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

Scott Stauth: Yes, well, I’ll give you my opinion on it. To me, when TMX calls, the differentials will shrink again. I think this is a short-term lift. Obviously, many companies, including ourselves, had incremental volumes coming on in the fall here based on TMX being up and running. So, I look at it as a short-term pressure on the differentials. Also, the refineries were doing some maintenance. Those refinery programs are pretty much wrapped up, so that pressure will come off. As far as crack spreads, again, the differential is kind of wide, so I see that putting a little pressure on synthetic in the short-term, but in general, crack spreads are strong and synthetic will probably stay at a little bit of a premium. So I just think this is just a short-term pressure because the nominations were higher. You’ve seen apportionment move up about 24%. And really, once TMX calls for oil and starts moving it, that pressure will come off the apportionment.

Manav Gupta: Thank you so much.

Scott Stauth: You’re welcome.

Operator: Thank you. [Operator Instructions] Next question comes from Doug Leggate from Bank of America. Please go ahead.

Kalei Akamine: Hey, guys. Good morning. This is Kalei on for Doug. So, thanks very much for taking my question. I guess this one is a follow-up to Manav’s question, you’ve addressed some of the tension between the volumes and the WCS pricing, but I guess I am thinking about this more in the context of 2024 planning, because it looks like the industry is trying to ramp up into TMX, but start-up still looks fairly uncertain. So I’m wondering, as you’re going through that budgeting process, what does the scenario planning look like?

Mark Stainthorpe: Yes, you know what, for me, it doesn’t change our 2024 plan. When I look at it, the TMX is coming very quickly. Last reports, they were 97% done. So to me, it’s just a matter of which month it will start the line fill and then start to ramp up its operations. So if you look at Western Canada, the storage levels are 30% or whatever it is and pretty steady. So as long as the Egress pipelines run reasonably well, Egress the storage piece is not climbing that high, I mean, we’ve had much higher storage levels in Western Canada in the past. So I just look at it as it’s just more of a timing issue and it will not impact 2024 in fact at all in my mind.

Kalei Akamine: Got it. I appreciate that. Maybe for the next one, I’m hoping that I can get you to comment on your long-term outlook for natural gas pricing. And it’s really in the context of LNG Canada starting up sometime in the near future. So as that comes up, do you see a new dynamic for Canadian natural gas emerging, or do you think that the scale of the Canadian gas resource sort of keeps returns for gas at a more modest premium? And how does that play into your views of gas M&A in the basin?

Tim McKay: Yes, that’s a fairly tough question to say. I mean, I look at Western Canada, it does have Egress issues in terms of whether it’s oil or natural gas. And so, it’s very important that these incremental Egress operations run reliably and consistently. So, I really do not know the timing of LNG Canada. I’ve heard it looks like into next year, mid-next year. So, I think it will still – because there are so many good opportunities in natural gas, Montney primarily in Western Canada, that any Egress that does open up, I think, that the companies here in Western Canada are very efficient in terms of filling that space, provided that the pricing is right. So, difficult to say, where we’ll all level out, but I do know that the Montney in all areas is quite prolific. And we’ve had very good results in our Montney operations, both on the oil side and natural gas side. So I just see that incremental Egress will be filled in short time.