Canadian Natural today announced 2021 fourth quarter and year end results.

Commenting on the Company's 2021 results, Tim McKay, President of Canadian Natural, stated, 
"Our unique and diverse asset base, combined with our track record of operational excellence delivered by our dedicated teams, achieved record average production volumes in 2021 of approximately 1,235 MBOE/d, representing an increase of 6% or approximately 71 MBOE/d over 2020 levels. During Q4/21, daily production volumes averaged a record 1,314 MBOE/d, including 1,004 Mbbl/d of liquids, primarily driven by strong quarterly production volumes from oil sands mining and thermal in situ. Our strong operational results during 2021 delivered robust annual adjusted funds flow of approximately $13.7 billion, which after capital expenditures of approximately $3.5 billion, excluding acquisitions, and dividends of approximately $2.2 billion, resulted in annual free cash flow of approximately $8.0 billion.

One of Canadian Natural's key strengths is the diversity of our world class assets. Strategically assembled and developed over several decades, our top tier assets have a low decline rate as well as low maintenance capital relative to the size and quality of our reserves, which affords us significant flexibility when balancing our four pillars of capital allocation to maximize shareholder value. Canadian Natural continues to deliver strong finding, development and acquisition ("FD&A") costs and reserves replacement ratios in 2021. Canadian Natural's total proved reserves increased 6% to 12.813 billion BOE, replacing 2021 production by 257% and resulting in a reserves life index of approximately 30 years. Total proved FD&A costs, including changes in future development costs, were $5.88/BOE in 2021.

Environmental, Social and Governance ("ESG") remains a priority for us as evidenced by our ongoing investment into new technology and innovation options designed to improve our environmental performance and reduce our environmental footprint. Canadian Natural aligns its environmental reporting with recommendations from the Task Force on Climate-related Financial Disclosures and the reporting framework from the Sustainability Accounting Standards Board. Canadian Natural has been producing its sustainability report, the Stewardship Report to Stakeholders, since 2004 to report on our ongoing commitment to environmental performance, social responsibility and continuous improvement. This report provides a performance overview across the full range of Canadian Natural's operations in Western Canada, the UK portion of the North Sea and Offshore Africa. Canadian Natural targets to publish its 2021 Stewardship Report to Stakeholders in Q3/22 including third-party independent "reasonable assurance" on scope 1 and 2 emissions (including methane emissions) and "limited assurance" on scope 3 emissions. Additionally, Canadian Natural will continue to outline its pathway to lower carbon emissions across its asset base and its journey to achieve its goal of net zero greenhouse gas ("GHG") emissions in the oil sands. The report will display how Canadian Natural leverages technology and innovation to reduce its environmental footprint while ensuring safe, reliable, effective and efficient operations."

Canadian Natural's Chief Financial Officer, Mark Stainthorpe, added 
"The strength and sustainability of our business model was evident during 2021, with strong net earnings of approximately $7.7 billion ($6.49 per share) and adjusted funds flow of approximately $13.7 billion ($11.63 per share). We prudently balanced our four pillars of capital allocation throughout 2021 to maximize value for our shareholders and drive increasing returns on capital employed. Our large diversified portfolio of assets, underpinned by long life low decline assets which generate significant and sustainable free cash flow, allowed us in 2021 to enhance returns to shareholders through increased dividends and share repurchases, while reducing debt much faster than originally targeted. In 2021, we reduced net debt, inclusive of our recent opportunistic acquisition of Storm Resources Ltd. ("Storm") which closed in Q4/21, by approximately $7.3 billion when compared to year end 2020. Effective July 1, 2021, Canadian Natural enhanced its free cash flow allocation

policy that states when net debt levels are below $15 billion, the Company will target to allocate 50% of free cash flow to share repurchases and 50% of free cash flow to the balance sheet. To the extent net debt is below $15 billion, such amount will be made available for strategic growth / acquisition opportunities. As year end 2021 net debt levels were approximately $14 billion, Canadian Natural is targeting in 2022 to allocate 50% of free cash flow to the balance sheet, less any strategic growth capital / acquisitions, and 50% of free cash flow to share repurchases.

Throughout 2021, we significantly increased returns to shareholders. We announced two dividend increases for a combined increase of 38% to $2.35 per share annually, which marked 2021 as the 21st consecutive year of dividend increases by Canadian Natural. Direct returns to shareholders in 2021 totaled approximately $3.8 billion, comprised of our sustainable and growing dividend of approximately $2.2 billion and share repurchases throughout the year which totaled approximately $1.6 billion, as well as indirect returns to shareholders through net debt reduction of approximately $7.3 billion.

Subsequent to quarter end, up to and including March 2, 2022 the Company has returned approximately $680 million to shareholders through the repurchase and cancellation of 10.5 million common shares and the Board of Directors have approved the renewal and increase of the Company's Normal Course Issuer Bid ("NCIB"). The approval states that during the 12 month period commencing March 11, 2022 and ending March 10, 2023, the Company can repurchase for cancellation up to 10% of the public float, subject to TSX approval.

Additionally, the Board of Directors has approved a 28% increase to our quarterly dividend to $0.75 per share, up from $0.5875 per share, continuing the Company's leading track record of 22 consecutive years of dividend increases with a significant compound annual growth rate of 22% over that period of time.

This increase in the quarterly dividend demonstrates the confidence that the Board of Directors has in the Company's world class assets and its ability to generate significant and sustainable free cash flow. Our asset base is underpinned by top tier, long life low decline assets, a strong balance sheet and effective and efficient operations that drive an industry leading WTI break-even in the mid-US$30s per barrel, which covers our base maintenance capital requirements and the increased dividend commitment, maximizing value for our shareholders."

ANNUAL HIGHLIGHTS

• Canadian Natural delivered net earnings of approximately $7.7 billion and adjusted net earnings from operations of approximately $7.4 billion in 2021.
• Cash flows from operating activities were approximately $14.5 billion in 2021.
• Canadian Natural generated strong annual adjusted funds flow of approximately $13.7 billion in 2021, an increase of approximately $8.5 billion from 2020 levels.
• Canadian Natural increased its sustainable and growing dividend twice in 2021 for a total combined increase of 38% to $2.35 per share annually, marking 2021 as the 21st consecutive year of dividend increases.

Production

In 2021, the Company achieved record annual production volumes of 1,234,906 BOE/d, an increase of 6% over 2020 levels. The increase was primarily the result of strong operational performance with several production volume records achieved across the asset base in 2021.

Record annual average corporate liquids production of 952,404 bbl/d was achieved in 2021, an increase of 4% over 2020 levels. The increase in 2021 was primarily as a result of record annual production volumes over the Oil Sands Mining and Upgrading segment, strong drilling results in North American E&P assets as well as record thermal in situ production volumes.

The Company's Oil Sands Mining and Upgrading assets averaged record annual production of 448,133 bbl/d of Synthetic Crude Oil ("SCO"), an increase of 7% over 2020 levels. The increase over 2020 levels was primarily as a result of high utilization rates and the execution of operational enhancements throughout the year.

Canadian Natural's North America E&P assets produced record annual liquids volumes averaging 472,621 bbl/d in 2021, an increase of 3% over 2020 levels. The increase was primarily the result of strong drilling results and increased thermal in situ production.

The Company's thermal in situ assets achieved record production in 2021, averaging 259,284 bbl/d, an increase of 4% over the previous record levels achieved in 2020. The increase in production volumes in 2021 was primarily due to successful development activity and higher utilization at Jackfish.

CapEx

The Company's 2022 capital budget is targeting base capital of approximately $3.6 billion that delivers targeted production of approximately 1,270,000 BOE/d to 1,320,000 BOE/d, with disciplined year over year near-term growth of approximately 60,000 BOE/d derived primarily from conventional E&P operations.

Strategic growth capital in 2022 of approximately $0.7 billion will be allocated to the Company's long life low decline assets, which targets to add incremental annual production starting in 2023 and beyond, resulting in targeted total production growth of approximately 63,000 bbl/d by 2025.

QUARTERLY HIGHLIGHTS

• Net earnings of $2,534 million and adjusted net earnings from operations of $2,626 million were realized in Q4/21, significant increases over Q4/20 net earnings of $749 million and adjusted net earnings from operations of $176 million, primarily as a result of higher realized pricing and effective and efficient operations.
• Cash flows from operating activities were $4,712 million in Q4/21, an increase over $1,270 million in Q4/20.
• Canadian Natural generated strong quarterly adjusted funds flow of $4,338 million in Q4/21, a significant increase over Q3/21 levels of $3,634 million, primarily the result of higher realized pricing and effective and efficient operations.

Production

Record quarterly liquids production volumes averaged 1,004,425 bbl/d in Q4/21, increases of 8% and 5% over Q4/20 and Q3/21 levels respectively, primarily due to Canadian Natural's effective and efficient operations contributing to record Oil Sands Mining and Upgrading volumes, record thermal in situ volumes and strong light crude oil and NGL volumes.

The Company delivered record average natural gas production of approximately 1,857 MMcf/d in Q4/21, an increase of 9% over Q3/21 levels. The increase from Q3/21 levels primarily reflects strong drilling results and production volumes from acquisitions, partially offset by natural field declines.

Canadian Natural's North America E&P liquids production, including thermal in situ, averaged 478,738 bbl/d during Q4/21, comparable to Q4/20 levels and an increase of 5% over Q3/21 levels.

Canadian Natural's thermal in situ production averaged 263,110 bbl/d in Q4/21, comparable to Q4/20 levels and a 6% increase over Q3/21 levels. The increase in thermal in situ production during Q4/21 compared to Q3/21 was primarily due to the successful completion of planned turnaround activities at Jackfish during Q3/21.

KeyFacts Energy: Canadian Natural Resources Canada country profile