EXHIBIT 99.1
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[GRAPHICS OMITTED - LOGO, PHOTOGRAPHS]
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News Release ------------- --------------- ------------
Discipline Opportunity Strategy
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CANADIAN NATURAL RESOURCES LIMITED ANNOUNCES 2008 BUDGET
CALGARY, ALBERTA - NOVEMBER 27, 2007 - FOR IMMEDIATE RELEASE
Commenting on the Company's 2008 budget, Canadian Natural's Vice-Chairman, John
Langille, stated, "2008 will be a year of execution. Canadian Natural has
always taken the approach that focusing on economic returns is more important
than growth at any cost. 2008 is likely reflective of this more than any other
year in our history. On the natural gas side of the business, we are faced with
eroded economics due to low commodity prices and a new royalty regime in
Alberta that reduces the returns on certain types of drilling. Canadian Natural
continues to high-grade our projects to ensure that the maximum value to
shareholders will be achieved in 2008. As expected, this reduction in capital
will result in a decrease in natural gas production throughout 2008 due to
normal production declines not being offset by new resource production. The new
royalty regime introduced by the Province of Alberta effective for 2009 will
take the vast majority of any increases in natural gas prices for most of our
natural gas wells. As such, the ability to increase natural gas drilling
activity with increasing gas prices is severely impacted."
Steve Laut, President & Chief Operating Officer, further commented "Crude oil
prices remain robust although muted by the strong Canadian dollar. The
disparity between low natural gas prices and high crude oil prices affords us
the opportunity at Primrose to optimize the economics of production of mature
wellbores by steaming and producing these reserves now. As a result, the
Company is capturing reserves which may not otherwise be economic under our
long term price assumptions. New pad drilling will be reduced in 2008 as will
new production volumes. In 2009, Primrose East will provide significant in-situ
production growth and new pad development will again occur in existing Primrose
Fields.
In addition to these initiatives, we are currently developing four major
projects with targeted productive capacity of between 176,000 and 180,000
barrels per day. As such, 2008 becomes a year of emphasis on execution and
optimization. The largest of these projects is, of course, the Horizon Project
Phase 1, which is targeted for first oil in Q3 2008.
We are pleased to provide further clarity on our execution strategy to expand
the Horizon Project for Phase 2/3 to targeted production levels between 232,000
to 250,000 barrels per day of SCO by 2013. We believe we can have better
control over execution and costs by avoiding the mega-project mindset. Hence we
have reconfigured the expansion into four distinct tranches that optimize our
available human and financial resources and which help to ensure a more
controllable, effective execution. The first tranche of this revised Phase 2/3
plan will be largely complete in 2007 through the completion of construction of
certain infrastructure on the Horizon site, the purchase of certain long lead
items, and front end engineering and design. During 2008, the second tranche of
Phases 2/3 of the Horizon Project is targeted to remove redundancies in the
Mining and Ore Preparation Area, and debottlenecking the existing plant -
resulting in increased productive capacity of the facility between 6,000 and
15,000 SCO bbl/d by 2010. Tranche 3 of Phases 2/3 of the Horizon Project is
targeted for approval in late 2008 and Tranche 4 in 2010. We now have a better
defined path forward and will continue execution on this very economic project.
We are convinced that Canadian Natural has the people, the assets and the
resolve to continue to deliver superior returns to our shareholders on our
conventional crude oil and natural gas assets, as well as on the Horizon
Project over the longer term."
HIGHLIGHTS OF THE 2008 BUDGET
o Crude oil and NGLs production target of 316,000 to 366,000 bbl/d before
royalties, representing a midpoint increase of 3% from the midpoint of
2007 annual guidance. The increase reflects the commencement of operations
at the Horizon Project, but is partially offset by the long term
production optimization cycle at Primrose, polymer conversion at Pelican
Lake, and reduced activity in the North Sea.
o Natural gas production target of 1,429 to 1,513 mmcf/d before royalties,
representing a midpoint decrease of 12% from the midpoint of 2007 annual
guidance. The decrease reflects lower activity levels due to reduced
economics, relative to crude oil, and the resulting lower drilling
activity in Alberta largely due to the anticipated changes from the
Alberta Royalty Review.
o Equivalent production target of 554,000 to 618,000 boe/d before royalties,
representing a midpoint decrease of 4% from the midpoint of 2007 annual
guidance. Entry to exit production is targeted to increase 6% in 2008.
o Cash flow from operations estimate of $4.6 billion to $5.1 billion ($8.50
- $9.40 per common share) based upon a forecast average West Texas
Intermediate crude oil price of US$73.00/bbl, a Lloyd Blend heavy oil
differential of 30%, a NYMEX natural gas price of US$7.00/mmbtu and an
exchange rate of C$1.00 = US$1.00.
o Canadian conventional crude oil and natural gas capital expenditures of
$1.7 billion in 2008, representing a 33% reduction in capital spending
from 2007 levels. Of the reduction in capital spending, 78% ($645 million)
is due to a reduced drilling program in Alberta largely as a result of the
impact of the Royalty Review changes.
o International conventional crude oil and natural gas capital expenditures
are budgeted to be $689 million.
o Construction capital expenditures on the Horizon Oil Sands Project are
budgeted at $600 to $1,020 million for completion of Phase 1.
o The Company is moving forward with Phase 2/3 of the Horizon Project with a
four-tranche development plan increasing targeted capacity to 232,000 to
250,000 Synthetic Crude Oil ("SCO") bbl/d of by 2013. Tranche 2 of the
Phase 2/3 expansion expenditures are budgeted at $439 million in 2008.
Tranche 1 of Phase 2/3 expansion will be largely completed in 2007.
o Continued strong balance sheet management with targeted debt to book
capitalization at the end of 2008 of approximately 43% and debt to EBITDA
of 1.9x.
o The 2008 program is highlighted by the ongoing development of four major
development projects that will create value for 2009 and in the future:
PROVED ESTIMATED RESERVES 2008 TARGET PRODUCTION
RESERVES((1)) RECLASSIFIED BY 2008 CAPEX CAPACITY
(mmbbl) (mmbbl) ($ millions) (bbl/d)
------------ -------------------- ------------ -----------------
CONVENTIONAL CRUDE OIL AND NATURAL GAS
Baobab 65 14(2) $ 150 6,000-10,000
Olowi 15 5(2) $ 235 20,000
Primrose East 174 50(2) $ 245 40,000
OIL SANDS MINING
Horizon - Phase 1 (SCO reserves) 1,596 1,596(3) $600-1,020 110,000
----- ------- ---------- -------
176,000-180,000
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(1) NET RESERVES, AFTER ROYALTIES, DEC. 31, 2006 EVALUATION.
(2) COMPANY ESTIMATES - RESERVES RECLASSIFICATION FROM PROVED UNDEVELOPED TO
PROVED PRODUCING.
(3) COMPANY ESTIMATES - RESERVES RECLASSIFICATION FROM DEVELOPMENT STAGE TO
PRODUCTION STAGE.
PRODUCTION AND FINANCIAL GUIDANCE
Canadian Natural continues its strategy of maintaining a large portfolio of
varied projects, which enables the Company to provide consistent growth in
production and high shareholder returns over an extended period of time. Annual
budgets are developed, scrutinized throughout the year and changed if necessary
in the context of project returns, product pricing expectations, and balance in
project risks and time horizons. Canadian Natural maintains a high ownership
level and operatorship level in all of its properties and can therefore control
the nature, timing and extent of expenditures in each of its project areas.
The budgeted capital expenditures in 2007 and 2008 are as follows:
2007 2008
($ millions) Forecast BUDGET
- ------------ -------- ------
Conventional crude oil and natural gas
North America natural gas $ 991 $ 617
North America crude oil and NGLs 1,533 1,075
North Sea 474 231
Offshore West Africa 159 458
Property acquisitions,
dispositions and midstream (16) 390
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$ 3,141 $ 2,771
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Horizon Oil Sands Project
Phase 1 - Construction $ 2,741 $ 600 - 1,020
Phase 1 - Operating inventory
and capital inventory - 109
Phase 1 - Commissioning costs - 184
Phase 2/3 - Tranche 1 133 -
Phase 2/3 - Tranche 2 - 439
Sustaining capital - 19
Capitalized interest and other costs 451 379
3,325 1,730 - 2,150
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$ 6,466 $ 4,501 - 4,921
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The above capital expenditure budget incorporates the following levels of
drilling activity:
Drilling activity (number of net wells) 2007 2008
Forecast BUDGET
-------- ------
Targeting natural gas 456 314
Targeting crude oil 615 537
Stratigraphic test / service wells 257 36
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Total 1,328 887
===== ===
NORTH AMERICAN NATURAL GAS
The North American 2008 targeted natural gas program will result in a decreased
drilling program in Alberta and increased drilling outside Alberta.
Natural gas - (number of net wells) 2007 2008
Forecast BUDGET CHANGE
-------- ------ ------
Alberta 346 195 -44%
British Columbia and Saskatchewan 110 119 +8%
--- --- -
Total 456 314 -31%
=== === ==
Type of well
Coal Bed Methane and Shallow 156 161 +3%
Conventional 233 104 -55%
Cardium 23 14 -39%
Deep 39 32 -18%
Foothills 5 3 -40%
--- --- --
Total 456 314 -31%
=== === ==
o Natural gas drilling in Alberta is targeted to be reduced by 44% due to
the anticipated future impact of royalty changes effective 2009. In
Alberta 36% of the wells targeted to be drilled will be low rate shallow
natural gas and coal bed methane wells. The Company's activities outside
Alberta are targeted to increase 8% due mainly to a large development
program in the Hatton region of Saskatchewan.
o The shift in natural gas spending between categories and provinces
reflects both changing economics due to commodity price forecasts and the
anticipated implementation of the new Royalty Regime within the Province
of Alberta, effective 2009. The new Alberta royalty regime dramatically
reduces drilling economics of certain play types at current and higher
price forecasts in future years by extending the project payout period due
to a front end loaded royalty structure. As such, further cuts in both
conventional and high productive rate deep natural gas wells are expected
in future years as they would not benefit from first year production under
the current regime in Alberta.
o Our guidance range for North American natural gas production is 1,405 -
1,485 mmcf/d before royalties, a decrease of 12% from the midpoint of 2007
guidance.
NORTH AMERICAN CONVENTIONAL CRUDE OIL AND NGLS
The North American 2008 crude oil and NGLs drilling program consists of:
2007 2008
Forecast BUDGET CHANGE
-------- ------ ------
Crude oil - (number of net wells)
Alberta 500 388 -22%
British Columbia / Saskatchewan / Manitoba 106 138 +30%
--- --- --
Total 606 526 -13%
=== === ==
Type of well
Conventional heavy 356 311 -13%
Thermal heavy 58 32 -45%
Light 65 78 +20%
Pelican Lake 127 105 -17%
--- --- --
Total 606 526 -13%
=== === ==
o At Primrose, the Company has chosen to concentrate the 2008 thermal
drilling program on the new Primrose East Expansion project and defer
drilling at the existing Primrose North and South projects until 2009. As
a result, production from the existing operations at Primrose will rely on
relatively mature wells. As part of the cyclic steam process, steam oil
ratios ("SORs") climb and well productivity declines as a well matures.
The Company is taking advantage of the opportunity of the robust economics
of steaming mature wells in the current commodity price environment of low
natural gas prices and high crude oil prices.
o As expected thermal production is targeted to peak in late 2007/early 2008
as the Primrose North wells commence their production phase. Production
will then decline throughout the remainder of 2008, resulting in higher
SORs and higher corresponding operating costs. Drilling will resume at
Primrose North, Primrose South and Wolf Lake in 2009 as Canadian Natural
will continue to develop the excellent Clearwater, Grand Rapids and
McMurray reservoirs on these leases.
o At Pelican Lake, Canadian Natural is targeted to significantly expand the
polymer flood as a result of the success the Company has had in 2007.
Results have met or exceeded expectation, which provides the confidence to
apply this process to large regions of the pool. This will involve
converting many producers to polymer injection wells, which will require a
"reservoir fill-up" period of 12 to 18 months prior to seeing a positive
crude oil production response from the process. The result is that 2008
targeted production at Pelican Lake will be essentially flat while
awaiting response from these conversions.
o The guidance range for North American conventional crude oil and NGLs
production is 221,000 - 245,000 bbl/d before royalties.
INTERNATIONAL
2007 2008
Forecast BUDGET CHANGE
-------- ------ ------
Crude oil - (number of net wells)
UK North Sea 5 4 -20%
Offshore West Africa 4 7 +75%
- -- --
Total 9 11 +22%
= == ==
NORTH SEA
o Canadian Natural anticipates drilling approximately 4 net platform wells
while continuing its successful workover and recompletion program.
o As a result of reduced activity and major turnarounds, the 2008 guidance
range for North Sea crude oil production is 44,000 to 54,000 bbl/d,
representing an expected decrease of 12% from midpoint 2007 guidance.
OFFSHORE WEST AFRICA
o Canadian Natural anticipates spending approximately $150 million in 2008
on the development of the Baobab Field in Cote d'Ivoire, Offshore West
Africa, re-completing the wells that experienced sanding issues. The
Company is targeting to have 2 wells back on production by the end of
2008.
o The Company is budgeted to spend approximately $235 million completing the
Olowi project, in Gabon, Offshore West Africa, targeting first crude oil
in Q4/08. The peak production is targeted to be 20,000 bbl/d, net to
Canadian Natural.
o The 2008 guidance range for Offshore West Africa crude oil production is
24,000 to 32,000 bbl/d before royalties. This represents approximately 20%
increase in entry to exit production.
HORIZON OIL SANDS PROJECT
o The Horizon Project is targeting first crude oil for Q3/08. Phase 1
construction capital is targeted to range from $600 million to $1,020
million in 2008, representing a cost to completion forecast range of 8% to
14% over the original $6.8 billion estimate.
o The Company has decided to implement a plan for Phases 2/3 involving a
four-tranche approach to develop targeted capacity of 232,000 to 250,000
SCO bbl/d by 2013. The development plan for the Phase 2/3 expansion is
characterized by smaller incremental projects. The execution strategy
takes project control to the next step where Canadian Natural will
complete the detailed engineering and design work, procure equipment, and
award well defined, complete construction work packages. This strategy
will take more time to complete but will ensure greater cost control and
will provide intermediate production gains.
o This execution strategy plan for Phase 2/3 gives Canadian Natural better
project control over execution and costs and allows for greater capital
flexibility. The incremental approach also ensures the availability of the
people and project teams to complete the expansion while maximizing the
learnings from Phase 1. It will maintain the balance sheet strength of
Canadian Natural and the ability to respond accordingly to commodity price
fluctuations. This will minimize distraction for effective Phase 1
start-up and optimization and allow the Company to maximize its learnings
from Phase 1. The Company will not be creating a mega project, allowing
access to a greater depth of contractors.
- Tranche 1 was largely completed in 2006/07, which involved front-end
loading, building coker foundations and the pipe racks for Phase 2/3,
and ordering certain long-lead vessels, which are targeted to arrive
in Q1/08.
- Tranche 2 will involve procuring additional mining equipment,
constructing a third ore preparation plant, constructing additional
gas recovery and sulphur trains, and debottlenecking the existing
plant. The capital cost over the next three years is estimated to be
$1.1 billion and will provide increased plant capacity and targeted
production gains of between 6,000 and 15,000 SCO bbl/d.
- Tranche 3 will involve additional mining equipment and construction of
extraction trains, coker expansions, and CO2 recovery units. This
tranche will result in lower operating costs, improved "uptime" and
reliability, and targeted production increases of 10,000 to 20,000 SCO
bbl/d.
- Tranche 4 will involve construction of two additional ore preparation
plants, additional froth treatment and extraction facilities, support
facilities, a diluent recovery unit, a vacuum recovery unit, and
further hydrotreating units. This will take the targeted production to
232,000 to 250,000 SCO bbl/d, lower operating costs, and improve
"uptime" and reliability.
o The 2008 guidance range for the Horizon Project production is 27,000 to
35,000 SCO bbl/d.
FINANCIAL REVIEW
o Canadian Natural is committed to maintaining its strong financial
position, allowing the Company to withstand volatile crude oil and natural
gas commodity prices and the operational risks inherent in the crude oil
and natural gas business environment. The Company continues to build the
necessary financial capacity to complete the numerous projects under
development in the Company.
o Based upon the previously referenced price deck, capital expenditure and
production levels, Canadian Natural expects to exit 2008 with debt to book
capitalization of approximately 43% and with a debt to EBITDA of 1.9x.
o Canadian Natural expects to exit 2008 with new targeted production
capacities of 176,000 to 180,000 bbl/d from four major projects. This
significant increase in cash flow / net income generation capacity is
targeted to strengthen the Company's balance sheet metrics to 35% to 39%
debt to book capitalization and 1.3x to 1.5x debt to EBITDA by December
2009.
o In 2009, all business segments are expected to be generating significant
free cash flow available for Canadian Natural's capital allocation
process.
GUIDANCE
Detailed guidance on revised production levels, capital allocation and
operating costs can be found on the Company's website at
HTTP://WWW.CNRL.COM/INVESTOR_INFO/CORPORATE_GUIDANCE/.
FORWARD-LOOKING STATEMENTS
Certain statements in this document or documents incorporated herein by
reference for Canadian Natural Resources Limited (the "Company") constitute
"forward-looking statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. These forward-looking statements can
generally be identified as such because of the context of the statements
including words such as the Company "believes", "anticipates", "expects",
"plans", "estimates", "targets", or words of a similar nature.
The forward-looking statements are based on current expectations and are
subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others: general economic and business
conditions which will, among other things, impact demand for and market prices
of the Company's products; foreign currency exchange rates; economic conditions
in the countries and regions in which the Company conducts business; political
uncertainty, including actions of or against terrorists, insurgent groups or
other conflict including conflict between states; industry capacity; ability of
the Company to implement its business strategy, including exploration and
development activities; impact of competition; availability and cost of
seismic, drilling and other equipment; ability of the Company to complete its
capital programs; ability of the Company to transport its products to market;
potential delays or changes in plans with respect to exploration or development
projects or capital expenditures; ability of the Company to attract the
necessary labour required to build its projects; operating hazards and other
difficulties inherent in the exploration for and production and sale of crude
oil and natural gas; availability and cost of financing; success of exploration
and development activities; timing and success of integrating the business and
operations of acquired companies; production levels; uncertainty of reserve
estimates; actions by governmental authorities; government regulations and the
expenditures required to comply with them (especially safety and environmental
laws and regulations); asset retirement obligations; and other circumstances
affecting revenues and expenses. Our domestic operations are subject to
governmental risks that may impact our operations. Our domestic operations have
been, and at times in the future may be affected by political developments and
by federal, provincial and local laws and regulations such as restrictions on
production, changes in taxes, royalties and other amounts payable to
governments or governmental agencies, price or gathering rate controls and
environmental protection regulations. The impact of any one factor on a
particular forward-looking statement is not determinable with certainty as such
factors are interdependent upon other factors, and the Company's course of
action would depend upon its assessment of the future considering all
information then available.
Statements relating to "reserves" are deemed to be forward-looking statements
as they involve the implied assessment based on certain estimates and
assumptions that the reserves described can be profitably produced in the
future.
Readers are cautioned that the foregoing list of important factors is not
exhaustive. Although the Company believes that the expectations conveyed by the
forward-looking statements are reasonable based on information available to it
on the date such forward-looking statements are made, no assurances can be
given as to future results, levels of activity and achievements. All subsequent
forward-looking statements, whether written or oral, attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by these cautionary statements. Except as required by law, the Company
assumes no obligation to update forward-looking statements should circumstances
or Management's estimates or opinions change.
INVESTOR OPEN HOUSE 2007 - WEBCAST
The members of Canadian Natural's Management team will be presenting a detailed
discussion regarding our 2008 Budget at Canadian Natural's Investor Open House
2007 commencing at 8:30 a.m. Mountain Time (10:30 a.m. Eastern Time) this
discussion can be accessed at WWW.CNRL.COM/INVESTOR_INFO/CALENDAR.HTML
The full day's presentations on Tuesday, November 27, 2007 will be available on
the Company's website at WWW.CNRL.COM/INVESTOR_INFO/CALENDAR.HTML beginning at
8:30 a.m. Mountain Time (10:30 a.m. Eastern Time). An audio re-broadcast of the
highlights will be available on Wednesday, November 29, 2007.
The webcast is also being distributed over PrecisionIR's Investor Distribution
Network to both institutional and individual investors. Investors can listen to
the call through www.vcall.com or by visiting any of the investor sites in
PrecisionIR's Individual Investor Network.
For further information, please contact:
CANADIAN NATURAL RESOURCES LIMITED
2500, 855 - 2nd Street S.W.
Calgary, Alberta
T2P 4J8
TELEPHONE: (403) 514-7777 ALLAN P. MARKIN
FACSIMILE: (403) 514-7888 Chairman
EMAIL: IR@CNRL.COM
WEBSITE: WWW.CNRL.COM JOHN G. LANGILLE
Vice-Chairman
TRADING SYMBOL - CNQ STEVE W. LAUT
Toronto Stock Exchange President &
New York Stock Exchange Chief Operating Officer
DOUGLAS A. PROLL
Chief Financial Officer &
Senior Vice-President, Finance
COREY B. BIEBER
Vice-President,
Finance & Investor Relations