Value creation is achieved by following some basic principles as articulated below. Maintaining discipline is difficult, but Canadian Natural has proven that it is possible.
Drive to be an efficient and effective producer
This is an important element to the strategy. We strive to be an efficient and effective producer in every product and basin in which we operate. Over the long run we believe that only the efficient and effective producers will continue to generate economic returns throughout the cycle – the rest will be forced to divest their assets to the stronger competitors. We are a very strong competitor.
Focus on exploitation
We view this as a low-risk approach to value creation as emphasis is placed on maximizing the value of already discovered resource versus trying to find the next major pool. We use proven new technologies, our own discoveries, and new industry findings to effectively “lead the followers”. This ever-increasing industry knowledge is maximized across our large developed and undeveloped land holdings, creating even more upside potential.
Augment exploitation with strategic acquisitions
The combination of our low cost profile and extensive exploitation-based focus on the basins we operate, make us a natural consolidator of properties throughout our core regions. Often counter-cyclical, our major acquisitions have made us a stronger and more diverse company. Most of these major acquisitions were comprised of a strong footing in our core regions and on occasion provided entry into a new strategic basin.
Maintain flexibility and control allocation of capital
We strive to operate and own 100% of our assets. This allows us to start up or shut down drilling programs on very short notice – facilitating an ever-vigilant weekly allocation of capital by the Management Committee. Simultaneously, when practical we avoid committing ourselves to long term drilling or supply contracts.
Strive for balance
We believe that balance between natural gas, heavy crude oil and light crude oil provides some diversification from commodity price risk while also facilitating more options with which to allocate capital to the highest return projects. Balance between short, medium and long term projects also provides more visibility to future growth initiatives.
Maintain financial strength
Maintaining a strong balance sheet and access to capital markets is integral to delivering our plan. We target strong investment grade debt ratings and manage our liquidity as a core asset. We augment these plans with a disciplined hedge program which strives to provide cash flow certainty in the short term, such that the capital plans made by the Company are prudently financeable.