Canadian Natural Resources Limited Aktie

Good morning. We would like to welcome everyone to Canadian Natural's 2026 First Quarter Earnings Conference Call and Webcast. [Operator Instructions] Please note that this call is being recorded today, May 7, 2026, at 7:00 a.m. Mountain Time. I would now like to turn the meeting over to your host for today's call, Lance Casson, Manager of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining Canadian Natural's 2026 First Quarter Results Conference Call.

Before we begin, I'd like to remind you of our forward-looking statements, and it should be noted that in our reporting disclosures, everything is in Canadian dollars, unless otherwise stated, and we report our reserves and production before royalties. Also, I suggest you review the advisory section in our financial statements that include comments on non-GAAP disclosures.

Speaking on today's call will be Scott Stauth, our President; and Victor Darel, our Chief Financial Officer. Additionally in the room with us this morning is Robin Zabek, COO of E&P; and Jay Froc, COO of Oil Sands. Scott will first run through our operational highlights that once again includes production records in the quarter. Victor will then summarize our strong financial results and our significant returns to shareholders year-to-date that includes an increased pace to our share buybacks. To close, Scott will summarize prior to open up the line for questions. With that, over to you, Scott.

Thank you, Lance. Good morning, everyone. We have a long track record of being an effective and efficient operator while consistently delivering top-tier operational and financial performance through a relentless focus on continuous improvement.

Quarterly production averaged approximately 1,643,000 BOEs in Q1 2026, which included total quarterly liquids production of approximately 1,198,000 barrels per day, 66% of which was SCO, light crude oil and NGLs. Production in Q1 delivered year-over-year growth of approximately 4% or 61,000 BOEs per day from Q1 of 2025 levels, whereas quarterly liquids production of approximately 1,198,000 barrels per day was an increase of 24,000 barrels per day or 2% from Q1 2025 levels.

Quarterly production levels in Q1 '26 included the following production records: record quarterly North American E&P liquids production of approximately 773,000 BOEs per day, which includes record liquids production of 329,000 barrels per day and record natural gas production of 2.668 Bcf per day. Record quarterly production at Jackfish of approximately 134,000 barrels per day.

As a result of strong production volumes, combined with robust netbacks, we have reduced our net debt below $16 billion as of the end of April 2026, which resulted in targeted shareholder returns increasing to 75% of free cash flow on a forward-looking basis as evidenced by our robust share repurchases of approximately $360 million since March 31.

Also, in April, at our world-class Oil Sands Mining and Upgrading assets, we achieved strong monthly production of approximately 630,000 barrels per day or approximately 52% of Q1 2026 liquids production, resulting in upgrader utilization of 106%. These strong production volumes are high value with strong SCO prices at a premium to WTI averaging approximately USD 5.70 per barrel on the forward strip for the remainder of 2026, generating significant free cash flow.

As a result of industry-leading operating costs, increased commodity prices combined with the SCO premium, our netbacks are very strong. Put simply, the cash flow generation from Oil Sands Mining and Upgrading assets is significant and best-in-class.

As mentioned, Jackfish production has been strong as a result of new pad at Pike 1, which came on in late Q4 2025. The second new pad at Pike 1 came on production in late March 2026 and continues to ramp up. Current combined production from the 2 new pads at Pike 1 is approximately 41,000 barrels per day and continues to exceed expectations with an SOR of approximately 1.8.

As a result of strong performance from these Pike 1 pads and through facility optimizations, including pipeline interconnectivity and debottlenecking, Jackfish exceeded its facility nameplate capacity of 120,000 barrels per day by approximately 14,000 barrels per day on average in Q1. Another example of Canadian Natural's continued and consistent focus on delivering results through strong execution.

Additionally, as part of our defined medium (sic) [ medium-term ] growth strategy in thermal in situ, we are progressing front-end engineering in 2026, including advancing long lead equipment items on the 30,000 barrel per day Jackfish expansion project and the 70,000 barrel per day Pike 2 growth project.

We remain focused on executing our prudent and efficient 2026 capital program as outlined in our updated 2026 guidance previously released in March, and we continue our short- and medium-term growth plans across our top-tier asset base. Our ability to effectively allocate capital across our strong asset base provides us with a unique competitive advantage and when combined with accretive acquisitions, creates significant long-term value for our shareholders.

Now I will turn it over to Victor for our first quarter financial review.

Thanks, Scott, and good morning, everyone. The first quarter of 2026 delivered strong financial results, reflecting consistent execution in our operations, our high-quality diverse asset base and disciplined capital allocation framework. These were further supported by strengthening prices for our products during the quarter.

In Q1, we generated adjusted net earnings of $2.4 billion or $1.17 per share and adjusted funds flow of $4.4 billion or $2.10 per share. These results demonstrate the significant cash-generating capability of our diverse long-life, low-decline asset base and supported by industry-leading cost performance across our operations.

Net earnings for the quarter were approximately $1.3 billion, reflecting strong operational earnings and certain noncash items, including impacts related to the long-term LNG agreement, translation of U.S. dollar debt and higher share-based compensation expense driven by appreciation of the company's share price in the quarter.

Our free cash flow generation in the quarter allowed us to continue delivering meaningful shareholder returns, during which we returned approximately $1.5 billion directly to shareholders in the quarter, including $1.2 billion in dividends and $300 million through share repurchases, which we manage prudently on a forward-looking annual basis.

As announced previously in March, the Board increased our quarterly dividend, bringing the annualized dividend to $2.50 per common share and marking 26th consecutive years of dividend increases with a compound annual growth rate of 20%. This dividend track record reflects the sustainability of our business model, the strength of our balance sheet and the durability of our assets. With these results, the Board has approved a quarterly dividend of $0.625 per common share payable on July 7, 2026, to shareholders of record at the close of business on June 19, 2026.

Subsequent to quarter end, strong operating performance, combined with robust netbacks allowed us to continue to accelerate debt reduction and share buybacks. As a result, buybacks from April 1 to May 5 increased, as Scott mentioned, to approximately $360 million, with direct returns to shareholders in the form of dividends and share buybacks for the year-to-date of approximately $3.2 billion.

Looking forward, we remain focused on disciplined execution of our capital program while continuing to prioritize balance sheet strength and shareholder returns. With our high-quality production mix, strong cost structure and substantial free cash flow at current strip pricing, our next targeted debt level of $13 billion is approaching, at which time we increase shareholder returns to 100% of free cash flow.

Our balance sheet is strong, liquidity equally so, supported by internally generated cash flow and undrawn credit facilities, providing us with ongoing financial flexibility to deliver shareholder returns, drive resource value growth and deliver on strategic growth opportunities as demonstrated by the accretive acquisition we did here early in Q1 of this year.

Overall, our first quarter results reinforce the competitive advantages of Canadian Natural, scale, asset base, cost leadership and a clear framework for capital allocation that supports long-term value creation for shareholders, all of which look to be strengthening into the second quarter of 2026. Thank you. And with that, I'll turn it back to you, Scott.

Thanks, Victor. In summary, our relentless focus on continuous improvement, combined with effective and efficient operations has driven strong performance so far in 2026. Our ability to effectively allocate capital across our strong asset base provides us with a competitive advantage. This ability, combined with accretive acquisitions creates significant long-term value for our shareholders.

Our culture of accountability through strong shareholder alignment as everyone at Canadian Natural is an owner, combined with our portfolio of world-class assets creates unique advantages that result in lower operating costs, which maximizes our netbacks and free cash flow generation.

Before I turn it over for questions, I wanted to note the recent press release provided by the Oil Sands Alliance regarding competitiveness. We are committed to work together with the provincial and federal governments with the goal of achieving a fiscal competitive MOU framework that will attract capital investment to grow the oil sands.

At Canadian Natural, we are prepared to do our part and grow production, create more high-paying jobs and help this country achieve its potential for economic prosperity. We have a good chance of achieving this if we are competitive, which means investment dollars must return value that is better than investment alternatives in other countries.

As noted in the Oil Sands Alliance press release, we stand ready to roll up our sleeves and work with Canada and Alberta to make this happen.

And with that, I'll turn it over to questions.

[Operator Instructions] And your first question comes from the line of Doug Leggate from Wolfe Research.

Scott, thanks for your comments, especially that last comment. I wonder if I could just pick up on that and go back to your strategy presentation from last year. You laid out that you've got a couple of large growth opportunities that are still currently on hold. The macro environment has changed materially since then, obviously. But you also have this, to your point, over carbon pricing, I guess, with as I was going to say, really more about the Oil Sands Alliance position as opposed to your position. But I guess my question is, what would it take given the combination of changes, especially around the macro to get you to basically give the green light to some of those growth developments?

Yes. Doug, I think it's continued with the messaging that we have been talking about for some time now. In order to expand the growth and have growth in oil sands operations, we need to be able to have the egress capacity long term to do so. As you know, Doug, there's significant upside for volume development in oil sands. And we need a regulatory framework and a fiscal framework that will allow us to enact on that capacity to grow those volumes. And over a very long period of time of a decade or so in Canada, we have not had the environment regulatory-wise to be able to do so.

So we're hopeful that through the MOU and working together with the rest of the oil sands members and both levels of government that we can come to terms on an agreement that will work and bring those investment dollars towards those long-term projects. And we're hopeful that we'll be able to do that in short order here, Doug.

Very clear, and I hope folks are listening. My follow-up very quickly is on the dividend. I guess the cash return strategy generally. There's always a risk or perception in this business of procyclical buybacks, especially when you're about to breach your debt thresholds to give 100% back to shareholders. But you also have the lowest dividend breakeven, not just in Canada, but in the industry. What would it take for you to pivot more towards more meaningful and more frequent dividend bumps as opposed to focusing on what might be perceived as procyclical buybacks. I'll leave it there.

Thanks, Doug. I think it's important to ensure that we have the capacity to be able to do both buybacks and also continue on with our 26th year of growth of our annual dividends. Both of those are meaningful to our investors. And so we're trying to find a balance that works for all of our shareholders and one that aligns with our capacity to be able to grow our company, grow our production and increase our cash flow, which in turn increases more returns to shareholders. So it's a little bit about doing all of it, Doug, as to proceed to try to choosing one or the other.

And your next question comes from the line of Manav Gupta from UBS.

I want to congratulate you on the very strong performance on Pike 1. And I'm just trying to understand -- can you help us understand a little bit better how can you take the learnings of Pike 1 as you move ahead with your front-end design engineering on Pike 2 project?

Yes. I think it's more about -- from a reservoir perspective, Pike 1 would be very similar to the Pike 2 reservoir. And so in terms of learnings, for building a facility at Pike 2, I think we'd look at the assets that we've collected at Jackfish and then at our Kirby assets as well and take the best of both those worlds and apply our learnings into the development of the facilities for Pike 2. And then as I mentioned, from a reservoir perspective, both reservoirs are very similar. We would take our learnings from how we drill the wells at Pike 1 and apply that with some continuous improvement methodologies to drilling the wells in Pike 2.

And I wanted to ask you about the differentials. I think Syncrude is trading almost $5 over WTI. So if you could help us understand what's driving this premium? And if this premium sustains itself for the next 9 or 12 months, how does CNQ benefit from it?

Yes. Obviously, the continuance of premium over WTI for SCO is very beneficial to Canadian Natural with our significant SCO volumes. And so what we're seeing right now in the market is that the SCO barrels come at a high demand. From a cracking perspective, significant distillate cuts. And so with everything that's going on worldwide, there's just simply just a greater demand out there for that light crude to create that diesel production. So that would be where the demand is coming from on that perspective.

And your next question comes from the line of Dennis Fong from CIBC World Markets.

My first one focuses on oil sands mining. And I was actually hoping to understand like you showcased incredibly strong recent production there at the oil sands mining and operations situation. When you think about now owning 100% of the mine, can you talk towards any of the incremental learnings that you found any of the optimization techniques that you're kind of applying across both of the assets, also understanding that you've been operating it for a period of time as well prior to as well as how does that maybe change the interrelationship between Albian and Horizon and your go-forward plans with both assets?

Yes. Dennis, I think it's important to remember from an overall perspective for Canadian Natural with our Oil Sands Mining and Upgrading assets, we are best-in-class operating cost. And so anything that we've done, say, post the swap is just on the edges in terms of incremental continuous improvement opportunities. We've laid that out in terms of what they look like for savings, for warehousing cost, reductions in savings in that, we said in the range of about $30 million. Utilization of equipment is probably in the range of about $40 million a year.

So those are significant in themselves. And if you look at the overall development of both of those Horizon and the Albian sites, they both present significant upside given the vast reserves that we have. So there's projects that we've also outlined in -- back in the fall with our investor open house of 150,000 barrels a day at growth opportunity at Jackfish expansion and 90,000 barrels a day at Horizon. And so really, that sort of lays out the upside. It shows you the robustness of the reserve capacity in both of those areas. And so I think owning and operating those assets with the same mindset, which we have worked on doing since 2017, we've created significant value since 2017.

We reduced our operating cost from $42 a barrel at Albian down to $25 or less. We have increased the production by 50,000 barrels a day for extremely low capital cost in the range of about $30 million -- $300 million. So we have been able, over time, Dennis, to extract a lot of value out of the AOSP asset. We'll continue to work on the fringes to find continuous opportunities, but it's all on the backs of having the lowest operating cost in the industry.

Great, Scott. I really appreciate that context. Switching maybe to a follow-on to Manav's question on Pike. Obviously, really strong initial productivity from the first two pads there. Can you talk towards if the strength in well pad or the well productivity is making any, we'll call it, adjustments to the way that you guys think about the Jackfish expansion scope as well as that for Pike 2? Is that changing the way that you're thinking about the oil treatment or any of the scope of those two expansion projects?

Dennis, it really isn't changing our perspective of how we construct the facilities. The strong performance from the reservoir is very encouraging. Again, we expect Pike 2 to present similar results in itself. But again, if we look at the expansion that we're doing at Jackfish and the relative volumes that we have in the Pike area there, what I'm most excited about is, yes, we're going to add additional steam capacity to increase -- continue to increase the barrels of production that go through the facilities there.

But I'm also impressed and looking forward to the -- what the teams are going to be able to execute in terms of exceeding the facility capacities. And so we're starting to see an example of that right now where those facilities at Jackfish were designed for 120,000. In the quarter, we saw 134,000. So it's very significant. I do believe there is more to come from that perspective, and we're going to realize that value and continue to bolster that strong acquisition that we did back in 2019. And the strategic position that it was and execute on filling up those assets.

[Operator Instructions] And your next question comes from the line of Greg Pardy from RBC Capital Markets.

Maybe just to start with a question for Victor. So you had a pretty big working capital deficiency or a meaningful one in the first quarter. Do you expect any of that to reverse into 2Q? And then with respect to the $13 billion net debt target, I mean, I know everything is kind of moving around. But just given the commodity price strength, juxtaposed against increased buybacks, is $13 billion conceivable like that you would hit that this year, do you think?

Yes. For sure, when I said it's in view, definitely when we look at forward strip pricing, we see a path to get there this year. I mean, as you point out, it depends on what the premiums look like for SCO, et cetera, over the course of the year. But definitely, we're optimistic that with good operating performance, it's possible. But I'm not going to commit to you yet. We'll see how the next couple of quarters here play out. On the working capital front, to your point, pretty regular course tax items in the quarter. Otherwise, I think for the rest of the year, fairly regular working capital impacts in Q2 and Q3. So nothing out of the ordinary.

Okay. Okay. Understood. And then, Scott, maybe it's kind of related to the regulatory framework and so on. But I'm more interested in how you're thinking about egress and market diversification, right? There's a lot of proposals now that are cost efficient to move barrels into the U.S. There's an open season with respect to Trans Mountain. And then there's this looming big million barrel a day pipeline kind of off in the future. But how do you see the egress landscape shaping up? Is it better than maybe what it was a year ago? And then what about market diversification for CNQ just given your size?

Yes. Greg, I think if you look at the short and medium term and you compare where we're at now compared to a couple of years ago, it looks very good. But the expansions through the mainline through the Prairie Connector opportunity and through TMX, all of them are positive for this medium-term growth that will help the industry here grow. So it's very positive. I think if you looked at the expansion to the West Coast for 1 million barrel a day pipeline, I think that's very important to ensure that when you look beyond the short and sort of midterm growth platforms, we need that pipeline to be able to grow oil sands in a significant way.

And I would say it's all good, Greg. All of those point towards a very robust Western Canadian Sedimentary Basin development opportunity.

In terms of our positioning at Canadian Natural, we'll continue to take and look at those diversification opportunities to ensure that we achieve the best netbacks possible for all of our oil production. And that it comes through a combination of going both South and to the West Coast.

And your next question comes from the line of Patrick O'Rourke from ATB Cormark.

I was just thinking about the Duvernay asset, and now that you've had it for a period of time here, we've seen very strong IPs. Maybe perhaps an update on how the wells are performing and where you sort of sit in terms of capital cost and improvements there and what's left?

Yes, Patrick, the Duvernay has turned out very well for us. We are meeting the expectations from a production growth perspective there. The capital cost we have brought down significantly over time here since the acquisition. We've also had a significant reduction in the operating cost in the range of plus a couple of bucks a barrel drop in operating costs. And so that's very significant from a netback perspective.

We've applied our learnings from the Montney, brought them into the Duvernay with some adjustments and things have been looking very well. To the east side, there is a window of more significant liquids production as well as you move east. So we're just at the front-end stage of looking to understand the results from that part of it. So it's all very good, Patrick. And we like the play a lot. There's significant, obviously, netbacks in there and high liquids production. So it's a very good part of our portfolio.

Okay. Great. And maybe this ties back a little bit to Duvernay and some of the short-cycle targets that you have. But I think at the Investor Day, you did a very good job of sort of laying out short cycle, mid-cycle, long-cycle capital projects or targets that you have in the portfolio. And you're obviously a very regimented company, but we're in a very volatile commodity environment.

So I'm wondering if you could maybe walk us through a little bit of the process and how you're thinking about capital allocation, particularly in the shorter cycle end of the portfolio to ensure that we're -- that you're maximizing value here, and I think maybe shifting to oilier and more liquids-rich targets. And with the ebbs and flows of the oil price, how you manage that on a daily basis looking forward here in 2026?

Yes, Patrick, I think patience is a really important factor. When we look at how we've laid out our plans for the capital program, which we've had some adjustments back in March, and we talked about that. The short-term development opportunities in our multi-lats liquid-rich plays, we are putting significant efforts towards capitalizing on that, and we're getting good results, good productivity from the wells, low operating cost, lower capital cost. Our drilling -- drill times continue to improve.

So not only are we maximizing our ability to be able to develop these resources, we're doing it in such a manner on the short-term projects that -- we're doing it in such a manner that we're able to improve our netbacks, not just on -- because prices are higher today, but because the prices have remained flat, we would have had stronger netbacks for the cost reductions and stronger returns just with our activities through continuous improvement. So we'll continue on with that, and we're monitoring that. And we've got, as I mentioned, significant drilling rigs out there working in about -- 20, 21 rigs working.

And so then if you look at our medium-term plans, I think we've laid that out, as you mentioned, fairly detailed for our thermal in situ projects. I've talked about it again today. We're continuing with the engineering for Pike and for Jackfish expansion. We're looking to proceed with long lead items there to advance those projects, lots of confidence there. And again, the longer-term projects in oil sands mining, we need to see -- we're looking for positive outcomes on the MOU for development of those areas.

And your next question comes from the line of Neil Mehta from Goldman Sachs.

First question is just on natural gas. You talked about your marketing strategy around oil, but there's obviously been a lot of volatility around natural gas. So maybe your perspective on how that changes your activity plans in gas in Western Canada, how you're thinking about marketing it? And then can you talk a little bit about the global gas picture? You've got this interesting agreement in 2030 with Cheniere. Is there an opportunity to layer more of that in?

Yes. Neil, if you looked at the opportunity to expand on that to capture strong global pricing. We continue to talk to folks. We'll look at those opportunities as they present themselves. And more to come on that, but we are certainly thinking about diversification. It is part of our strategy. In terms of the development on the gas side, for some time now, we've been messaging that our focus has been on the liquids-rich production. We're really not drilling any dry gas in the basin. And we're looking at where the strongest returns are. That's how we manage our capital portfolio. We're focused on that.

And yes, we do have significant Montney dry gas opportunity as well, but we'll keep those in the bank for the future, and we'll capitalize in those areas that have the significant liquids production for now. So it's really a focus on liquids production, high returns and not any significant focus on drilling any dry gas wells.

Yes. That makes sense in this macro. And in the release, I thought this was interesting the comments about piloting solvent-enhanced oil recovery in some of your in situ assets. And it's certainly something that we've been talking a lot about solvent recovery and the potential upside from production that could generate, but it's such an interesting engineering organization. I'd be curious how big do you think this could be as it relates to your E&P assets?

Yes. If you look at the SAGD assets, we've -- and our cyclic team at Primrose. In both cases, we have deployed a bit of butane to reduce the steam and reduce the overall emissions through a couple of pilot projects. We had the commercial pad at K108 in Kirby North. And again, what we saw out of -- in all of these aspects of what we tested so far is that we're able to see, particularly on the Kirby pad, strong recoveries of the butane. Butane is a significant cost driver or any solvent that you're injecting would be the significant cost driver and really where you need to focus on in terms of ensuring that you're going to get strong returns for that type of investment. That's where the key is on that cost side of it.

And we're telling the teams, let's ensure that we can go out and find the lowest cost alternative to capture that upside of reduced steam requirements and still have strong SOR recoveries. So we're taking the path of ensuring that we really focus on getting the cost right before we deploy it in any kind of significant scale. If you look, Neil, at the future and what it does capture for, what it can capture is helping bring reserves forward for development in our thermal in situ assets with lower capital -- overall capital deployment. So the upside is certainly there.

It's just really important to ensure that you got the lowest cost alternative from a solvent perspective and designing your recovery facilities, you want to ensure we get that right because we can get the best of both worlds with that, Neil. We can look at that long-term opportunity. And in the interim, we can continue to develop and add pad adds at low capital efficiency cost.

[Operator Instructions] And your next question comes from the line of Menno Hulshof from TD Cowen.

I'll start by circling back on return of capital and the 75% return of free cash that you're currently on. You talked about being very active on the buyback in April and even through the beginning of May. But would you consider leaning into the balance sheet more aggressively over the near term to take advantage of higher spot prices?

It's not something that -- like the way the free cash flow allocation policy is laid out, I think we intend to adhere to that as it's currently laid out. As you know, there's going to be lots of free cash flow generation here in the second quarter at current strip pricing. And I don't think leaning into the balance sheet will be required. I think we'll have lots of cash flow to have a very robust program. And I think the target as laid out by the Board here is to maintain that 75% level. So that's the plan for now.

Okay. And then the second question is on sulfur, which is this commodity that comes up once every 10 years or so. But clearly, prices are a lot higher. Can you just refresh us on your exposure to that market? How much you're currently selling into the market today and what that could amount to in terms of quarterly revenue, if you're prepared to share that?

Yes. Menno, thanks. We won't get into the exact details of the revenue from it. But I can tell you we're a significant producer of sulfur at our oil sands mining operations at the upgraders, both Horizon and Scotford also in our conventional operations in our -- in the Western part of the province in BC. And so certainly, as you mentioned and indicated sulfur has been cyclic in nature. And we're certainly seeing a turn towards the upside at this point in time. And it's a good position to be in where we're able to realize strong value from the sale of those sulfur values. So we're going to continue to monitor that and take advantage of it as the cycle rides higher.

There are no further questions at this time. I will now hand the call back to Lance Casson for any closing remarks.

Thank you, operator, and thanks to everyone for joining our call this morning. If you have any questions, please give us a call. Have a great day.

And this concludes today's call. Thank you for participating. You may all disconnect.

Good morning. We would like to welcome everyone to Canadian Natural's 2025 Fourth Quarter and Year-End Earnings Conference Call and Webcast. [Operator Instructions] Please note that this call is being recorded today, March 5, 2026, at 9:00 a.m. Mountain Time. I'd now like to turn the conference over to your host for today's call, Lance Casson, Manager of Investor Relations.

Thank you, and good morning, everyone. Thank you for joining Canadian Natural's 2025 Fourth Quarter and Year-end Results Conference Call. As always, I'd like to remind you of our forward-looking statements, and it should be noted that in our reporting disclosures, everything is in Canadian dollars, unless otherwise stated, and we report our reserves and production before royalties. Also, I would suggest to review the advisory section in our financial statements that includes comments on non-GAAP disclosures.

Speaking on today's call will be Scott Stauth, our President; Robin Zabek, COO of E&P; and Victor Darel, our Chief Financial Officer. Additionally, in the room with us this morning is Jay Froc, COO of Oil Sands.

Scott will first run through our strategic updates and our strong operational performance that once again included numerous production records in the quarter and annually. Next, Robin will provide highlights of our growing high-value reserves that are significant when compared to other major oil and gas companies. And Victor will summarize our strong financial results and our significant return to shareholders in the year, along with details on the enhancement of our free cash flow allocation policy. To close, Scott will summarize prior to open up the line for questions.

With that, over to you, Scott.

Thank you, Lance, and good morning, everyone. 2025 was the best operational year in the company's long history of maximizing value for our shareholders. We set several new production records, lowered operating costs, and capital expenditures came in under our previous forecast. We grew our production organically as well as completed several accretive acquisitions. These include the Palliser Block assets, Southern Alberta, liquid-rich Montney assets in the Grande Prairie area, as well as increasing our ownership in the Albian mines 100% through an asset swap. We achieved record annual production of 1,571,000 BOEs per day in '25, resulting in year-over-year growth of 15% or approximately 207,000 BOEs per day from 2024 levels. We also showed continuous improvement in our safety record with our total recordable injury frequency at the lowest levels ever.

Our teams continue to be focused on safe, steady applications with a goal of no harm to people and no safety incidents. Specific to some of the annual operating highlights, record annual total liquids production of approximately 1,146,000 barrels per day, an increase annual liquids production of 141,000 barrels per day or 14% from 2024 levels. 65% are our liquids production at SCO, light crude oil or NGLs. Strong total corporate liquids operating costs of $18.44 per barrel. Record Oil Sands mining and upgrading production of approximately 565,000 barrels per day of zero decline SCO with upgrader utilization of 100%, including the planned turnaround at AOSP. Industry-leading Oil Sands mining and upgrading operating costs of $22.66 per barrel.

Record thermal in-situ production of approximately 275,000 barrels per day of long life, low decline production and primary heavy crude oil production growth of approximately 88,000 barrels per day, which is 11% growth from 2024 levels. This reflects strong drilling results from our multilateral well program. Operating costs in our primary heavy crude oil operations averaged $16.68 per barrel in 2025, a decrease of 8% from 2024 levels, primarily reflecting lower operating costs from multilateral production. Record natural gas production of approximately 2.5 Bcf per day, an increase of 400 million per day or 19% from 2024 levels. In December, we received regulatory approval for our Pike 2 70,000 barrel per day SAGD Growth Project opportunity. Shifting to our quarterly results.

Q4 2025 was equally impressive with numerous records, including record quarterly production of approximately 1,659,000 BOEs per day. Record total liquids production of approximately 1,215,000 barrels per day, an increase of 125,000 barrels per day or 12% from Q4 2024 levels. Record Oil Sands mining and upgrading production of approximately 620,000 barrels per day of SCO with upgrader utilization of 105%. Industry-leading Oil Sands mining and upgrading operating costs of $21.84 per barrel. Within our thermal areas, production from the first Pike 1 pad came on production ahead of schedule in December.

Current production from this pad exceeds our expectation at approximately 27,000 barrels per day with an SOR of approximately 1.8 xas we target to keep the production at the Jackfish facilities at full capacity. Second Pike 1 pad will come on production in the second quarter. Canadian Natural's reserves are significant when compared to other major oil companies, which support long-term growth opportunities. Year-end 2025 total proved reserves and total proved plus probable reserves increased by 4% and 3% respectively from year-end 2024 levels, another strong year of reserve replacement with very strong F&D costs. Robin will provide additional color on our year-end reserve shortly. Strong execution across our large, diverse asset base continues to provide significant opportunities to create shareholder value in 2026 and beyond.

This is evident by our increased production, cash flow, and reserves achieved in 2025 through accretive acquisitions and organic growth, which gave the board of directors confidence in their approval of a quarterly dividend increase of 6.4% and the enhancement of our free cash flow allocation policy by adjusting our net debt targets, accelerating direct returns to shareholders. Victor will explain in more detail in this finance section this morning. In addition, we completed a strategic acquisition in Q1 of '26, and as a result, we are increasing the midpoint of our 2026 production guidance by 20,000 BOEs per day with a range of 1,615,000 BOEs per day to 1,665,000 BOEs per day, and we are reducing our '26 capital, operating capital forecast by $310 million to approximately $6 billion.

We continue to progress our defined short and medium-term growth strategy development in our conventional EMP assets. Our drill to fill pad additions and FEED capital on both the 70,000 barrel per day Pike 2 Greenfield project and the 30,000 barrel per day Jackfish Brownfield expansion project. As part of our long-term growth strategy, we are deferring FEED capital for the Oil Sands Jackpine Mine expansion opportunity at Albian that was included in our 2026 capital budget. This approximately $8.25 billion project is being deferred due to lack of finalization of government regulatory policies around carbon pricing and methane, which creates uncertainty and economic burden for our long-term growth investment. Once there's more certainty on improved regulatory policy, improved timelines, and additionally egress, we will reassess the economic viability of this project.

Complementing the accretive and opportunistic acquisitions completed in 2025 and in Q1 of 2026, we have plenty of organic growth opportunities within our large, diverse asset base. We will leverage our portfolio of opportunities to continue creating long-term shareholder value while maintaining flexibility to manage the pace of these development opportunities and continue to maximize shareholder value.

Now I will turn it over to Robin to provide additional details on our year-end 2025 reserves.

Thank you, Scott. Good morning, everyone. I'll start by reminding everyone that 100% of Canadian Natural's reserves are externally evaluated and reviewed by independent qualified reserve evaluators. Our 2025 reserve disclosure is presented in accordance with Canadian reporting requirements using forecast pricing and escalated costs on a company working interest or royalties basis. As you just heard from Scott, 2025 was another very strong year for Canadian Natural, with that strength including the company's reserves. For December 31st, 2025, total proved reserves are 15.9 billion BOE, representing a 4% increase compared to 2024. Total proved plus probable reserves increased 3% to 20.75 billion.

Through a combination of organic growth and accretive acquisitions, Canadian Natural replaced 2025 production by 218% on a total proved basis and 212% on a total proved plus probable basis. To put that in context, that's more than 1.2 billion BOEs of reserves added in each of the proved and proved plus probable categories. As you heard from Scott, we've done that while achieving industry-leading finding, development, and acquisition costs. For 2025, our FD&A, including changes in future development cost, was $3.64 per BOE for total proved and $2.42 per BOE for total proved plus probable, underscoring the strength of our extensive diverse assets.

Highlighting one of the attributes that differentiates Canadian Natural, approximately 73% of total proved reserves are from long life, low decline or zero decline assets, resulting in a total proved reserve life index of 31 years and a total proved plus probable RLI of 40 years. Notably, at year-end 2025, approximately 50% of the company's total proved reserves are high-value SCO and mining bitumen reserves with zero decline and a total proved RLI of 39. In summary, our 2025 reserves continue to reflect the strength and depth of Canadian Natural's diverse asset base, the predictability of the company's long life, low decline reserves, and our proven ability to create value through organic growth and accretive acquisitions.

I will now hand over to Victor for the financial highlights.

Thanks, Robin, and good morning. The fourth quarter full year 2025 results were excellent, with record operational performance, which also reflected the impact of the acquisitions we did in 2024 and 2025, and which contributed to similarly strong financial performance. The strong execution by our teams in 2025 has resulted in adjusted net earnings of $7.4 billion or $3.56, and adjusted funds flow for the year of $15.5 billion or $7.39. Quarterly performance was equally strong, with adjusted net earnings of $1.7 billion or $0.82 per share and adjusted funds flow of approximately $3.7 billion or $1.82.

Net earnings of $5.3 billion this quarter or $2.55 per share was higher than the operational earnings related to the accounting for the AOSP asset swap, which resulted in a non-cash gain of approximately $3.8 billion after tax this quarter. Following the asset swap, where we assumed the entirety of the interest and control of the AOSP mines, we accounted for the transaction in accordance with the relevant requirements and recognized an adjustment from the previous carrying value to its fair value in accordance with GAAP. In doing so, we demonstrated the significant value that has been created in those operations since the acquisition of the initial interest in AOSP in 2017.

As Scott mentioned, the accretive acquisitions in late 2024 and throughout 2025, including the AOSP asset swap in November of this past year, have increased reserves, production and cash flow while contributing to net debt reduction of approximately $2.7 billion at year-end 2024, with net debt at approximately $16 billion at the year-end 2025. In 2025, the company returned approximately $9 billion to our shareholders, including direct returns of approximately $4.9 billion in dividends, $1.4 billion in share repurchases, and additionally the $2.7 billion in net debt reduction I just mentioned. As we end 2025, our balance sheet is strong, with quarter-end debt to EBITDA of 0.9 xand debt to book capital coming in at 26%.

Liquidity was also strong at over $6.3 billion at year-end, reflecting undrawn revolving bank credit facilities and cash on hand at end of period. Demonstrating the continued performance of and their confidence in our business, the board approved a 6% increase to our quarterly dividend, bringing the annualized dividend to $0.52 per common share. This marks 2026 as the 26th consecutive year of dividend increases by Canadian Natural, with a compound annual growth rate of 20% over that time, demonstrating the sustainability of our business model, our strong balance sheet, and the strength of our diverse, long-life, low-decline reserves and asset base that Robin spoke to. Additionally, the board of directors have, effective January 1st, 2026, adjusted the net debt target level in our free cash flow allocation policy, which results in an acceleration of the next increase to shareholder returns.

When net debt is below $16 billion compared to the previous target of $15 billion, we will increase shareholder returns to 75% of free cash flow generated and managed on a forward-looking basis. When net debt levels reach $13 billion compared to the previous target of $12 billion, we will target to increase shareholder returns to 100% of free cash flow generated. Our robust funds flow generation and strong balance sheet demonstrates our industry-leading cost structure, large reserve base, high quality, long-life, low-decline assets, and our commitment to continuous improvement and reliable execution. These factors, along with the company's track record of delivering strong shareholder returns, support significant long-term value creation for Canadian Natural and its shareholders. Our financial flexibility and low maintenance capital requirements demonstrate a track record of execution and allow us the opportunity to provide strong returns to shareholders going forward.

With that, Scott, I'll turn it back to you.

Thanks, Victor. In summary, our strong 2025 results and our growing reserves are supported by safe, reliable and consistent operations. Our commitment to continuous improvement as part of our effective and efficient operations is driven by focusing on cost improvement, margin expansion, and strong execution. This is combined with our increased production guidance and accelerated shareholder returns. We are set up to continue to return real value to our shareholders in the near, medium, and long term.

With that, I will turn it over for questions.

[Operator Instructions] Your first question comes from the line of Dennis Fong from CIBC World Markets.

Congratulations on a strong quarter and year. My first one here is really you guys have shown a track record of applying CQ best practices on kind of new assets you've acquired or taken over operatorship of. And as you alluded to in your prepared comments, really a focus on continuous improvement. Can you talk to some of the opportunities you're looking to chase down or that you're seeing now that you control 100% of the Albian mine? And how does that maybe interact with Horizon on a go-forward basis?

Yes, Dennis, I think if you recall, we did have a bit of this discussion at the last quarter. We had estimated an instantaneous savings of about $30 million and an annual savings in around $30 million per year, $30 million to $40 million per year. It's just really about the synergies of being able to utilize the equipment and the people resources, the contractors back and forth at the mine sites in a more efficient manner than we would have otherwise been able to do so before. Better utilization of your service providers allows for more efficient practices and ultimately more efficient costs.

You know, over time, Dennis Fong, it's fairly evident to be able to see the reduction in operating costs from 2017 going right through to the acquisition of Chevron 2024, and we continue to make improvements in the operating costs from that point going forward here, just through our continuous improvement methodology and also, you know, significant increase in production in the range of 50,000 barrels a day since 2017. You know, we had made some significant gain certainly before the acquisition of Chevron, and at this point in time, we'll be working more on the continuous improvement portions of that where small dollars add up to big dollars.

Great. . Really appreciate that color. My second question shifts here a little bit. It's obviously great to see the confidence in the board or from the board on the current strength of the balance sheet and the potential acceleration of returning free cash to shareholders. Can you talk towards a little bit around where the discussions may have gone in terms of we'll call it bookends or ensuring kind of key metrics that both management and the board focus on in terms of determining some of these factors, as well as maybe touching on some of the flexibility that you still have in the capital program, obviously either higher or lower, given the volatile commodity price environment that we're in today.

Yes, Dennis, it's really about the robustness of our balance sheet. On the backs of the synergies created through these recent acquisitions, we've been able to achieve increased cash flow, lowering the operating costs, increasing the production. All of those things combined don't necessarily lead towards bookends per se, Dennis, but what they do is show a continued improvement to the overall strength of our balance sheet, primarily providing additional cash flow. That's resulted in the board taking a look at all of the acquisitions that we've done, combined with the way we've been able to effectively and efficiently manage our capital development programs through organic growth, have really provided that stepping stone to get to change the net debt levels for the free cash flow policy and obviously continue to increase our dividends.

Dennis, not really about bookends, but just part of the ongoing continued growth of the company, both organically and through acquisitions that have strengthened the balance sheet and have set us up for continued strength through strong commodity prices, lower commodity prices or any cycle.

Your next question comes from the line of Patrick O'Rourke from ATB Capital Markets.

Maybe just a little bit more on the capital side of the equation here. Obviously, the bulk of the capital that came out was, it seems like with respect to Jackpine. I just wonder what opportunities there are still remaining for the rest of the year. I think back to years past, we were looking at a sort of a weaker gas tape right now. Are there any opportunities to potentially shift some capital from the liquids rich gas portfolio towards some of the short cycle oil here remaining in 2026?

We always carry that nimbleness, certainly when we're looking at our capital allocation. Seeing good returns, strong returns with strong liquids pricing on the liquid rich natural gas activity areas that do compete. If you look at it, Patrick, we've got payouts in our multilaterals 12 months or less, very comparable payouts to 12, 13 months or less on the strong liquid rich gas areas. They're very competitive with each other. I think what the way to look at it is we have a very well-balanced rig program across all of the areas. We're working very hard to ensure that we don't sort of apply any self-inflicted inflation in the areas in which we're operating in. We do that by having that balanced rig program.

We continue to monitor the commodity prices. We have about 21 rigs working, very well balanced across the entire basin here. Looking at strong returns, we're not spending money on dry gas activity. We're really focused on the value returns. I don't see us making significant changes to that a whole lot. We do have the capacity to be able to increase the heavy oil multilateral potentially to a small percentage. Again, we're running very well balanced. We're not creating inflation. We're making sure we're keeping up with the efficiencies in our drill times. People are very focused, and we wanna keep the momentum going in that direction.

Okay, great. Just thinking about the operational performance, sort of one thing that really stuck out to me was the 105% upgrade or utilization in the quarter. Just wondering how you think about how repeatable this is, does that open sort of the pathway to a potential rerate on these assets going forward?

Patrick, we'll see on a go-forward basis here. I think you've seen some strong production in the fourth quarter. That's not unique, in compared to previous years. Strong efficiencies, running into the fourth quarters, coming out of turnarounds and so forth. You know, 105% is certainly very strong. And 620,000 barrels a day is extremely strong production levels. We're happy with, in the range of 600,000 barrels a day is very strong efficiencies and utilization. You know, we certainly strive to continue to work towards maximizing and overutilizing the facilities from a utilization perspective. I doubt it's gonna lead us to a rewrite.

We'll look at that some point down the road at Horizon, potentially when we bring on the 6,300 barrels a day of SCO from the NRU project. Until that time, Patrick, I think we're pretty happy with where our capacities are rated at.

Your last question for today comes from the line of Neil Mehta from Goldman Sachs.

Congrats on a good quarter as always. I had some more macro questions, so I want to get your perspective on the environment that we're in right now, where there's a lot of volatility. There's talk of, obviously, the Venezuela barrels coming to the market. At the same time, we've got some disruptions here in the Middle East in terms of supply. How you are seeing real-time that flowing through into the heavy markets and how that shapes your near-term view around TIWCs? That's a good starting point, and then I have follow-up on gas.

Yes, Neil, I think if you look back a month or so ago with the potential to increase the volumes into the US Gulf Coast, the differentials to WTI did widen out. We did see increased barrels of Venezuelan barrels coming into the US Gulf Coast for processing. Now as to your point, there has been some tightening in the market with the recent developments in the Middle East. We're seeing differentials swing back down, probably about $1.50 to $1.60 lower than they were. Approximately tighter than they were, excuse me, about a month or so ago.

For us, it's all about continued focus on our operating costs and ensuring that we can be competitive in all the markets, and that we also have a diversified portfolio. We've got 256,000 barrels a day, and we've got that well diversified between the U.S. Gulf Coast and the West Coast of Canada here. Continue to focus on those types of opportunities for diversification of our portfolio and continue to focus on our operating cost to ensure that in the long run, rather than just on the short-term thinking, that in the long run, we can manage and excel and be competitive in any market condition.

And to the extent we are in a firmer market condition as the world is now pulling on heavy barrels maybe a little bit harder, does that change the way you think about your near-term activity, or you kind of have to stay level loaded just given the long-term planning assumptions?

We have to go by long-term planning assumptions, Neil. You know, there's ebbs and flows that are caused by various different factors. Obviously a major factor going on right now in the Middle East, but also what times in the year, there's factors of turnarounds that happen in the U.S. refining complexes. You know, again, the thinking has to be long-term and ensuring that we're achieving the best net backs that we can with our portfolio.

And then that's a follow-up is just natural gas. I think a number of us have been waiting for AECO to get firmer, and it just seems like production is ever flowing. Just how do you guys think about this cleaning itself up? As you guys look at the AECO balances, is this a structural issue or is there line of sight to better pricing on the Horizon?

Well, I think it's evident that you're seeing with LNG Canada, processing in the range of about 1.5 Bcf, not yet approaching full capacity, but not that far away from full capacity. You're seeing the market is suggesting that the system is full. That's likely coming through the development of, a lot of liquids rich gas production and some producers, drilling with potentially, lower liquids, gas production as well. A very strong, supply market. We continue to see on a go-forward basis that those conditions will remain tight, over time.

Canada really needs additional LNG export capacity and the projects to be approved in an expeditious matter, so we can take advantage of prosperity for all Canadians by increasing our gas production and our exports, and providing a product the world truly needs.

We have an additional question coming from the line of Greg Pardy from RBC Capital Markets.

Scott. I was not gonna let you off that easy. Look, just maybe I may have missed this. It's, it's kind of a question for Victor, but effectively, are you at 75% payout now? I.e. post everything in terms of the updated budget, year-end numbers, the acquisition and so forth. Is the debt at a level where it's now triggered that higher payout or is that still to come?

Yes. So to your point, Greg, at December 31st, we were below 16%. Under the policy, we would have achieved the target for sure. Of course, as a result of that target increase returns here in 2026. As you know, we do that on a forward-looking basis. We model the script and the cash flows for it as we look at the policy over the course of the year. Of course, keep in mind significant volatility in pricing, we're all aware. Under the current policy as just announced, strong pricing we're seeing we'd be very solidly there in Q3 with slightly higher and slightly lower debt over the course of the first and second quarter. Hopefully that helps.

Yes, yes. No, exactly from a modeling perspective.

There are no further questions at this time. So I'd like to turn the call back to Lance Casson for closing comments. Sir, please go ahead.

Thank you, operator, and thanks to everyone for joining us this morning. If you have any questions, please give us a call. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.

Good morning, everyone. We'll get going here. Welcome to Canadian Natural's 2025 Investor Open House. Today, we will show you why Canadian Natural is the unparalleled independent energy company that investors need to own.

Before we get started, a couple of housekeeping items. The bathrooms are back through these doors actually up on the third floor, fire exits on both sides. And of course, coffee and everything is available in the back room here.

Canadian Natural is unparalleled in everything we do. Specifically, this is driven by our unparalleled assets, unparalleled execution and unparalleled resilience.

Today's agenda is as follows: Scott Stauth, President, will start us off by laying the groundwork, showing why Canadian Natural is an unparalleled independent company. We'll then shift and run through our asset base, where Robin Zabek, CEO of E&P, will run through his conventional assets, followed by Jay Froc, COO of Oil Sands, who will go through both thermal and oil sands mining and upgrading. Our execution section will be next presented by Ron Laing, Chief Commercial and Corporate Development Officer. Then Victor, our CFO, will give a rundown of our resilience. And last, Scott will return for our outlook and summary. At that point, the webcast will conclude and we'll break for 10 to 15 minutes, grab a coffee before beginning the Q&A session with senior management and Murray Edwards, our Executive Chairman.

As always, I remind you of our forward-looking statements and of course, the advisory section at the back of the presentation. To start, I'd like to remind you the size and scale of Canadian Natural. We are large with a current market cap of approximately $93 billion and a dividend yield of over 5% from our annualized dividend of $2.35 per share. Our balance sheet is strong today, net debt to EBITDA at 0.9x. And on the operations side, we currently produce over 1.6 million BOEs per day from our significant reserve base, where we have 27 million acres of land, which provides a deep inventory of future value creation opportunities, some of which we will highlight today during the presentation.

Next, I'll call up Scott, who will discuss Canadian Natural strategy and advantages. Scott?

Thank you, Lance, and good morning, everyone. Scott Stauth. And today, our team will show the key differentiating factors that set Canadian Natural apart and why we are truly an unparalleled independent. Canadian Natural's strategy is underpinned by these 3 significant factors: our assets, our execution and our resilience. All 3 cohesively tied together and integral to deliver long-term value for our shareholders. Starting with our assets. Canadian Natural holds one of the largest, most diversified resource base in the industry.

Our long-life, low-decline nature of our assets provides reliable production, while operatorship of our extensive infrastructure allows us to deliver high utilization, which is key to our low operating costs and strong capital efficiencies. Through our execution, we focus on value growth in a disciplined manner. Our teams deliver strong safety performance and cost efficiencies. We operate our assets with a culture of accountability and funnel down continuous improvement opportunities, driving down costs and enhancing productivity. Our low maintenance capital and low breakeven costs support consistent free cash flow generation, while our strong ESG commitment ensures we operate responsibly.

Finally, our resilience is a result of our strong balance sheet and supported by our disciplined free cash flow allocation policy and anchored by our assets that deliver significant and sustainable returns to shareholders. Together, these 3 unique characteristics provide the foundation that sets us apart as an unparalleled independent resource company.

Canadian Natural has been delivering long-term shareholder value for decades, which also continued to increase over time on the basis of our large, low-risk, high-value reserves, our diversified assets that have low maintenance capital requirements, a flexible, very disciplined capital allocation strategy and executing effective and efficient operations. We will continue this trend and build and deliver more free cash flow for shareholders returns for decades to come. You will see these advantages in more detail throughout the morning.

Canadian Natural's unique culture is a key differentiating factor. It's our driving force that delivers results and strong shareholder value. Our people have the expertise, experience and commitment to do it right by working together. Every team member understands the expectations of executing effectively and always finding ways to optimize more value from the assets. They are inspired by results and appreciate the accountability that goes with it.

Every employee is a shareholder at Canadian Natural. When the teams deliver results, all employees benefit and we win together. At every level, our people are empowered to not only bring forward value opportunities, but to champion those ideas. The power of culture is the mindset of continuous improvement at the planning and execution level, which helps our teams to ensure we are always striving to do things more efficiently than before. And 20 of you here today were present on the Albian oil sands mine tour in July, and you're able to experience this culture firsthand.

Canadian Natural has always been a very disciplined allocator of capital. And that discipline revolves around the balancing of the 4 pillars that drives our strategy and maximizes shareholder value. Our 4 pillars are designed to maximize value through our balance sheet strength, returns to shareholders, resource value growth and opportunistic acquisitions, all of which are integral to our strategy and our success. Canadian Natural's reserves can only truly be appreciated when compared on a global scale and are significantly more than our Canadian peers.

As you can see, we are the second largest globally, showing the magnitude and depth of our reserves, which also has a leading total preserved -- leading total proved reserve life index of approximately 32 years. When you layer on the context of reserves to market capitalization, Canadian Natural provides approximately 177 BOEs of total proved reserves for every USD 1,000 of market capitalization, significantly more than any peer. Even on a global level, the value proposition in Canadian Natural is compelling.

To take it one step further, you can see here on the left-hand side how Canadian Natural stacks up when compared to Canadian and U.S. average reserve life indexes, a significant long-term differentiator for our company. We have decades of top-tier development optionality and when combined with our low corporate breakeven on the right-hand side of the slide, that includes long-term dividend growth, we can develop our inventory at a pace that makes sense, maintaining production in low commodity price cycles with breakevens in the low to mid-40s while having significant optionality to grow in stronger commodity price periods.

We have a balance of high returns, quick payout conventional assets, long-life, low-decline thermal in situ and long-life, no decline oil sands mining and upgrading assets. All combined, our company is the most resilient over the short, medium and long term, providing sustainable free cash flow generation through the cycle with significant torque and upside to increasing commodity price cycles.

Robin and Jay will go through all the details of our 3 core areas. However, I will highlight in advance for you that because of the robust nature of our assets, we have the opportunity to deliver unparalleled value growth in conventional of approximately 295,000 BOEs per day. Our thermal in situ assets of 210,000 barrels per day and our oil sands mining and upgrading of 240,000 barrels per day. Again, Robin and Jay will walk you through that.

And with that, I will pass it over to Rob.

Thanks, Scott, and good morning, everyone. I'm really pleased to be here today to talk to you a bit about our North America conventional E&P assets and all of the ways that our teams have been working hard to lower costs, improve productivity and deploy technologies to increase value. Our conventional E&P [indiscernible] Manitoba. We are the largest conventional producer in Canada with 715,000 BOE/ds, of which over 40% is liquids. With that production comes the largest reserves in conventional in the country with 2.1 billion barrels of liquids and 27 Tcf of gas 2P reserves.

Our 25 million net acres of land has been strategically put together over many years. And as you'll see later from Ron, it gives us significant ownership in the most economic plays in the basin. With over 10,000 locations and an extensive network of infrastructure, we have got a lot of options. Our balanced portfolio means that we are not restricted to one commodity or one area, and we can readily adjust our development plans in response to market conditions. And very importantly, as technology changes and improves, the depth and breadth of our assets means there is no one better positioned to generate incremental value through the adoption and evolution of technology.

My next 2 slides highlight some of the continuous improvement in performance of our conventional assets over the last 2 to 3 years. First, on this slide, the left chart is production growth since 2023 and the right chart is our estimated reserves growth since 2023. Through a combination of acquisitions and organic drilling, we've increased both by over 20%. Essentially, we've added the equivalent of a midsized E&P, increasing near-term cash flow and long-term value.

And this slide shows that our continued commitment to improving margins drives results year after year. That's reflected in our operating costs on the chart, where over the past 3 years, we're showing sustained decrease in nonenergy costs of 8%. Our teams have achieved that through a constant focus on effective and efficient operations by adopting technologies to improve productivity and lower operating costs and through economies of scale that once again are enabled by the size of our assets and our operations.

Now 2 slides ago, I mentioned that I see us as better positioned than anybody else to take advantage of technologies. A great example of that is multilateral heavy oil drilling. This is a technology that really didn't exist a few years ago. And today, it makes up the majority of our drilling. What's key is that multilaterals have opened up areas that a few years ago were not productive. With a deep heavy oil inventory, over 3,000 of which are multilaterals, we have meaningfully extended the life, increased the value and increased the reserves largely on legacy Canadian Natural lands that we've held for a long time. And by continually improving the technology and execution, we're accessing more reservoir for lower costs and reduced service requirements.

On average, in 2025, we're drilling wells that are 30% longer than we drilled in 2022. And in fact, in some cases, in stacked pay, we're actually drilling 2 sets of multilaterals from a single surface wellbore, doubling that length to about 20,000 meters per well. And we're doing that without adding a second surface wellbore, without adding additional surface or downhole facilities, lowering costs. And by continuously improving the technology and the execution, we're drilling the wells faster, 24% faster than we did 2 years ago. And that's helping drive our cost down by 9% on a dollar per meter basis.

As we've improved the technology and execution, we continue to deliver top-tier results from our multilateral heavy oil wells with 2023, '24 and '25 on this chart essentially being overlays of one another. To me, what this chart really shows is that our programs and our results are dialed in, and we're not going to run out of top-tier inventory anytime soon. And not only are those great results repeatable, they're driving down our operating costs. On the chart in the blue bars, you can see that multilaterals have become a much larger share of our production over the last 5 years. And these longer life, lower OpEx wells are driving our costs, which is the green arrow that you read off the right-hand side of the chart, down.

In fact, in the last 5 years, we've lowered our OpEx by $2 a barrel. Over that same 5-year span, we've grown our multilateral heavy oil production by a factor of 6x to the 45,000 barrels a day that we're at now and with multilaterals now making up 90% of our drilling activity in heavy oil.

And I'll finish the multilaterals with a look at where they could take us in the near to midterm. With only the defined inventory in front of us today and keeping in mind, we are replenishing that inventory constantly, but only with what we see today, we have the potential to double our primary heavy oil production to over 150,000 barrels per day, surpassing the peak of 140,000 that we saw in 2014 from the older technology of slant well drilling. With our 3 million net acres of primary heavy oil rights, the vast majority of that value creation is going to come from lands that Canadian Natural has held for years. To me, a clear demonstration of the value created by combining industry-leading assets with skilled teams implementing the right technology.

Speaking of technology, I'm going to finish up my heavy oil section in Pelican Lake and Driftwood. In our world-class Pelican Lake polymer flooding -- polymer flood, we've been injecting polymer since 2006 into the Wabiskaw A pool, recovering over 0.5 billion barrels of oil to date with a low base decline and low maintenance capital. Now we're taking our 20 years of polymer flooding experience from Pelican, and we're bringing it to a new zone, the Wab C in Driftwood, where we started flooding this year, and we're planning to expand and increase and target to grow that production to about 19,000 barrels a day out of Driftwood. Ultimately, we expect to be in the high 20% recovery factor range from both assets, giving us decades of long-life, low decline, high-value production.

Switching gears now a bit to the Montney. This slide shows the distribution of our premium Montney assets from Northeast B.C. through Northwest Alberta, with the shading on the map showing that the majority of our lands lie within the high-value liquids-rich gas and light oil windows of the play. With ample infrastructure, over 3,000 locations with short payouts, we've got a deep inventory that we can choose to develop at a measured pace, drilling to fill our existing facilities or we could expand facilities and accelerate development should market conditions support it.

This slide just gives a little bit more color to the size and depth of our Montney assets. With our 1.65 million net acres of Montney rights, sitting within a zone, 200 to 300 meters thick with multiple benches of development, we're showing 3 on the diagram on the left. The reality is in some of these areas, there's 4 to 5. And that all sits within a band stretching from Northwest to Southeast, about 400 kilometers long, giving us exposure to virtually every Montney play in the basin.

Looking at our Montney cost performance, on average since 2023 in both drilling on the left-hand chart and completion on the right-hand chart, we've reduced our unit costs by 9% since 2023. On the drilling side, we're drilling faster, decreasing costs by optimizing the placement of our wells within the zones to the highest porosity, which gives us the highest rate of penetration in the best reservoir. And on completions, we've increased productive time on our frac spreads, driving costs down. Our teams are doing this by close integration of our drilling, completions and exploration groups, using data analytics and customized dashboards that give our people the information they need in real time to make better decisions to drill faster and to lower our costs.

My last Montney slide shows that by using technology to integrate our teams, optimizing location selection and well design upfront and enabling better decisions faster in real time during operations, we are continually improving the performance of our Montney wells every year with 2025 on trend to be 40% higher in first year production than 2023. This means fewer wells to fill our facilities, keeping production up and costs down.

I'm going to finish up my conventional section in the Kaybob Duvernay core area. In Kaybob, we're producing about 60,000 BOE/ds, half of which is liquids. We have dedicated processing capacity in place with both drill to fill room and options in place to increase capacity. And as you can see on the map, our lands are extremely concentrated in the very rich liquids-rich gas windows and the light oil window. And further enhancing value, we continue to drive margin improvements with a 20% improvement in our operating cost in 2025 year-to-date.

And by applying the lessons that we've learned in the Montney, our Duvernay cost metrics show very similar profiles. Like the Montney, we're extending our well lengths. We're lowering our cost per meter while we're accessing more reservoir, driving our drilling costs down by 5% year-over-year. We're realizing even more significant savings of 17% on completions by maximizing the efficiency of our fracking operations, again, through real-time monitoring and analytics, but also optimizing our tonnage and reducing our water usage through advanced frac modeling and planning and design upfront before we ever touch the ground. And just like the Montney, our focus on continuous improvement in location selection, well design and execution is on trend to increase productivity year-over-year, looking at about a 10% increase over a 1-year period.

To conclude, our conventional E&P assets post an extensive, unique land base underpinned by 2.1 billion barrels and 27 trillion cubic feet of reserves. With a 2P RLI of 35 years, there is no shortage of development opportunity, meaning our existing assets will continue to fuel value creation for many years. Our developments are repeatable and scalable, providing options for drill to fill and expansion projects across all product types and giving us the flexibility to very quickly respond to market conditions. By leveraging technology, we have a track record of unlocking additional development and creating new value across our assets. And our culture of continuous improvement means we are constantly driving to find new efficiencies and further improve execution, thereby increasing value.

With that, I'm going to hand it over to Jay, who will talk to you about our thermal and mining assets.

Thanks, Robin. Good morning. My name is Jay Froc. I'm the Chief Operating Officer of our Oil Sands operations. I'm going to -- this morning, I'm pleased to walk you through both our world-class mining and upgrading assets, along with our top-tier thermal in situ.

Canadian Natural's thermal assets produced approximately 274,000 barrels per day in Q3 2025, with strong operating costs of $10.35 per barrel. These assets are significant with over 5.2 billion barrels of 2P reserves. Our primary assets, Primrose, Jackfish and Kirby have a total combined facility capacity of 340,000 barrels per day. And with that, we have significant opportunities to utilize this capacity at low cost. We are a top-tier thermal in situ operator with almost 30 years of experience focusing on enhancing our margins, utilizing Cyclic Steam Stimulation, Steam Assisted Gravity Drainage and Steam Flood.

One of our strengths at Primrose wolf Lake is our substantial infrastructure. With current capacity -- with current production of approximately 95,000 barrels per day and with approximately 45,000 barrels per day of available capacity, we are allowing for development opportunities, again at relatively low costs. We have about 90 potential future pad locations where we are able to bring on production at a very strong capital efficiency of approximately $10,000 per flowing barrel. This deep inventory allows for brownfield expansion opportunities, which could increase the total capacity by 40,000 to 180,000 barrels per day.

Our SAGD operations at Kirby and Jackfish are another great example of how we can add significant value through economies of scale. With our current production of 177,000 barrels per day, we have about 23,000 barrels per day of available capacity. Our development program has room to grow. And at Kirby and Jackfish, we have 110 potential pad additions with development capital efficiencies, again of approximately $10,000 per flowing barrel. I do want to draw your attention to the black line at the top right corner of the map. This connects Jackfish to Pike 1, and I'm going to talk about it on the next slide.

On our Pike 1 acreage, we recently completed a key piece of strategic infrastructure. The new 18-kilometer interconnect pipeline between Pike 1 and our Jackfish facilities allows us to accelerate our access to the massive resource of approximately 2.7 billion barrels of original in place bitumen. We are targeting to bring this production on stream in January of next year, 2026. A key part of our continuous improvement in SAGD performance is the use of technology and well design. Our use of steam splitters, wire wrap screens, inflow control devices and fiber optics, all work together to allow improved steam distribution from the well pairs. This results in higher production rates and lower SORs.

We are also using artificial intelligence to maximize steam throughput, fuel usage and steam quality to help ensure our operations are optimized. The result of leveraging technology has helped to improve our well performance. And as such, our current oil production has shown significant improvement over wells drilled in 2019, as you can see in the graphs in the top right corner. Another opportunity is co-injecting solvent with steam, which reduces SORs and frees up steam for additional thermal development and brings forward reserves across our extensive asset base.

On this slide, we're highlighting how we're unlocking additional value by drilling new producers in mature areas. By drilling into existing pads, typically with a new producer lower in the reservoir, as shown in the schematic, we are adding both production and reserves. These wells come online quickly, about 2 months and achieve strong production and lower SORs. These wells represent highly efficient capital barrels, and we think it's a smart way to enhance our performance without expanding our footprint.

Leveraging technology, innovation and our culture of continuous improvement has resulted in significant cost reductions. This has allowed us to capture an impressive 13% reduction in drilling cost per meter. And at the same time, we've increased our drilling efficiency by drilling 32% more meters per day. These lower drilling costs, combined with increased drilling efficiency, lowers the overall development costs and combined with the higher well productivity I showed on the previous slide, drives strong thermal capital efficiencies and robust returns.

The Jackfish Brownfield Expansions are a growth initiative designed to leverage our existing infrastructure. By focusing on steam capacity expansion and process debottlenecking across the 3 operating Jackfish plants, we expect to add approximately 30,000 barrels per day of bitumen capacity. These brownfield expansions will increase total Jackfish production to 150,000 barrels per day, and we're going to implement that at a steady pace of about 10,000 barrels per day each year over the last 3 years of the 5-year program.

This capital investment is estimated between $650 million and $750 million with a target range of $22,000 to $25,000 per flowing barrel. This level of efficiency underscores our disciplined approach to development and our focus on maximizing returns from existing assets. Front-end engineering for this project is targeted for 2026. In summary, the Jackfish expansion strengthen our medium-term value creation strategy, leveraging proven assets and driving cost effective production growth.

Pike 2 is a greenfield thermal expansion project targeting roughly 70,000 barrels per day of bitumen. We expect regulatory approval late this year, 2025, with front-end engineering beginning in 2026. Development will be phased over 6 years, allowing us to manage capital efficiency efficiently. Total investment is targeted at $2.5 billion to $2.8 billion, delivering strong capital efficiency in the range of $35,000 to $40,000 per flowing barrel. When completed, Pike 2 targets to contribute approximately 20% additional capacity growth across our thermal portfolio, reinforcing our strategy of disciplined organic growth. Capital investment in both the SAGD growth opportunities would take place over several years.

However, the respective time lines of these projects are independent of each other. These projects would ultimately deliver approximately 100,000 barrels per day of highly capital-efficient production ranging from $22,000 to $40,000 per flowing barrel, which is highly competitive when compared to both the original Jackfish acquisition of approximately $35,000 per flowing barrel or recent in situ transactions in the public market.

To conclude, our Thermal In Situ business is underpinned by roughly 5.2 billion barrels of 2P reserves, giving us long-term running room and significant optionality for decades of development and production. Our development strategy remains focused on highly capital-efficient growth. We have the flexibility to adjust development pace with market conditions, ensuring a disciplined investment strategy. With drill-to-fill opportunities, we can grow production economically, ensuring we maximize existing facility capacity. We continue to leverage technology and by integrating AI-based monitoring, we're able to improve well performance, reduce steam-to-oil ratios, lowering cost and generating strong returns.

A cornerstone of our success is our culture of continuous improvement. Our well pad design initiatives have reduced costs and improved onstream timing, ensuring predictable, repeatable area development. In summary, our Thermal In Situ program combines scale, efficiency and innovation. We have a long-life, low-decline resource base that continues to deliver returns to shareholders through strong resource development.

Canadian Natural's world-class mining and upgrading assets have a total capacity of approximately 592,000 barrels per day, 90% of which is highly valued SCO barrels. We have 8.3 billion barrels of 2P SCO reserves with a reserve life index of approximately 47 years. This underscores the magnitude of this resource and its ability to support stable, long-term cash flow generation. Beyond the booked reserves, there's a substantial future potential with 20.4 barrels of bitumen initially in place. Our industry-leading operating costs capture significant value with highly -- with upgraded high-quality SCO barrels with no decline and no reserve risks.

We have the advantages of economies of scale with our teams focused on optimizing production, increasing reliability and improving our cost structure through continuous improvement. Additionally, with a strong -- very strong focus on safety performance. Our maintenance capital requirements are low, and our teams remain focused on safety, reliability and high utilization rates, all key drivers of consistent performance and margin strength. Canadian Natural clearly leads the industry in oil sands upgrading utilization, a significant advantage. Our operating costs have trended down in recent years with 2025 forecasted to be approximately 12% lower than 2017 when we completed Phase 2 and 3 at Horizon and acquired our initial acquisition at AOSP.

This slide shows the AOSP value proposition by reducing costs and increasing production. Beginning in 2017 with our acquisition of a 70% working interest of AOSP, we have added gross capacity in the mines by improving efficiency while pushing costs even lower. We did this while keeping safety as a core value. Less than a year ago, we acquired Chevron's 20% working interest. And on November 1, we closed on the swap transaction with Shell that saw us take our ownership in the Albian mines to 100%. It's important to note that from 2017 to 2025, we have reduced operating costs by 38%, while adding approximately 57,000 barrels of gross production to AOSP.

As I mentioned before, on November 1, we completed the swap transaction with Shell that took our ownership in the Albian mines to 100%. Simply, this translates into incremental free cash flow and ultimately supports higher shareholder returns. Beyond production growth, full ownership enables greater operational control and synergies across both the Horizon and Albian mines. We are now able to optimize utilization of equipment, including heavy haul trucks, shovels, dozers, cranes and other shared assets. By combining warehousing, we eliminate redundant stock while streamlining supply chain operations and maintenance.

This consolidation also enhances the value of future growth projects and allows us to pursue integrated optimization strategies across both mining operations. We estimate annual savings of about $30 million in addition to approximately $30 million of onetime savings. By aligning ownership, operations and strategy, we're setting the stage for long-term scalable and efficient growth. At Horizon, 2017 was a key milestone for us as we completed Phases 2 and 3, which took our capacity to 250,000 barrels per day. And in 2024, we completed the reliability enhancement project, which increased our capacity by about 14,000 barrels per day. This shifted our planned turnarounds to once every 2 years from the previous annual cycle.

Most importantly, over the past 8 years, our culture of continuous improvement has allowed us to optimize production, which results in 2025 targeted production of approximately 275,000 barrels per day, an increase of 25,000 barrels per day, and that's along with a 10% reduction in operating costs. Currently, we're progressing with our naphtha recovery unit tails treatment project, which targets to bring an additional 6,300 barrels per day of SCO production following its mechanical completion in Q3 of 2027. This project has a strong capital efficiency of approximately $55,000 per flowing barrel and benefits of reduced future tailings costs. Relentless pursuit of improvement year after year have consistently delivered material results driving increased value for shareholders.

Through our culture of accountability and continuous improvement, a long list of efficiencies and cost savings are constantly being identified. Some examples listed here are the safe introduction of mining traffic circles, which resulted in annual cost savings of approximately $10 million. Using metallurgical advances and new teeth design in our crushers saves us $3 million per year. And optimizing the pigging processes in our Horizon cokers reduced downtime, which resulted in approximately $80 million of incremental annual revenue. These improvements matter because they all add up and they all contribute to significant value on an annual basis.

Utilizing artificial intelligence and operations has resulted in increased efficiency and cost savings. An example of how we are leveraging AI to enhance operations is on our flotation cells where virtual operators boost efficiency through real-time adjustments, resulting in an incremental 400,000 barrels per day per year -- barrels per year, excuse me. Using AI for smart monitoring has increased reliability, resulting in reduction of unplanned downtime while extending pump maintenance intervals. We also use AI to assist in pipe integrity monitoring, reducing the time technicians spend on this task while maintaining a high level of reliability. Whether through the use of virtual operators or early warning detection offered up by real-time dashboards, AI is a useful tool in our relentless pursuit of efficiency and cost savings.

This slide outlines the Jackpine mine expansion, a significant value creation opportunity within our oil sands portfolio. It represents a development opportunity that leverages proven technology to deliver high-value, capital-efficient production. This project targets approximately 150,000 barrels per day of bitumen, a significant opportunity to contribute to our long-term growth. We're targeting capital costs in the range of $7.5 billion to $9 billion with development expected to occur over a 6-year time frame. Importantly, we've already secured regulatory approval for the project, which clears -- which provides a clear pathway. The Jackpine mine expansion delivers strong capital efficiency with a targeted range of $50,000 to $60,000 per flowing barrel, a highly competitive, capital-efficient oil sands development. In summary, the Jackpine mine expansion represents a material growth opportunity, large in scale and highly capital efficient.

This slide highlights the North Mine expansion opportunity at Horizon. The project builds on our proven expertise while integrating advanced technologies to deliver efficient and cost-effective production growth. The North Mine expansion presents a unique opportunity to combine our in-pit extraction process technology with paraffinic froth treatment. The project is expected to increase production by approximately 90,000 barrels per day of bitumen, providing a meaningful uplift to our overall oil sands output. We are maintaining a disciplined capital approach with an estimated investment in the range of $4.5 billion to $5.5 billion spread over a 7-year time frame. This project delivers strong capital efficiency targeting between $50,000 and $60,000 per flowing barrel, a highly competitive metric for development of this scale.

Before proceeding to full execution, this project will require regulatory approval, and we're continuing to constructively engage with regulators and stakeholders on an ongoing basis. In summary, the North Mine expansion combines innovation and discipline. It's a clear example of how we're pursuing strategic growth that creates significant values for our shareholders. Combining the future growth opportunities in our mining assets through Jackpine mine expansion and Horizon's North mine expansion offers the opportunity to grow mine production without the necessity of upgrader expansion.

In the longer term, our 100% ownership of both Horizon and Albian provides us with the opportunity to grow production capacity of combined SCO and bitumen to approximately 840,000 barrels per day. Capital investment in both growth opportunities would take place over several years and results in approximately 240,000 barrels per day at capital efficiency targeted to be in the range of $50,000 to $60,000 per flowing barrel. These projects are an opportune way to increase production of high-value, 0 decline assets creating significant value for our shareholders.

To conclude, our mining oil sands business is anchored by approximately 8.3 billion barrels of 2P reserves, representing one of the largest, most stable reserve bases in Canada. These reserves support a 2P resource life index of 47 years, providing a secure and reliable foundation for decades of production. We continue to pursue growth opportunities across both mines, which positions us for increased 0 decline production. Technology continues to be a key enabler in how we operate. The integration of artificial intelligence into our operations allows us to prevent issues before they occur, reducing unplanned downtime and improving our utilization. Our success is built on a culture of continuous improvement where we realized significant capacity increases through creep capacity projects, ensuring we maximize the use of our existing assets.

Additionally, our culture of accountability keeps us focused on cost savings, operational excellence and efficiency gains across every part of our business. In summary, our oil sands mining and upgrading operations combine scale, longevity and innovation with extensive reserves, high reliability, strong growth opportunities and a culture that relentlessly pursues improvement. We are well positioned to deliver sustainable value for shareholders for decades to come. With that, I'll turn it over to Ron Laing, our commercial -- Chief Commercial and Corporate Development Officer.

Thanks, Jay. Good morning, everyone. My name is Ron Laing, and I'll be walking you through Canadian Natural's unparalleled execution of a strategy that has created a portfolio of diverse and low-decline assets, achieved industry-leading F&D costs, diversified our market strategy to maximize returns, all while doing it safely and responsibly and while working with industry partners to provide leadership on a national scale on the carbon file through the Pathways project.

Canadian Natural has a balanced and diverse product mix, which in 2026 will produce approximately 1.6 million BOE a day, including approximately 1.2 million barrels a day of liquids and approximately 2.5 Bcf a day of natural gas. Our targeted 1.2 million barrels per day of liquids in 2026, 50% is targeted to be high-value SCO, while light oil and NGLs make up roughly 16% and heavy crude oil makes up approximately 34%. Diversity of product streams limits our pricing exposure to any one product. Further, we are maximizing value from our liquids stream through our committed exports to the West Coast of Canada and the U.S. Gulf Coast.

Natural gas is targeted to be approximately 2.5 Bcf a day or roughly 25% of our total targeted production. We are extracting value from our natural gas production through a balanced portfolio of sales points where over 800 million a day are exported out of Western Canada, maximizing our netbacks. With over half our production being long-life, low-decline or 0 decline assets, we have -- 12%, largely made possible through the approximately 56% of our production coming from our long-life, low decline or no decline assets in our oil sands. This low corporate decline rate means our portfolio of assets require less maintenance to maintain production volumes, again, making our free cash flow more predictable and sustainable.

Comparing our low corporate decline to our peers, you can see Canadian Natural's industry-leading decline rate. We estimate that on an annual basis, it costs us approximately CAD 9 to CAD 10 per barrel in maintenance capital to maintain our production levels. Our oil sands represent the most economic source of sustained oil supply and production is more easily maintained through periods of commodity price volatility, such as what we saw in 2020. According to BMO research, you can see how much more sustainable oil sands is versus typical energy companies shown on the left side of the slide in estimated U.S. dollars sustaining capital required per barrel.

In Situ oil sands operations have sustaining capital of just USD 4 per barrel, while mining oil sands has a sustaining capital level of approximately USD 8 per barrel. Again, highly competitive when compared to typical conventional operations. Oil sands is a significant part of Canadian Natural's portfolio, and we have top-tier low capital rate -- a low sustaining capital ratio when compared to Canadian and U.S. peers shown on the right side.

Switching to a peer comparison of F&D costs. Our 5-year average is the lowest in our peer group at less than USD 6 per barrel. Our teams are focused on constantly adding reserves through cost-effective development activities across our high-quality asset base and through value-adding acquisitions. Canadian Natural's high-quality conventional assets are top tier. As shown in this ranking of the top plays in North America, our significant ownership position in each of these play types provides Canadian Natural with significant optionality as we allocate capital each year. Included in this, we have a significant land base in Western Canada of approximately 25 million acres with approximately 10,000 premium drilling locations in the leading North American plays, which Robin discussed earlier.

Canadian Natural's world-class oil sands mining assets deliver top-tier results through low-cost operations at our 2 projects, Horizon and AOSP, which deliver a combined 592,000 barrels a day of capacity, 90% of which is high-quality SCO. These long-life, no-decline oil sands mining assets combine effective and efficient operations to support a low WTI breakeven price, delivering us significant and superior returns.

Switch gears to talk a bit about our marketing. Our marketing strategy is focused on maximizing netbacks through strong market access and balanced commodity exposure. We're diversified across natural gas, NGLs, synthetic crude, light and heavy oil, giving us flexibility in rapidly changing markets. With committed export capacity on TMX, pipeline access to the U.S. Gulf Coast and North America's gas networks, we ensure reliable egress and premium market reach. Infrastructure planning is critical by optimizing our blending, transportation and upgraded production capacity, we consistently maximize our netbacks, delivering long-term value for shareholders. We also support projects that enhance heavy crude oil and bitumen conversion such as the North West Redwater refinery, which increases our upgraded production capacity.

Canadian Natural produces approximately 2.5 Bcf a day of natural gas. As you can see, this breakdown shows our diverse and balanced portfolio of natural gas sales, which helps maximize netbacks. Our exports are spread across key hubs, which you'll see noted on the slide, with a total of 823 million a day exported out of Alberta. This diversified approach allows us to capture stronger North American pricing and generate approximately $375 million of incremental margin in 2025. Our strategy ensures flexibility and resilience in a dynamic market.

At Canadian Natural, we're also expanding our reach into global LNG markets through our commitment with Cheniere LNG at Sabine Pass in Louisiana. This 15-year contract provides exposure to JKM pricing, offering pricing diversification and access to international markets. This project is expected to be in service by 2030, pending a positive final investment decision by Cheniere. This commitment further diversifies our portfolio and positions us to benefit from global LNG demand growth.

On the crude oil side, our marketing strategy is built around accessing multiple target markets. Canada's West Coast, which obviously opens us up to more international markets than previously able as well as the U.S. Midwest and the U.S. Gulf Coast markets. Canada has more egress options for crude oil than ever before. Here, we see the various options available to Canadian Natural to move our share of the roughly 5.3 million barrels per day of Western Canadian supply on pipelines such as TMX, Keystone, Enbridge, Flanagan South and Express. With the addition of TMX to the list of export options, significant value has been created, which I'll speak to in a little more detail shortly.

We continue to work with industry partners to pursue options for further expansion of egress capacity to ensure that there is sufficient capacity to allow our teams to continue to grow production with the certainty that adequate capacity to move the additional barrels will be available well into the future. Potential expansions on Express and Enbridge Mainline as well as the Trans Mountain expansion are just some of the opportunities being developed. The Western Canadian oil market currently enjoys some spare egress capacity out of the basin with the addition of TMX.

This slide shows production today with the dash line being the production forecast. This is a roll-up of local refining demand and pipeline export capacities, which depending on growth, indicates we could see egress constraints as early as 2027. If this happens and pipelines are full, the question becomes, what are we going to do about it? The top boxes show there are debottlenecks that can occur on both the Enbridge Express Pipeline and Enbridge Mainline, as I mentioned previously. This could add 150,000 barrels per day and up to 300,000 barrels per day, respectively, on these pipelines. In addition, TMX has expansion capability that could add incremental 240,000 barrels a day by 2030 or 2031.

In addition to these projects, there are other new build pipeline projects that could add significant capacity. But these are large builds. They would be subject to significant permitting processes and significant producer commitments to see them proceed. Industry is currently working closely with pipeline service providers to evaluate each of these projects and others to mitigate any constraints caused by production growth.

Heavy crude oil and bitumen continue to drive significant value for Canadian Natural. The completion of TMX led to an improvement of more than USD 7 per barrel in the WCS differential. This translated to approximately nine -- Natural in 2025. This further reinforces one of the main pillars of Canadian Natural's marketing strategy, that is to support the development of sufficient market egress to mitigate the risk of apportionment and to ensure narrow differentials, pardon me, on a long-term basis.

This slide highlights our diversified portfolio of approximately 1.2 million barrels a day of liquids. Our liquids production is comprised of 16% light crude oil and NGLs, 50% SCO and 34% heavy crude oil. We have a total of 256,500 barrels per day of committed export capacity. This includes 169,000 barrels per day to the West Coast via TMX and 87,500 barrels a day to the U.S. Gulf Coast via Flanagan South and Keystone. The light crude and SCO add significant value as they are priced at or near the value of WTI, generating significant cash flow for Canadian Natural. These pipeline export options enhance netbacks, reduce egress constraints and provide access to expanded refining markets.

Canadian Natural's focus on effective and efficient execution of liability management programs continues with substantial well abandonment and reclamation programs. Our land management performance highlights our commitment to responsible resource development. Over the last 5 years, we've successfully abandoned approximately 11,300 inactive wells, a major step in reducing our environmental footprint. In addition, since 2009, we planted roughly 5 million trees across our oil sands mining operations and another 5.9 million trees across North American exploration and production areas, contributing to the long-term ecosystem restoration. In addition, we've also reclaimed over 17,600 hectares since 2016.

And in 2024, we submitted more than 1,300 reclamation certificates, exceeding our goal in 2024 of approximately 1,100 per year, demonstrating our strong commitment to the environment and land reclamation. Canadian Natural's strong safety performance continues to reflect the safety is a core value at Canadian Natural. Since 2020, we've achieved a 37% reduction in total recordable injury frequency, a clear indicator of continuous improvement in incident prevention. Lost time incident frequency is down 70% over the same period. In 2024 alone, our teams conducted over 100,000 worksite safety observations, helping identify and address risk before they led to incidents.

Our comprehensive safety management system focuses on proactive measures, including safety audits, coaching frontline supervisors and reinforcing expectations through safety excellence meetings. Our ultimate goal remains unchanged, no harm to people, no safety incidents. And if you're safe, your operations are reliable. And if you're reliable, your free cash flow is sustainable. Canadian Natural continues to be a global leader on the CO2 capture and sequestration. We own more carbon capture and sequestration capacity than anyone else in Canada. We have 3 major capture facilities at Horizon, Quest and North West Redwater, capturing roughly 2.7 million tons of CO2 per year.

The Pathways Alliance is a coalition of 6 major Canadian oil sands producers working together to reduce greenhouse gas emissions from oil and gas production. Their main goal is to achieve net zero emissions from their production by 2050 through collaborative projects, most notably a large-scale carbon capture and storage network. The proposed CO2 transportation line is a key part of the Pathways project as it connects facilities which capture CO2 emissions to the storage hub where the CO2 is sequestered underground. The front-end engineering for this project has been completed. and the necessary regulatory applications have been filed. In addition, Pathways has also started consultation with the 25 indigenous groups located along the Pathways -- the path of the pipeline, pardon me.

The pipeline project consists of over 400 kilometers of high-pressure main transportation line as well as a number of laterals connecting oil sands capture facilities to the transportation line. The pipeline runs from the mining operations north of Fort McMurray down through the Christina Lake area where many In Situ facilities are located, then continues down to the Cold Lake region where more thermal facilities are located and finally, to the storage hub. Pathways continues to work closely with all levels of government to move this nation-building project forward. Now I'd like to pass it over to Victor to talk about our unparalleled resilience.

Thanks. So moving on to our 2025 outlook and 2026 as well as our summary. So inclusive of the swap with Shell that closed earlier this week as well as opportunistic acquisitions that closed earlier in the year, we are now targeting 2025 annual production of between 1,560,000 barrels BOEs per day and 1,580,000 BOEs per day. Compared to 2024 annual production levels, the midpoint of our updated forecast represents significant annual growth of approximately 15% or 207,000 BOEs per day. Importantly, our liquids production remains strong in 2025, consisting of approximately 73% of total production.

On the capital side, we maintained our operating capital of $5.9 billion from the reduced levels announced in May 2025, while also executing additional activity on our acquired assets, which is excellent execution and results from our teams as they drove even more efficiencies across our operations than we announced in May. For 2026, our outlook has averaged annual production of between 1,590,000 barrels per day and 1,650,000 BOEs per day. The midpoint of this range represents annual growth production of approximately 50,000 BOEs per day or 3% over 2025 levels. Consistent with our strategy of disciplined and flexible capital allocation, 2026 operating and capital and carbon capital outlook is targeted to be approximately $6.425 billion. We are planning to finalize our 2026 budget in early to mid-December, and we remain flexible and nimble with our execution plans with respect to changing commodity.

To summarize our value creation opportunities, our portfolio of North American conventional assets has significant opportunities to create value in the short term through potential drill to fill of approximately 180,000 BOEs per day through maximizing existing facility capacity and approximately 115,000 BOEs per day in the medium term through facility expansions, indeed, a significant value opportunity. Across our thermal assets, we have medium-term opportunities that include approximately 210,000 barrels per day of future growth potential. This includes drill-to-fill development to maximize available facility capacity plus the 2 opportunities in Jackfish and Pike 2 that set the stage for significant value creation from our thermal in situ assets, as Jay detailed earlier.

In 2026, we are targeting front-end engineering for Jackfish and Pike 2 as part of our capital outlook. At our world-class mining and upgrading assets, expansion projects in our mines could increase the production of bitumen at Jackpine and Horizon by 240,000 barrels per day. Again, as part of our 2026 capital outlook, we are targeting front-end engineering for Jackpine mine expansion. With the additional Western Canadian egress and narrow WCS differentials, growing production of 0 decline volumes represents a significant value creation opportunity for Canadian Natural. All these significant value creation opportunity underscores the magnitude of development potential Canadian Natural has, totaling future potential of approximately 745,000 BOEs per day, unlocking massive value for shareholders for decades to come.

To summarize, our strategy is anchored in 3 distinct differentiators: assets, execution and resilience, which together position Canadian Natural as the most reliable and value-driven independent in the industry. It begins with our very significant reserves and our extensive infrastructure that provides a clear differentiation from our peers. Our low-cost, long-life, low decline production base generates sustainability while maintaining the flexibility to grow meaningfully when it makes sense to do so. On execution, we operate safely, reliably and efficiently. We deliver cost control, asset optimization and value-driven performance.

And finally, our resilience is underpinned by our disciplined capital and free cash flow allocation policy. We continue to strengthen our financial position and return significant value to shareholders. Our low maintenance capital requirements further enhance that flexibility across our commodity cycles.

So wrapping up today, we want to leave you with this message. Our unparalleled assets, execution and our financial resilience provides the best choice for reliable long-term value to shareholders as an unparalleled independent.

Good morning. We would like to welcome everyone to Canadian Natural's 2025 Third Quarter Earnings Conference Call and Webcast. [Operator Instructions] Please note that this call is being recorded today, November 6, 2025, at 9:00 a.m. Mountain Time.

I would now like to turn the meeting over to your host for today's call, Lance Casson, Manager of Investor Relations. Please go ahead.

Thank you, operator. Good morning. Thanks for joining Canadian Natural's 2025 Third Quarter Earnings Conference Call. As always, I'd like to remind you of our forward-looking statements, and it should be noted that in our reporting disclosures, everything is in Canadian dollars, unless otherwise stated, and we report our reserves and production before royalties. Also, I would suggest to review the advisory section in our financial statements that includes comments on non-GAAP disclosure.

Speaking on today's call will be Scott Stauth, our President; and Victor Darel, our Chief Financial Officer. Additionally in the room with us this morning are Robin Zabek, COO of E&P; and Jay Froc, COO of Oil Sands. Scott will begin by running through our strong operational performance that includes numerous production records in the quarter and our leading operating costs. Victor will then summarize our strong financial results and our significant return to shareholders so far this year. To close, Scott will summarize prior to open the line for questions.

With that, over to you, Scott.

Thank you, Lance, and good morning, everyone. Canadian Natural achieved record quarterly corporate production during the quarter, both in liquids and natural gas production. This is the second time this year where we have achieved quarterly production records on strong performance by our teams as we executed both organic growth and accretive acquisitions. Our production totaled approximately 1.62 million BOEs per day, which, as mentioned, includes records for both liquids and natural gas at approximately 1.18 million barrels per day and approximately 2.7 Bcf per day, respectively. The increase in production from Q3 2024 levels is very significant, totaling approximately 257,000 BOEs per day or up 19%.

Our world-class oil sands mining and upgrading assets continue to achieve strong operational performance as Q3 2025 production averaged approximately 581,000 barrels of SCO with strong utilization of 104% and industry-leading operating costs of approximately $21 per barrel. On November 1, we closed the AOSP swap with Shell Canada Limited. Canadian Natural now owns and operates 100% of the Albian oil sands mines and associated reserves and retains a non-operated 80% working interest in the Scotford Upgrader and Quest facilities. This transaction adds approximately 31,000 barrels per day of annual zero-decline bitumen production to our portfolio, providing additional cash flow, driving long-term value creation for our shareholders. This swap also enhances our ability to integrate equipment and services across our mining operations, unlocking additional value through continuous improvement initiatives.

Subsequent to the close of the swap transaction, we increased our 2025 corporate production guidance range to 1,560,000 BOEs per day (sic) [ 1,560 million BOEs per day ] to 1,580 million barrels per day, while our operating capital forecast remain unchanged at approximately $5.9 billion despite executing on additional activity on our larger asset base, reflecting acquisitions this year.

I will now run through our third quarter area operating results, starting with oil sands mining and upgrading. During the quarter, our world-class oil sands mining and upgrading production was strong, averaging 581,136 barrels per day of SCO, an increase of approximately 83,500 barrels per day or 17% from Q3 2024 levels, reflecting the additional interest in the AOSP acquired in December 2024, combined with our effective and efficient operations, which drove stronger utilization of approximately 104% in the quarter. Additionally, Canadian Natural's oil sands mining and upgrading operating costs continue to be industry-leading, averaging $21.29 per barrel of SCO in Q3 of 2025.

In our thermal in situ operations, we achieved strong thermal production in the quarter, averaging 274,752 barrels per day in Q3, up slightly from Q3 2024 levels. Thermal in situ operating costs remained strong, averaging $10.35 per barrel in Q3, a decrease of 2% from the same quarter last year. We continue to progress our pad development plans across our thermal assets. At Primrose, we began drilling a CSS pad in Q3 of '25 with production targeted to come on in the second half of '26. At Jackfish, we brought a SAGD pad on production in July '25 as planned. At Kirby, we brought on a 5 well-pair SAGD on production in late October as planned. And lastly, at Pike, the company tied in the 2 recently drilled SAGD pads into the Jackfish facilities. These 2 SAGD pads targeted to keep the Jackfish facilities at full capacity with the first pad targeted to come on production in January 2026, the second pad in Q2 of '26.

At the commercial scale solvent SAGD pad in Kirby North, current SOR reductions and solvent recoveries are meeting expectations following recent workovers and optimization. On the conventional side of the business, Canadian Natural's highly successful multilateral heavy crude oil drilling program continues to unlock opportunities on our approximately 3 million net acres of high-quality land throughout our primary heavy oil crude -- crude oil assets. Primary heavy crude oil production averaged 87,705 barrels during the quarter, an increase of 14% from Q3 2024 levels, reflecting strong drilling results on our multilateral wells.

Operating costs in our primary heavy oil crude oil operations averaged $16.46 per barrel in Q3, a decrease of 12% from Q3 of 2024, primarily reflecting higher production volumes and the increasing proportion of lower operating costs for multilateral production. Pelican Lake production averaged approximately 42,100 barrels per day, a decrease of 7% from Q3 of '24, reflecting planned maintenance that took place in Q3 of '25 and the low nature of field declines from this long-life, low-decline asset. While operating costs at Pelican averaged $9 per barrel in the quarter. North American light crude oil and natural gas production averaged 180,100 barrels per day during the quarter, an increase of 69% or approximately 74,000 barrels per day from Q3 of '24, primarily reflecting production volumes from the acquisition of the liquid-rich Duvernay assets in December of '24 and light crude oil from the Palliser Block assets in Q2 of this year as well as liquid-rich Montney assets in the Grande Prairie area during the third quarter.

Operating cost of the company's North American light crude oil and NGLs operations averaged $12.91 per barrel. a decrease of 6% from Q3 '24, primarily reflecting higher production volumes. On the natural gas side, North American production averaged approximately 2.66 Bcf for the quarter, an increase of 30% from Q3 2024 levels, primarily reflecting the Duvernay and Montney acquisitions and strong drilling results in our liquids-rich natural gas assets. North American natural gas operating costs averaged $1.14 per Mcf in Q3, a decrease of 7% from Q3 of '24 levels of $1.23 per Mcf, reflecting higher production volumes and cost efficiencies.

Our unique and diverse asset base provides us with a competitive advantage. We allocate capital to the highest return projects without being reliant on any one commodity. Our consistent and top-tier results are driven by safe and reliable operations. Our commitment to continuous improvement is supported by a strong team culture in all areas of our company that focus on improving our cost, driving execution of growth opportunities and increasing value to shareholders.

Now I will turn it over to Victor for our third quarter financial review.

Thanks, Scott, and good morning, everyone. In the third quarter of 2025, we achieved several production records as a result of strong operational performance and the accretive acquisition over the past year, contributing to the strong results this quarter. Our teams demonstrated excellent execution, evidenced through our strong operating cost performance in the [indiscernible] Our results, including strategic acquisitions completed in the last 12 months supported strong quarterly adjusted funds flow of approximately $3.9 billion and adjusted net earnings of $1.8 billion. Returns to shareholders in the quarter were $1.5 billion, including $1.2 billion of dividends and $300 million of share repurchase. Dividend payments and share repurchases in 2025 up to and including November 5, bring total year-to-date shareholder returns to approximately $6.2 billion and contributing significant production growth per share in 2025, targeted at 16% compared to 2024, demonstrating very significant value creation this year.

As a reminder, Canadian Natural has increased its dividend for 25 consecutive years with a CAGR of 21%, a truly impressive track record that is unique amongst our peer group. Subsequent to quarter end, the Board has approved a quarterly dividend of $0.5875 per common share, payable on January 6, 2026, to shareholders of record at the close of business on December 12, 2025. Our balance sheet remains strong with quarter end debt-to-EBITDA of 0.9x and debt to book capital coming in at 29.8%. Quarter end liquidity was also strong at over $4.3 billion, reflecting undrawn revolving bank facilities and cash on hand at period end. Additionally, during Q3, the company repaid USD 600 million of U.S. dollar debt securities and received a new long-term investment-grade credit rating of BBB+ from Fitch Ratings.

Our third quarter results reflect the impact of accretive acquisitions, which have immediately contributed to incremental production and additional free cash flow generation. Our robust quarterly funds flow and strong balance sheet demonstrates our industry-leading cost structure, large reserve base of high-quality, long-life, low-decline assets and our commitment to continuous improvement and reliable execution. These factors, along with the company's track record of delivering strong shareholder returns, support significant long-term value creation for Canadian Natural and our shareholders.

With that, I'll turn it back to you, Scott.

Thanks, Victor. In summary, here at Canadian Natural, our culture of continuous improvement and ownership alignment with shareholders drives our teams to create significant value across all of the areas of the company. Once again, we achieved record production levels, strong financial results through our effective and efficient operations, driving strong returns on capital and value creation for our shareholders. Lastly, just a reminder that we will be hosting our Open House tomorrow morning started at 8:30 Eastern Standard Time, where we will go over our strategy, unparalleled dependent, provide details on our assets and value creation opportunities. You're also invited to listen to the management presentation and view the presentation slides via webcast. You can look to our website for further details.

With that, I'll turn it over for questions.

[Operator Instructions]

Your first question comes from Dennis Fong of CIBC World Markets.

The first one is related to your recent closing of the asset swap for the Albian mine. Now that you control 2 mining assets in very close proximity to each other, can you talk to some of the potential upside or opportunities that exist? I know you've already addressed consolidating inventory and lowering kind of spare parts required in kind of various store rooms. But can you talk towards maybe operational benefits beyond that, again, given the proximity of the 2 assets?

Yes. Thanks, Dennis. And in addition to what you had mentioned, there's also the utilization of equipment. So that would include the large haul trucks and the support equipment such as dozers, graders and other assets that -- of that nature. But Dennis, I would suggest that it would be worthwhile for listening for more details tomorrow to run an open house, and we can get into some more detail in terms of the cost savings that we are working on and working to achieve there. So I think that's probably the best way to explain it is to be a part of our open house tomorrow.

Perfect. I'll have to wait and see, I guess, on that basis. I suspect the second question may have a similar answer. But I mean, given the continued development and the tie-in of the wells at Pike, I was just kind of looking through and it seems like Grouse in close proximity to your Kirby assets has a similar, I guess, opportunity there. Can you maybe outline maybe some of the efficiencies that you could see via developing kind of proximal resource to your 2 other central processing facilities?

Yes. For sure, Dennis. And I think you were banging on me to suggest that it's probably going to be a similar answer. For sure, we'll walk you through tomorrow the assets that are adjacent to the -- adjacent Jackfish and Kirby assets. So we'll be able to give you a good rundown tomorrow of how we would look at development plans given the opportunities that are presented in those areas. So looking forward to that discussion tomorrow.

Your next question comes from Manav Gupta of UBS.

Congrats on a very strong quarter again. I wanted to ask you about an announcement yesterday from Energy Transfer that they are looking to FID the South Illinois Connector Pipeline, getting -- looking to get more Canadian crude into Illinois and to Gulf Coast. And I just wanted to understand, would you be open to participating in any such project or any other major projects out there, which give you more incremental egress capacity towards the Mid-Con or the Gulf Coast refiners where your crude is highly valued?

Yes. Thanks for the question. And certainly, we review those opportunities for egress when tabled. And I can just tell you that there are a number of opportunities, whether it be Enbridge, TMX or others, we're certainly going to look at those and to see if we would participate in volumes commitments on those or otherwise. But the good news is for the basin and the egress opportunities that companies have been talking about bode very well for strong differentials. And ultimately, that's the most important part of the aspect, whether your barrels are locked up or whether they're sold in the Hardisty Edmonton area, it's a positive for Canadian crude. So looking forward to those opportunities as they come about, and we'll see where that goes.

Your next question comes from Doug Leggate of Wolfe Research.

This is Carlos actually on for Doug, who, by the way, is on his way to your Analyst Day. So he sends his apologies. But just to be real quick with this in respectful of my peers' time. Number one, I wonder what your perception is today of the need to further consolidate West Canada gas in the context of weak AECO pricing and despite the ramp in LNG, perhaps similar to how your U.S. peers have been doing in the recent past.

Yes, it's a good question. You don't have to apologize for Doug. That's good to see that he'll show up tomorrow. We're looking forward to those discussions. In terms of consolidation, certainly, we're seeing some of that evolve. I think the most important thing to the basin is maybe a certain degree of consolidation. But the most important thing is egress opportunities. So the more gas that we can move out of the basin, the better the LNG projects that are online now, LNG Canada and others that are coming on in the future are very much needed for the basin to fully unlock the potential. So in spite of whatever M&A activity that may be going on in the basin, we look forward to more egress because ultimately, that's what the basin requires.

Appreciate that. And just a real quick housekeeping item. It looks like your Palliser and Duvernay might have contributed to your sequential oil production growth. Just wonder if you could share if that is the case? And if so, how does it set you up for your growth outlook into first half of '26?

Yes. Certainly, both of those areas will be part of our budgeting activities for next year. We've got strong production growth in the Duvernay and having taken over the assets earlier this year in the Palliser Block, we continue the capital allocation towards going light oil wells in that area, and it will be a part of our program for next year as well.

Your next question comes from Greg Pardy of RBC Capital Markets.

And Scott, I'll apologize because I won't be here in person tomorrow, which is probably the first time in 20-something years. But in any event, I'll have a go at you maybe ahead of tomorrow. What's your thinking now? I mean, we've had a new federal government in place for a little bit of time now. There's been a lot more dialogue with the industry. Just curious, any broad strokes on progress on things like pathways, how much easier is it maybe now to work with the federal government? Is this sort of a cautious approach? Just interested in any broad strokes there that you might have.

Well, we'll miss you tomorrow there, Greg, but I do appreciate your question there today. And certainly, we're seeing more positive signs than we've seen in the past under previous leadership. So we like the discussions that are going on, Greg. But as always, there's lots of details to work through in terms of carbon competitiveness. That's going to be key to understand the impacts that may come out of that level of discussion. The details at this point are not well understood, and we'll certainly be very anxious to work with the government and the government of Alberta to make sure that we've got a collaborative way to move forward to address the needs for pathways and certainly for future growth opportunities to, again, unlock additional value out of the basin, whether it be oil sands or conventional, more egress is needed on both gas and oil.

And so the more that we can do collectively working together with the government to help promote that growth, increase the jobs in Canada, increase, of course, taxes and royalties. Certainly, everyone is aware on this call, the importance of the industry for the GDP of Canada. So I think it's really important to continue on these discussions. Good to see what we have seen so far, but we want to get into the detailed discussions, Greg, and make sure we truly understand what carbon competitive actually means. And until we get those details, it's a little bit early to say exactly how things will unfold, but we are encouraged by the engagement.

Okay. Okay. Terrific. No, I think that's probably as much as you can say right now. And as you say, there's a lot more water that needs to flow into the bridge. Maybe I'll pivot just on a specific question that came in from one investor, which was just around the potential acceleration of the T-Block decommissioning. So if we look at your financing cost in 3Q, significantly lower. I know some of that had to do with PRT and so forth. The abandonment expenditures tend to be a fairly large number. I'm just trying to get, even though you may not want to talk too much about '26 CapEx and so forth, maybe I just want to get a sense maybe from Victor as to what the implications there could be and to the extent you can quantify it, that would -- or even roughly quantify it, that would be super helpful.

Just in terms of the impacts on the '26 capital budget, is that the question effectively, Greg?

Yes. I mean -- so Victor, like if I look at what, '25, I think it was like, what, $756 million, a good chunk of that, I know, is North Sea and then there's PRT in there and you get cash recoveries. But I'm just trying to understand, should we be directionally thinking about a bigger number than, say, $750 million next year if you decide to accelerate? Or would this all kind of come out in the wash?

Yes. The way I would look at it, Greg, is that 2025 coming into 2026, the expenditure levels do go up modestly in '26 overall. That would be the target. But we're working through that still and we're trying to plan for our 2026 budget. Overall, when you look at the next 5-year period, you do have to remember that the tax recoveries on that expenditure, they're actually weighted to the first 5 years. So the net increase after tax recovery is fairly modest. We'll see about a 75% tax recovery on next 5 years expenditure.

Your next question comes from Menno Hulshof of TD Cowen.

I'll just put -- I'm just going to put a very short-term lens on things. And for my first question, now that we're halfway through the fourth quarter, give or take, how would you describe the operational setup into the end of the year? And are there any assets that you would flag as having outperformed or underperformed quarter-to-date?

Yes, it's a good question. at this point in the quarter, all assets are performing as expected. Optimization utilization looks very strong and continuance from what we've seen over the past couple of quarters here from that perspective of utilization. So nothing really to highlight there. Just the assets are performing as we would expect them to perform.

Terrific. And then you may or may not want to answer this one because it might cannibalize tomorrow a little bit. But second question is on maintenance. Maybe you could just remind us of which assets are scheduled for turnaround in 2026. Presumably, Horizon is one of them, but what are the others? And how large are these turnarounds expected to be?

Yes. Horizon would certainly be the most significant likely in the third quarter of next year. So outside of that, it would be our normal routine ones that we'd see every one facility, once like every 5 years, our thermal facilities go in for a turnaround. So there'll be one next year as well. So nothing too significant and nothing stands out. The only real difference from '25 to '26 would be Horizon.

Terrific. I appreciate the confirmation.

Your next question comes from Alexa Petrick of Goldman Sachs.

Following the close of several accretive acquisitions, we were curious, what are your updated thoughts on M&A? And then can you provide any broader commentary around your capital allocation strategy, balancing dividend growth with share repurchases and potential for further M&A?

Yes. Not a lot to comment, Alexa, on the M&A activity. Certainly, you made a reference to some recent acquisitions that were opportunistic for us. As you probably are aware, we do look at a lot of opportunities of M&A. We execute on very few, but we certainly look at the ones that seem to be most accretive to our operations and generally in close proximity to our core areas. So I think that in terms of our allocation, no significant changes there. It's -- the allocation policy is pretty straightforward. We don't have any plans to change that relative to M&A activity or not.

Okay. That's helpful. And then maybe just as a follow-up, if we could dig a little more into kind of your macro outlook, how are you thinking about light heavy differentials from here, particularly as we see OPEC add barrels into the market? And then any views on mid-cycle differentials and some of the assumptions embedded in that?

I think we expect to see, Alexa, the differentials to be -- stay in that range of the $10 to $13 a barrel, and then it will go up and down depending on Turner activities in the refineries in the United States. So I don't really see any of that changes changing in the near term. And as long as we have strong egress out of Western Canada, those differentials will remain in that range. And so there's still some spot capacity on the TMX system, which is very supportive for pricing. We're seeing a strong demand out of Asia for Canadian heavy crude. That's also very supportive. And we like what we've seen. Essentially, TMX has stabilized the entire Western market here. So that's how I would summarize it up for you.

There are no further questions at this time. I would hand over the call to Lance Casson for closing remarks. Please go ahead.

Thank you, operator. Thanks, everyone, for joining our call this morning. We look forward to seeing you all tomorrow at our Investor Open House or on the webcast. If you have any questions, please do call.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Good morning. We would like to welcome everyone to the Canadian Natural's 2025 Second Quarter Earnings Conference Call and Webcast. [Operator Instructions] Please note this call is being recorded today, August 7, 2025 at 9 a.m. Mountain Time.

I would now like to turn the meeting over to your host for today's call, Lance Casson, Manager of Investor Relations.

Good morning, everyone, and thank you for joining Canadian Natural's 2025 Second Quarter Earnings Conference Call. As always, I'd like to remind you of our forward-looking statements. And it should be noted that in our reporting disclosure, everything is in Canadian dollars unless otherwise stated, and we report our reserves and production before royalties.

Also, I would suggest to review our advisory section in our financial statements that includes comments on non-GAAP disclosures.

Speaking on today's call will be Scott Stauth, our President; and Victor Darel, our Chief Financial Officer. Additionally, in the room with us this morning is Robin Zabek, CEO of E&P; and Jay Froc, COO of Oil Sands. Scott will start off by providing details on how strong operational performance, the completion of turnarounds and our recent accretive acquisition set Canadian Natural up for a strong second half of the year. Victor will then summarize our financial results, liquidity and our significant return to shareholders year-to-date. To close, Scott will summarize prior to open up the line for questions.

With that, over to you, Scott.

Thank you, Lance, and good morning, everyone. Our relentless focus on continuous improvement, combined with effective and efficient operations drove strong performance year-to-date in 2025. Our ability to effectively allocate capital across our strong asset base provides us with a competitive advantage. This ability, combined with accretive acquisitions create significant long-term value for our shareholders. Our culture of accountability and the strength of our assets is a unique advantage that results in both capital and operating cost savings and maximizes value for our shareholders.

We successfully completed a planned turnaround at AOSP in the second quarter of 2025, 5 days ahead of schedule and on budget. Production and upgraded utilization at Horizon and AOSP before and after the turnaround was high, driven by strong performance from our reliability enhancement and debottlenecking projects. In July 2025, Oil Sands Mining and Upgrading production averaged approximately 602,000 barrels per day with upgrader utilization of 106%, and we expect the second half of 2025 to continue to deliver strong operating results.

In the second quarter of 2025, despite the planned turnaround at AOSP, which reduced production levels in the quarter by approximately 120,000 barrels per day, we achieved quarterly production volumes totaling approximately 1.420 million BOEs per day, including liquids production of 1.019 million barrels per day and natural gas production of 2.4 Bcf per day. Total corporate production on a BOE basis in the second quarter of 2025 was up approximately 135,000 BOEs per day from the second quarter of 2024, reflecting opportunistic acquisitions and organic growth across our asset base achieved in the last 12 months.

On the acquisition front, we closed the Palliser Block on June 26. Originally, we budgeted to close this acquisition on March 1, 2025, which would have added production of approximately 50,000 BOEs per day, including 20,000 barrels per day of Mannville light crude oil and NGLs in the second quarter of 2025. This acquisition and production were included in our original 2025 capital budget and production guidance. But due to the delayed closing in late June, it added only 2,000 barrels per day to our production levels for the second quarter. This acquisition also included approximately 1.1 million net acres of high-quality land with currently identified significant light crude oil inventory of approximately 850 locations.

Subsequent to quarter end, on July 2, we closed an acquisition of liquids-rich Montney assets located in the Grand Prairie area for approximately $750 million with production from the acquisition of approximately 32,000 BOEs per day, including 12,500 barrels per day of NGLs. Our original 2025 capital budget and production guidance did not include this acquisition. These assets are directly adjacent to our existing Montney assets, providing opportunities for synergies while adding approximately 120,000 net acres of high-quality land with currently identified significant liquids-rich inventory of approximately 150 locations.

To summarize, our combined recently closed accretive acquisitions have added approximately 82,000 BOEs per day of production, which includes approximately 32,500 barrels per day of liquids and total inventory of roughly 1,000 light oil and liquids-rich drilling locations. Further related to these acquisitions, our full year capital budget will essentially remain unchanged from guidance provided in the first quarter, excluding the purchase price of the Grand Prairie acquisition, which closed on July 2. All maintenance capital related to the Grand Prairie asset and other acquisitions we've noted will be covered by our 2025 budget.

In Q1, Canadian Natural was one of the first in the industry to reduce 2025 capital spending due to efficiencies, and we are now executing development on the Grand Prairie asset, while maintaining our capital guidance we provided in the first quarter for the year. We are also targeting to close the AOSP swap in the third quarter and we plan to update our annual 2025 corporate production guidance after that swap closes.

I will now run through the second quarter operational results. On the conventional side of the business, primary heavy oil production averaged approximately 87,300 barrels per day in the second quarter, an increase of 10% over the second quarter of 2024, reflecting strong drilling results from our multilateral well program. We continue to achieve strong results from our drilling programs across our conventional E&P assets as we are realizing capital efficiencies, resulting in high levels of activity without increasing capital. This includes our multilateral heavy oil program, where we are targeting to drill 26 more wells in 2025 than originally budgeted.

Importantly, the low operating costs on these multilateral wells drive strong results on capital, adding significant value. Heavy oil operating costs averaged $17.44 per barrel in the second quarter of 2025, comparable with the second quarter of 2024. Pelican Lake production averaged approximately 43,100 barrels per day in the second quarter, a decrease of 4% from the second quarter of 2024, reflecting low natural field declines from this long life, low decline assets. Operating costs at Pelican Lake averaged $9.01 per barrel in the quarter comparable to the second quarter of last year. North American light crude oil and NGL production averaged approximately 140,700 barrels per day in the second quarter, which is up 31% from the second quarter of 2024, primarily driven by production from our Duvernay assets in addition to strong deal drilling results and our liquids-rich natural gas assets.

Operating costs on our light oil and NGL operations averaged $10.94 per barrel, a decrease of 24% compared to the second quarter of 2024 level of $13.75 per barrel, reflecting higher production volumes. On our Duvernay assets, we are continuing to achieve strong production results and further cost reductions on these assets in the short time that we've owned them. Through our culture of continuous improvement, we remain confident we will continue to realize more value for shareholders than what was originally planned at the time of the acquisition. Our team's efforts have resulted in strong operating costs during the first 6 months of these operating these assets, averaging $8.43 per barrel in the second quarter of 2025. The decrease of more than 11% compared to the first quarter of 2025 when operating costs were $9.52 per BOE. This results in annual operating cost savings of approximately $60 million as compared to our original target of $40 million.

Our extended well lengths in the Duvernay, which are on average 20% longer than our 2024 well lengths and optimized completion designs combined with strong execution, continue to lower development costs. On a length normalized basis, combined drilling and completion costs for 2025 are now targeting an improvement of approximately 16% or $2 million per well lower than compared to 2024 costs. That's a further improvement of $200,000 per well compared to the first quarter of 2025. We remain on track to achieve 2025 budget production of approximately 60,000 barrels per day in the Duvernay, BOEs per day in the Duvernay.

North American natural gas production for the second quarter averaged approximately 2.4 Bcf per day, an increase of 14% over the second quarter of 2024. The Operating costs on our North American natural gas averaged $1.07 per Mcf, which is 10% lower compared to the second quarter of 2024 of $1.19 per Mcf, primarily the result of higher production volumes. In our Thermal In Situ operations, we achieved strong thermal production in the second quarter, averaging approximately 274,800 barrels per day. This is up 3% from the second quarter of 2024, resulting from our capital-efficient thermal pad development program.

Second quarter Thermal In Situ operating costs averaged $11.05 per barrel, which is comparable to the second quarter of 2024. At Primrose, we turned to drill a CSS pad in the third quarter this year with production targeted to come on in 2026. At Jackfish during the month of July, we brought on production a recently drilled SAGD path. At Kirby, we are targeting to bring the recently drilled 5-well per SAGD pad on production in the fourth quarter of 2025. At Pike, we completed drilling 2 SAGD pads, which will be tied into the existing Jackfish facilities and targets to keep the Jackfish plants at full capacity. The first of these 2 pads is targeted to come on in production in the first quarter of 2026 and second pad will be on production in the second quarter.

At our commercial scale solvent SAGD pad and Kirby North, we began solvent injection in June of 2024. In the second quarter of 2025, we executed workovers on 2 well pairs to enhance SOR's solvent recovery and production trends will continue to be monitored over the coming months. In our Oil Sands Mining and Upgrading, during the second quarter of 2025, our world-class oil sands mining and upgrading production averaged approximately 463,800 barrels per day of SCO, an increase of 13% from the second quarter of 2024. The increase is a result of the reliability enhancement project, eliminating the need for a turnaround at Horizon in 2025 and the Scotford Upgrader debottleneck, which were both completed in 2024, combined with the additional 20% working interest in AOSP acquired in December of 2024. Oil Sands Mining and Upgrading costs averaged $26.53 per barrel of SCO in the second quarter of 2025, an increase of 2% from second quarter of 2024, reflecting the AOSP turnaround in the second quarter of '25.

Our growing world-class asset base is a strategic balanced -- strategically balanced across commodity types so that we can be flexible and capture opportunities throughout the commodity price cycle, maximizing value for our shareholders. A substantial portion of our unique and diverse asset base consists of long-life, low-decline assets which have significant low-risk, high-value reserves that require low maintenance capital than most other reserves, making Canadian Natural a truly robust and resilient energy company.

I will now turn it over to Victor for our second quarter financial review.

Thanks, Scott, and good morning, everyone. In the second quarter of 2025, we delivered excellent financial results on the strong operational performance that Scott just discussed. And this is highlighted by adjusted fund flow in the quarter of approximately $3.3 billion and adjusted net earnings of $1.5 billion. These results also reflect the turnaround activities at AOSP that were completed in the quarter.

Results in Q2 clearly reflect our disciplined approach to capital allocation and where Canadian Natural focused and executed on our 4 pillars, where balance sheet strength and return to shareholders went hand-in-hand with resource value growth and opportunistic acquisitions. Returns to shareholders in the quarter were $1.6 billion, including $1.2 billion of dividends and an additional $400 million of share repurchases. These returns, including dividend payments and buybacks up to and including August 6, bringing shareholder returns for the year-to-date to $4.6 billion. Additionally, subsequent to quarter end, the Board has approved a quarterly dividend of $0.5875 per common share, payable on October 3, 2025, to shareholders of record at the close of business on September 19, 2025.

Net debt levels were below $17 billion at quarter end, while having completed the acquisitions that were included in our 2025 budget. Our balance sheet remains strong, where debt-to-EBITDA was at 0.9x and debt-to-book capital came in at 29.1%. Liquidity of over $4.8 billion was also strong, and reflects undrawn revolving bank facilities and cash on hand. The accretive acquisitions that were completed in late 2024 and year-to-date in 2025 immediately contribute to incremental production and additional free cash flow generation.

Taken together with the strong operational results in 2025, Canadian National targets to provide similar shareholder returns in 2025 as compared to 2024. This is targeted to be achieved despite only allocating 60% of free cash flow in 2025 to shareholder returns as compared to allocating 100% in 2024. Our industry-leading cost structure predictable long-life, low-decline assets and reserve base, combined with a consistent commitment to continue its improvement and ability to execute on opportunistic acquisitions in our core areas continue to drive significant value at Canadian Natural. We maintain our disciplined approach that contributes to our top tier U.S. dollar WTI breakeven that remains in the low to mid-$40 WTI per barrel range, which we define as the WTI price required to generate the adjusted fund flow cover both maintenance capital and dividends.

Returns to shareholders remain a top priority for our focused and dedicated teams. Where our culture and drive to do things right every day continues to enable material free cash flow generation and returns on capital.

And those are my comments, and I'll turn it back to you, Scott.

Thanks, Victor. In summary, our relentless focus on continuous improvement, combined with effective and efficient operations drove strong performance year-to-date in 2025. Our ability to effectively allocate capital across our strong asset base provides us with a competitive advantage. This ability, combined with our accretive acquisitions create significant long-term value for our shareholders. Our culture of accountability and the strength of our assets is a unique advantage that results in both capital and operating cost savings and maximizes value for our shareholders.

And with that, I will turn it over for questions.

[Operator Instructions] Your first question is from Patrick O'Rourke from ATB Capital Markets.

I guess first question here is just with respect to liquidity management. As we look out, 2027 is a bit of a heavier maturity year between the term loan and one of your larger nominal debt notes that's outstanding here. Just thinking about sort of the interplay of tight credit spreads and a sticky end of the long curve, how are you sort of approaching this maturity as we head into 2026?

Yes. Thanks, Patrick. It's Victor here. Good question. I appreciate where you're coming at it from. When we look at our balance sheet now coming out of 2025 and forecast into 2026, cash flow generation in the period looks strong. So I think our refinancing needs will probably be a little bit lower than what you might be anticipating. But that said, we'll look to 2026 here. And to your point, look at the refinancing requirements and try to pick an opportune time to do so as we see fit.

Okay. And the second question is sort of more on the operational side. Obviously, it's probably a smaller asset within the portfolio, but conventional multilateral drilling success here added 26 wells to the program. A lot of smaller peers that are out there talking about secondary recovery, waterflood. We hear a lot on the primary side from Canadian Natural. Can you maybe talk to potential opportunity set for secondary recovery and waterflood in your portfolio there?

Yes. Thanks, Patrick. It's Scott here. So we do look at those opportunities as well. Some of the ones you're mentioning, both on the polymer and the waterflood side. We are commencing testing of a polymer flood currently in the Clearwater. And we'll look to see how those results work out down the road here, but looks very promising. And we also looked at our Smith waterflood and have that implemented as well in that area. That's the first area that we're in, in the Clearwater as well, Patrick. So yes, we are undertaking those activities, along with the multi-let.

Your next question is from Dennis Fong from CIBC.

My first one is obviously, the company has completed a few number of acquisitions over the course of the last several months. Can you talk towards your view of the A&D or M&A environment right now? Obviously, completing some of these acquisitions. How do you -- and do you mind touching also as well on your comfort level around the policy environment, how comfortable you feel about adding these assets to your portfolio as well as the opportunity to improve operations, bolster inventory and any other opportunity sets from the acquired assets?

Thanks, Dennis. Yes, I'd like to speak to the acquisitions that we just recently completed here in June and July. We've already talked significantly about the AOSP and the Duvernay acquisition. So we know a lot about that already. But recently with the 2 acquisitions, they've come at very accretive for us. They add cash flow for us immediately. I think that's really important when you look at returns to shareholders, these assets do bring significant cash flow for us. So that's really how we look at it in terms of -- on the M&A side, we're not buying something just to grow. We're buying something that adds cash flow that as inventory for development programs and ultimately adds additional value for our shareholders. So it's a balance between the organic growth opportunities and the accretive acquisition opportunity, Dennis.

Great. Scott, my second question moves towards the Oil Sands Mining and Upgrading business unit. I guess on the Albian tour, you guys showcased, obviously, your ability to be quite nimble in terms of opportunities to develop other areas of mine and kind of optimize mine progression, specifically referring to the Sharkbite assets. I was curious as to how you think about Horizon. Obviously, as you've layered on incremental land adjacent to existing producing projects. And how you're thinking about mine progression over the next few years, especially as you've added again incremental land or developable opportunities in and around your existing operations?

Sure. So in terms of Horizon, Dennis, I think if you look at where we're at now for the next, call it, 7 to 8 years, we'll be progressing our way through the southern portion of the Horizon mine, which was acquired from Total several years back. Following that, we'll be moving up to the North Pit, the North Pit extension area, and that's where we'll be moving in the next phase of development there to maintain the upgrader production levels to currently what they're at. In reference to your comments about the additional assets, whether that's Pure River or the North Pit at 6.

Those assets would have -- are not booked in terms of reserves. They're resource for us, but they have significant bitumen in place. and they potentially would be assets that could be developed sometime down the road that would support significant oil sands mining development opportunities.

Your next question is from Greg Pardy from RBC Capital Markets.

Scott, has there been a pronounced shift in your mind in terms of how Canada's Competition Bureau assesses or processes acquisitions. I mean, obviously, when you're spending 10% of your press release just indicating that you've got these deferrals on deals and you guys do deals all the time, it just feels like something is different that might not have been there a year or 2 ago.

Yes. Thanks, Greg. No, I don't believe there's a significant difference there, Greg. The particular one that we have in the Palliser Block, it was unique to a certain extent. Just in terms of the amount of the facilities in the area, various different competitors in the area. I would call it a unique circumstance. I do agree with you. It took a longer process than it should have, longer than we would have anticipated. In the end, we were able to close the deal and move along. If we look forward, I don't anticipate we will see the same type of situation going forward.

Okay. I'll shift gears, maybe Victor and Scott, but I mean, obviously, the limited buybacks in Q2 obviously stand out as you're deleveraging. So Victor, I just want to make sure I've kind of got the number, the targeted net debt number is around $17 billion, I guess or so at year-end. Does that then puts you in pretty good stead to achieve that $15 billion net debt target in like next year under futures? Looks like would you expect getting there next year under futures?

That's -- we're still right where we were on the last call. When we look at the back half of last year, we're looking at coming out of 2026 at that $15 billion target based on the current forecast, Greg. I think the rate of buyback to your point, still remains fairly strong. We look at that on an annualized basis, the rate of buyback here in Q2, very similar to what we saw in Q1. And the current forecast, we'd expect a strong rate of buyback here over the last half of the year as well. So no real change in the policy there.

Okay. So no change in the policy, but -- and I'm splitting hairs, but getting to $15 billion before December 31 is not unrealistic. Is that fair?

That's fair. Yes. We're looking at that in that $65 to $70 WTI range. So obviously, it depends on pricing here coming into 2026.

Your next question is from Manav Gupta from UBS Financial.

I have 2 questions. I'll ask them upfront. First, I wanted to -- if you could help us understand the benefits of closing the AOSP deal with Shell, how much volume comes in? But would that change the way you look at the mine also, could you increase your bitumen output because you don't have to match the upgrader? And then second question is, can I get your outlook on the AECO pricing and going forward, especially with the LNG Canada also starting up?

Yes. Thanks for the question. I'll answer the second part first, with LNG Canada coming online, I think if you look at the forward strip, the pricing still does look soft. In terms of AECO. I think the market is probably anticipating certain amount of gas that we'll easily be able to be turned on. Our view, though, is that once the second train is brought online, that there will be definitely a period of time that it will take to fill up the full 2 Bcf of capacity of LNG Canada.

So I would think that we're going to see ebbs and flows in terms of AECO pricing and its relativity to what the basin is able to produce for total egress capacity. I think that will ebbs and flows in the next 5-plus years. And on your -- sorry, could you repeat the first question for me?

How does the AOSP transaction change the outlook? And is there a way you would change the mine also just because probably you can produce more bitumen. I'm just speculating because you don't have to match the upgrader, but if you could talk about how the transaction changes your ability to operate the ASP mine once you do become 100% owner?

Right. So just to clarify for you, the swap involves Canadian Natural acquiring 31,000 barrels a day of bitumen production. So that's important to us. We see 100% ownership of the mine important to us just from a synergies with Horizon perspective. We will no longer have a JV in terms of the mines. It's easier for us to be able to move our equipment back and forth, whether that's heavy haul trucks, cranes, people and other types of assets that we can move back and forth to optimize and warehousing is another one that we look at where will no longer have to maintain 2 separate warehouse. Warehouse is where you would have one at 90% and the other one at 100% working interest. So those are all items that are small in nature, but they do add up. So we see some important synergies coming through that.

Now in terms of going forward for production opportunities, I think we'll talk more about that probably later this fall. We'll have some more in-depth discussions that we can form of what our views are on the long term. And of course, all that's going to be relative to where we see pricing WTI and bitumen pricing over the long term. But I can tell you that there are significant opportunities both at Horizon and AOSP to increase production.

Your next question is from Neil Mehta from Goldman Sachs.

I want to say on the marketing theme here and just talk about the WCS heavy differential. Obviously, year-over-year, we tightened up nicely, but we've seen it widen out here. And just your perspective on whether this tightening that we've seen more recently is structural post TMX and given the tightness of heavy on the Gulf Coast or as OPEC brings barrels back online and Canadian production does seem like it is growing that we're going to move back to, let's call it, the $13 run rate you were at -- most of last year into early this year.

Good question, Neil. I think the way to look at it is we would anticipate the WCF differential to vary in the range of $10 to $13. There's going to be timed it could be more than that or wider than $13. There's going to be times when it will be lower than $10. And yes, that will vary dependent on OPEC production potentially. It also has impacts just within North America in terms of the refinery turnaround timing. And so those all -- those situations are going to impact it, but the structural change happened when TMX came online in May of 2024. We anticipate the differentials will be in a pretty solid range bound at $10 to $13.

Okay. That's really helpful. The same question on the SCO premium. We obviously had a lot of maintenance in the second quarter as it relates to the upgrades. It had been kind of bouncing at a discount of a couple of bucks up until this point. SCO also is influenced by the strength of distillate, which trades at a decent premium to no gas right now. So how are you guys thinking about pricing relative to TI?

Again, I think same type of scenario, probably you look at a range bound of minus 1.5 to plus 1.5. It'd be somewhere in that range, Neil. And of course, you mentioned on the distillate side as well. So -- and you'll have time to the year where we saw strong Q2, as you mentioned, related to maintenance. So I expect to have some flows to move on a go-forward basis, just like they have done in the past relative to turnaround activities. And so if you look back over time, that differential has -- it has varied from minus 2 to plus 3. And so I don't think you'll see any structural shifts going forward here.

Your next question is from Menno Hulshof from TD Cowen.

I'll start with a question on synthetic. You talked about 602,000 barrels a day for the month of July. With little to no turnaround activity tied to SCO production in the second half. What could get in the way of you being able to maintain 600,000 barrels a day or even a bit higher through the end of the year?

Yes. Good question,. I think we should be looking within that range. There isn't anything necessarily stopping us. We have the turnarounds that have been worked through at AOSP and Horizon has -- all things look really good at Horizon as well in terms of the upgraders performance. So you would have noted, we had a very strong Q1, where everything went very well for us, really solid road conditions through the winter time. You don't quite see those solid haul road conditions in the summer and fall that you do in the wintertime. But in that range, in that 600,000 range, I think, is probably a good run rate to consider now.

Okay. And then flipping over to turnarounds. You had the 5-day acceleration at the ASP in the quarter. That seems to be a trend. We've seen similar updates from some of your peers, including Suncor yesterday. So my question is, what is driving better-than-expected turnaround execution for yourselves? And then on a related note, how much contingency is typically built into the time line for a given turnaround?

Yes. Really good question. For us, I would say that the opportunities such that happened here with being 5 days early at AOSP. It's really just a matter of -- if you look at all the manpower required on site, we're driving for efficiencies, lots of labor required taking units apart, doing inspections, doing cleaning of vessels and so on and so forth. The teams that are driving those turnaround activities are -- have that same continuous improvement culture that we do have with the rest of our operations in the company. So they're expected, and they do look at ways of trying to find efficiencies, Menno.

So really, there isn't a lot of built-in contingency probably in the 10% range of estimates when they're building their turnaround schedules. So they're enticed and we certainly encourage the teams to continue their opportunities that they look at to create those efficiencies and find ways to have the manpower on site be more effective and more efficient.

Your next question is from Doug Leggate from Wolfe Research.

It's [indiscernible] on for Doug Leggate. I just wanted to kind of get some insight to get your view on when do you see capacity to grow the dividend, especially in light of some of the acquisitions that were described on the -- in the press release and on a go-forward basis?

Thanks for the question. Obviously, we've had a long history of growing the dividend every year now for 25 years. There's definitely some good incremental cash flow coming off the acquisitions. I wouldn't want to step into the Board shoes there, but I would just say that as we go forward, I'd anticipate that there'd be some room for dividend growth here into 2026 should the Board continue to pursue the track record that we have seen in the past.

And Nick, I would just add to that. If you look at the history of the company over the past 25 years, the opportunities for the Board to consider adding an increasing the dividend payout has come on the backs of both organic and opportunistic acquisition opportunities that the company has taken on over the past 35 years. And I think that's really important to remember the future doesn't always represent the past, Nick, but for a company with the strength of the assets that we have, it is extremely important to the Board and to the management team to maintain the dividend, the value of the dividend that has been brought to the shareholders, and it's very important to us. So we're going to make sure that we continue to operate our assets and grow organically and find opportunity to acquisitions when we can to help support continued growth of that dividend.

Thank you. And for my follow-up kind of ties into that. So where do you kind of see your post-dividend breakeven right now for your metrics? And is there a threshold that you're comfortable -- I guess, what's the threshold that you're comfortable kind of taking it from its previous, I guess, $1?

You're asking what our breakeven is, Nick?

Yes. yes. I'm asking what is the post dividend breakeven currently? And is there a range that you're looking to kind of stay within, I guess, as you kind of feel comfortable and maintain your balance sheet?

Yes. So currently, we're in that $40 to $45 WTI breakeven range, and the incremental cash flow from the acquisitions is keeping us there. We do, do that calculation post dividend. The dividend is something that we consider very valuable shareholders and shareholder returns. So that's -- we calculated after the dividend.

And is there a threshold and that the targeted threshold that you're looking to stay within the $40 to $45 range essentially?

We're comfortable in that range now. So essentially, the answer is yes. And obviously, we take a view to commodity prices going forward and as the Board assesses that in future periods.

[Operator Instructions] There are no further questions at this time. Please proceed with closing remarks.

Thank you, operator, and thanks, everyone, for joining our call this morning. If you have any questions, please give us a call. Have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.