John Langille - Vice Chairman Allan Markin - Chairman Steve Laut - COO Réal Doucet - SVP Oil Sands Doug Proll - SVP Finance

Andrew Fairbanks - Banc of America Martin Molyneaux - FirstEnergy Capital Mark Polak - Scotia Capital Brian Dutton - Credit Suisse

Welcome to the Canadian Natural Resources 2009 second quarter results conference call. I would now like to turn the meeting over to Mr. John Langille, Vice-Chairman of Canadian Natural Resources.

Thank you for attending this conference call. We will discuss our second quarter and first half results and our outlook for the balance of 2009, which were covered in a press release issued earlier this morning. Participating with me today are Allan Markin, our Chairman; Steve Laut, our President and Chief Operating Officer; Réal Doucet, our Senior Vice President of Oil Sands; and Doug Proll, our Senior Vice President of Finance. Before we start, I would refer you to the comments regarding forward-looking information contained in our press release and also note that all dollar amounts are in Canadian dollars and production and reserves are both expressed as before royalties, unless otherwise stated. ': First of all, our financial results are obviously affected by the sales price we received for our oil and natural gas production. Year-over-year prices are reduced by about 50% and continue to be very volatile, but in this second quarter, they reacted in opposite directions, with oil increasing 38%, and natural gas decreasing 35% from the prior quarter. We would expect that this time the sales price of natural gas will continue to be under pressure as the fundamentals of supply versus demand continue to be negative. Despite these swings in commodity prices, our balance portfolio of producing properties, backstopped by our prudent hedging programs and emphasis on cost control and returns contribute to a strong cash flow position, and importantly, in the second quarter, we realized almost $900 million of cash flow in excess of our capital expenditures. As expected, these funds have been directed toward repayment of our maturing bank debt and overall strengthening of our balance sheet. Steve and Réal will cover our operations in more detail and Doug will expand on our financial results, but before we get those updates, I would ask Allan to make some comments.

': Conventionally, we continue to allocate capital towards higher returning projects in crude oil. It has been challenging for the natural gas side of the business as returns currently remain far more attractive in our crude oil. We all need to get our costs down. In my opinion, the Canadian natural gas industry is at a crossroads. To remain viable, all of industry, including producers, all levels of government, suppliers and other stakeholders must be vigilant on reducing cost and improving efficiencies. We see some provinces, such as British Columbia, which are proactively looking at ways to support the industry, but more must be done by all of us. ': With over half of our crude oil projects falling into the heavy oil category, the second quarter benefited from a historically narrow heavy oil differentials contributing to strong returns in oil. ': Our priorities for the remainder of the year remain the same. We will continue to strengthen our balance sheet through the effective utilization of our resources, including capital, infrastructure, and services, and our people. Flexibility is getting tougher because of lack of natural gas drilling activity. Thank you.

As both John and Al have said, the second quarter was a solid quarter for Canadian Natural. Oil production was up 11% over the first quarter, driven by strong production volumes at Horizon, Baobab and from our primary heavy oil assets. We were well within our oil production guidance ranges and for Horizon, the North Sea and Offshore West Africa, we exceeded the top end of our production guidance. ': Let me briefly update you on each of our assets. Starting in Canada with gas. Our gas production delivered as expected in Q2, with no gas drilling occurring in second quarter, production declined as reflected in our Q2 guidance. For the remainder of 2009, we will reallocate capital from gas to our oil projects. We now expect to drill roughly 110 gas wells for 2009 versus roughly 140 wells previously planned. Our gas production guidance remains unchanged and will decline as previously expected, reflecting the strength of our gas assets. The gas wells that are now being drilled in 2009 are being drilled to offset drainage, conserve land or are strategic in nature. With the current gas price and cost environment, it makes no sense to drill gas wells for any other reason. ': ': Canadian Natural has the second largest land base in Western Canada. Canadian Natural dominates the land base and infrastructure in our core areas and as result we are a low-cost producer. As a low-cost producer, Canadian Natural is well-positioned to withstand a sustained low cost price environment. Currently, we have roughly 10 million cubic feet a day of gas shut in due to low prices. It pays to be the low-cost producer. One of the strength of Canadian Natural is our low-cost diversified asset base and portfolio, and in this period of low gas prices, this is clearly evident. It is very difficult for gas assets in our portfolio to compete for capital with oil projects. That being said, low gas prices have a very positive impact on our Horizon operations, as well as our thermal heavy oil operations and hefty returns on these assets. ': Primrose East is our most recent incremental step on our road to 300,000 barrels a day of incremental production. As you know, we experienced a containment event at Primrose East early in Q1. We completed a significant amount of diagnostic work in the field and analysis of the containment event. We believe we identified the event as a well-bore issue with one well-bore. A detailed report and an analysis was submitted to the provincial regulators in Q2. Our report recommends a number of preventative steps and further diagnostic testing, including diagnostic steam testing before we bring Primrose East back to full steaming capacity. We are confident that this issue can and will be resolved and effectively managed going forward with minimal effect on the long-term performance of Primrose East. We have been working effectively with the regulators and have received regulatory approval to proceed with our diagnostic steam program. We expect to have all of the monitoring in place and calibrated and ready for first diagnostic steaming in the next two weeks, a very positive result. ': ': At Pelican Lake, we continue with our program to convert the field to our highly successful polymer flood. As you know, Pelican Lake is a world-class pool, with four billion barrels of oil in place, and between 350 and 475 million barrels recoverable, a very large pool. We expect to have the entire field on polymer flood by 2016. Pelican continues to generate significant value for shareholders. Our primary heavy oil program continues to roll along effectively and efficiently. In this commodity and cost environment, primary heavy oil generates top-decile returns on capital in our asset portfolio. Importantly, it also generates the quickest payout and largest cash on cash return. Our dominant high-quality land base, infrastructure, and effective operations continue to make primary heavy oil one of the best value generators in our portfolio. ': At Pelican Lake, we continue with our program to convert the field to our highly successful polymer flood. As you know, Pelican Lake is a world-class pool, with four billion barrels of oil in place, and between 350 and 475 million barrels recoverable, a very large pool. We expect to have the entire field on polymer flood by 2016. Pelican continues to generate significant value for shareholders. Our primary heavy oil program continues to roll along effectively and efficiently. In this commodity and cost environment, primary heavy oil generates top-decile returns on capital in our asset portfolio. Importantly, it also generates the quickest payout and largest cash on cash return. Our dominant high-quality land base, infrastructure, and effective operations continue to make primary heavy oil one of the best value generators in our portfolio. ': In the North Sea, production has been steady and was slightly above the upper end of our guidance in Q2. In Q2 and in the first part of Q3, we successfully completed the 23-day plant turnaround in Ninian Central Platform on time and on budget. We also completed the drilling of the Deep Banff high pressure, high temperature gas exploration prospect, which was not successful and abandoned. Canadian Natural paying interest on this well is roughly 19%. Turning to Offshore West Africa; at Baobab, our very successful four-well program was completed early in Q2, providing another 11,000 barrels a day of incremental net production. Production has remained solid through the second quarter and we are very happy with the performance of Baobab. At Espoir production is steady. We had anticipated being able to accelerate the installation of additional compression capacity this summer. However, we reverted to the original schedule, which has the installation scheduled for late 2009 or early 2010, as we optimize the utilization of the heavy lift vessel between Espoir and Olowi. The additional Espoir compression will increase gas processing capacity and provide better processing reliability. ': Production performance has not met our expectations from Olowi and current production performance seems to indicate that we have some form of impairment. It is anticipated that results from this work-over will identify any well-bore or reservoir impairment issues and potentially to remedial work-overs at later date to enhance production. We have seen some positive indications from Olowi production, however, as the gas-oil ratios are lower than anticipated and if we can identify the pressure impairment mechanisms, does leave us some optimism about the overall success of Olowi in the platform C area. As far as the progress in overall development of Olowi, all three remaining jackets have been installed and the deck for platform B will be installed in the next week or two depending on, to a small degree, to weather. The decks for platform D and A will be installed in sequence following platform B. The jack-up rig will complete the diagnostic work-over and then move to platform B. ': ': At Horizon, our world class oil sands mining project, we have made considerable progress and our ramp up in production volumes have exceeded the forecast. The second quarter production averaged 59,599 barrels a day, well ahead of expectations, driven by a strong month of June, in which production averaged 92,097 barrels a day of light sweet, 34 degree API oil. In July, we also exceeded our forecast with production of 83,573 barrels a day, despite an unexpected failure of an ancillary component on our wet gas compressor. ': ': ': ': ': Thirdly, we have a very strong operations, maintenance and process teams, who have done an outstanding job ramping up production, as well as proactively solving ramp up issues. Four, the Horizon operation is capable of being very effective and efficient. Our operating costs in Q2 were C$42.65 a barrel, significantly better than we had forecast for this part of the ramp up schedule. Helped somewhat by energy costs, at this point we expect to be well within our offering cost guidance for the year of C$35 to C$40 a barrel. ': ': ': Réal Doucet: ': ': ': ': ': ': Another challenge we have is the higher-abrasive material. That has forced us to readjust our preventative maintenance schedule. The fillings pipe and the hydro-transport pipe replacement and rotation cycle has been reduced, so we have more maintenance to do. ': ': ': ': ': ': ': ': ': ': ': ': ': All in all, in these things in the froth treatment and the extraction plant and the upgrading has given us here a tremendous learning experience. ': All in all, in these things in the froth treatment and the extraction plant and the upgrading has given us here a tremendous learning experience. ': ': We have seen some opportunities throughout the plant also. We are running right now and mining on the top bench and it looks like the top bench is producing lighter bitumen than anticipated, which is an advantage actually because the API is higher for the our bitumen coming into the plant. ': ': ': ': ': ': ': ': ': ': ':

': ': Horizon is a world-class asset with over 6 billion barrels of recoverable oil. We have targeted increased production through phases 2 and 3 to 232,000 barrels a day and further expansions in phases 4 and 5 to just under 500,000 barrels a day or 0.5 million barrels a day of light sweet crude with no declines for 40 years and virtually no reserve replacement costs. Currently Canadian Natural is proceeding with tranche 2 of our phase 2/3 expansion and we will only proceed and proceed very carefully with tranches 3 and 4 when we are certain of the following. One, we can implement all our lessons learned from phase 1 to build and enhance on our successful phase 1 execution strategy. Two, we see significantly less cost and cost pressure going forward and we see a period of more stable commodity prices with a risk basis biased to the upside versus the down side. It is clear that Canadian Natural is in a very strong and enviable position. Horizon is a world-class asset that is and will continue to add tremendous value to shareholders. Our thermal heavy oil assets can add value similar in magnitude to Horizon, yet in more manageable sizes and are in my opinion the hidden gem in our portfolio and in this low gas price environment, generate even a greater value for shareholders. ': Horizon is a world-class asset with over 6 billion barrels of recoverable oil. We have targeted increased production through phases 2 and 3 to 232,000 barrels a day and further expansions in phases 4 and 5 to just under 500,000 barrels a day or 0.5 million barrels a day of light sweet crude with no declines for 40 years and virtually no reserve replacement costs. Currently Canadian Natural is proceeding with tranche 2 of our phase 2/3 expansion and we will only proceed and proceed very carefully with tranches 3 and 4 when we are certain of the following. One, we can implement all our lessons learned from phase 1 to build and enhance on our successful phase 1 execution strategy. Two, we see significantly less cost and cost pressure going forward and we see a period of more stable commodity prices with a risk basis biased to the upside versus the down side. It is clear that Canadian Natural is in a very strong and enviable position. Horizon is a world-class asset that is and will continue to add tremendous value to shareholders. Our thermal heavy oil assets can add value similar in magnitude to Horizon, yet in more manageable sizes and are in my opinion the hidden gem in our portfolio and in this low gas price environment, generate even a greater value for shareholders. ': Our teams are strong throughout the company, and as Doug will point out, our balance sheet is strong and getting stronger. Our capital program is very flexible, giving Canadian Natural the ability not to only maximize the value of our well-balanced portfolio but also capture any opportunities that will present themselves this environment. ': ':

Operationally and financially, the results of the second quarter and the first half of 2009 were very good. We have now completed our big dollar projects and with Horizon phase 1 on-stream and producing SCO at better than anticipated grades in the second quarter, all of our core areas are generating free cash flow. In the first half of 2009, Canadian Natural generated close to $2.9 billion of cash flow from operations or $5.32 per share and $467 million of earnings. We incurred $1.7 billion of capital expenditures. This has allowed us to reduce long-term debt by $1 billion from the beginning of the year to slightly less than $12 billion at June 30, with targeted reductions as we move through the year. Our balance sheet metrics continue to improve with debt-to-book capitalization of 39% and debt-to-EBITDA of 1.7 times, both at or below the midpoint of our targeted ranges. Our liquid resources remain strong. At the end of the second quarter, our undrawn bank lines exceeded $1.7 billion. We continue to systematically retire the non-revolving credit facility which matures in October. To-date, we have reduced the outstanding balance to just over $1 billion from the $2.3 billion outstanding at December 31. With a further $350 million being repaid since June 30, we are in excellent position to retire the remaining $1 billion outstanding from an allocation of cash flow from operations, which includes the proceeds from our commodity hedge program. Our revolving syndicated facilities are in place through June 2012, and our debt maturities are manageable at less than $500 million per year through 2012. Our access to the debt capital markets is good, with strong and stable rating and of course considering the apparent and remarkable recovery of the financial and debt capital markets. We remain active with our commodity hedge program, 92,000 barrels of oil per day of crude oil puts with a floor of $100 per barrel. In addition, we have 25,000 of collars with a floor of $70 through the remainder of 2009. For natural gas, we have 400,000 GJs per day of AECO natural gas physical sales contracts with an average price of $5.29 per GJ through to the end of December. In 2010, we have 50,000 barrels per day of crude oil collars with a floor of $60 and a ceiling of $75 per barrel. In addition, we have 220,000 GJs of AECO with a floor of $60 and a ceiling of $8 for all of next year. We continue to monitor this program for expansion opportunities into 2010 and our commodity hedge book is posted on our website and is presented in the press release. Finally, we have declared a quarterly cash dividend of $0.105 per share, payable October 1, continuing in the tradition of paying dividend for the ninth consecutive year. Canadian Natural continues to grow and diversify our asset portfolio with production from conventional oil and natural gas, new production fields in Canada and Offshore West Africa and the addition of synthetic crude oil volumes from the oil sands mining and upgrading, we continue to grow shareholder value through the prudent management of our world-class assets. I will return you to John for some closing comments.

Thanks very much for the updates Steve, Réal and Doug. As you have heard, our operations continue to be driven by our long-standing basic strategy of having a balanced portfolio that allows us to allocate capital where it can create sustainable returns and value. With that, operator, I would open up the conference call for any questions that people may have.

(Operator Instructions) Our first question is from Andrew Fairbanks from Banc of America. Andrew Fairbanks - Banc of America: Just a couple of questions on Horizon, if I could. There seems to be still a reasonable wedge between the production at about 60 MBD and then the sales barrels at 47. So first, do you think that that wedge will continue as a ramp up through the balance of the year or will production and sales come together a little more closely as you get into the second quarter?

': ': ': Andrew Fairbanks - Banc of America: ':

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Our next question is from Martin Molyneaux from FirstEnergy Capital. Martin Molyneaux - FirstEnergy Capital: ':

': Martin Molyneaux - FirstEnergy Capital: Okay.

': ': Réal Doucet: ': ': ': Martin Molyneaux - FirstEnergy Capital: ': ':

': ': ': ': ': ': ': Martin Molyneaux - FirstEnergy Capital: So timing-wise?

I guess probably the best way to look at it is, if we take the full program before we find out exactly what it is and to remediate it, we could be in full steaming probably later this year, but more likely early in 2010. Martin Molyneaux - FirstEnergy Capital: ':

': ': ': Martin Molyneaux - FirstEnergy Capital: ':

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Our next question is from Mark Polak of Scotia Capital. Mark Polak - Scotia Capital: ':

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': Mark Polak - Scotia Capital: ': ':

': Mark Polak - Scotia Capital: Then just one final one. Can we just talk about the potential for commercializing the gas reserves at Olowi and if there are any discussions underway with regards to that?

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(Operator Instructions) Our next question is from Brian Dutton from Credit Suisse. You may go ahead. Brian Dutton - Credit Suisse: I was just wondering if you could give us some of your thoughts here on the heavy oil market and where you think markets may be trending both near and long term?

Thanks, Brian. Our view is that the heavy oil differential has traditionally been around that 30 to 32%. We believe there has been a structural change in the heavy oil market with Mexico volumes coming off and coming off hard and looking like it will be very difficult for them to return to levels they were before. Venezuela has its own issues that will probably be here for a while. That gives an opportunity for Canadian heavy oil to move into that market with the pipelines being built. ': Brian Dutton - Credit Suisse: Is there any way for you at this time to walk in the spread to reduce your risk on your investments?

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Thank you. The conference call is now concluded. Please disconnect your lines at this time and we thank you for your participation.