Canadian Natural Resources Limited
Q4 2014 Earnings Call Transcript

Published: 5 Mar 2015

[Operator:]

Good morning, ladies and gentlemen, and welcome to the Canadian Natural Resources Fourth Quarter 2014 and Year-End Conference Call. After the presentation, we will conduct a question-and-answer session. Instructions will be given at that time. Please note that this call is being recorded today, Thursday, March 5, 2015 at 9 AM Mountain Time. I would now like to turn the meeting over to your host for today's call, Doug Proll, Executive Vice President of Canadian Natural Resources. Please go ahead, Mr. Proll.

[Douglas A. Proll:]

Thank you, Sean. Good morning and thank you for joining our 2014 year-end conference call. Today we will review our fourth quarter and year-end financial and operating results. We will also provide you with an update on our ongoing projects and operations, the results of our year-end reserve evaluation, and discuss our strong financial position. Together these things matter as the board of directors approved an increase in our quarterly dividend to CAD 0.23 per share from CAD 0.225 per share. This is the 15th consecutive year of dividend increases and the 15th year of paying a dividend and returning capital to our shareholders. With me this morning are Steve Laut, our President; Corey Bieber, our Chief Financial Officer; and Lyle Stevens, our Executive Vice President, Canadian Conventional Operations. Before we begin, I would like to refer you to the comments regarding forward-looking information contained in our press release and also note that all amounts are in Canadian dollars and production and reserves are expressed as before royalties unless otherwise stated. I would like to make a few brief comments before turning the call over to Steve, Corey and Lyle. Canadian Natural had a very successful year in 2014 and closed the year out with a strong fourth quarter. In the first half of the year, we announced and successfully closed a significant acquisition, which expanded our footprint in light crude oil and natural gas assets adjacent to or near our current operations in Western Canada. As part of the integration of these assets into our portfolio, we were able to take advantage of several synergies to increase the efficiency and effectiveness of our operations, resulting in lower operating cost, while increasing our productive capacity and our reserves. A significant royalty stream came as part of the acquisition and we worked to integrate these assets with our own portfolio in preparation for monetization with a focus on generating shareholder value. In the second half of 2014, as part of our transition to longer-life, low-decline assets, we completed the tie-in of the Horizon coker expansion Phase 2A, increasing Horizon production. Later in the year, as the shift towards lower commodity prices became apparent, we implemented a high degree of flexibility into our 2015 capital expenditure plans. Throughout 2014, we focused on our very diverse production base to maximize our profitable growth in each of light oil and natural gas liquids, Western Canadian Select heavy oil, including Pelican Lake, primary heavy and thermal oil, and our synthetic crude oil from Horizon as well as natural gas. As we continue to navigate through changing commodity price expectations, we remain focused on the following key elements of our strategic plan. We maintained a strong financial position. At December 31, debt-to-EBITDA was 1.3 times and debt-to-book cap was 33%, and we had a strong line of liquid resources available to us. We maintained a large balanced, high-quality asset base, which provides flexibility and choice to our measured approach to our allocation of capital decisions. We are transitioning to long-life, low-decline assets, which introduces additional flexibility. We are increasing sustainable free cash flow through organic profitable growth, and we are unlocking significant shareholder value. Thank you, and I will now turn you over to Steve.

[Steve W. Laut:]

Good morning, everyone. As Doug pointed out, our fourth quarter and 2014 were both very solid. Production growth was very strong with liquids growth up 20% Q4 2014 over Q4 2013, and gas growth driven by acquisitions up 45% over the same period. Canadian Natural's operations are effective and efficient. Operating costs were essentially flat Q4 2014 over Q4 2013, with the exception of Horizon where op costs were down 12% Q4 over Q4 2013. Reserve replacement and F&D costs were also excellent. Fourth quarter cash flow, earnings and our balance sheet were also strong despite the declining commodity prices, an expected outcome considering the strength of our diversified and well-balanced asset base, an asset base that is delivering sustainable cash flow, robustness of our business model and strategies which features maintaining a strong balance sheet and significant capital flexibility, as well as our ability to effectively execute these strategies while maintaining and strengthening our effective and efficient operations. As we all know, oil prices are significantly lower in 2015 than in Q4 2014. The game has changed. In low commodity price periods, Canadian Natural's strengths and capabilities become even more important allowing us to further differentiate ourselves from the peer group. In 2015, we're utilizing these strengths. We've exercised our capital flexibility deferring CAD $2.4 billion of capital spending in January and another CAD $150 million of capital optimization announced today. As a result, the 2015 capital budget is set at CAD $6.04 billion, with CAD $2.2 billion allocated to the execution of our Horizon Phase 2/3 expansion, the major component of our transition to a longer-life, low-decline asset base capital spending that delivers no additional production in 2015. We also have 161 wells drilled but not completed. We'll complete these wells when oil prices stabilize at higher levels. These wells will add roughly 20,000 BOE per day of production. Canadian Natural's operations and the execution of our plans are going very well, allowing Canadian Natural to optimize 2015 execution. As a result, production guidance has been increased by 10,000 barrels a day for 2015, delivering 11% production growth with capital being reduced another CAD $150 million. Importantly, using strip pricing of $55 WTI for 2015 with Q1 at $49 rising to $59 in Q4 and a CAD $2.95 AECO price, and at the midpoint of production guidance, Canadian Natural generates CAD $6.3 billion in cash flow. Dividends have been increased to CAD $1 billion, reflecting the strength of our assets and the confidence in our ability to execute. With the current capital program of CAD$6 billion, we will utilize CAD $700 million of our balance sheet to fund the CAD $2.2 billion of capital allocated to Horizon Phase 2/3 expansion. Our balance sheet remains strong and is projected to end the year at 35% debt to book and a debt to EBITDA at 2.3x. We're also committed to monetizing Canadian Natural's royalty assets, assets that generate CAD $186 million a year on an annualized Q3 basis and production's growing. We target this monetization in 2015, and the timing of the monetization will be somewhat dependent on the commodity price outlook. This provides Canadian Natural with additional balance sheet flexibility. Canadian Natural is built to withstand low commodity price cycles. In 2015 we'll strengthen our capacity to deliver value throughout the commodity price cycles by stepping up our focus on effective and efficient operations. We're doing this by enhancing our execution strategies in all aspects of our business, ensuring that reduction of material costs, particularly steel and copper, are reflected in our activities, and together with our contractors and suppliers, we're driving productivity enhancements in all our operations. And on future capital spending, we're optimizing the scope, maximizing process safety management, ensuring the most effective cost outcome. We're also placing these expectations on all our suppliers, service providers, and contractors to increase their own internal focus on these initiatives and pass these expectations throughout the supply chain. Canadian Natural is also leveraging technology to enhance well productivity, enhance recovery, unlock additional reserves, and deliver more effective and efficient operations. And finally, together with industry, we're also working with the governments and regulators to reduce regulatory duplication and administrative burdens that do not add any regulatory oversight or environmental value, while maintaining the very high regulatory standards in Canada. As a result, we expect a more effective and efficient regulatory process that'll improve timing and ultimately lower cost of both industry and the government. Canadian Natural is built for low commodity price cycle. Our strong balance sheet, diverse and balanced asset base, and importantly, our culture, which is focused on effective and efficient operations, allows us to quickly adapt to the new reality, the reality in which the cost structure must be lowered going forward to ensure all participants in the industry – owners, contractors, suppliers, service providers, labor, and governments – are not just viable but robust. Our 2015 budget is conservative and does not reflect a significant gain in effectiveness and efficiency anticipated from this effort. For reference, a 10% reduction in all op cost translates into an additional CAD $500 million of cash flow on an annualized basis. And a 10% reduction in capital cost translates into CAD $600 million of additional balance sheet capacity. We anticipate over time that our approach will generate greater than 10% savings particularly on the capital cost side. In some cases, we expect 30% to 40% reduction in capital costs. In fact, even before these initiatives got off the ground, we're seeing op cost improvements in 2015 over 2014. North American gas costs are down 3%, North American oil costs are down 10%, North Sea down 20%, Offshore Africa down 36%, and Horizon down 10% at midpoint of guidance. Most of these gains have come from improved reliability and production gains over fixed cost facilities. We believe we can gain additional cost savings on both operating and the capital side of business as we progress through the year and importantly into 2016. Production guidance is up 10,000 barrels a day and that's driven by Horizon performance where Horizon production guidance for 2015 has been revised upward by 10,000 barrels a day to 121,000 barrels a day to 131,000 barrels a day. And operating costs have been revised downward an additional CAD $2 a barrel to CAD $32 to CAD $35 a barrel since our revised budget announcement in January and down CAD $3.70 a barrel from 2014. This increases cash flow from op cost savings by CAD $170 million and from production by CAD $105 million. Horizon guidance revisions are driven by three factors

[Lyle G. Stevens:]

Thanks, Steve. Good morning, ladies and gentlemen. To start our reserves review, I'd like to point out that as in previous years, 100% of our reserves are externally evaluated and reviewed by independent qualified reserve evaluators. Our 2014 reserves disclosure is presented in accordance with Canadian reporting requirements, using forecast prices and escalated costs. The Canadian standards also require the disclosure of reserves on a company gross working interest share before royalties. In 2014, we had an excellent year replacing 230% of our production on a proved basis, a 148% for crude oil, NGLs, bitumen and synthetic crude, and 399% for natural gas. On a proved plus probable basis, we replaced 413% of our production, 394% for crude oil, NGLs, bitumen, and synthetic crude, and 457% for natural gas. Total corporate proved reserves increased by 7% to 5.51 billion BOE. Proved additions and revisions, excluding production, totaled 662 million BOE, 43% of which were liquids. On a proved plus probable basis, total company reserves increased by 11% to 8.89 billion BOE. On a 2P basis, additions and revisions excluding production totaled 1.19 billion BOE, 63% of which were liquids additions. If we exclude Horizon, our proved additions and revisions before production totaled 672 million BOEs and our proved plus probable totaled 842 million BOE. These additions correspond to a capital spend of CAD 8.18 billion, including acquisitions. Our 2014 North America E&P results were excellent with total proved reserves increasing 18% to 3.03 billion BOE and proved plus probable reserves increasing 15% to 4.81 billion BOE. The reserve life index for the company is now 19 years using proved reserves and 31 years using proved plus probable reserves. If we exclude the Horizon reserves, we still have very long reserve life indices, which reflects the strength of our asset base

[Corey B. Bieber:]

Thank you, Lyle, and good morning, everyone. The fourth quarter was a strong operational and financial quarter for Canadian Natural. Our production averaged 861,000 BOEs per day. This included all-time record quarterly production rates for crude oil at 572,000 barrels per day and natural gas at 1.733 Bcf per day. Annual production levels averaged 790,000 BOEs per day, an 18% increase over the previous year and also an all-time record. Cash flow at CAD 9.6 billion in 2014 represented a 28% increase over 2013 levels, and as noted by both Steve and Lyle, all of our major projects moved forward in 2014. As Lyle noted, our proved reserve replacement ratio was 230% and 413% on a proved and proved plus probable basis, very strong metrics. The longevity of those reserves is a very significant 19 years on a proved basis and almost 31 years on a 2P basis. Focus on detail and innovation also set us up for the future as witnessed in the reduced scope of the 2015 Horizon turnaround. The team has managed to defer approximately CAD 115 million of work to 2016. This has a double benefit to our balance sheet as we both reduce capital spend and increase operating cash flows for the 10,000 barrel a day increment added to annual guidance. Throughout our asset base, we continue to look for similar opportunities to increase production and/or avoid unwarranted cost. We also furthered our understanding of our royalty revenue stream and focused on lease compliance, well commitments, offset drilling obligations, and compensatory royalties payable. Production levels and the royalties increased 10% between Q3 and Q2 and look to continue this upward trend as the development of leased acreage continues at a strong pace with over 268 new wells having been rig released on our royalty land in Q3 and Q4. This means more value is continually being created for Canadian Natural shareholders. Our estimate of royalty revenues attributable to the third quarter is approximately CAD 47 million of which CAD 7 million represents Canadian Natural royalties paid to ourselves within our corporate group of companies. I would refer you to our press release to find more facts indentified with respect to this revenue stream. The size and diversity of the company affords us the breadth of opportunities that many of our peers do not possess. Similarly, our focus on returns and emphasis on execution excellence results in operational reliability and consistency amongst the leaders in the industry. These items combined with our prudent balance sheet stewardship have resulted in a resilient financial outlook throughout the business cycle. As Steve earlier noted, through nimble reallocation of capital, we now expect to generate mid-point cash flow in excess of those required for current operations and dividends and still expect to fund the majority of CAD $1.5 billion of our CAD $2.2 billion of major project spend at Horizon. Based upon forward strip pricing, foreign exchange rates, and forecast production, we're currently anticipating ending in 2015 at about 2.3 times debt-to-EBITDA on a trailing 12-month basis. This is well within any covenants, and quite reasonable given the current stage of the pricing cycle. No value is attributed to the potential monetization of the royalty revenue stream in these estimates. Our financial resilience is bolstered by the significant available liquidity. At the end of 2014, we had approximately CAD 2.6 billion of available bank lines. Through negotiation of a new CAD $1.5 billion, three-year drawn bank facility, this available liquidity increases to about CAD $4.1 billion on a pro forma basis. In addition to this available committed liquidity from our banks, we still enjoy strong access to the debt capital markets as witnessed by our November 2014 US $1.2 billion, two-tranche offering. In short, we have strong operational results driven off a very strong assets and reserves base coupled with a strong balance sheet and more-than-adequate available liquidity. This recent downdraft in commodity prices is allowing us to further enhance focus on cost and inefficiency reductions, which will only mean a more robust and economically sustainable model when commodity prices recover. It is a combination of these factors that resulted in the board of directors increasing the dividend by CAD 0.02 per annum representing a 15th consecutive year of dividend increases, a strong endorsement of our financial strength, prudent cost management and our capital flexibility in these challenging times. I want to re-emphasize the flavor of Steve's comments. We have prudently and methodically managed capital to both preserve value created to-date and allow for optionality to generate incremental value to shareholders throughout the business cycle. In summary, I believe Canadian Natural is financially strong and has a well thought-out plan for ongoing creation of shareholder value. The plan is complete with the optionality to protect in a downside and to proactively take advantage of opportunities when they arrive. Thank you and back to you, Steve.

[Steve W. Laut:]

Thank you, Corey. Canadian Natural is in a strong position. Our diversified, well-balanced asset base is delivering ever-increasing sustainable cash flow. Our strong balance sheet and significant liquidity combined with our robust business model and strategies drive effective and efficient operations. Canadian Natural is built to withstand the low-commodity price cycles. We've been here many times before. And each and every time we've come out of the cycle stronger than when we went into the cycle. I expect this cycle to be no different. That concludes our comments. And we'll open it up for discussions – questions.

[Operator:]

Your first question comes from the line of Greg Pardy from RBC Capital Markets. Your line is open.

[Greg Pardy:]

Yes. Thanks. Good morning. Great rundown. Steve, I just want to make sure I got my math right. Then with the rerating that you've done at Horizon, you're at 137,000 barrels currently post the Phase 2B expansion, and simple math is capacity by early 2016 would be about 182,000 barrels?

[Steve W. Laut:]

I think, what you do, Greg, is take the 137,000 barrels a day of that stream-day capacity.

[Greg Pardy:]

Yes.

[Steve W. Laut:]

We expect to have utilization of between 92% and 96%. So I guess that's about 125,000 barrels. So, we'll be adding 45,000 barrels a day of capacity when we bring on Phase 2B, so you add that to our number and then you add another 80,000 barrels a day for Phase 3.

[Greg Pardy:]

Okay. Okay. Great. But your expectation is that Phase 2B is essentially in line or online by the end of 2015 and essentially you should be good to go by early next year?

[Steve W. Laut:]

Phase 2A is on already. 2B will be fully on by late 2016. And we'll ramp up to 40,000 barrels to 45,000 barrels.

[Greg Pardy:]

Okay.

[Steve W. Laut:]

So, what happens here with this moving the scope, reducing the scope in 2015 into 2016, we're taking...

[Greg Pardy:]

Right.

[Steve W. Laut:]

...advantage of that synergy. We're going to pick up another 4,000 barrels a day because we got some equipment on earlier from Phase 2B, and we'll pick up another 10,000 barrels a day in the fourth quarter because of the ramp up and more equipment will be on earlier than we anticipated originally in the plan.

[Greg Pardy:]

Okay. Got it. Just to be clear then on monetizing or maximizing the value with the royalty stream. Then, I think what you were saying on the call is clearly the value of this royalty stream is worth a heck of a lot more outside the company than in. But you've not landed on whether it's an IPO or whether it's an outright sale. But you expect to move sometime in 2015. Is that correct?

[Steve W. Laut:]

That's our plan as to move sometime in 2015. Obviously, we'll watch commodity prices, and we're going to look for the opportunity to maximize this value for shareholders.

[Greg Pardy:]

Okay. And maybe just to come back to Kirby South a little bit, you were talking pretty fast through that. But that was probably a little bit of a delta in our numbers in the fourth quarter. Can you just walk through that a little bit more in terms of what the technical issues are, and then where we stand in terms of rectifying them?

[Steve W. Laut:]

Sorry for talking fast. But...

[Greg Pardy:]

No, that's okay. That's all right.

[Steve W. Laut:]

...it's one of my flaws. What happened at Kirby is that with the steam issues we had in the central facility, we were up and we were down. So we're doing a lot of starting-stopping. And what that did, and we didn't realize this at the time, we were able to control the slow start-up. But the stops were sometimes quite hard. And what we've done, we believe, as we've damaged some of those liners, so we have some fines or scaling. And then in some cases, we broke the liners. So, seven of the well pairs, we broke the liners. So those are being repaired. That's why three are back on circling right now; four will be shortly. On the other ones, we'll probably have fines migration or maybe some scale, and we'll do a stimulation, basically, sort of a pseudo-acid job. It's a concoction that's been used by other operators very successfully. It's not uncommon to have this happen, by the way. So we're doing that right now. Some of this has been done already; so we expect to see some positive results. So, really, what happened here is we had a compound effect from the start-up issues from the central facility that we had anticipated that probably caused some damage to our wells. It's temporary. We know we can fix it, and we expect the ramp-up to increase now as we get the wells repaired.

[Greg Pardy:]

Okay. What's your best guess at this stage, then, for hitting design of 40,000 barrels? Like, is that more of a second half, or do you still think you can achieve that in the first half 2015?

[Steve W. Laut:]

I think it's probably more likely, to be conservative, it'll be in the second half.

[Greg Pardy:]

Okay. Okay. Great. Thanks, Steve.

[Operator:]

Your next question comes from the line of Amir Arif from Cormark Securities. Your line is open.

[Amir Arif:]

Thanks. Good morning, guys. Just a couple of quick follow-ups. The number of wells you drilled that didn't complete, can you give us that number again and just give us a sense of what kind of wells those are? Is it gas, oil, heavy oil?

[Steve W. Laut:]

Thanks, Amir. So, yeah, there's 161 wells. It's 20,000 BOEs per day. It's about half gas, half oil, and most of that oil, as you can imagine, are heavy oil wells.

[Amir Arif:]

Okay. And is that number of the 160 wells, will that be increasing as the year progresses or roughly staying flat?

[Steve W. Laut:]

I think it will stay flat from here on forward. Our drilling program is going to be reduced quite a bit.

[Amir Arif:]

Okay. And the share buybacks, they continued in the fourth quarter. Can you just give us an update on what you're thinking for 2015 in terms of share buybacks?

[Corey B. Bieber:]

At this point, Amir – it's Corey. At this point, we're inactive on the share buyback.

[Amir Arif:]

Okay. Thanks, Corey. And then just a final question. Historically, you've shown a willingness to take advantage of opportunities in the acquisition market when they arise. I mean it seems like a lot of assets might be coming into the market in the next few months. Can you just give us a sense of your desire to look at acquisitions versus focusing on the inventory and the opportunities you have in-house?

[Steve W. Laut:]

Thanks, Amir. I'd say our focus is on organic growth and what we have in-house. As you know, we really have no gaps in our portfolio. So, we don't need to do any kind of acquisition. That being said, we know we're good at acquisitions; that's something we do well. But I don't think we're going to see any acquisitions here for quite a while. I think there's too big an arb between bid and ask, so I don't actually see much happening this year at all.

[Amir Arif:]

And then just one final question. As I go out to 2016-2017, once we get Horizon ramped up fully from Phase 2B and Phase 3, and you'll get all that free cash flow, is there a sense of what you're thinking of doing with that free cash flow longer term?

[Steve W. Laut:]

I think we've been pretty clear that depending on what commodity prices are, we expect them to stabilize at higher levels, probably not at the CAD 90 to CAD 100 level that we've seen before, but at higher levels than we are today. That free cash flow – we'll have substantial free cash flow over and above what we need to grow and effectively develop the rest of our assets in the portfolio, primarily heavy oil, thermal, Pelican Lake and International. And so, obviously, that free cash flow has priorities. Number one is to grow our assets and we said that's at optimal levels pretty much. Second would be return to shareholders through share buybacks or dividends. Third would be optimistic acquisitions. But as I just said, we really don't have any gaps on portfolios. And the fourth would be balance sheet, pay down the balance sheet or pay down debt. Now that may be a higher priority as we come out of this cycle. So, it's probably going to be the first priority to come out of this cycle.

[Amir Arif:]

Okay. So, if we think more about a CAD $75 normalized price longer term, it sounds like thermal and heavy would be ahead of any kind of mining expansion at that point beyond Phase 3?

[Steve W. Laut:]

At CAD $75 and the way we're seeing cost structure changes here in the cost – on the gas side of the business, I would expect that Septimus will be able to compete with primary heavy oil and thermal.

[Amir Arif:]

Okay. Thank you.

[Operator:]

Your next question comes from the line of Fai Lee from Odlum Brown. Your line is open.

[Fai Lee:]

Thank you. Steve, we've seen some of your peers issue high-cost equity to either pay down or avoid issuing low-cost debt. Could you please comment on your views regarding this strategy? And given you appear to be taking a different approach, do you attribute this to a difference in capital allocation strategy, greater confidence in your business model or a more optimistic view on commodity prices?

[Steve W. Laut:]

I think in reality, it's a reflection of the strength of our asset base, the robustness of our model and our strategies, our effective and efficient operations, we are clearly low cost, and our capital flexibility. We feel very confident in our ability to execute to the low-price cycle. We still have additional capital flexibility. We still have ability to monetize royalties. And as I said earlier, a CAD $0.10 reduction in operating cost gives us CAD $500 million of cash flow, a 10% reduction in capital cost. And we think we can do better than that. There's a CAD $600 million of balance sheet capacity. So, we think we're in a very strong position. Clearly, we don't see the need to issue equity and think that to lose our shareholders, especially with the strength of our company, that's not an option at this point.

[Fai Lee:]

Okay. Thank you.

[Operator:]

Your next question comes from the line of John Herrlin from Société Générale. Your line is open.

[John P. Herrlin:]

Yeah. Hey, Steve. You're a lot bigger company now that when you bought your International operations. Are they still really strategic given the size and scope of what you have in Canada?

[Steve W. Laut:]

Yeah. We get asked this question quite often, John.

[John P. Herrlin:]

I know.

[Steve W. Laut:]

The question that really is – we believe that there's opportunities internationally. Obviously, the North Sea, the tax rates are too high. We still have opportunities there. We're hopeful that the tax rate may be adjusted in the future. Obviously, the UK North Sea, we've seen some distress, and it needs to be revised to get more activity. Offshore Africa, we do have quite a bit of significant activity there. Obviously, it's the highest return on capital on our portfolio. We have exploration ongoing in Block 514 in Côte d'Ivoire, that looks good, the discovery there or potential for discovery that we'll delineate here in April. We're going to drill another well to delineate that presence of hydrocarbons. And clearly we have what we think could be a significant potential in South Africa. So at this point in time, we want to keep that optionality for capital allocation going forward. And we're leveraging our strengths out of the North Sea, in Africa.

[John P. Herrlin:]

All right. That's fine. Regarding services costs. Are you trying to restructure now – now that costs are coming down, are you trying to restructure the deals in a way that may be more indexed rather, of activity rather than the typical boom-bust cycle the industry experiences?

[Steve W. Laut:]

I think, John, what we're really – we're trying to do – we mentioned in the call here, in my comments, there's a number of fronts we're trying to work on. But I think the most significant front and where we're going to see the most cost savings and the change in the cost structure is in the execution strategies and in productivity, those two areas. We're really trying to change the way we do the work and the way our contractors work with us and how they do the work. It's actually changed how things are executed. If we can do that, we change this cost structure throughout the cycle. And we may allow the contractors and suppliers to make a profit and they remain viable. So that's what a real focus – we're focusing on all, but that's a big focus, that's a big care.

[John P. Herrlin:]

Okay. Great. Thanks, Steve.

[Operator:]

There are no further questions at this time. Presenters, I turn the call back to you.

[Steve W. Laut:]

Thank you, Sean, and thank you, ladies and gentlemen for attending our conference call. As we're now beginning our way through another period of very high, very volatile commodity prices, Canadian Natural has a very strong and diverse asset base, a complementary balance of production, and a strong well-developed plan for the systematic development of this asset base. We concentrate on safe, efficient and reliable operations and a strong financial position, supported by readily available liquid resources. If you have any further questions, please give us a call. Thank you again and we look forward to our Q1 2015 conference call in May. Thank you.

[Operator:]

This concludes today's conference call. You may now disconnect.