John Langille - Vice Chairman Allan Markin - Chairman Steve Laut - President and COO Doug Proll - SVP of Finance and CFO Real Doucet - SVP of Oil Sands

Martin Molyneaux - First Energy Capital Stephen Calderwood - Raymond James

Good morning, ladies and gentlemen. Welcome to the Canadian Natural Resources fourth quarter conference call. I would now like to turn the meeting over to Mr. John Langille, Vice Chairman of Canadian Natural Resources. Please go ahead, Mr. Langille.

Thank you, Operator, and good morning everyone. Thanks for attending this conference call and giving us the opportunity to review our 2007 fourth quarter as well as the whole year results for 2007. Participating with me today will be Allan Markin, our Chairman; Steve Laut, our President and Chief Operating Officer; Lyle Stevens, our Senior Vice President of Exploitation; Doug Proll, our Financial officer and Senior Vice President of Finance; and Real Doucet, our Senior Vice President of Oil Sands. Before we start, I would like to refer you to the comment on forward-looking statements contained in our press release and also note that unless otherwise stated all dollar amounts are in Canadian dollars and references to production of reserves are before royalties. I'll make a couple of quick comments before I turn the call over to Allan, Steve, Lyle, Real and Doug. In 2007, we again achieve excellent results both operationally and financially and for the eighth consecutive year, we have increased the dividend we pay to our shareholders, this year an 18% increase to $0.04 cents a share. Our cash flow is totaling $6.2 billion. We're strong with our conventional businesses in all areas providing the free cash flow necessary to undertake the building of our oil mining project, which will provide years and years of additional free cash flow. And as we look forward early in this year, the current commodity strip prices for the balance of 2008 and our very strong production base will again result in excellent free cash flows. As we meet these financial results, our balance sheet continues to strengthen from late in 2006 when we did complete our major acquisition. Our finding and development costs for proven reserves decreased in 2007 compared to 2006 and we achieved an excellent recycle ratio of 2.3 times, that is a topnotch result, which is one metric to push you to high value creation. As we go through the review of our assets and businesses, I believe you will see that our strategies are well entrenched to ensure future value creation for our shareholders. With that, I will turn it over to Al.

Thanks, John. Canadian Natural has enjoyed another solid year. A year defined by value creation. We reached several milestones at Horizon and had more than significant success in our conventional business. Major progress has been made at the Horizon project, as we exited 2007 at 90% complete with first oil expected during the third quarter of 2008. That represents tremendous progress on a project of this magnitude. As always, we remain committed to doing it right. As a result, we have made getting production online at Horizon our top, top priority. This along with other challenges and inflationary pressures has had an effect on our cost. On February 12th of this year, we announced a cost increase to Phase 1 of the project of 25% to 28% over our initial budget of $6.8 billion. With this increase, we project our on-stream cost to be less than $80, 000 a flowing barrel. And this includes the benefits of the free bill capital we have invested for future phases. Our conventional assets have continued to deliver solid returns, which have some of the highest netbacks in the company history, a true reflection of the strength of our asset base. Our first class heavy crude oil projects alongside our high graded natural gas program have produced results that have exceeded our expectations. In a business environment characterized by high crude oil prices, lower natural gas prices, a strong Canadian dollar and uncertainty surrounding Alberta's Royalty review, Canadian Natural has been able to respond to the ever changing economics of exploration and production. We balance our production mix just as we balance near, mid and long-term projects within our portfolio of assets. And as a result, we are able to allocate capital within our production mix from one commodity to another. This underlies our fundamental approach to creating and maintaining value. As a team, we believe we have the people, assets and plan to continue to deliver shareholder value for years to come. The challenges we met and successes we achieved during 2007 are a reflection of that. I want to thank the employees of Canadian Natural for all their hard, dedicated work and I look forward to working together with everyone ensuring 2008 as another successful year. And in spite of the Alberta Royalty view and the unintended consequences in 2009, we are surviving and will deliver. Over to Steve.

Thanks, Al, and good morning, everyone. As both John and Al have pointed out the fourth quarter and 2007 were strong. Operationally, we were well within our guidance, driving strong cash flow and earnings. As Al just mentioned 2007, was particularly successful in light of the many challenges the industry faced in 2007; new environmental charges, tax changes for oil sands, Alberta Royalty changes, rapid inflation in the oil sands business, a strong Canadian dollar and a weak gas prices. In the face of these challenges, Canadian Natural has effectively executed our capital allocation strategy, maximizing value by allocating capital to oil projects away from gas projects and delivering a strong year. Cost control is the cornerstone of the company. And on the gas side of the business, we have made tremendous progress with capital cost down roughly 20% to 30% from Q1 2008 versus Q1 2006 for the similar type work. This is kind of go from rate reductions, enhanced productivity of crudes, and better use of technology with each contributing about a third of the overall savings. On the oil side of the business, we have not seen the same effect as the activity in heavy oil and thermal heavy oil is very high. In bitumen, we've been able to hold cost in line with Q1 2006 due to the better use of technology. And of course, at Horizon, our ability to control cost while maintaining the schedule has been severely tested in a highly inflationary environment. And as you know, we have made a choice to increase cost to meet schedule. That been said, our cost control culture and focus on execution is as strong as it has ever been in the company. Horizon first oil is still on target for Q3 2008 as originally planned in May 2004. Our costs are up. Our overall (inaudible) cost are less than 80,000 barrels a day, which is unmatched in this environment. Now, let me comment on each of the products starting with gas. Canadian Natural's gas assets are very strong. We have the second largest undeveloped land base and a dominating infrastructure. And we are poised to have significant value once the relative economic returns of gas and oil projects returned to more historical levels. Production levels declined in 2007 and will decline in 2008. So I am sure, some of you are wondering why we would say our gas assets are strong and why they are very strong. Well, the decline is strictly a result of Canadian Natural's ability to allocate capital to maximize value. We're focused on maximizing value and adding value, not growing volumes for growth's sake. To illustrate this point, in 2005, we grew gas volumes organically 5% by drilling 890 gas wells. In 2007, volumes actually declined 11% entry to exit. But we only drilled 383 wells, only 43% of what we drilled in 2005 to achieve a 5% organic growth. In 2008, we will drill 314 wells, half of which are core or shallow or CBM wells which are low rate relative to unaffected by the new royalty program, for roughly 35% of what we drilled in 2005. And in 2008, we expect our declines to only be about 10%. That reflects the strength of our gas assets. [If we don't] have gas wells, gas production will not grow. Today, we have over 8,000 gas locations in the inventory. So when the relative economics normalize, Canadian Natural will be able to quickly and effectively utilize a deep gas inventory, our dominating infrastructure and our very strong technical and operational teams to add significant value from our gas assets. Turning to oil in Canada and particularly heavy oil and thermal heavy oil, which we believe is the most undervalued and under appreciated asset in our portfolio. However, the world is changing. With higher overall levels of oil pricing and access to secure supplies is becoming increasingly difficult to achieve. These assets are very, very valuable. As you know, Canadian Natural has over 300, 000 barrels a day of incremental oil to develop from our heavy oil asset base. We have the oil. The value of these assets has not only increased dramatically with higher pricing, it is set to take another significant step in value with access to the Gulf of Mexico refining markets. Roughly 7.5 million barrels a day of capacity, it is the largest refining market in the world. Canadian Natural expects at least one of the four pipeline proposals to be completed in on-streams likely in late 2011 or early 2012. The Primrose East development the second phase being on 40,000 barrels a day of the incremental 300,000 barrels a day is on track with first stream in late 2007and first oil in 2009. At Kirby our 45,000 barrels a day or third phase or third phase is in the regulatory process and we expect regulatory approval for Kirby in 2009. At Pelican Lake, our polymer flood and expansion continues on track and is delivering as expected. Pelican is a world-class tool with 2.8 billion barrels in place. And with polymer flooding we can take recovery from 5% up to 25% on an additional 560 million barrels of low cost incremental oil. The polymer flood at Pelican will and is adding significant value for Canadian Natural shareholders. On heavy oil differential side, two differentials widened as we expected. However, in Q1 of this year, differentials have narrowed markedly, as Midwest heavy oil requirement capacity has been brought back on line. We currently see March differentials at about $17 or 17% of WTI, very low and very positive for Canadian Naturals March cash flows. Our heavy oil assets are vast, pricing is strong with traditional pipeline access to new markets and our defined plans, and the future looks very bright, but for the undervalued and underappreciated fuel in our portfolio. Turning to our international operations, which provides light oil balance and some of the highest returns on capital project in our portfolio. North Sea production was steady in Q4 and is expected to remain relatively flat for 2008, as we continue to execute our material base and strategy. [Maximizing] water floods and infill drilling, workovers and re-completions to maintain production, adding reserves and extend well life. In Cote d'Ivoire, Espoir continues to outperform as we've successfully completed the West Espoir development and are in the process of expanding the FPSO to increase our capacity for late 2009. At Baobob, we now expect to rig sometime mid 2008 and it's possible, maybe even likely, that we'll described earlier and we expect to bring on a minimum three wells of the five wells shut-in due to standing issues in our one-year contract window close to 8,000 to 10,000 barrels a day of capacity shut-in. Our Olowi development in Gabon is on track, the FPSOs and (inaudible) in Dubai, [we have] towers in Sardinia are ahead of schedule and the drilling rig is expected late in Q2 with first off schedule for late 2008, early 2009 ramping up to a 20,000 barrel a day plateau. Now, before we move on, I'll make a few comments in Horizon. I will turn it over to Real to comment on a very good reserve results in 2007. Real?

Thanks, Steve, good morning. Before I review the results, I'd like to mention that a 100% of our reserves are externally evaluated, not just audited or reviewed. All metrics that I'll be mentioning are based only on our conventional crude oil and natural gas reserves, but I'll mention Horizon Oil Sands Mining reserves at the end. 2007 was another very good year for Canadian Natural with our net proved finding an on-steam cost coming in at $14.28 a boe while replacing a 110% of our net production. This is a 12% reduction from our 2006 proved finding cost and also helps drive our three-year average down to $15.07 a boe. The significant improvement in 2007 is the result of our excellent drilling and development program, good results from our EOR Project at Pelican Lake and Primrose and our focused effort to reduce capital cost. On a net proved and probable basis, our finding and on-stream cost were $18.02 a boe. As expected, this is slightly higher than our historical numbers, primarily as a result of our significantly reduced drilling program in 2007. In North America, high natural gas production levels and a small natural gas capital program resulted in being unable to replace the natural gas produced. Another contributing factor was the focus on low-risk development drilling in the North Sea and to the large extent has been previously booked. In Offshore West Africa, net proved and probable reserves in the Cote d'Ivoire were reduced to a high yearend oil prices which accelerates project payout and under the terms of the PSA would increase the government share. Our net proved reserves increased to 1.97 billion barrels of oil equivalent made up of 1.4 billion barrels of crude in NGLs and 3.7 Tcf of natural gas. For the Horizon Oil Sand Mining project reserves are also externally evaluated. The gross lease proved bitumen reserve increased by 110 million barrels to 2.39 billion barrels. This equates to proved synthetic crude oil reserves of 1.96 billion barrels. The increase in proved reserves relates primarily the Tranche 2 capital spending and a small improvement in the project lights. Proved and probable reserves remained essentially unchanged from our 2006 evaluation at 3.53 billion barrels of bitumen and 2.96 billion barrels of synthetic crude. With that I will pass it back to Steve. Steve W. Laut: Thanks, Real. As you can see we dropped our proven F&D costs by about 14% in 2007, reflecting not only the strength of our asset base but our ability to control costs. Now, before I ask Real to give you an update on Horizon, our world class Oil Sands Project, I will make a few general comments. As you know, we have over 6 billion barrels of oil to develop at Horizon. Phase I is currently under construction and will take us to 110,000 barrels a day and is on track for Q3'08 start-up. We've broken Phases 2/3 into four tranches. The first tranche is complete and the second tranche is underway. The long lead items for Phase 2/3 are ordered and the coke drums and hydrotreating vessels are actually on site. Phase 2/3 will take us to between 230,000 and 250, 000 barrels a day of light, sweet 30 degree, 40 degree API crude with no declines for four years. In addition, we have plans for Phases 4 and 5 to take production to just under 500, 000 barrels a day or 0.5 million barrels a day of light sweet oil. As you know, from our earlier press release, we have made the choice to meet schedule on Phase I. And, of course, we announced this has come at an additional cost. Although, we're very disappointed in the cost increase, it is clearly the right decision to make, as it has the most value for paying actual shareholders. And as I pointed out earlier, our costs are less than 80,000 barrels a day, unmatched in this environment. And with that, I will turn it over to Real to bring the update on what we're doing right now and some of our plans going forward. Real?

Thank you, Steve. So we have as Steve mentioned, make the strategic decision here to invest into protecting our schedule. So we have increased our manpower, which were originally were supposed to be around 7,000 people, we're up to 10,000 people now on site. And obviously, we have some cold weather here in January and February and now the weather is getting much better. We have seen now an improvement in productivity here over the past week or so. And I think we're going back into our former schedule here doing hydro testing and so on. We are quite confident right now that 95% is achievable at the end of the first quarter or so. And then, we'll be quite in good shape for the start-up here in August. As a matter of fact, right now on the mining we are ready. The trucks are on site. They have been assembled. We have the hydraulic shovel also that has been put in the bank already and did some test and it's fully commissioned. We have the two electric shovels that are being built right now, and it's about two-third complete. And this should be complete here within a month. So we will be about three months ahead of schedule here in the mine ready to start rolling the equipment and testing it out. On the bitumen production, right now, we are demobilizing in the extraction plants since the plant is mechanically, just about mechanically complete. We have also imported diluents for the start up of the froth treatment plant. We have 50,000 barrels right now being imported into two tanks here on site, which also have been ready for some time. The extraction plant at the froth treatment plant here actually, is just about ready to commission. We've completed most of the hydrotesting testing on these pipes and within a couple of months, they will be in to the commissioning mode, which is about also three months ahead of what's needed. In the upgrading, the sulfur plant and the hydrogen plant have also one to two months of float right now, and they are planned to be completed sometime in April, May, beginning of June. The primary and secondary upgrader, which have always been sensitive [20:40] on the critical path as per the project was based on, are on target right now for the third quarter start-up as were planned originally. All the support plans like our water circulation, fire water, portables and sewers and so on are already operational. They have been tested and they have been running all along. So in terms of the schedule, right now, it's looking quite favorable. We are quite comfortable also that the third quarter is achievable. In terms of being ready for operation, we have already on-site right now 250 operators in place and we're hiring right now to the rate of 20 operators a week. We need about 400 operators by December '08. So we're quite comfortable that it will be there. All our start-up commissioning operating procedures have been written. They have been hazed up. They have been approved and so on. So we're ready also to roll in that area. We have also 800 systems to operate this plan as a whole. We have already 125 of them have been walk down. Over 75 of them have been already commissioned and they are in operation, as I speak right now. So we're quite comfortable right now, also, in terms of being ready for operation of this plan at the end of the day. So on this, Steve's perspective.

Thanks, Real. As you can see we're on the top of the action at Horizon and on target for Q3 start-up, and as Real said we're comfortable with that. We're roughly working to control costs and ensure that we meet that schedule. Overall the company is in a very enviable position with a strong well-balanced asset base. Our gas assets are strong and quite deliver a significant value growth once the relative economics of oil and gas return. Our oil assets are even stronger in Canada, with over 300,000 barrels a day incremental volumes stat. Internationally, we continue to leverage our mature base and expertise, our offshore expertise and our government relation niche in some of the highest return projects in the company's portfolio. And, of course, Horizon is a world-class project, which will add tremendous value to shareholders. We have the assets, a well-defined plan, the discipline and most importantly the people to execute the plan and generate significant value for shareholders. We are in great shape. I'll now turn it over to Doug to update you on our financials. Doug?

Thank you, Steve, and good morning. The accomplishments of Canadian Natural in 2007 were many and are outlined in our press release and summarized by Steve and John. Financially, we generated $6.2 billion of cash flow from operations or $11.49 per share and $2.6 billion of net earnings or $4.84 per share. We incurred $6.4 billion of capital expenditures, roughly imbalance with cash flow and exited 2007 with long-term debt of $10.9 billion in line with our 2006 yearend debt of $11 billion. Our financial metrics improved considerably, as debt-to-book capitalization was 45% compared with 51% at the end of 2006, and debt-to-EBITDA was 1.6 times compared with 2.1 times last year. Both of these metrics are within our targeted ranges and signify our commitment to balance sheet strength. Our liquid resources are also strong. At yearend, we had undrawn bank lines of credit of $1.4 billion. Pro forma, our issue of U.S $1.2 billion of notes on January the 10th, our undrawn lines of credit exceeded $2.5 billion. This liquidity combined with our plan to once again balance cash flow and capital expenditures will allow us to carryout our plan and not have to reenter the debt-to-capital markets in 2008. Our commodity hedge book is posted on our website and laid out in the press release. It is our intention to continue to monitor commodity hedge opportunity and underpin our cash flow from operations. As we look forward to 2008, we have today reconfirmed our annual guidance for production and operating cost. Based on current strip pricing, largely improvements in heavy oil differentials and the current outlook for natural gas pricing, we're now estimating that 2008 cash flow may approach $6 billion. This would allow us to further improve our balance sheet metrics. Finally, we announced our eight straight year of dividend increases. The 2008 quarterly dividend will increase 18% to $0.10 per common share effective with the April 1, 2008 payment. This confirms our belief in the stability of cash flow and our production base. It also confirms our strategic principles of a strong balance sheet and diligent review of allocation of capital. Thank you and I will return you to John for some closing comments.

Thank you very much, Doug and Steve and Real, and Lyle. I think everybody can appreciate that balance of assets in businesses is very strong. We have excellent focus on what we're doing. And we continue to carry on that focus, as we continue to develop our assets and continue to strive to create value for our shareholders. And remember that value is not necessarily goes in production. That is not our targets all the time. We are targeting towards always creating long-term value for the shareholders that will go through many peaks and values of commodity price changes. With that, operator, I'd like to open up the call to questions that people may have.

Thank you. We will now take questions from the telephone lines. [Operator Instructions] The first question is from Martin Molyneaux of First Energy Capital. Please go ahead. Martin Molyneaux - First Energy Capital: Gentlemen, the obvious questions we've now got the strip at $200 for all of Q2 and very close to $100 for the balance for the year. Cash flows are going to be substantially higher than budgeted as Doug suggested. With the marginal dollars, what would you do over and above their current budget?

Steve Laut, here. I think what we're doing now with the strip is up there and we have additional cash flow, obviously we're strengthening our balance sheet. And as we're ready for any other opportunities -- obviously, we have some great opportunities. We'd like to allocate more capital to an oil side of the business. That's a possibility. There might be other opportunities internationally, but I think that first allocation at capital was our cash flow would go to the debt. Martin Molyneaux - First Energy Capital: Okay. And in term of you guys in the board sitting down to have a kind of top to bottom review of budget, when is that going to happen?

We normally -- every year we do it in April and May. And we allocate capital based on results in the first quarter. Again, we'll do that this period of time. I think by then we'll have a little bit more confidence as the strip is going to stay up there, obviously through higher prices for both oil and gas. Martin Molyneaux - First Energy Capital: Great. Thank you

Thank you. The next question is from Stephen Calderwood of Raymond James. Please go ahead. Stephen Calderwood - Raymond James: Yes, good morning. You mentioned that you are peaking labor now at the project at Horizon, its 10,000 workers. Is that expected to come down in the next few months? What does the profile look like and what should we be looking for that?

Steve, I think what is going to happen here is the 10,000 people will probably be there from March and April, and maybe part of May but will probably be coming down in May. And they will probably drop off fairly quickly. Would you like to add anything to that, Real?

No. I think you've got it right, Steve. I think we want to keep the manpower on-site here to make sure that we are well ahead of our expectations here and there were [bunch of all the] plan. And I would say that by sometime in March, April we're going to start to wind out. Stephen Calderwood - Raymond James: Okay. And you mentioned a couple of times in the presentation that August is the target month. What happens if it's a couple of months later? Does that really matter?

I think, Steve, what you've to look at is that we'd say Q3. I know everybody has got August on their mind, but I guess that is in Q3. It's a middle of Q3. So we think Q3 is realistic and we're pretty confident with that. If it slips into October, probably not an issue, November depending on the weather it might be okay, but it can get cold in November so we'll probably have to make a call. But, again, we don't see that as something that we're going to have to worry about. As we said -- as both Real and I said, we're confident we're going to make Q3. Stephen Calderwood - Raymond James: Thanks a lot.

Thank you. (Operator Instructions) There are no further questions registered at this time. I would like to turn the meeting back over to Mr. Langille.

Thank you very much, operator. And thank you, ladies and gentlemen, for attending our conference call. As usual, if do you have any further questions, I ask you to go through our press release. Do not hesitate to call us and we will get the answers to your questions. Thank you very much and everybody have a good day. Good bye.

Thank you. The conference has now ended. Please disconnect your lines at this time and thank you for your participation.