like next year under futures? Would you expect getting there next year under futures?

Victor Durell, Chief Financial Officer, Canadian Natural Resources: We that’s we’re still right where we were on the last call. When we look at the back half of last year, we’re looking at coming out of 2026 at that $15,000,000,000 target based on the current forecast, Greg. I think the rate of buyback, to your point, still remains fairly strong. We look at that on an annualized basis, the rate of buyback here in Q2, similar to what we saw in Q1. And at current forecasts, we’d expect a strong rate of buyback here over the last half of the year as well.

So no real change in the policy there.

Greg Pardy, Analyst, RBC Capital Markets: Okay. So no change in the policy, but and I’m splitting hairs, getting to $15,000,000,000 before December 31 is not unrealistic. Is that fair?

Lance Casson, Manager of Investor Relations, Canadian Natural Resources: That’s fair, yes.

Greg Pardy, Analyst, RBC Capital Markets: Thanks very much.

Victor Durell, Chief Financial Officer, Canadian Natural Resources: Yes. Looking at that in that $65 to $70 WTI range. So obviously, it depends on pricing here and coming into 2026.

Greg Pardy, Analyst, RBC Capital Markets: Okay, understood.

Nick McHenry Trusseller, Analyst, Wolfe Research: Yes, thanks for the question.

Conference Operator: Your next question is from Manav Gupta from UBS Financial. Please go ahead.

Manav Gupta, Analyst, UBS Financial: Good morning. I have two questions. I’ll ask them upfront. First, I wanted to if you could help us understand the benefits of closing the AOSP deal with Shell, how much volume comes in. But would that change the way you look at the mine also?

Could you increase your bitumen output because you don’t have to match the upgrader? And then second question is, can I get your outlook on the Echo pricing going forward, especially with the LNG Canada also starting up? Thank you.

Scott Seltz, President, Canadian Natural Resources: Yes. Thanks for the question. I’ll answer the second part first. With LNG Canada coming online, I think we’re if you look at the forward strip, the pricing still does look soft in terms of AECO. I think the market is probably anticipating a certain amount of gas that will easily be able to be turned on.

Our view though is that once the second train is brought online that there will be a definitely a period of time that it will take to fill up the full two Bcf of capacity of LNG Canada. So I would think that we’re going to see ebbs and flows in terms of AECO pricing and its relativity to what the basin is able to produce for total egress capacity. I think that all ebbs and flows over the next five plus years. On your sorry, could you repeat the first question for me?

Manav Gupta, Analyst, UBS Financial: How does the AUSP transaction change the outlook? And is there a way you would change the mine also just because probably you can produce more bitumen? I’m just speculating because you don’t have to match the upgrader. But if you could talk about how that transaction changes your ability to operate the AOSP mine once you do become 100% owner.

Scott Seltz, President, Canadian Natural Resources: Right. So just to clarify for you, the swap involves Canadian Natural corn, 31,000 barrels a day of bitumen production. So that’s important to us. We see 100 ownership of the mine, important to us just from a synergies with Horizon perspective. We will no longer have a JV in terms of the mines.

It’s easier for us to be able to move our equipment back and forth, whether that’s heavy haul trucks, cranes, people and other types of assets that we can move back and forth to optimize and warehousing is another one that we look at where we will no longer have to maintain two separate warehouses where you would have one at 90% and the other one at 100% working interest. So those are all items that are small in nature, but they do add up. So we see some important synergies coming through that. Now in terms of going forward for production opportunities, I think we’ll talk more about that probably later this fall. We’ll have some more in-depth discussions that we can inform of what our views are on the long term.

And of course, all that’s going to be relative to where we see pricing WTI and bitumen pricing over the long term. But I can tell you that there are significant opportunities both at Horizon and AOSP to increase production. Thank you. Next question.

Conference Operator: Your next question is from Neil Mehta from Goldman Sachs. Please go ahead.

Neil Mehta, Analyst, Goldman Sachs: Yes, thank you. I want to stay on the marketing theme here and just talk about the WCS heavy differential. Obviously, year over year we tightened up nicely but we’ve seen it widen out here. And just your perspective on whether this tightening that we’ve seen more recently is structural post TMX and given the tightness of heavy on the Gulf Coast or as OPEC brings barrels back online and Canadian production does seem like it is growing that we’re going to move back to let’s call it the $13 run rate you were at for the balance most of last year into early this year?

Scott Seltz, President, Canadian Natural Resources: Yes, good question, Neel. I think the way to look at it is we would anticipate the WCF differential to vary in the range of 10 to $13 There’s going to be times when it could be more than that or wider than $13 There’s going to be times when it will be lower than $10 And yes, that will vary depending on OPEC’s production potentially. But it also has impacts just within North America in terms of the refinery turnaround timing. And so those situations are going to impact it, but the structural change happened when TMX came online in May 2024. We anticipate the differentials will be in a pretty solid range bound at $10 to $13

Manav Gupta, Analyst, UBS Financial: Okay.

Neil Mehta, Analyst, Goldman Sachs: That’s really helpful. And same question on the SEO premium. We obviously had a lot of maintenance in the second quarter as it relates to the upgrades. It had been kind of bouncing at a discount of a couple of bucks up until this point. SEO also is influenced by the strength of distillate, which trades at decent premium to MoGas right now.

So how are you guys thinking about pricing relative to TI?

Scott Seltz, President, Canadian Natural Resources: Again, same type of scenario, probably you look at a range bound of minus $1 point to plus $1 point It’d be somewhere in that range, Neil. And of course, you mentioned on the distillate side as well. And you’ll have times of the year where we saw a strong Q2, as you mentioned, related to maintenance. So I expect to have some flows to move on a go forward basis, just like they have done in the path relative to turnaround activities. And so if you look back over time, that differential has it has varied from minus two to plus three.

And so I don’t think you’ll see any structural shifts going forward here.

Lance Casson, Manager of Investor Relations, Canadian Natural Resources: That’s really helpful.

Manav Gupta, Analyst, UBS Financial: Thanks, guys.

Conference Operator: Your next question is from Menno Hilsoff from TD Cowen. Please go ahead.

Lance Casson, Manager of Investor Relations, Canadian Natural Resources0: Thanks, and good morning, everyone. I’ll start with a question on synthetic. You talked about 602,000 barrels a day for the month of July. With little to no turnaround activity tied to SCO production in the second half, what could get in the way of your being able to maintain 600,000 barrels a day or even a bit higher through the end of the year?

Scott Seltz, President, Canadian Natural Resources: Yes. Good question, Menno. I think you know, we should be looking within that range. There isn’t anything necessarily stopping us. We have the turnarounds that have been worked through at AOSP.

And Horizon has all things look really good at Horizon as well in terms of the operators’ performance. So you would have noted we had a very strong Q1 where everything went very well for us, really solid road conditions through the wintertime. You don’t quite see those solid haul road conditions in the summer and fall that you do in wintertime. But in that range, in that 600,000,000 range, I think, is probably a good run rate to consider now.

Lance Casson, Manager of Investor Relations, Canadian Natural Resources0: Okay. Thanks for that, Scott. And then flipping over to turnarounds, the you had the five day acceleration at the AOSP in the quarter. That seems to be a trend. We’ve seen similar updates from some of your peers, including Suncor yesterday.

So my question is, what is driving better than expected turnaround execution for yourselves? And then on a related note, how much contingency is typically built into the time line for a given turnaround?

Scott Seltz, President, Canadian Natural Resources: Yes, really good question. For us, I would say that the opportunities such that happened here with being five days early with P, it’s really just a matter of if you look at all the manpower required on-site, we’re driving for efficiencies, lots of labor required, taking units apart, doing inspections, doing cleaning of vessels and so on and so forth. The teams that are driving those turnaround activities have that same continuous improvement culture that we do have with the rest of our operations in the company. So they’re expected and they do look at ways of trying to find efficiencies, Mano. So really, isn’t a lot of built in contingency, probably in the 10% range of estimates when they’re building their turnaround schedules.

So, they’re enticed and we certainly encourage the teams to continue their opportunities that they look at to create those efficiencies and find ways to have the manpower on-site be more effective and more efficient.

Lance Casson, Manager of Investor Relations, Canadian Natural Resources0: Thanks again. I’ll turn it back.

Conference Operator: Your next question is from Doug Ledick from Wolfe Research. Please go ahead.

Nick McHenry Trusseller, Analyst, Wolfe Research: How’s it going? It’s McHenry Trusseller on for Doug Leggate. Thanks for taking my call. I just wanted to kinda get some insight to get your view on where do you see capacity to grow the dividend, especially in light of some of the acquisitions that were described in the press release and on a go forward basis?

Victor Durell, Chief Financial Officer, Canadian Natural Resources: Thanks for the question. Obviously, we’ve had a long history of growing the dividend every year now for twenty five years. There’s definitely some good incremental cash flow coming off the acquisitions. I wouldn’t want to step into the Board shoes there, but would just say that as we go forward, I’d anticipate that there’d be some room for dividend growth here into 2026 should the Board continue to pursue the track record that we have seen in the past.

Scott Seltz, President, Canadian Natural Resources: And Nick, would just add to that. If you look at the history of the company over the past twenty five years, the opportunities for the Board to consider adding and increasing the dividend payout has come on the backs of both organic and opportunistic acquisition opportunities that the company has taken on over the past thirty five years. And I think that’s really important to remember. The future doesn’t always represent the past, Nick, but for a company with the strengths of the assets that we have, it is extremely important to the board and to the management team to maintain the dividend, the value of the dividend has been brought to the shareholders. And it’s very important to us.

So we’re to make sure that we continue to operate our assets and grow organically and find opportunity in acquisitions when we can to help support continued growth of that dividend.

Nick McHenry Trusseller, Analyst, Wolfe Research: Thank you. And, for my hollow my follow-up kinda ties into that. So where where do you kinda see your post dividend breakeven right now for your metrics? And is there a threshold that you’re comfortable, what’s the I guess, what’s the threshold that you’re comfortable kind of taking it from its previous, I guess, dollar amount?

Scott Seltz, President, Canadian Natural Resources: You’re asking what our breakeven is, Nick?

Nick McHenry Trusseller, Analyst, Wolfe Research: Yes. I’m asking what is the post dividend breakeven currently? And is there a range that you’re looking to kind of stay within, I guess, as you kind of feel comfortable with maintaining your balance sheet?

Victor Durell, Chief Financial Officer, Canadian Natural Resources: Yes. So currently, we’re in that $40 to $45 WTI breakeven range and the incremental cash flow from the acquisitions is keeping us there. We do, do that calculation post dividend. The dividend is something that we consider very valuable shareholders and shareholder returns. So that’s we calculate it after the dividend.

Nick McHenry Trusseller, Analyst, Wolfe Research: And is there a threshold in that set, the targeted threshold looking you’re looking to stay within the $40 to $45 range essentially?

Victor Durell, Chief Financial Officer, Canadian Natural Resources: We’re comfortable in that range now. So essentially the answer is yes. And obviously we take a view to commodity prices going forward as the Board assesses that in future periods.

Nick McHenry Trusseller, Analyst, Wolfe Research: Okay. Thank you for taking my questions. Thank you.

Conference Operator: There are no further questions at this time. Please proceed with closing remarks.

Lance Casson, Manager of Investor Relations, Canadian Natural Resources: Thank you, operator, and thanks, everyone, for joining our call this morning. If you have any questions, please give us a call. Have a great day.

Conference Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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