Canadian Natural Resources (CNQ) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Chevron's Alberta assets increases working interest in AOSP to 90% and adds a 70% operated interest in Duvernay, enhancing scale, operational control, and asset robustness.

• Adds 62,500 bbl/d of synthetic crude oil and 60,000 BOE/d from Duvernay, supporting immediate and sustainable free cash flow generation.

• Leverages Canadian Natural's expertise in oil sands mining and deep basin operations, with synergies from adjacent assets.

• Duvernay assets complement core Deep Basin holdings, offering operational and cost synergies.

• Strategic fit leverages existing infrastructure and supports long-term growth and sustainability.

Financial terms and conditions

• Purchase price is US$6.5 billion (CAD 8.775 billion at 1.35 FX), effective September 1, 2024, with targeted close in Q4 2024.

• Funded by a fully committed $4 billion term loan, existing cash, and bank facilities; $6.2 billion liquidity as of September 30, 2024.

• Acquisition cost is $71,600 per BOE per day at targeted 2025 production, immediately accretive to flowing metrics.

• Dividend increased by 7% to $0.5625/share, effective January 2025, marking 25 consecutive years of increases.

• Debt to book capital targeted at ~30% and debt to forward EBITDA at ~1.1x post-acquisition.

Synergies and expected cost savings

• Operational synergies expected between Horizon and AOSP mines, and cost synergies in Duvernay with adjacent assets.

• Identified cost efficiencies in Duvernay of approximately 15% or CAD 40 million per year through contractor, purchasing, and transportation savings.

• G&A and operating cost improvements expected in Duvernay.

• Duvernay assets offer over 340 net drilling locations and potential to grow production to 70,000 BOE/d by 2027, leveraging existing infrastructure.

• Continuous improvement initiatives aim to further reduce costs and optimize production.