Canadian Natural Resources Limited (NYSE:CNQ) Q2 2023 Earnings Call Transcript

Manav Gupta: Perfect. And a quick follow-up here is you are making investments to grow volumes, both at Oil Sands as well as in [indiscernible] projects, expected to start-up somewhere around 2025. Help us understand how those development projects are growing at this stage?

Tim McKay: Well really if you’re talking about the thermal piece and the reliability pieces, those are really the only pieces that we’ve got going into next year, right now. We have, we’ll be starting a budget process here in the fall to – for other areas and decide on if we do more additions – pad additions at Primrose or at Kirby. So it’s a little early on the forecasting into 2024 and 2025.

Manav Gupta: Thank you so much.

Operator: Thank you. Next question comes from Dennis Fong at CIBC World Markets. Please go ahead.

Dennis Fong: Hi, good morning, and thank you for taking my questions. I’ll start with the first one and maybe a bit of a follow-up to Manav’s question. You’ve done a really good job in terms of ramping the production at Wolf Lake and Primrose to 90,000 barrels a day plus for this year. What’s your ability to kind of further optimize that capacity? I believe at your Investor Day, you outlined facility capacity towards 140,000 barrel a day level. Seems like that’s really low hanging fruit when you think about again, driving OpEx and so forth; so just any kind of commentary around how you evaluate that and what the opportunity is there?

Tim McKay: Yes. Good, very good question there, Dennis. And obviously the drill-to-fill opportunities are obviously ranked quite highly. So the team is progressing additional pads at Primrose, Kirby where we could do those incremental volumes going into next year. Usual cycle time is about a year; so once we start sanctioning those pads, obviously they’re – they’re not cheap. They’re roughly be almost $170 million per pad, so it’s a pretty big project, and they take about a year’s cycle time. So as we go into our budget process there, I can say that they are highly ranked as well as some of the SAGD opportunities and looking forward here into next year. So to your point they are low hanging fruit in terms of adding volumes.

Dennis Fong: Great. Great. Thanks for that context. And then the second question I have switching more over to the Oil Sand side, and you mentioned it briefly, and I guess your answer there to Greg’s question was just related to this kind of go around, we saw a little bit of scope change as well as I guess maybe incremental found work. And as you think about stretching the time between periods of planned maintenance, how are you managing potential – the potential for additional found work or changes in scope as you, as you kind of run through?

Tim McKay: Yes, that’s a very good question and it really the key is having a very good preventative maintenance program and asset integrity program and so I’m actually very proud of our team and the way we’re approaching this. What they do is if they find any kind of concern on whether it’s piping or equipment they basically risk its asset. They go through a very detailed process in terms of will that piece of equipment make it until the next turnaround, or is it something that has to be dealt with today? And I look at this last turnaround at Horizon, I mean at both AOSP and Horizon, we saw in some inflationary costs, but at Horizon we have, like I said a very detailed program. I’m very proud of the way they – they approached it because they saw potential issues that would potentially decrease our reliability or decrease our utilization there.