On the backs of strong drilling results and operational efficiency, Canadian Natural Resources Ltd. posted record annual net earnings of C$1.4 billion, or C$10.48 per share, compared with C$0.6 billion, or C$4.46 per share in 2002.

The company’s fourth quarter 2003 also showed a net earnings increase to C$251 million, or C$1.87 per share, compared with C$209 million, or C$1.56 per share for 4Q2002.

Canadian Natural recorded record annual cash flow of C$3.2 billion, compared with C$2.3 billion in 2002. During 2003, the company continued strengthening its financial position, with debt to book capitalization at the end of 2003 falling to 32% versus 46% at the end of 2002 and a debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio of 0.8 times in 2003 compared to 1.6 times in 2002.

“We have made significant progress on our larger, future growth projects while maintaining our focus on existing assets, both in North America and internationally,” said Chairman Allan Markin. “As we look into 2004, we see continued opportunities to significantly add value. Our 2004 natural gas exploration and development program looks strong as we continue to capitalize on program advancements made in 2003. Cost reduction strategies in Northwest Alberta and targeted new exploration horizons there and in Northeast British Columbia have met planned expectations early in this year’s drilling season.”

As expected, natural gas production levels during the fourth quarter decreased from the third quarter to 1,270 MMcf/d, equal to 46% of proved reserves, falling near the mid point of the company’s guidance. The company noted that the decline reflects the normal production declines on the portion of Canadian Natural’s asset base that is suitable for winter-only access. Canadian Natural expects production levels in the first quarter of 2004 to average 1,285 to 1,315 MMcf/d of natural gas and 245 to 265 mbbl/d of crude oil and NGLs. This results in expected annual 2004 production levels of approximately 1,320 to 1,395 MMcf/d of natural gas (2003 – 1,299 MMcf/d) and approximately 263 to 283 mbbl/d of crude oil and NGLs (2003 – 242 mbbl/d).

Canadian Natural’s natural gas well drilling program increased significantly, jumping from 183 gross wells in 2002 to 841 gross wells in 2003. In 2003, the company drilled a total of 777 net natural gas wells and 458 net crude oil wells, increases of 380% and a 73%, respectively, over the comparable period in 2002.

In order to increase the liquidity of its common shares, Canadian Natural’s board of directors will recommend to the shareholders that the company’s common shares be subdivided on the basis of 2:1, which will result in an increase in outstanding common shares to 268 million common shares. The proposal will be voted on at the annual and special meeting of the shareholders to be held on May 6.

“Based upon current strip pricing, we estimate 2004 cash flow of between C$3.0 billion and C$3.2 billion, with a capital expenditure budget of C$2.75 billion to C$2.95 billion,” Markin added.

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