Canadian Natural Resources NYSE: CNQ detailed what executives described as a record-setting 2025 during its fourth-quarter and year-end earnings call held March 5, 2026, highlighting higher production, lower costs, reserve growth and an enhanced free cash flow allocation framework tied to net debt targets.
Operational performance and production records
President Scott Stauth said 2025 was the “best operational year” in the company’s history, citing multiple production records, lower operating costs and capital spending that came in below the prior forecast. He said growth came from both organic activity and several acquisitions, including the Palliser Block assets in Southern Alberta, liquids-rich Montney assets in the Grande Prairie area, and an asset swap that increased Canadian Natural’s ownership of the Albian mines to 100%.
For the full year, Stauth reported record production of 1,571,000 BOEs per day, up 15% year over year (about 207,000 BOEs per day). He also highlighted safety performance, saying total recordable injury frequency reached the lowest level in company history.
Key annual operating metrics discussed on the call included:
- Total liquids production of about 1,146,000 barrels per day, up 14% year over year, with 65% of liquids as synthetic crude oil (SCO), light crude or NGLs.
- Total corporate liquids operating costs of CAD 18.44 per barrel.
- Oil sands mining and upgrading production of about 565,000 barrels per day, described as “zero decline” SCO, with upgrader utilization of 100% including a planned turnaround at AOSP.
- Oil sands mining and upgrading operating costs of CAD 22.66 per barrel.
- Thermal in-situ production of about 275,000 barrels per day.
- Primary heavy crude oil production growth of about 88,000 barrels per day (11% growth), which Stauth attributed to drilling results from the multilateral well program; operating costs in primary heavy crude averaged CAD 16.68 per barrel, down 8%.
- Natural gas production of about 2.5 Bcf per day, up 19% (about 400 MMcf/d).
Stauth also noted the company received regulatory approval in December for the Pike 2 70,000 barrel-per-day SAGD growth project opportunity.
In the fourth quarter, Canadian Natural reported record production of about 1,659,000 BOEs per day and record liquids output of about 1,215,000 barrels per day, up 12% from the prior-year quarter. Oil sands mining and upgrading production was cited at about 620,000 barrels per day of SCO with upgrader utilization of 105%. Mining and upgrading operating costs in the quarter were CAD 21.84 per barrel.
Within thermal operations, Stauth said production from the first Pike 1 pad came on stream ahead of schedule in December and was producing about 27,000 barrels per day with a steam-oil ratio (SOR) of about 1.8x. A second Pike 1 pad is expected to come on production in the second quarter.
Reserves growth and reserve life
CEO of E&P Robin S. Zabek said 100% of Canadian Natural’s reserves are externally evaluated and reviewed by independent qualified reserve evaluators. She said the company’s 2025 reserves disclosure follows Canadian reporting requirements using forecast pricing and escalated costs on a working interest (or royalties) basis.
As of Dec. 31, 2025, Zabek said total proved reserves were 15.9 billion BOE, up 4% from 2024, and proved plus probable reserves were 20.75 billion BOE, up 3%.
She also said Canadian Natural replaced 2025 production by 218% on a proved basis and 212% on a proved-plus-probable basis, adding more than 1.2 billion BOE in each category. Zabek cited 2025 finding, development and acquisition costs (including changes in future development cost) of CAD 3.64 per BOE for proved reserves and CAD 2.42 per BOE for proved-plus-probable reserves.
Zabek emphasized the long-life profile of the company’s reserve base, saying about 73% of proved reserves are from long-life, low-decline or zero-decline assets, resulting in a total proved reserve life index (RLI) of 31 years and a proved-plus-probable RLI of 40 years. She added that about 50% of proved reserves are high-value SCO and mining bitumen reserves, with a proved RLI of 39 years.
Financial results, shareholder returns and the AOSP accounting gain
Chief Financial Officer Victor Darel said record operational performance and acquisition impacts contributed to “similarly strong” financial results.
For 2025, Darel reported:
- Adjusted net earnings of CAD 7.4 billion (CAD 3.56 per share).
- Adjusted funds flow of CAD 15.5 billion (CAD 7.39 per share).
For the fourth quarter, Darel reported adjusted net earnings of CAD 1.7 billion (CAD 0.82 per share) and adjusted funds flow of about CAD 3.7 billion (CAD 1.82 per share).
Darel said quarterly net earnings were CAD 5.3 billion (CAD 2.55 per share), which he attributed to a non-cash gain of about CAD 3.8 billion after tax related to accounting for the AOSP asset swap. He said the company recognized an adjustment from the previous carrying value to fair value under GAAP, reflecting value created at those operations since Canadian Natural acquired an initial interest in AOSP in 2017.
On leverage, Darel said net debt was about CAD 16 billion at year-end 2025, reflecting net debt reduction of about CAD 2.7 billion from year-end 2024. He cited quarter-end debt-to-EBITDA of 0.9x, debt-to-book capital of 26%, and liquidity of more than CAD 6.3 billion at year-end.
Darel said the company returned about CAD 9 billion to shareholders in 2025, including CAD 4.9 billion in dividends and CAD 1.4 billion in share repurchases, along with the net debt reduction.
Dividend increase and updated free cash flow allocation targets
The company’s board approved a quarterly dividend increase of about 6%, bringing the annualized dividend to CAD 0.52 per common share. Darel said 2026 marks Canadian Natural’s 26th consecutive year of dividend increases, citing a 20% compound annual growth rate over that period.
Effective Jan. 1, 2026, the board also adjusted the net debt thresholds in the company’s free cash flow allocation policy. Darel said when net debt is below CAD 16 billion (previously CAD 15 billion), Canadian Natural will increase shareholder returns to 75% of free cash flow generated on a forward-looking basis. When net debt reaches CAD 13 billion (previously CAD 12 billion), the company will target returning 100% of free cash flow generated.
In the Q&A, Darel told RBC Capital Markets that the company was below CAD 16 billion at Dec. 31 and would have achieved the threshold under the policy, adding that based on management’s forward-looking modeling and current pricing, the company would be “very solidly there in Q3,” while noting commodity price volatility.
2026 outlook: guidance update, capital changes and project deferrals
Stauth said Canadian Natural completed a strategic acquisition in the first quarter of 2026 and, as a result, raised the midpoint of 2026 production guidance by 20,000 BOEs per day. The company now expects 2026 production in a range of 1,615,000 to 1,665,000 BOEs per day. He also said the company reduced its 2026 capital (operating capital) forecast by CAD 310 million to about CAD 6 billion.
He said the company is progressing near- and medium-term development plans, including drill-to-fill pad additions and FEED capital for the Pike 2 greenfield project and a 30,000 barrel-per-day Jackfish brownfield expansion.
Stauth also said the company is deferring FEED capital for the Jackpine Mine expansion at Albian—an approximately CAD 8.25 billion project that had been included in the 2026 capital budget—citing a lack of finalized government regulatory policies around carbon pricing and methane. He said the company will reassess the project’s economics once there is more certainty on regulatory policy, timelines and “additionally egress.”
During the Q&A, management discussed potential operational synergies from 100% control of the Albian mine, including previously cited cost savings tied to better utilization of equipment, people and contractors across mine sites. Executives also said they aim to keep a balanced rig program and remain focused on “value returns,” noting they are not spending on dry gas activity. On markets, management said heavy differentials had tightened by roughly $1.50 to $1.60 from levels seen about a month earlier, while emphasizing a long-term planning approach. On AECO gas pricing, management pointed to demand from LNG Canada (citing processing around 1.5 Bcf) and said additional LNG export capacity approvals are needed over time.
About Canadian Natural Resources NYSE: CNQ
Canadian Natural Resources Limited NYSE: CNQ is a Calgary-based independent oil and natural gas exploration and production company. Established in the early 1970s and publicly listed in Canada and the United States, the company is principally engaged in the exploration, development, production, and marketing of crude oil, natural gas and natural gas liquids. Its asset base spans conventional and unconventional reservoirs and includes oil sands mining and in-situ thermal projects, midstream processing and upgrading capacity, and related field operations.
The company's operations are concentrated in Western Canada, where it develops heavy crude, bitumen from oil sands and conventional light crude and natural gas resources.
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