Horizon Oil Sands

Horizon Oil Sands

Horizon Oil Sands Mining and Upgrading Activity

The Horizon Oil Sands include a surface oil sands mining and bitumen extraction plant, complimented by on-site bitumen upgrading with associated infrastructure to produce high quality synthetic crude oil ("SCO"). Canadian Natural holds extensive leases that are estimated to contain approximately 14.4 billion barrels of bitumen initially in place (BIIP), with best estimate contingent resources other than reserves of 3.7 billion barrels of bitumen and 3.6 billion barrels of proved and probable SCO reserves. The Horizon Oil Sands are located on these leases just north of Fort McMurray, Alberta in the Athabasca region. Due to the massive resource base, the mine and plant facilities are expected to produce for decades to come without production declines normally associated with crude oil production.

Horizon – Current Phase

Construction progress to date at Horizon has met or exceeded expectations on cost and performance. Canadian Natural has a disciplined execution strategy, to achieve cost certainty for a defined and stepped expansion at our Horizon operations from Phase 1 productive capacity of 110,000 bbl/d to 250,000 bbl/d of SCO . As of Q4/14. the Horizon expansion project is 56% complete. In 2004, we advanced the completion of the project through the completion and commissioning of Phase 2A. This phase added 12,000 bbl/d of production capacity through the addition of an additional coker pair. Through this pahse and certain operational synergies, Canadian Natural was able to increase the name plate capacity to 137,000 bbl/d. In 2015, Canadian Natural will continue progress the expansion of Horizon with work on both Phases 2A and 3.

The timing of construction for future expansions is critical for cost control and we remain focused to take advantage of favorable market conditions. We are not driven to production increases at the expense of a higher capital cost. Current expansion and debottlenecking will be very deliberate and flexible to ensure projects can be started or stopped based on market conditions. The Horizon Oil Sands asset is substantial and anticipated to provide significant free cash flow well into the future. The development of this world class asset is predicated upon generating the greatest value for our shareholders.

Horizon – Planning - Past Phases

Canadian Natural's Board of Directors sanctioned the Horizon Oil Sands Project in February 2005 and after years of planning and construction, the Horizon Oil Sands successfully and sustainably produced its first barrels of high quality, low-sulphur, 34° API, sweet SCO in early 2009. First production of SCO was a major milestone for Canadian Natural and we were pleased with the success of the project. Acting as our own primary contractor on the Horizon Oil Sands, we built a core competency in executing large scale projects from the ground up and have learned a great deal from the construction and startup of Phase 1.

Phase 1 was just the first step in value creation from this significant asset. A considerable amount of capital for infrastructure was included in Phase 1 in anticipation of future phases. These include but are not limited to, support infrastructure such as the aerodrome, buildings, shops, warehouses, camps and roads, site preparation, the piperack, coker foundations, gas and power distributions, the majority of underground piping and so on. Canadian Natural is positioned to leverage the benefits from our existing operation into future expansions.

The expansions to the Horizon Oil Sands have been broken into five categories, in adopting this strategy and breaking the overall expansion into smaller, more manageable pieces Canadian Natural believes that this will lead to enhanced project and cost control. Phase 1 of the expansion was completed during 2009. This Phase included engineering and design specifications for greater production capacity, the setting of additional coker foundations, other supporting infrastructure, and the procurement of long lead equipment such as coke drums, reactors and mobile equipment. The current expansion has been re-profiled into five categories as follows:

We will see incremental production gains throughout the completion of future expansion and debottlenecking, with targeted full facility capacity of approximately 250,000 bbl/d. Further phases of expansion could potentially bring the ultimate capacity to 500,000 bbl/d.