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Canadian Natural Resources Limited Management Discusses Q4 2011 Results - Earnings Call Transcript

Stocks in this article: CNQ

I believe the fourth quarter of 2011 was very strong from both an operational and financial perspective, with record quarterly crude oil drilling, total crude oil and NGLs production, total BOE production, and of course, record quarterly cash flow. During 2011, we also replaced almost 4x of our production on a 2B basis and exit with a very impressive 21.4-year proved life -- proved reserve life index or 33.3-year proved and probable reserve life index. I believe that as you hear Allan, Steve, Lyle and Doug talk about the company's prospects, diverse asset base and strong balance sheet, you will agree the company is well positioned to continue a strong track record of profitable growth.

I'll now turn it over to Allan to give his thoughts on the quarter.

Allan P. Markin

Thanks, Corey. Good morning, everyone. We are delivering. We ended the year strong, achieving record quarterly cash flow from operations of $2.16 billion, driven by quarterly production of over 657,000 barrels per day, a record. In 2011, we economically grew our diverse asset base, increasing gross proved plus probable crude oil, bitumen, SCO and NGL reserves by 10% and increasing gross proven plus probable natural gas reserves by 6%, resulting in total company gross proved plus probable reserves of 7.5 billion BOE. Our total proved plus probable reserve replacement ratio was 390%. Our dedicated team delivered strong results from our North American crude oil E&P operations in 2011. Our light oil and primary heavy oil operations executed record drilling programs and achieved 10% and 11% average annual production growth, respectively. At Pelican Lake, response to the polymer flood continued to be positive, increasing gross proved crude oil reserves by 15%. And we focused on maximizing oil recoveries through effective well configuration and injection techniques. Thermal in situ operations achieved 9% production growth as a result of optimizing steaming techniques and low-cost pad developments at Primrose. We continue to advance the development of our high-quality SAGD projects through an active strat well program and through construction on Kirby South Phase 1. In 2011, we were selective in our approach to developing our natural gas assets and focused primarily on liquids-rich plays in Northeast British Columbia and Northwest Alberta. At Septimus, our unconventional Montney shale gas play, we continued to see results that exceeded expectations. And in the fourth quarter, we completed the tie-in to a deep cut facility to increase liquid recoveries. Internationally, we continue to optimize operations in the North Sea and sanctioned an infill drilling program at Espoir in offshore Africa targeted to begin in late 2012.

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