Date of Call: May 7, 2026

Financials Results

  • EPS: CAD 1.17 per share (adjusted net earnings)

Guidance:

  • Targeted shareholder returns increased to 75% of free cash flow, with next target of CAD 13 billion net debt approaching, at which returns will increase to 100% of free cash flow.
  • Continued focus on disciplined execution of 2026 capital program and prioritizing balance sheet strength and shareholder returns.
  • Path to CAD 13 billion net debt is viewed as possible this year, depending on commodity prices and operating performance.

Business Commentary:

Production Growth and Records:

  • Canadian Natural's quarterly production averaged approximately 1,643,000 BOEs in Q1 2026, a 64% increase year-over-year.
  • This growth was driven by strong production volumes, particularly in North American E&P liquids and Jackfish, which exceeded facility capacity, alongside new production pads and optimizations.

Financial Performance and Shareholder Returns:

  • The company reported adjusted net earnings of CAD 2.4 billion or CAD 1.17 per share, and adjusted funds flow of CAD 4.4 billion or CAD 2.10 per share for Q1.
  • Financial results were supported by strong operational earnings, high commodity prices, and a disciplined capital allocation framework, enabling significant shareholder returns.

Debt Reduction and Buybacks:

  • Canadian Natural reduced its net debt below CAD 16 billion by the end of April 2026, facilitating an increase in shareholder returns to 75% of free cash flow.
  • The reduction in debt and acceleration of buybacks were a result of strong production volumes and robust netbacks, with plans to target a net debt level of CAD 13 billion for further buyback increases.

Oil Sands Production and Efficiency:

  • The company achieved strong monthly production of approximately 630,000 barrels per day at its oil sands mining and upgrading assets, with upgraded utilization at 106%.
  • The efficiency was attributed to industry-leading operating costs, increased commodity prices, and a focus on continuous improvement, maximizing netbacks and free cash flow.

Strategic Growth and Regulatory Environment:

  • Canadian Natural is progressing front-end engineering for thermal in-situ projects, including the Jackfish expansion and Pike 2 growth projects.
  • The strategic growth is contingent upon securing long-term egress capacity and a favorable regulatory and fiscal framework to attract investment for long-term projects.

Sentiment Analysis:

Overall Tone: Positive

Canadian Natural Resources’ 2026 Q1 Earnings Call: Albian Savings Shift, Debt Timeline Discrepancies Highlight Contradictions
  • Management highlighted 'strong financial results', 'record quarterly production', 'significant free cash flow', and '26 consecutive years of dividend increases'. They expressed optimism about growth projects, e.g., 'we have a good chance of achieving this if we are competitive' and noted the company is 'well positioned' with 'low operating costs' and 'unique competitive advantages'.

Q&A:

  • Question from Doug Leggate (Wolfe Research): What would it take to get the green light for large growth opportunities given macro changes and carbon pricing?
    Response: A long-term regulatory and fiscal framework that allows for volume growth and attracts investment, ideally through a competitive MoU with governments.

  • Question from Doug Leggate (Wolfe Research): What would it take to pivot more towards dividend bumps instead of buybacks?
    Response: Balancing both buybacks and dividend growth, using the capacity to grow production and free cash flow to increase returns without choosing one over the other.

  • Question from Manav Gupta (UBS): How do you apply Pike 1 learnings to Pike 2 front-end engineering?
    Response: Use reservoir similarities for drilling and combine facility learnings from Jackfish and Kirby assets for continuous improvement.

  • Question from Manav Gupta (UBS): What's driving the Syncrude premium over WTI and how does CNQ benefit?
    Response: High demand for SCO's distillate cuts globally; the premium is very beneficial for Canadian Natural's significant SCO volumes.

  • Question from Dennis Fong (CIBC Capital Markets): What optimizations are being applied across oil sands mining assets and how does ownership affect plans?
    Response: Focusing on continuous improvement for cost savings (CAD 30M to CAD 40M annually); large growth upside remains at Jackfish and Horizon with low operating costs.

  • Question from Dennis Fong (CIBC Capital Markets): Is strong well productivity changing the scope of Jackfish expansion or Pike 2?
    Response: No major changes to facility construction; strong reservoir performance is encouraging and may allow exceeding facility capacity, similar to Jackfish's recent run rate.

  • Question from Greg Pardy (RBC Capital Markets): Will the Q1 working capital deficiency reverse in Q2 and is CAD 13B debt target achievable this year?
    Response: Working capital impacts are regular; path to CAD 13B net debt is possible this year with good operating performance, but not yet committed.

  • Question from Greg Pardy (RBC Capital Markets): How do you see egress and market diversification shaping up?
    Response: Short-to-medium term pipelines (Mainline, Prairie Connector, TMX) are positive for growth; a West Coast million-barrel pipeline is needed for long-term development. CNQ will diversify to maximize netbacks.

  • Question from Patrick O’Rourke (ATB Capital Markets): What's the update on Duvernay well performance and capital cost improvements?
    Response: Duvernay is performing well with production growth, significant capital and operating cost reductions, and good netbacks; further liquids-rich potential to the east is being evaluated.

  • Question from Patrick O’Rourke (ATB Capital Markets): How do you manage short-cycle capital allocation in a volatile commodity environment?
    Response: Focus on liquids-rich, short-cycle projects with low costs and strong netbacks; use patience and continuous improvement to maximize value, while advancing medium-term thermal and long-term oil sands projects.

  • Question from Neil Mehta (Goldman Sachs): How does natural gas volatility affect activity plans and marketing?
    Response: Focus remains on liquids-rich production; dry gas is not being drilled currently. The company is exploring opportunities to capture global pricing through LNG agreements.

  • Question from Neil Mehta (Goldman Sachs): What's the potential of solvent enhanced oil recovery in E&P assets?
    Response: Pilot projects show promise in reducing steam and emissions, but focus is on finding the lowest-cost solvent solution to ensure strong returns before significant-scale deployment.

  • Question from Menno Hulshof (TD Cowen): Would you lean into the balance sheet more aggressively for buybacks given high spot prices?
    Response: No, management intends to adhere to the current 75% return of free cash flow policy; ample cash flow is expected in Q2 without needing to lean into the balance sheet.

  • Question from Menno Hulshof (TD Cowen): What is your sulfur exposure and potential quarterly revenue?
    Response: Significant sulfur producer across oil sands and conventional operations; revenue details not disclosed, but the company is positioned to benefit from the current upturn in cyclic sulfur prices.