Financial Data and Key Metrics Changes - In Q4 2018, Canadian Natural delivered cash flow of $1.22 billion despite low prices, showcasing the strength of its assets and operations [7] - For the full year 2018, cash generated from operating activities reached a record $10.1 billion, with adjusted fund flow at $9.1 billion, resulting in net earnings of $2.6 billion and adjusted earnings of $3.3 billion, an increase of about $1.9 billion compared to 2017 [43][44] - The company reduced long-term debt by $1.8 billion, with gross debt to total capitalization decreasing to 39.1% from 41.4% at the end of 2017 [44] Business Line Data and Key Metrics Changes - Natural gas production for 2018 was 1.548 billion cubic feet (bcf), down from 1.662 bcf in 2017, primarily due to proactive reductions in response to low prices [18] - North American light oil and NGL production was strong at 93,728 barrels per day, up 2% from 2017, with Q4 production at 98,826 barrels per day, a 6% increase from Q3 [20] - Heavy oil production for 2018 was 86,312 barrels per day, down approximately 10% from 2017, with Q4 production at 79,678 barrels per day [27] Market Data and Key Metrics Changes - The Canadian oil market experienced high differentials for both heavy and light oil in Q4 2018, but prices for SCO, light oil, and heavy oil increased significantly in Q1 2019, with light oil up 66% and heavy oil pricing up 400% [8] - WCS differentials tightened to $1,238 per barrel, approximately 23% of WTI, indicating a return to more normal pricing levels [25] Company Strategy and Development Direction - Canadian Natural focuses on creating shareholder value through disciplined cash flow allocation across four pillars: balance sheet, returns to shareholders, resource development, and opportunistic acquisitions [9] - The company emphasizes reducing its environmental footprint, having invested $3.1 billion in R&D since 2009, and achieved significant reductions in greenhouse gas emissions [10][11] - The company believes that oil sands will withstand price fluctuations due to their low environmental footprint and total costs, with operating costs at Horizon reduced to approximately $14.5 per barrel [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate significant and sustainable free cash flow, which is less impacted by short-term commodity price volatility [9] - The company is optimistic about future pricing and market access improvements, with ongoing discussions regarding the nomination process with the government [57][59] - Management highlighted the importance of maintaining a strong balance sheet and the potential for further debt reduction and shareholder returns in 2019 [44][50] Other Important Information - The company has a robust succession plan in place, with the CFO transitioning to a new role and Mark Stainthorpe appointed as the new CFO [48] - Canadian Natural's disciplined resource development has resulted in a 359% replacement of 2018 production for proven reserves, with a reserve life index of 27.7 years [50] Q&A Session Summary Question: Should Canadian Natural expect to look for more crude by rail due to Line 3 delays? - Management indicated they would consider rail options if the terms are favorable for shareholders, recalling past flexibility in rail usage [52][53] Question: Will the startup of Kirby North and Primrose pads still make sense with Line 3 delays? - Management stated it is too early to decide on deferring the startup of projects, noting that they are ahead of schedule and on cost [54] Question: What efforts are being made to fix the dysfunctional nomination process? - Management confirmed ongoing collaboration with the government and industry players to propose changes to the nomination process [57] Question: How does the company view the potential for curtailments extending through the year? - Management expressed uncertainty but noted that curtailments may diminish due to declining production rates and other factors [69] Question: What is the strategy around capital returns amidst uncertainty in Alberta? - Management emphasized the importance of sustainable dividends and the need for stress testing to ensure long-term growth [78]