Conference Call 2011 Budget December 2, 2010 THE PREMIUM VALUE - PDF document

DEFINED GROWTH INDEPENDENT Conference Call 2011 Budget December 2, 2010 THE PREMIUM VALUE

Canadian Natural Canadian Natural Today Today • Strong well balanced, diversified assets with significant upside • Strong experienced teams; operational, technical, financial • Efficient operations (safe, minimize enviro footprint, low cost) • Significant free cash flow • Capital allocation flexibility and discipline • Strong balance sheet • Return on capital focused CNQ 2

Canadian Natural Canadian Natural The Next Step in Our Evolution The Next Step in Our Evolution • Assets that provide significant free cash flow • Focus on effective allocation of cash flow • Ability to take on more mid and long term projects • Effective leverage of technology and expertise across our vast asset base CNQ 3

Canadian Natural Canadian Natural Going Forward Going Forward • Continued focus on oil development • Greater proportion of capital allocated to mid and long term projects – Thermal projects – Light oil EOR projects – Horizon Oil Sands expansion • Preserve natural gas assets for long term recovery • Focus on Execution Excellence - operational, technical, financial • Preserve capital allocation flexibility • Opportunistic acquisitions • Dividends • Pay down debt – ensure balance sheet strength • Share buybacks CNQ 4

Financial Objectives Financial Objectives • To maintain a strong balance sheet – Debt / book capitalization target of 35% - 45% – Q3/10 at 26.3% – Debt / EBITDA target of 1.8x - 2.2x – Q3/10 at 1.1x • To maintain strong credit ratings allowing for access and flexibility in public debt markets • To finance the operations of the Company with a flexible capital structure – Bank credit facilities – US and Canadian debt capital markets – Tenor diversification – Manageable refinancing risk – Proactive risk management Financial Discipline CNQ 5

Going Forward 2011 Going Forward 2011 • 6% boe production growth – 10% oil growth • Allocate $2.4 billion to $2.8 billion (> ~ 45% of budget) to future production growth (post 2011) • Pay down debt • Deliver $1.0 billion to $1.8 billion of free cash flow CNQ 6

Canadian Natural Canadian Natural 2011 Budget 2011 Budget Production 2010F* 2011B* % Change Crude oil (mbbl/d) Canada Light and NGLs 50-51 54-58 11% Pelican Lake 38-39 43-47 17% Heavy 93-94 101-105 10% Thermal 89-91 97-105 12% International 63-65 49-59 (16%) Horizon 90-93 105-112 19% Total 423-430 449-486 10% Natural gas (mmcf/d) 1,242-1,250 1,177-1,246 (3%) BOE/D 630-638 645-694 6% *Rounded to the nearest 1,000 bbl/d Note: Numbers may not add due to rounding. CNQ 7

Canadian Natural Canadian Natural 2011 Budget 2011 Budget Capital ($ million) 2010F 2011B % Change Natural gas 700 600 (14%) Crude oil Pelican Lake 500 615 23% Heavy 630 820 30% Thermal 555 1,345 142% Light Canada 315 460 46% North Sea 180 370 106% Offshore West Africa 250 135 (46%) Total crude oil 2,430 3,745 54% Horizon Sustaining and reclamation 130 220 69% Capital Projects 360 800-1,200 122-233% Other 80 100 25% Total Horizon 570 1,120-1,520 96-167% Acquisition and Midstream 1,900 110 - Total 5,600 5,575-5,975 0-7% CNQ 8

Canadian Natural Canadian Natural 2011 Budget 2011 Budget 2010F 2011B Change Production (boe/d) 630-638 645-694 6% Cash Flow* ($ million) $6,100-6,500 $7,000-7,400 14% Capital ($ million) $5,600 $5,575-5,975 0-7% Free Cash Flow ($ million) $500-900 $1,025-1,825 104% Debt ($ million) $8,900 $8,000 ($900) Debt/book 28.7% 25.6% (3.1%) *Based on average annual WTI of US$84.32/bbl Nymex of US$4.31/mmbtu and an exchange rate of US$0.98 to C$1.00. CNQ 9

Asset Overview Asset Overview CNQ 10

Natural Gas Natural Gas Outlook Outlook • Shale gas production is real • Shale gas reserves look real • Shale gas full cycle returns at $4.00 AECO not certain – Sweet spots – yes – Liquids rich – yes to maybe – Overall – too early to tell • LNG supply threat still exists • Anticipate North America natural gas market to be over supplied for 2-7 years • Being the most efficient producer is paramount CNQ 11

Natural Gas Natural Gas Overall Strategy Overall Strategy • Leverage our dominant infrastructure and land base – Maintain our position as most efficient producer • Continue to strengthen our unconventional / tight gas asset base • Continue to delineate new / emerging plays / technology • Stay prepared for strengthening of natural gas prices • Opportunistic acquisitions CNQ 12

North America Natural Gas North America Natural Gas 2011 Plan 2011 Plan 2010F 2011B % Change Production (mmcf/d) 1,217-1,222 1,150-1,210 (3%) Drilling (net wells) 100 72 (28%) Capital ($ million) Turnaround / Maintenance $100 $120 20% Land / Seismic $50 $65 30% Drill, Complete, Tie-in $550 $415 (25%) Total $700 $600 (14%) CNQ 13

Natural Gas Natural Gas Future Growth Potential Future Growth Potential (mmcf/d) 1,600 $6 plus 5% Growth Potential 1,400 1,200 No Growth $4-$5 Upside Potential Option 1,000 12% Proactive Decline 800 S u b $ 4 600 Disciplined 400 Allocation of Capital 200 0 2010F 2011 2012 2013 2014 Natural Gas Forecast $6.00 plus Natural Gas Sub $4.00 Natural Gas $4.00-$5.00 Natural Gas Focus on Creating Value CNQ Focus on Creating Value 14

International International Overall Strategy Overall Strategy • Maintain our existing operations • Convert undeveloped potential to production – As platform slots become available • North Sea • Offshore West Africa  Ninian  Espoir  Tiffany  Baobab  Murchison • Progress near pool development in Côte d’Ivoire • Progress “Big E” exploration in South Africa • Monitor acquisition opportunities • Generate significant free cash flow Leverage Expertise CNQ Leverage Expertise 15

International International Free Cash Flow Free Cash Flow Our International assets account for a substantial portion of Canadian Natural’s free cash flow Free Cash Flow Production International ~25% International ~8% 2011B 2011B Core Area with Significant Free Cash Flow Core Area with Significant Free Cash Flow CNQ 16

North Sea North Sea 2011 Plan 2011 Plan 2010F 2011B % Change Crude oil production (mbbl/d) 33-34 27-32 (12%) Capital ($ million) $180 $370 106% • 10 workovers • 2.3 net wells drilled • Facility improvements – Lyell subsea pump, manifold upgrades • Turnaround on 4 platforms – Lower volumes due to turnarounds and fixed cost nature result in higher op costs in 2011 CNQ 17

Offshore West Africa Offshore West Africa 2011 Plan 2011 Plan 2010F 2011B % Change Crude oil production (mbbl/d) 30-31 22-27 (20%) Capital ($ million) $250 $135 (46%) • Complete Olowi development • 2 Gabon exploration wells (Gamba, Vandji) potential drills • Prepare for Espoir and Baobab infill programs • Progress South Africa “Big E” exploration CNQ 18

Canadian Light Oil Canadian Light Oil 2011 Plan 2011 Plan 2010F 2011B % Change Production* (mbbl/d) 50-51 54-58 11% Drilling (net wells) 117 138 18% Capital ($ million) Drilling, completions and tie-ins 155 290 87% Technology, EOR 160 170 6% Total 315 460 46% • Target modest production growth of 2%-10% per year in 2012 and beyond . * Includes NGLs. CNQ 19

Canadian Light Oil Canadian Light Oil • Mature basin Gross Operated Light Oil Production (bbl/d) 120,000 • Large land holdings across basin 100,000 • Optimize existing water floods to maximize value 80,000 • New pool exploration • New technology application 60,000 – Horizontal wells – Multistage fracs 40,000 • Tertiary recovery 1 billion barrels recovered – CO 2 20,000 since 1974 peak – ASP 0 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 Value Creation in Mature Basin Value Creation in Mature Basin CNQ 20

Technology Leverage / Implementation Technology Leverage / Implementation Capital ($ million) 2010F 2011B Light Oil $160 $170 Primary Heavy Oil $20 $30 Thermal $20 $30 Pelican Lake $10 $10 Natural Gas $40 $65 Total $250 $305 CNQ 21

Primary Heavy Oil Primary Heavy Oil Production Areas Production Areas • Current production – Crude oil 93 mbbl/d • Land (net) ECHO Pipeline – Developed 0.4 million acres CNQ Developed Lands CNQ Undeveloped Lands – Undeveloped 1.2 million acres • Facilities – 5 major crude oil processing facilities – 4 salt cavern disposal wells and 1 under development – ECHO sales pipeline 143 miles • Drilling Forecast – 9,000 net wells in 10 year plan – Drill 600-800 net wells per year Note: Reflects Q3/10 actual production, before royalties. ~144 Miles Dominate Land Base and Infrastructure Dominate Land Base and Infrastructure CNQ 22

Primary Heavy Oil Primary Heavy Oil 2011 Plan 2011 Plan 2010F 2011B % Growth Production (mbbl/d) 93-94 101-105 10% Drilling (net wells) 650 790 22% Recompletion (net wells) 522 465 (11%) Capital ($ million) 630 820 30% • Target production growth of roughly 10% per year for the next three years Strong Cash on Cash Returns CNQ Strong Cash on Cash Returns 23