Canadian Natural Resources Reports Record Quarterly Cash Flow

In commenting on the third quarter 2005 results and the Company's defined growth plan, Canadian Natural's Chairman, Allan Markin, stated "Canadian Natural is in an enviable position.

We have a strong asset base and a strong core of technical, operational and financial expertise to unlock the value of these assets as well as the Balance Sheet capacity to finance it. Today, we are announcing our long-term plan to unlock the potential of our vast oil sands assets and in so doing will create significant value for our shareholders. Our plan calls for the evaluation of the combination of Horizon Project Phases 2 and 3 into one combined Project as well as the planned expansion of a further 265,000 bbl/d of Synthetic Crude Oil production from Phases 4 and 5 of the Horizon Project. In addition, we have articulated plans to review the feasibility of constructing a 125,000 bbl/d heavy oil upgrader near our in-situ oil sands developments. This provides additional markets for our heavy oil production and captures a significant portion of the heavy oil value chain. Execution of this strategic plan will allow Canadian Natural to develop its vast oil sands in-situ potential with plans to bring on an incremental 240,000 bbl/d of thermal heavy oil over the next 10-15 years. Management's vision is to build a balanced, sustainable lower-risk exploitation based enterprise and we believe that no other Company has the asset base to define such a plan with such clarity. Just as importantly, we have the skill set and team to deliver on that plan."

Steve Laut, President and Chief Operating Officer of Canadian Natural added, "We have a clearly defined, low-risk plan and the key to value creation is the successful low cost execution of that plan, on a quarter by quarter, year by year basis. The third quarter was a tremendous example of that. In Canada, our natural gas production increased by 5% over the previous year despite weather challenges. Our thermal crude oil sands development as well as our Pelican Lake waterflood continue to exceed expectations. Internationally, we brought Baobab on-stream in only 4.5 years after initial discovery while our infill program at East Espoir has resulted in 27% production gains on that Field. Our world-class Horizon Project continues on time and on budget and the $400 million of engineering work completed prior to construction is paying dividends, allowing us to contain costs and capitalize on construction opportunities going forward. For 2006 we look for continued production growth in each of our segments and 10% overall, all achieved while maintaining strong financial discipline. Of particular note, in 2006 our West Espoir Field located offshore Cote d'Ivoire will come on stream and we will commence development of the newly acquired Olowi Field located offshore Gabon. In Canada, we expect our Primrose in-situ oil sands production volumes to continue to rise to approximately 80 mbbl/d. Construction expenditures on the Horizon Oil Sands Project are expected to reach $2.6 billion in 2006, with construction progress expected to reach 63% completion by December 2006. All of this is to be financed primarily through cash flow. Expected year end debt to book capitalization at the end of 2006 is targeted at approximately 31%. We are definitely capitalizing on our opportunities while maintaining financial and operational discipline."

($ millions, except as noted)
                             Quarterly Results        Months Results
                          Q3/05    Q2/05    Q3/04      2005     2004
Net earnings (loss)     $   151  $   219  $   311   $   (54) $   828
 per common share,
 basic (1)              $  0.28  $  0.41  $  0.58   $ (0.10) $  1.54
Adjusted net earnings
 from operations (2)    $   593  $   460  $   381   $ 1,433  $ 1,084
 per common share,
 basic (1)              $  1.10  $  0.86  $  0.71   $  2.67  $  2.02
Cash flow from
 operations (3)         $ 1,386  $ 1,136  $ 1,041   $ 3,531  $ 2,819
 per common share,
 basic (1)              $  2.58  $  2.12  $  1.94   $  6.58  $  5.26
Capital expenditures,
 net of dispositions    $ 1,272  $   609  $   875   $ 3,253  $ 3,212
Debt to book
 capitalization (4)          32%      35%      33%       32%      33%
Daily production,
 before royalties
 Natural gas (mmcf/d)     1,423    1,454    1,396     1,444    1,381
 Crude oil and NGLs
  (mbbl/d)                334.7    289.1    297.3     304.0    278.1
 Equivalent production
  (mboe/d)                571.9    531.4    529.9     544.7    508.2
(1) Restated to reflect two-for-one common share split in May 2005.
(2) Adjusted net earnings from operations is a non-GAAP term that the
    Company utilizes to evaluate its performance. The derivation of
    this item is discussed in the MD&A.
(3) Cash flow from operations is a non-GAAP term that the Company
    considers key as it demonstrates its ability to fund capital
    reinvestment and debt repayment. The derivation of this item is
    discussed in the MD&A.
(4) Includes current portion of long-term debt.

- Record cash flow generation during Q3/05 of approximately $1.4 billion, a 33% improvement over Q3/04 and a 22% improvement over Q2/05.

- Strong quarterly adjusted net earnings from operations of $593 million, representing a 56% increase over Q3/04 and a 29% increase over Q2/05.

- Record quarterly production volumes, 8% higher than Q3/04 and Q2/05. Quarterly natural gas production represents 42% of equivalent production and 50% of North American equivalent production. North American natural gas volumes increased 5% over Q3/04 levels.

- Third quarter net earnings of $151 million included charges of:

  • $430 million after tax for the unrealized mark-to-market of the Company's non-designated commodity hedge position, effectively recognizing commodity strip price strength at September 30 for hedged production for the remainder of 2005 and future years into current results.
  • $135 million after tax for revaluation of stock option liability to reflect stock price appreciation during the quarter.

- Successful third quarter drilling program of 414 net wells, excluding stratigraphic test and service wells, with a 95% success ratio, reflecting Canadian Natural's strong, predictable, low risk asset base.

- Continued strong undeveloped conventional land base in Canada of 11.2 million net acres - a key asset in today's highly competitive industry.

- Facilities for the offshore Baobab Field in Cote d'Ivoire were commissioned in early August with initial production levels of 30 mbbl/d net to Canadian Natural.

- Record production in the North Sea during Q3/05 at 76.5 mboe/d, up 16% from Q2/05, following successful completion of maintenance work.

- In October 2005, Canadian Natural completed the acquisition of the permit to develop the Olowi Field, offshore Gabon, West Africa with development plans to proceed in 2006.

- Horizon Oil Sands Project ("Horizon Project") remained on budget and on schedule with site preparation and construction work completed as planned.

- During the quarter, a pipeline transportation agreement was signed, which will facilitate a dedicated, expandable pipeline to Canadian Natural which will allow Horizon Project Synthetic Crude Oil ("SCO") to reach the pipeline hub at Edmonton, Alberta.

- Strong balance sheet maintained with debt to book capitalization of 32% and debt to EBITDA of 0.7 times.

- Repurchased 300,000 common shares under its Normal Course Issuer Bid.

- Determined 2006 Budget initiatives as follows:

  • 2006 capital expenditures of $6.8 billion. This includes $2.8 billion in North America reflecting the drilling of 1,139 natural gas wells and 722 crude oil wells as well as $0.9 billion internationally to effect exploitation and development work in both the North Sea and Offshore West Africa. Approximately $2.6 billion will be expended on construction of the Horizon Project with a further $128 million spent on pre-engineering of future Phases 2 and 3 of the Horizon Project.
  • Capital spending on the Horizon Project in the amount of $400 million has been accelerated into 2006 from 2007 following completion of significant site work in 2005. This allows for early turnover for construction of several key areas and better balancing of demands on a limited labour force.
  • Equivalent production targets of 580 - 632 mboe/d before royalties, an increase of 10% over midpoint 2005 guidance. Natural gas production is targeted to increase by 5%, while crude oil production will increase by 13%.
  • Utilizing a 2006 planning price deck of US$55/bbl WTI and C$8.75/GJ AECO, cash flow is estimated to reach $5.4 billion to $5.6 billion. These parameters would result in a debt to book capitalization ratio of approximately 31% and debt to EBITDA of 0.9 times at the end of 2006.

- Developed and commenced the implementation of long-term strategic investment plans for the Company's Canadian crude oil assets, as follows:

  • Review the economic and engineering merits of combining Phase 2 and Phase 3 expansions of the Horizon Project into one combined Phase targeted to commence production in 2011. While not changing overall expected capital costs, this combination will provide enhanced overall economics as it allows full synergies and production to be achieved at an earlier date.

    -- Commission engineering review on the feasibility of installation of gasification into Horizon Project Phases 1 to 3 in 2013. This technology would be built into Horizon Project Phase 4 and 5 expansions.

    • Commencement of scoping of Phase 4 of Horizon Project to include the addition of 125 mbbl/d of new SCO production targeted to commence in 2014 with Phase 5 adding a further 140 mbbl/d of SCO targeted in 2017.
    • Commence and complete engineering design and execution strategy to build a 100% owned and operated upgrader ("Canadian Natural Upgrader") for the Company's in-situ oil sands assets in the Cold Lake to Athabasca region. This 125 mbbl/d Upgrader would produce light, sweet SCO and would be targeted for commissioning in 2012, with the ability to expand to 175 mbbl/d of light, sweet SCO in later years.
    • The initiation of a program targeted at the development of Canadian Natural's vast in-situ oil sands opportunities as feedstock for the Canadian Natural Upgrader. Over the next 13 -15 years, the Company will target to add over 240 mbbl/d of additional thermal oil sands production to be brought on stream from an estimated undeveloped resource potential of over 3 billion barrels.
    • Upon completion of these strategic investment plans, the Company targets total oil sands in-situ production could reach 300 mbbl/d, 175 mbbl/d of which will be upgraded to SCO and the remainder of which will be marketed as heavier crude oil blends. This is in addition to 497 mbbl/d of SCO currently targeted to be marketed from the Horizon Project and related expansions.


    In order to facilitate efficient operations, Canadian Natural focuses its activities into core regions where it can dominate the land base and infrastructure. Undeveloped land is critical to our ongoing growth and development within these core regions. Land inventories are maintained to enable continuous exploitation of play types and geological trends, greatly reducing overall exploration risk. By dominating infrastructure the Company is able to maximize utilization of its production facilities, thereby increasing control over production costs.

    Activity by core region
                                Net undeveloped land   Drilling activity
                                               as at   Nine Months Ended
                                        Sep 30, 2005        Sep 30, 2005
                             (thousands of net acres)         (net wells)
    Canadian conventional
     Northeast British Columbia                2,071                 206
     Northwest Alberta                         1,646                 121
     Northern Plains                           6,698                 626
     Southern Plains                             652                 223
     Southeast Saskatchewan                       90                  45
                                              11,157               1,221
    Horizon Oil Sands Project                    116                 122
    United Kingdom North Sea                     413                   9
    Offshore West Africa                         886                   5
                                              12,572               1,357
    Drilling activity (number of wells)
                                                Nine Months Ended Sep 30
                                                  2005              2004
                                         Gross     Net     Gross     Net
    Crude oil                              490     437       249     221
    Natural gas                            723     611       607     537
    Dry                                    106      94        88      82
    Subtotal                             1,319   1,142       944     840
    Stratigraphic test / service wells     217     215       277     276
    Total                                1,536   1,357     1,221   1,116
    Success rate (excluding
     stratigraphic test / service wells)            92%               90%

    The Company's business approach is to maintain large project inventories and production diversification among each of the commodities it produces; namely natural gas, light crude oil and NGLs, Pelican Lake crude oil, primary heavy crude oil and thermal heavy crude oil.

    Total Company equivalent production
                                      Q3/05        Q2/05        Q3/04
                                   mboe/d    %  mboe/d    %  mboe/d    %
    Natural gas                     237.2   42   242.3   46   232.7   44
    Light crude oil and NGLs        153.6   27   126.3   24   128.8   24
    Pelican Lake crude oil           24.8    4    20.0    4    21.0    4
    Primary heavy crude oil          93.6   16    92.2   17    96.3   18
    Thermal heavy crude oil          62.7   11    50.6    9    51.1   10
    Total                           571.9  100   531.4  100   529.9  100
    North American natural gas
                                  Quarterly Results   Nine Month Results
                                Q3/05   Q2/05   Q3/04      2005     2004
    Natural gas production
     (mmcf/d)                   1,400   1,434   1,336     1,421    1,319
    Net wells targeting
     natural gas                  226      68      99       680      611
    Net successful wells
     drilled                      213      60      93       611      537
     Success rate                  94%     88%     94%       90%      88%

    - Q3/05 natural gas production represented a 5% increase over the previous year and a lower than normal summer production decline from Q2, despite much wetter than normal weather. This summer decline occurs each year due to the winter-oriented drilling program in Canada. In 2005 this decline only approached 2.4% versus 3.8% in 2004 and 2003. This reflects an active drilling program and the more balanced approach that the Company has taken in 2005 in an effort to control drilling cost escalation.

    - High success rates reflect Canadian Natural's low-risk exploitation approach and high quality land base. The Q3/05 drilling program included an active Southern Plains program and was highlighted by the drilling of 81 shallow natural gas and 31 coal bed methane wells. These types of wells, although highly economic, do not add enough productive capacity to offset normal basin declines. In addition, a combined 101 natural gas wells were successfully drilled throughout the Company's four natural gas regions.

    - Canadian Natural growth rates for Q4/05 and annual 2005 volumes are expected to approach 5% when compared to the previous year, a further reflection of the balanced drilling program and the strength of the Company's natural gas assets. Q4/05 drilling activity is expected to total 346 net wells. This program combined with current North American production levels of approximately 1,412 mmcf/d, will result in fourth quarter production of 1,396 mmcf/d to 1,436 mmcf/d.

    - Given that Canadian Natural made the strategic decision to control inflationary pressures through a more balanced distribution of drilling activities throughout the year, drilling activity for the third quarter was 129% more than that of the previous year. Canadian Natural continues to believe that a balanced drilling approach will yield better cost control and in fact is essential in a high cost environment, as peak drill rig utilization is reduced at high demand periods.

    North American crude oil and NGLs
                                  Quarterly Results   Nine Month Results
                                Q3/05   Q2/05   Q3/04      2005     2004
    Crude oil and NGLs
     production (mbbl/d)          231     216     214       219      203
    Net wells targeting
     crude oil                    184     153      37       451      219
    Net successful wells
     drilled                      175     146      33       427      212
     Success rate                  95%     95%     89%       95%      96%

    - Q3/05 crude oil drilling activity was concentrated in the Northern Plains with 112 net wells targeting heavy crude oil. Wetter than normal weather impeded the primary heavy crude oil drilling program with only 112 of an expected 150 wells being drilled. These wells, along with 29 wells budgeted for Q4/05, will be reinventoried for future years.

    - The Primrose Field development continued with the drilling of 19 new wells in Q3/05. Production from the pads at Primrose is subject to the cycling of steam injection and crude oil production. Due to normal cycling activities as well as the addition of new well pads, average thermal crude oil production levels in Q3/05 were 62 mbbl/d or 23% higher than Q3/04. Volumes are expected to decrease in Q4/05 for another steam cycle. Overall, the new Primrose pads continue to produce at rates approximately 30% better than expected while project development continues on plan.

    - The Primrose North expansion plans continue on schedule and on budget. Steam injection into the first pad has commenced with first crude oil production expected in January 2006 ramping to 30 mbbl/d by Q3/2006.

    - The Pelican Lake waterflood expansion continues to exceed expectations and, coupled with the drilling of 21 additional producing wells, resulted in production levels increasing by 5 mbbl/d or 24% over Q2/05.

    - In Southeast Saskatchewan, 16 wells were drilled on the Pierson light oil play, resulting in 575 bbl/d of new light oil production. This better than expected result will create additional exploitation inventory as this knowledge is leveraged on a regional basis.


    The Company operates in the North Sea and Offshore West Africa where production of lighter quality crude oil is targeted, but natural gas may be produced in association with crude oil production. Natural gas typically comprises less than 10% of boe production.

                                  Quarterly Results   Nine Month Results
                                Q3/05   Q2/05   Q3/04      2005     2004
    Total crude oil production
     North Sea                     74      63      72        69       63
     Offshore West Africa          30      10      11        16       12
    Total natural gas production
     North Sea                     18      17      53        19       54
     Offshore West Africa           5       3       7         4        8
    Net wells targeting
     crude oil                    4.3     4.2     3.1      11.4     10.1
    Net successful wells
     drilled                      4.3     3.4     3.1      10.0      9.1
     Success rate                 100%     81%    100%       88%      90%

    North Sea

    - Canadian Natural continues to execute its exploitation plans in the North Sea. Q3/05 production achieved all time record levels following completion of scheduled maintenance. However, production remained below expectations due to continued production curtailments resulting from third party natural gas export restrictions at the Murchison Platform and a loss of productivity from certain wells in the Columba Terraces as the lift capacity performance of the long reach wells was less than anticipated with the expected onset of water production.

    - Commencing late in Q3/05, all production from the Kyle Field was processed through the Banff Floating Production Storage and Offtake vessel ("FPSO"). The existing Kyle FPSO was released in September 2005. The consolidation of these production facilities has resulted in lower combined operating costs from these fields and may ultimately extend field lives for both fields.

    - During Q3/05, 2.5 net wells were drilled with an additional 3.6 net wells drilling at quarter end.

    - On the T-Block, at Toni a three subsea well intervention program resulted in an uplift of about 3 mbbl/d. In addition, on Thelma the first of two wells is currently drilling, targeting unswept areas of the field.

    - At Balmoral, agreement was reached to tie in the third party Brenda facilities, which will result in lower per-unit operating costs when that field commences production in 2006/7.

    - Construction of the subsea water injection pump at Columba E commenced during the quarter. This will be tied into 2 additional subsea water injection wells that will be drilled in 2006.

    - Plans for the further development of Lyell progressed, comprising the drilling of 4 new wells and workovers at 2 existing wells in 2006/7.

    - Canadian Natural continues to utilize its mature basin expertise and will continue to evaluate accretive acquisition opportunities with exploitation upside potential.

    Offshore West Africa

    - First production from the 57.61% owned and operated Baobab Field, located offshore Cote d'Ivoire, commenced on August 9, 2005 at approximately 48 mbbl/d (approximately 30 mbbl/d net to Canadian Natural) from 4 wells. Upon completion of drilling of further wells in early 2006, production levels will achieve 35 mbbl/d net to Canadian Natural. Completion of this project is a significant indicator of the high level of expertise that Canadian Natural has achieved since entering the offshore production arena in 2000. Baobab, a deep water development, was first discovered by Canadian Natural in Q1/01 and was brought on stream in 4.5 years and within the Company's budgeted costs in a highly competitive environment.

    - Net production at East Espoir increased by 3 mbbl/d from Q2/05 levels and averaged 14 mboe/d during Q3/05 following the commencement of production from the infill drilling program. The infill drilling program consists of four wells, with two wells now completed and the remaining to be completed in 2006.

    - The construction of the West Espoir drilling tower, which will facilitate development drilling of this reservoir, was completed during the quarter and is currently being installed on location. The project continues on time and on budget with first crude oil production expected in mid-2006, ramping up to 13 mboe/d when fully developed.

    - In October 2005, Canadian Natural completed the acquisition of the permit to develop the Olowi Field, offshore Gabon, West Africa. The acquired permit (No. G4-187) comprises a 100% operating interest in the production sharing agreement for the block containing the Olowi Field, located about 20 kilometres from the Gabonese coast and in 30 metres water depth. Olowi has been delineated by the drilling of 15 wells on the block and contains approximately 500 million barrels of 34 degree API light crude oil in place. The oil reservoir is overlain by a large gas cap with about 1 trillion cubic feet of gas in place. The development of the crude oil reserves will commence in late 2006 with first production targeted for late 2008 at a rate of 20 mbbl/d.

    Horizon Oil Sands Project

    - The Horizon Oil Sands Project ("Horizon Project") continues on plan and on budget. First production of 110 mbbl/d of light, sweet Synthetic Crude Oil from Phase 1 construction is targeted to commence in the second half of 2008. Production is targeted to increase to 155 mbbl/d following completion of Phase 2 in 2010. Finally, production levels of 232 mbbl/d are targeted for 2012, following completion of Phase 3 construction. The company is currently evaluating the opportunity to combine Phase 2 and 3 for a joint operational date of 2011.

    - All major milestones required before winter have been completed despite excessive rainfall in the third quarter which slowed site preparation work. Completion of these milestones is a key component in achieving critical path success.

    - The high degree of up front project engineering and pre-planning has reduced the risks on "cost-plus" aspects of the project and will mitigate the risk of scope changes on the fixed bid portions (68% of Phase 1 costs). The pre-engineering and lessons learned from predecessors have also enabled the Company to prepare a detailed development and logistical plan to reduce the scheduling risk. Geological risk is considered low on the Company's mining leases as over 16 delineation wells have been drilled per section with over 40 wells per section having been drilled on the south pit, which will be the first to be mined. Finally, technology risk is low as the Company is using existing proven technologies for mining, extraction and upgrading processes.

    - Capital costs for Phase 1 of the Horizon Project are estimated at, including a contingency fund of $700 million, $6.8 billion with $1.4 billion to be incurred in 2005, and $2.6 billion in 2006. Total targeted capital costs for all three phases of the development are $10.8 billion.

    - The quarterly update for the project is as follows:

    Project status summary                Sep 30, 2005      Dec 31, 2005
                                       Actual       Plan            Plan
    Work progress (cumulative)             13%        14%             16%
    Capital spending (cumulative)          12%        13%             20%

    Accomplished during the third quarter

    Detailed Engineering

    - All project areas are fully staffed and overall detailed engineering is on schedule to plan.

    - 3-D design models are 30% complete and interface confirmation is underway.


    - Total procurement progress is at C$3.65 billion in awarded contracts and purchase orders, with a further C$700 million in the tender stage.

    - Key common service awards were made, notably for air charter services, which has facilitated the Company's fly-in / fly -out strategy for skilled labour.


    - Module fabrication and assembly continues for the main piperack, and module deliveries to the site commenced in September. Deliveries will continue to achieve an inventory of over 80 modules on site to allow efficient installation to begin in the first half of 2006.


    - On-site safety performance improved for the 8th month in a row, as Canadian Natural continues to stress safety awareness.

    - Occupancy of the first (of three) on-site camp, built to accommodate up to 1,500 construction personnel was completed.

    - Completion and commissioning of the site Aerodrome with 737-size aircraft now landing regularly.

    - Coker foundations are 80% complete and are on track for Coker installation in spring 2006.

    - Mine overburden removal is 15% ahead of plan, with 3.5 million banked cubic meters of overburden removed to date. Overburden removal operations averaged over 80,000 tonnes/day in September.

    - Plant site areas for Hydrotreating, Froth Treatment, Sulphur, Hydrogen, Main Piperack and Extraction have been turned over for construction in order to begin foundation work.

    - Completed and operating the first project systems; Potable Water, Communications, Sanitary Sewer, Power Distribution, River Intake and Natural Gas.

    Q4/2005 milestones

    - Expect the total awarded contracts and purchase orders to exceed C$4 billion.

    - Begin earthwork for raw water and recycle water pond systems.

    - Shop maintenance building ready for occupancy and start of the gas-oil and diesel reactors assembly.

    - Turnover of Fire Hall and Emergency Medical Services buildings to respective units.

    - Substantial completion of the second (of three) on-site camps built to accommodate an additional 1,500 construction personnel.

                                  Quarterly Results   Nine Month Results
                                Q3/05   Q2/05   Q3/04      2005     2004
    Crude oil and NGLs pricing
     WTI benchmark price
      (US$/bbl)               $ 63.17 $ 53.13 $ 43.85   $ 55.45  $ 39.13
     Lloyd Blend Heavy
      oil differential
      from WTI (%)                30%     40%     29%       36%      29%
     US/Canada average
      exchange rate            0.8325  0.8038  0.7650    0.8170   0.7530
     Corporate average
      pricing before risk
      management (C$/bbl)     $ 57.35 $ 42.51 $ 43.50   $ 47.04  $ 38.37
    Natural gas pricing
     AECO benchmark price
      (C$/GJ)                 $  7.73 $  7.00 $  6.32   $  7.03  $  6.34
     Corporate average
      pricing before risk
      management (C$/mcf)     $  8.61 $  7.33 $  6.24   $  7.53  $  6.40

    - Heavy oil differentials returned to the long term average of 30% following a period of higher than normal differentials experienced throughout the first half of 2005. The Company's current expectations for average differentials over the next twelve months are approximately 32%, with Q4/05 expected to be in the high-30% range due to normal seasonality.

    - During the third quarter, the Company blended approximately 130 mbbl/d of crude oil. The majority of heavier crude oils were contributed to the Western Canadian Select ("WCS") stream as market conditions resulted in this stream offering the optimal pricing for bitumen.

    - The Company has committed to 25 mbbl/d of new pipeline capacity on the reversal of the Corsicana Pipeline, which will carry heavy crude oil from the terminus of the current pipeline sales lines at Patoka, Illinois to the east Texas refining complex near Nederland. This pipeline is currently being filled with first deliveries expected to commence in early 2006.


    - Canadian Natural has prepared its financial position to profitably grow its conventional crude oil and natural gas operations over the next several years and to build the financial capacity to complete the Horizon Project. A brief summary of its strengths are:

    • A diverse asset base geographically and by product - currently producing in excess of 570 mboe/d, comprised of approximately 42% natural gas and 58% crude oil - with 95% of production located in G7 countries with stable and secure economies.
    • Financial stability and liquidity - $3.4 billion of bank credit facilities. In the aggregate, Canadian Natural had $3.36 billion of unused bank lines available at September 30, 2005.
    • Strong balance sheet - with a debt to book capitalization ratio of 32%, debt to cash flow of 0.8x, debt to EBITDA of 0.7x and shareholders' equity of $7.2 billion.
    • Financial flexibility - Canadian Natural's 5- and 10-year business plans allow it to be proactive in its planning to allow for maximum flexibility as the Company moves forward to develop its conventional crude oil and natural gas asset base and the Horizon Project.

    -In January 2005, the Board of Directors authorized the expansion of the Company's economic hedging program to reduce the risk of volatility in commodity price markets and to support the Company's cash flow for its capital expenditure program throughout the Horizon Project construction period. This expanded program allows for the economic hedging of up to 75% of the near 12 months budgeted production, up to 50% of the following 13 to 24 months estimated production and up to 25% of production expected in months 25 to 48 through the use of derivative financial instruments. For the purpose of this program, the purchase of crude oil put options is in addition to the above parameters. As a result, approximately 75% of fourth quarter expected 2005 crude oil volumes and approximately 55% of expected 2006 crude oil volumes have been hedged through the use of collars. In addition, approximately 70% of fourth quarter expected 2005 natural gas volumes and approximately 55% of expected 2006 natural gas volumes have similarly been hedged through the use of collars.


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