Canadian Natural Resources has announced that its 2020 capital budget will be $250 million higher than last year as it adds about 60 drilling locations across Alberta and puts three additional rigs to work. This follows the Alberta government decision to eliminate curtailments for some conventional drilling in the province, and because of reduced corporate income tax rates.

The company’s overall 2020 budget is targeted to be $4.05 billion, including $1.55 billion for conventional and unconventional assets and $2.5 billion for what it calls long life low decline assets.

Commenting on the Company’s 2020 budget, Steve Laut, Executive Vice-Chairman of Canadian Natural stated,
“Canadian Natural's ability to generate significant and sustainable free cash flow sets us apart from our peers. Our focus on capital discipline, as a part of our four pillars of capital allocation, operational excellence and leveraging our competitive advantages drives economic asset development, significant margin growth and a strong balance sheet.”

Canadian Natural’s President, Tim McKay, added, 
“The Company is unique, sustainable and robust, driven by our large, Long Life Low Decline asset base, effective and efficient operations, disciplined capital allocation and a strong balance sheet. Our 2020 capital budget of $4.05 billion, delivers targeted production of approximately 1,172,000 BOE/d at mid-point of guidance, resulting in approximately 9% production per share growth in a curtailed environment, as we allocate capital to the highest return projects and progress projects that add production and value in 2020 and beyond. These targeted 2020 volumes assume that the Alberta government curtailment program will continue throughout 2020, and as a result 2020 targeted production is 10,000 bbl/d to 25,000 bbl/d less than it would have been without the curtailment program. We will continue to manage within our curtailment optimization strategy and target to maintain capital flexibility by aligning production growth with improved market access. We are hopeful that the curtailment levels will be reduced or eliminated as we progress through 2020. Safe, reliable and low cost operations continue to be a focus for the Company as we capture synergies, increase margins and maximize value for our shareholders in 2020 and beyond.

Due to the Alberta government's recently announced elimination of curtailment for certain conventional drilling in Alberta and its previously announced reduction in income tax rates, Canadian Natural has increased its 2020 capital budget by approximately $250 million over 2019 levels, adding approximately 60 drilling locations across Alberta, and putting 3 additional drilling rigs to work, creating an additional approximate 1,000 full time equivalent jobs for Albertans."

Canadian Natural’s Chief Financial Officer, Mark Stainthorpe, continued, 
“In 2020, our commitment to maintain a strong financial position is supported by a disciplined capital program, ample liquidity, and effective and efficient operations. Free cash flow in 2020 is targeted to be approximately $4.8 billion based on current strip WTI pricing and stable differentials relative to 2019. Based upon such pricing assumptions, according to Canadian Natural's free cash flow allocation policy, the Company targets to allocate, after current dividend requirements, approximately $2.4 billion to share repurchases and approximately $2.4 billion towards strengthening the balance sheet. As a result, the Company's year end debt metrics are targeted to strengthen further throughout 2020 to approximately 1.6x debt to adjusted EBITDA and approximately 35% debt to book capitalization at year end. Our financial strength gives us the flexibility to deliver on our plan and continue to drive long-term shareholder value."

HIGHLIGHTS OF THE 2020 BUDGET

The Company’s large, balanced and diverse asset base is complemented by an extensive network of owned and operated infrastructure and is supported by a deep inventory of Long Life Low Decline assets and conventional and unconventional assets. The Company is focused on enhanced margin growth and high return on capital projects that can deliver leading free cash flow with production and value growth opportunities.

Canadian Natural’s 2020 capital budget is targeted to be $4.05 billion, of which approximately $1.55 billion is allocated to conventional and unconventional assets and approximately $2.5 billion is allocated to Long Life Low Decline assets.

Overall, production in 2020 is targeted to be between 1,137,000 BOE/d and 1,207,000 BOE/d, with a product mix of approximately 80% crude oil, Synthetic Crude Oil ("SCO") and NGLs and approximately 20% natural gas. These targeted 2020 volumes assume that the Alberta government curtailment program will continue throughout 2020, and as a result 2020 targeted production is 10,000 bbl/d to 25,000 bbl/d less than it would have been without the curtailment program.

Overall, 2020 crude oil, SCO and NGL production is targeted to grow approximately 9% from 2019 levels and approximately 13% on a per share basis, ranging from 910,000 bbl/d to 970,000 bbl/d.

• Long Life Low Decline production is targeted to be approximately 77% of liquids production.
• Production is targeted to ramp up at the Company's Kirby North Steam Assisted Gravity Drainage ("SAGD") project throughout 2020 reaching targeted production capability of 40,000 bbl/d in early 2021.
• At Jackfish, SAGD production from pad additions with targeted production capability of approximately 21,000 bbl/d will ramp up within curtailment levels, with peak production targeted to be reached in 2022.
• At the Company's Oil Sands Mining & Upgrading assets Canadian Natural is targeting continued strong reliability which combined with continuous improvement will drive margin growth in 2020.

Natural gas production guidance is targeted to range between 1,360 MMcf/d to 1,420 MMcf/d, as the Company's natural gas capital investment in 2020 focuses on strategic land retention for future value generation.

Due to the Alberta government's recently announced elimination of curtailment for certain conventional drilling in Alberta and its previously announced reduction in income tax rates, Canadian Natural has increased its 2020 capital budget by approximately $250 million over 2019 levels adding approximately 60 drilling locations across Alberta, and putting 3 additional drilling rigs to work, creating an additional approximate 1,000 full time equivalent jobs for Albertans. If the Alberta government expanded the elimination of curtailment to include newly drilled conventional heavy oil wells, Canadian Natural would look to put an additional 6 drilling rigs to work in Alberta.

Link to Canadian Natural Resources Canada Onshore country profile