Canadian Natural Resources Limited (NYSE:CNQ) Q3 2023 Earnings Call Transcript

Operator: Thank you. The next question comes from John Royall at JPMorgan. Please go ahead.

John Royall: Hi. Good morning. Thanks for taking my question. So, I have a question on capital allocation. I think you are tracking a little under your 50% allocation year-to-date. If I did the math right, it’s about 40%. Should we expect a catch up in 4Q or conversely, does it make more sense to pull back a little in 4Q and get to that floor more quickly?

Mark Stainthorpe: Yes, we’ll evaluate as we go through the quarter here. We’re going to get close. We try and manage as close as we can to the policy. Of course, you’ve seen based on the numbers reported here this morning that in October, the buyback program has increased from the pace we’ve gone through for the rest of the year. Yes, so we’ll manage as best we can to close to that 50% for now until, again, we get to that $10 billion and then it moves to 100%.

John Royall: Great. And then just another on capital allocation. This one is on the dividend hike. Can you talk about why the 11% is the right level for the hike and also the frequency? I think it’s been three hikes now. I think up 33% over the past five quarters. Should we think about this as kind of a gradual reset on a view of structurally higher earnings or is it simply maybe your policy was a little bit more conservative than it needed to be before and you’re catching that up or some combination? Just any color there would be helpful.

Mark Stainthorpe: Yes, I mean, every quarter, of course, the board reviews the dividend and we evaluate the level based largely on sustainability through cycles. When we look at the significant free cash flow generation, how well the effect of operations, the sustainable dividend is there at lower commodity prices. And we take that and look at the balance sheet and how we’re approaching that $10 billion of net debt along with the ongoing buyback program. The dividend increase made sense at this time and at that level. I can’t necessarily speak for the board on cadence and when those happen, but I know the dividend level will be reviewed at every meeting, like I said, and with low breakevens, low decline production, our business can support further dividend increases. So, it’s got to just be taken in context with all the share over term profile, given the significant buyback program going on as well.

John Royall: Thank you.

Operator: Thank you. Next question comes from Manav Gupta from UBS. Please go ahead.

Manav Gupta: Good morning, guys. My question is on the oil sands mining upgrade volumes, a very strong rebound versus 3Q. What’s kind of expected but still a pretty strong number? Can you share some data around October and then how should we think about the fourth quarter versus the third quarter as it relates to oil sands volumes?

Scott Stauth: Sorry. In terms of – well, I would say that after the turnaround, we should be pretty steady. So to me, I feel a good run is between the kind of that 490 to 500 range is what I would call top tier RINs [ph]. And so that’s always our target is to be within that kind of range. Obviously, there is always your turnarounds that you have to make sure you model in, but that to me is, from my perspective, I like to see a number that’s 490 plus.

Manav Gupta: Perfect. And also, if you could give us some of your views on the both near and medium term differentials. We have seen some widening on the WCS side, and then I think, synthetic is now below TI, it was trading over TI. So in your view, when the line actually does start to fill, should we expect these diffs to narrow or when the line actually – I mean, I am trying to understand, will the line fill actually impact the differentials or the line would have to flow to impact the differentials? What’s your view over there?