EX-99.3 4 a12312022q4fs.htm EX-99.3 Document





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CANADIAN NATURAL RESOURCES LIMITED














UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 AND 2021
MARCH 1, 2023


INTERIM CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
As atNoteDec 31
2022		Dec 31
2021
(millions of Canadian dollars, unaudited)
ASSETS   
Current assets   
Cash and cash equivalents $920 $744 
Accounts receivable 3,555 3,111 
Inventory1,815 1,548 
Prepaids and other 215 195 
Investments
7
491 309 
Current portion of other long-term assets
8
61 35 
  7,057 5,942 
Exploration and evaluation assets
4
2,226 2,250 
Property, plant and equipment
5
64,859 66,400 
Lease assets
6
1,447 1,508 
Other long-term assets
8
553 565 
  $76,142 $76,665 
LIABILITIES   
Current liabilities   
Accounts payable $1,341 $803 
Accrued liabilities 4,209 3,064 
Current income taxes payable 1,324 1,607 
Current portion of long-term debt
9
404 1,000 
Current portion of other long-term liabilities
6,10
1,373 948 
  8,651 7,422 
Long-term debt
9
11,041 13,694 
Other long-term liabilities
6,10
8,161 8,384 
Deferred income taxes10,114 10,220 
  37,967 39,720 
SHAREHOLDERS' EQUITY   
Share capital
12
10,294 10,168 
Retained earnings27,672 26,778 
Accumulated other comprehensive income (loss)
13
209 (1)
  38,175 36,945 
  $76,142 $76,665 
Commitments and contingencies (note 17)


Approved by the Board of Directors on March 1, 2023.
Canadian Natural Resources Limited
1
Three months and year ended December 31, 2022

CONSOLIDATED STATEMENTS OF EARNINGS
Three Months EndedYear Ended
(millions of Canadian dollars, except per
 common share amounts, unaudited)		NoteDec 31
2022		Dec 31
2021		Dec 31
2022		Dec 31
2021
Product sales
18
$11,012 $10,190 $49,530 $32,854 
Less: royalties(1,323)(977)(7,232)(2,797)
Revenue9,689 9,213 42,298 30,057 
Expenses
Production2,309 1,869 8,712 7,152 
Transportation, blending and feedstock2,601 2,065 9,973 6,604 
Depletion, depreciation and amortization
5,6
3,129 1,473 7,353 5,724 
Administration108 97 415 366 
Share-based compensation
10
319 191 804 514 
Asset retirement obligation accretion
10
82 46 281 185 
Interest and other financing expense76 171 549 711 
Risk management activities
16
13 2 (35)36 
Foreign exchange (gain) loss(185)(106)738 (127)
Gain on acquisitions— — — (478)
Income from North West Redwater Partnership
8
— — — (400)
Gain from investments
7
(93)(5)(196)(141)
  8,359 5,803 28,594 20,146 
Earnings before taxes 1,330 3,410 13,704 9,911 
Current income tax expense
11
399 683 2,906 1,848 
Deferred income tax (recovery) expense
11
(589)193 (139)399 
Net earnings $1,520 $2,534 $10,937 $7,664 
Net earnings per common share   
Basic
15
$1.37 $2.16 $9.64 $6.49 
Diluted
15
$1.36 $2.14 $9.52 $6.46 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months EndedYear Ended
(millions of Canadian dollars, unaudited)Dec 31
2022		Dec 31
2021		Dec 31
2022		Dec 31
2021
Net earnings$1,520 $2,534 $10,937 $7,664 
Items that may be reclassified subsequently to net earnings
Net change in derivative financial instruments
designated as cash flow hedges
  
Unrealized (loss) income during the period, net of taxes of
$nil (2021 – $1 million) – three months ended;
$1 million (2021 – $2 million) – year ended
— (19)4 15 
Reclassification to net earnings, net of taxes of
$nil (2021 – $nil) – three months ended;
$1 million (2021 – $1 million) – year ended
— 1 (6)(7)
 — (18)(2)8 
Foreign currency translation adjustment  
Translation of net investment
(21)(20)212 (17)
Other comprehensive (loss) income, net of taxes(21)(38)210 (9)
Comprehensive income$1,499 $2,496 $11,147 $7,655 
Canadian Natural Resources Limited
2
Three months and year ended December 31, 2022

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Year Ended

(millions of Canadian dollars, unaudited)		NoteDec 31
2022		Dec 31
2021
Share capital
12
  
Balance – beginning of year $10,168 $9,606 
Issued upon exercise of stock options 442 707 
Previously recognized liability on stock options exercised for common shares
 387 139 
Purchase of common shares under Normal Course Issuer Bid(703)(284)
Balance – end of year 10,294 10,168 
Retained earnings   
Balance – beginning of year 26,778 22,766 
Net earnings 10,937 7,664 
Dividends on common shares
12
(5,175)(2,355)
Purchase of common shares under Normal Course Issuer Bid
12
(4,868)(1,297)
Balance – end of year 27,672 26,778 
Accumulated other comprehensive income (loss)
13
  
Balance – beginning of year (1)8 
Other comprehensive income (loss), net of taxes 210 (9)
Balance – end of year 209 (1)
Shareholders' equity $38,175 $36,945 
Canadian Natural Resources Limited
3
Three months and year ended December 31, 2022

CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months EndedYear Ended
(millions of Canadian dollars, unaudited)NoteDec 31
2022		Dec 31
2021		Dec 31
2022		Dec 31
2021
Operating activities   
Net earnings $1,520 $2,534 $10,937 $7,664 
Non-cash items  
Depletion, depreciation and amortization
5
3,129 1,473 7,353 5,724 
Share-based compensation 319 191 804 514 
Asset retirement obligation accretion 82 46 281 185 
Unrealized risk management loss (gain) 15 8 (28)19 
Unrealized foreign exchange (gain) loss (203)(79)852 (205)
Gain on acquisitions— — — (478)
Gain from investments
7
(88)(3)(182)(132)
Deferred income tax (recovery) expense (589)193 (139)399 
Realized foreign exchange loss (gain) (1)
7 — (62)118 
Proceeds on settlement of cross currency swap
16
— — 89 — 
Other (65)21 (144)13 
Abandonment expenditures
 10
(100)(92)(449)(307)
Net change in non-cash working capital517 420 79 964 
Cash flows from operating activities 4,544 4,712 19,391 14,478 
Financing activities   
Repayment of bank credit facilities and commercial paper, net
9
— (1,979)(1,156)(6,151)
Repayment of medium-term notes
9
(18)— (1,498)— 
Repayment of US dollar debt securities
9
(1,356)— (1,356)(628)
Settlement of long-term debt acquired— (183)— (183)
Proceeds on settlement of cross currency swap
16
— — 69 — 
Payment of lease liabilities
6,10
(83)(55)(232)(209)
Issue of common shares on exercise of stock options
12
110 360 442 707 
Dividends on common shares(834)(552)(4,926)(2,170)
Purchase of common shares under Normal Course Issuer Bid
12
(746)(838)(5,571)(1,581)
Cash flows used in financing activities(2,927)(3,247)(14,228)(10,215)
Investing activities   
Net (expenditures) proceeds on exploration and evaluation assets
4,18
(9)4 (33)(1)
Net expenditures on property, plant and equipment
5,18
(1,224)(1,558)(5,103)(4,492)
Proceeds from investment— — — 128 
Repayment of North West Redwater Partnership subordinated debt advances— — — 555 
Net change in non-cash working capital(29)(61)149 107 
Cash flows used in investing activities (1,262)(1,615)(4,987)(3,703)
Increase (decrease) in cash and cash equivalents355 (150)176 560 
Cash and cash equivalents – beginning of period565 894 744 184 
Cash and cash equivalents – end of period $920 $744 $920 $744 
Interest paid on long-term debt, net $131 $122 $613 $672 
Income taxes paid (received), net $575 $32 $3,057 $(62)
(1)Consists of the realized foreign exchange gain on settlement of cross currency swap in 2022 and the realized foreign exchange loss on repayment of US dollar debt securities in 2022 and 2021.
Canadian Natural Resources Limited
4
Three months and year ended December 31, 2022

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions of Canadian dollars, unless otherwise stated, unaudited)
1. ACCOUNTING POLICIES
Canadian Natural Resources Limited (the "Company") is a senior independent crude oil and natural gas exploration, development and production company. The Company's exploration and production operations are focused in North America, largely in Western Canada; the United Kingdom portion of the North Sea; and Côte d’Ivoire and South Africa in Offshore Africa.
The "Oil Sands Mining and Upgrading" segment produces synthetic crude oil through bitumen mining and upgrading operations at Horizon Oil Sands ("Horizon") and through the Company's direct and indirect interest in the Athabasca Oil Sands Project ("AOSP").
Within Western Canada in the "Midstream and Refining" segment, the Company maintains certain activities that include pipeline operations, an electricity co-generation system and an investment in the North West Redwater Partnership ("NWRP"), a general partnership formed to upgrade and refine bitumen in the Province of Alberta.
The Company was incorporated in Alberta, Canada. The address of its registered office is 2100, 855 - 2 Street S.W., Calgary, Alberta, Canada.
These interim consolidated financial statements and the related notes have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), applicable to the preparation of interim financial statements, including International Accounting Standard ("IAS") 34 "Interim Financial Reporting", following the same accounting policies as the audited consolidated financial statements of the Company as at December 31, 2021, except as disclosed in note 2. These interim consolidated financial statements contain disclosures that are supplemental to the Company's annual audited consolidated financial statements. Certain disclosures normally required to be included in the notes to the annual audited consolidated financial statements have been condensed. These interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2021.
Critical Accounting Estimates and Judgements
The Company has made estimates, assumptions and judgements regarding certain assets, liabilities, revenues and expenses in the preparation of these interim consolidated financial statements, primarily related to unsettled transactions and events as of the date of these interim consolidated financial statements. Accordingly, actual results may differ from estimated amounts, and those differences may be material.
2. CHANGE IN ACCOUNTING POLICIES
In May 2020, the IASB issued amendments to IAS 16 “Property, Plant and Equipment” to require proceeds received from selling items produced while the entity is preparing the asset for its intended use to be recognized in net earnings, rather than as a reduction in the cost of the asset. The amendments were adopted January 1, 2022 and did not have a significant impact on the Company's consolidated financial statements.
3. ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED
In January 2020, the IASB issued amendments to IAS 1 "Presentation of Financial Statements" to clarify that liabilities are classified as either current or non-current, depending on the existence of the substantive right at the end of the reporting period for an entity to defer settlement of the liability for at least twelve months after the reporting period. In October 2022, the IASB issued further amendments to specify that the classification of debt as current or non-current at the reporting date is not affected by covenants to be complied with after the reporting date, and added disclosure requirements about these covenants. The amendments are effective January 1, 2024 with early adoption permitted. The amendments are required to be adopted retrospectively. The Company is assessing the impact of all amendments on its consolidated financial statements.
Canadian Natural Resources Limited
5
Three months and year ended December 31, 2022

4. EXPLORATION AND EVALUATION ASSETS
 Exploration and ProductionOil Sands
Mining and
Upgrading		Total
 North
America		North
Sea		Offshore
Africa		  
Cost     
At December 31, 2021$2,057 $— $91 $102 $2,250 
Additions41 — 5 — 46 
Transfers to property, plant and equipment
(71)— — — (71)
Derecognitions and other(1)— — — (1)
Foreign exchange adjustments— — 2 — 2 
At December 31, 2022$2,026 $— $98 $102 $2,226 
5. PROPERTY, PLANT AND EQUIPMENT
 Exploration and ProductionOil Sands
Mining and
Upgrading		Midstream and
Refining		Head
Office		Total
 North
America		North
Sea		Offshore
Africa		    
Cost       
At December 31, 2021$77,834 $7,438 $3,980 $46,856 $466 $508 $137,082 
Additions / Acquisitions3,136 127 119 1,759 9 25 5,175 
Transfers from exploration & evaluation assets71 — — — — — 71 
Change in asset retirement obligation estimates428 177 (44)(379)(1)— 181 
Derecognitions (1)
(394)(1)— (469)— — (864)
Disposals— — — (35)— — (35)
Foreign exchange adjustments and other— 517 277 — — 3 797 
At December 31, 2022$81,075 $8,258 $4,332 $47,732 $474 $536 $142,407 
Accumulated depletion and depreciation     
At December 31, 2021$52,732 $5,951 $2,923 $8,499 $183 $394 $70,682 
Expense3,502 117 148 1,684 15 23 5,489 
Derecognitions (1)
(394)(1)— (469)— — (864)
Disposals— — — (2)— — (2)
Recoverability charge— 1,620 — — — — 1,620 
Foreign exchange adjustments and other(5)419 206 — — 3 623 
At December 31, 2022$55,835 $8,106 $3,277 $9,712 $198 $420 $77,548 
Net book value
At December 31, 2022$25,240 $152 $1,055 $38,020 $276 $116 $64,859 
At December 31, 2021$25,102 $1,487 $1,057 $38,357 $283 $114 $66,400 
(1)An asset is derecognized when no future economic benefits are expected to arise from its continued use or disposal.
During the year ended December 31, 2022, the Company acquired a number of crude oil and natural gas properties in the North America Exploration and Production segment for net cash consideration of $513 million and assumed associated asset retirement obligations of $11 million. No net deferred income tax liabilities were recognized and no pre-tax gains were recognized on these transactions.
Canadian Natural Resources Limited
6
Three months and year ended December 31, 2022

Prevailing regulatory and economic conditions in 2022 and the increasingly challenging commercial outlook in the United Kingdom, including the impact of higher natural gas and carbon costs, led the Company to assess the viability of its North Sea operations. Following a detailed review of its development plans, the Company determined that the Ninian field is no longer economic, de-booked associated crude oil reserves as at December 31, 2022, and is accelerating abandonment.
As a result, the Company completed a recoverability assessment of its assets in the North Sea, and recognized a non-cash charge of $651 million (after-tax) related to the Ninian field property, plant and equipment, comprised of a recoverability charge of $1,620 million recognized in depletion, depreciation and amortization, net of deferred tax recoveries of $969 million.
As at December 31, 2022, the Company completed its normal course assessment of the recoverability of its other property, plant and equipment and exploration and evaluation assets, and determined the carrying amounts of all its cash generating units to be recoverable.
6. LEASES
Lease assets
Product
transportation
and storage		Field
equipment
and power		Offshore
vessels and
equipment		Office leases
and other		Total
At December 31, 2021$974 $354 $99 $81 $1,508 
Additions44 110 28 — 182 
Depreciation(106)(86)(31)(21)(244)
Foreign exchange adjustments and other
— (1)1 1 1 
At December 31, 2022$912 $377 $97 $61 $1,447 
Lease liabilities
The Company measures its lease liabilities at the discounted value of its lease payments during the lease term. Lease liabilities as at December 31, 2022 were as follows:
 Dec 31
2022		Dec 31
2021
Lease liabilities $1,540 $1,584 
Less: current portion244 185 
 $1,296 $1,399 
Total cash outflows for leases for the three months ended December 31, 2022, including payments related to short-term leases not reported as lease assets, were $322 million (three months ended December 31, 2021 – $258 million; year ended December 31, 2022 – $1,204 million; year ended December 31, 2021 – $1,089 million). Interest expense on leases for the three months ended December 31, 2022 was $15 million (three months ended December 31, 2021 – $15 million; year ended December 31, 2022 – $60 million; year ended December 31, 2021 – $62 million).
Canadian Natural Resources Limited
7
Three months and year ended December 31, 2022

7. INVESTMENTS
As at December 31, 2022, the Company had the following investment:
Dec 31
2022		Dec 31
2021
Investment in PrairieSky Royalty Ltd.$491 $309 
The gain from investments was comprised as follows:
Three Months EndedYear Ended
Dec 31
2022		Dec 31
2021		Dec 31
2022
Dec 31
2021(1)
Gain from investments$(88)$(3)$(182)$(132)
Dividend income (5)(2)(14)(9)
$(93)$(5)$(196)$(141)
(1) Includes the gain and dividend income from the Company's investment in Inter Pipeline Ltd.
The Company's 22.6 million share investment in PrairieSky Royalty Ltd. does not constitute significant influence, and is accounted for at fair value through profit or loss, measured at each reporting date. As at December 31, 2022, the market price per common share was $21.70 (December 31, 2021 – $13.63).
8. OTHER LONG-TERM ASSETS
 Dec 31
2022		Dec 31
2021
Prepaid cost of service tolls$199 $157 
Long-term inventory137 126 
Risk management (note 16)
9 140 
Long-term contracts, prepayments and other (1)
269 177 
 614 600 
Less: current portion61 35 
 $553 $565 
(1)Includes physical product sales contracts assumed in the acquisition of Painted Pony Energy Ltd. ("Painted Pony") in the fourth quarter of 2020, accrued interest on the deferred PRT recovery, and the unamortized portion of the Company's share bonus program.
The Company has a 50% equity investment in NWRP. NWRP operates a 50,000 barrels per day bitumen upgrader and refinery that processes approximately 12,500 barrels per day (25% toll payer) of bitumen feedstock for the Company and 37,500 barrels per day (75% toll payer) of bitumen feedstock for the Alberta Petroleum Marketing Commission ("APMC"), an agent of the Government of Alberta. The Company is unconditionally obligated to pay its 25% pro rata share of the debt component of the monthly fee-for-service toll over the 40-year tolling period until 2058 (note 17). Sales of diesel and refined products and associated refining tolls are recognized in the Midstream and Refining segment (note 18).
During the third quarter of 2022, NWRP extended its $3,000 million syndicated credit facility and increased it to $3,175 million. The revolving portion of the credit facility was increased to $2,175 million, with $118 million maturing in June 2023, and $2,057 million maturing in June 2025. The $1,000 million non-revolving portion of the credit facility was extended, with $60 million maturing in June 2023, and $940 million maturing in June 2025. During the third quarter of 2022, NWRP also entered into a $150 million facility to support letters of credit.
The carrying value of the Company's interest in NWRP is $nil, and as at December 31, 2022, the cumulative unrecognized share of the equity loss and partnership distributions from NWRP was $551 million (December 31, 2021 – $562 million). For the three months ended December 31, 2022, the Company's recovery of its share of unrecognized equity losses was $37 million (year ended December 31, 2022 – recovery of unrecognized equity losses of $11 million; three months ended December 31, 2021 – unrecognized equity loss of $12 million; year ended December 31, 2021 – unrecognized equity loss of $9 million and partnership distributions of $400 million).
Canadian Natural Resources Limited
8
Three months and year ended December 31, 2022

9. LONG-TERM DEBT
 Dec 31
2022		Dec 31
2021
Canadian dollar denominated debt, unsecured  
Medium-term notes$1,702 $3,200 
US dollar denominated debt, unsecured  
Bank credit facilities (December 31, 2022 – US$nil;
     December 31, 2021 – US$901 million)
— 1,140 
US dollar debt securities (December 31, 2022 – US$7,250 million;
     December 31, 2021 – US$8,250 million)
9,812 10,441 
 9,812 11,581 
Long-term debt before transaction costs and original issue discounts, net11,514 14,781 
Less: original issue discounts, net (1)
13 15 
transaction costs (1) (2)
56 72 
 11,445 14,694 
Less: current portion of other long-term debt (1) (2)
404 1,000 
 $11,041 $13,694 
(1)The Company has included unamortized original issue discounts and premiums, and directly attributable transaction costs in the carrying amount of the outstanding debt.
(2)Transaction costs primarily represent underwriting commissions charged as a percentage of the related debt offerings, as well as legal, rating agency and other professional fees.
Bank Credit Facilities and Commercial Paper
As at December 31, 2022, the Company had undrawn revolving bank credit facilities of $5,520 million. Details of these facilities are described below. The Company also has certain other dedicated credit facilities supporting letters of credit.
•a $100 million demand credit facility;
•a $500 million revolving credit facility, maturing February 2024;
•a $2,425 million revolving syndicated credit facility, maturing June 2024; and
•a $2,495 million revolving syndicated credit facility, with $70 million maturing June 2023, and $2,425 million maturing June 2025.
During the second quarter of 2022, the Company repaid and cancelled the $500 million non-revolving portion of the $1,000 million term credit facility, reducing the remaining facility to the $500 million revolving facility maturing February 2023. In the fourth quarter of 2022, this facility was extended from February 2023 to February 2024.
During the first quarter of 2022, the Company repaid $500 million of the $1,150 million non-revolving term credit facility maturing February 2023. During the second quarter of 2022, the Company repaid the remaining $650 million and the facility was cancelled.
Borrowings under the Company's revolving term credit facilities may be made by way of pricing referenced to Canadian dollar bankers' acceptances, US dollar bankers’ acceptances, LIBOR, SOFR, US base rate or Canadian prime rate.
During the first quarter of 2022, the Company discontinued its £5 million demand credit facility related to its North Sea operations.
The Company's borrowings under its US commercial paper program are authorized up to a maximum of US$2,500 million. The Company reserves capacity under its revolving bank credit facilities for amounts outstanding under this program.
The Company's weighted average interest rate on total long-term debt outstanding for the year ended December 31, 2022 was 4.3% (December 31, 2021 – 3.5%).
As at December 31, 2022, letters of credit and guarantees aggregating to $637 million were outstanding.

Canadian Natural Resources Limited
9
Three months and year ended December 31, 2022

Medium-Term Notes
In July 2021, the Company filed a base shelf prospectus that allows for the offer for sale from time to time of up to $3,000 million of medium-term notes in Canada, which expires in August 2023. If issued, these securities may be offered in amounts and at prices, including interest rates, to be determined based on market conditions at the time of issuance.
During the fourth quarter of 2022, the Company repaid through market purchases $18 million of medium-term notes with interest rates ranging from 1.45% to 3.55%, originally due between 2023 and 2028 (year ended December 31, 2022 - $498 million).
During the first quarter of 2022, the Company repaid $1,000 million of 3.31% medium-term notes.
US Dollar Debt Securities
In July 2021, the Company filed a base shelf prospectus that allows for the offer for sale from time to time of up to US$3,000 million of debt securities in the United States, which expires in August 2023. If issued, these securities may be offered in amounts and at prices, including interest rates, to be determined based on market conditions at the time of issuance.
During the fourth quarter of 2022, the Company early repaid US$1,000 million of 2.95% debt securities, originally due January 15, 2023.
10. OTHER LONG-TERM LIABILITIES
 Dec 31
2022		Dec 31
2021
Asset retirement obligations$6,908 $6,806 
Lease liabilities (note 6)
1,540 1,584 
Share-based compensation832 489 
Transportation and processing contracts
159 241 
Risk management (note 16)
3 85 
Other
92 127 
 9,534 9,332 
Less: current portion1,373 948 
 $8,161 $8,384 
Canadian Natural Resources Limited
10
Three months and year ended December 31, 2022

Asset Retirement Obligations
The Company's asset retirement obligations are expected to be settled on an ongoing basis over a period of approximately 60 years and discounted using a weighted average discount rate of 5.6% (December 31, 2021 – 4.0%) and inflation rates of up to 2% (December 31, 2021 – up to 2%). Reconciliations of the discounted asset retirement obligations were as follows:
 Dec 31
2022		Dec 31
2021
Balance – beginning of year$6,806 $5,861 
Liabilities incurred20 5 
Liabilities acquired, net11 76 
Liabilities settled(449)(307)
Asset retirement obligation accretion281 185 
Revision of cost, inflation and timing estimates (1)
897 508 
Impact of regulatory changes (2)
982 1,208 
Change in discount rates(1,698)(723)
Foreign exchange adjustments58 (7)
Balance – end of year6,908 6,806 
Less: current portion495 249 
 $6,413 $6,557 
(1)Includes normal course revisions of cost, inflation and timing estimates, as well as revisions related to the acceleration of the abandonment of Ninian field assets in the North Sea at December 31, 2022.
(2)Reflects changes to the estimated timing of settlement of the Company's asset retirement obligations due to provincial regulatory changes in Alberta, British Columbia and Saskatchewan.
Share-Based Compensation
The liability for share-based compensation includes costs incurred under the Company's Stock Option Plan and Performance Share Unit ("PSU") plans. The Company’s Stock Option Plan provides current employees with the right to elect to receive common shares or a cash payment in exchange for stock options surrendered. The PSU plan provides certain executive employees of the Company with the right to receive a cash payment, the amount of which is determined by individual employee performance and the extent to which certain other performance measures are met.
The Company recognizes a liability for potential cash settlements under these plans. The current portion of the liability represents the maximum amount of the liability payable within the next twelve month period if all vested stock options and PSUs are settled in cash.
 Dec 31
2022		Dec 31
2021
Balance – beginning of year$489 $160 
Share-based compensation expense804 514 
Cash payment for stock options surrendered and PSUs vested(79)(48)
Transferred to common shares(387)(139)
Other5 2 
Balance – end of year832 489 
Less: current portion559 329 
 $273 $160 
Canadian Natural Resources Limited
11
Three months and year ended December 31, 2022

11. INCOME TAXES
The provision for income tax was as follows:
Three Months EndedYear Ended
Expense (recovery)Dec 31
2022		Dec 31
2021		Dec 31
2022		Dec 31
2021
Current corporate income tax – North America
$345 $691 $2,789 $1,841 
Current corporate income tax – North Sea33 (3)69 7 
Current corporate income tax – Offshore Africa
23 3 74 21 
Current PRT (1) – North Sea
(5)(12)(42)(34)
Other taxes3 4 16 13 
Current income tax399 683 2,906 1,848 
Deferred corporate income tax(148)193 302 399 
Deferred PRT (1) – North Sea
(441)— (441)— 
Deferred income tax(589)193 (139)399 
Income tax$(190)$876 $2,767 $2,247 
(1)Petroleum Revenue Tax
In connection with the Company's de-booking of its crude oil reserves and acceleration of the abandonment at the Ninian field in the North Sea (note 5), as at December 31, 2022, the Company recognized deferred tax recoveries comprised of a deferred corporate income tax recovery of $528 million and a deferred PRT recovery of $441 million.
12. SHARE CAPITAL
Authorized
Preferred shares issuable in a series.
Unlimited number of common shares without par value.
 Year Ended Dec 31, 2022
Issued Common Shares
Number of shares
(thousands)
Amount
Balance – beginning of year1,168,369 $10,168 
Issued upon exercise of stock options11,605 442 
Previously recognized liability on stock options exercised for common shares— 387 
Purchase of common shares under Normal Course Issuer Bid(77,338)(703)
Balance – end of year1,102,636 $10,294 
Dividend Policy
The Company has paid regular quarterly dividends in each year since 2001. The dividend policy undergoes periodic review by the Board of Directors and is subject to change.
On March 1, 2023, the Board of Directors approved a 6% increase in the quarterly dividend to $0.90 per common share, beginning with the dividend payable on April 5, 2023.
On November 2, 2022, the Board of Directors approved a 13% increase in the quarterly dividend to $0.85 per common share, beginning with the dividend paid on January 5, 2023.
On August 3, 2022, the Board of Directors approved a special dividend of $1.50 per common share, paid on August 31, 2022.
On March 2, 2022, the Board of Directors approved a 28% increase in the quarterly dividend to $0.75 per common share. On November 3, 2021, the Board of Directors approved a 25% increase in the quarterly dividend to $0.5875 per common share. On March 3, 2021, the Board of Directors approved an 11% increase in the quarterly dividend to $0.47 per common share, from $0.425 per common share.

Canadian Natural Resources Limited
12
Three months and year ended December 31, 2022

Normal Course Issuer Bid
On March 8, 2022, the Company's application was approved for a Normal Course Issuer Bid ("NCIB") to purchase through the facilities of the Toronto Stock Exchange, alternative Canadian trading platforms, and the New York Stock Exchange, up to 101,574,207 common shares, representing 10% of the public float, over a 12-month period commencing March 11, 2022 and ending March 10, 2023.
For the year ended December 31, 2022, the Company purchased 77,338,200 common shares at a weighted average price of $72.03 per common share for a total cost of $5,571 million. Retained earnings were reduced by $4,868 million, representing the excess of the purchase price of common shares over their average carrying value. Subsequent to December 31, 2022, up to and including February 28, 2023, the Company purchased 6,000,000 common shares at a weighted average price of $77.72 per common share for a total cost of $466 million.
On March 1, 2023, the Board of Directors approved a resolution authorizing the Company to file a Notice of Intention with the TSX to purchase, by way of Normal Course Issuer Bid, up to 10% of the public float (as determined in accordance with the rules of the TSX) of its issued and outstanding common shares. Subject to acceptance of the Notice of Intention by the TSX, the purchases would be made through facilities of the TSX, alternative Canadian trading platforms, and the NYSE.
Share-Based Compensation – Stock Options
The following table summarizes information relating to stock options outstanding as at December 31, 2022:
 Year Ended Dec 31, 2022
 
Stock options
(thousands)
Weighted
 average
 exercise price
Outstanding – beginning of year38,327 $35.88 
Granted7,547 $68.15 
Exercised for common shares(11,605)$38.06 
Surrendered for cash settlement(441)$38.43 
Forfeited(2,678)$41.43 
Outstanding – end of year31,150 $42.37 
Exercisable – end of year5,522 $37.60 
The Stock Option Plan is a "rolling 7%" plan, whereby the aggregate number of common shares that may be reserved for issuance under the plan shall not exceed 7% of the common shares outstanding from time to time.
13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The components of accumulated other comprehensive income (loss), net of taxes, were as follows:
 Dec 31
2022		Dec 31
2021
Derivative financial instruments designated as cash flow hedges$75 $77 
Foreign currency translation adjustment134 (78)
$209 $(1)
Canadian Natural Resources Limited
13
Three months and year ended December 31, 2022

14. CAPITAL DISCLOSURES
The Company has defined its capital to mean its long-term debt and consolidated shareholders' equity, as determined at each reporting date.
The Company's objectives when managing its capital structure are to maintain financial flexibility and balance to enable the Company to access capital markets to sustain its on-going operations and support its growth strategies. The Company primarily monitors capital on the basis of an internally derived financial measure referred to as its "debt to book capitalization ratio", which is the arithmetic ratio of current and long-term debt less cash and cash equivalents divided by the sum of the carrying value of shareholders' equity plus current and long-term debt less cash and cash equivalents. The Company's internal targeted range for its debt to book capitalization ratio is 25% to 45%. This range may be exceeded in periods when a combination of capital projects, acquisitions, or lower commodity prices occurs. The Company may be below the low end of the targeted range when cash flow from operating activities is greater than current investment activities. As at December 31, 2022, the ratio was below the target range at 21.6%.
Readers are cautioned that the debt to book capitalization ratio is not defined by IFRS and this financial measure may not be comparable to similar measures presented by other companies. Further, there are no assurances that the Company will continue to use this measure to monitor capital or will not alter the method of calculation of this measure in the future.
 Dec 31
2022		Dec 31
2021
Long-term debt$11,445 $14,694 
Less: cash and cash equivalents920 744 
Long-term debt, net$10,525 $13,950 
Total shareholders' equity$38,175 $36,945 
Debt to book capitalization21.6%27.4%
The Company is subject to a financial covenant that requires debt to book capitalization as defined in its credit facility agreements to not exceed 65%. As at December 31, 2022, the Company was in compliance with this covenant.
15. NET EARNINGS PER COMMON SHARE
Three Months EndedYear Ended
  Dec 31
2022		Dec 31
2021		Dec 31
2022		Dec 31
2021
Weighted average common shares outstanding
   – basic (thousands of shares)
1,106,042 1,174,683 1,134,960 1,181,250 
Effect of dilutive stock options (thousands of shares)13,529 11,150 14,222 5,307 
Weighted average common shares outstanding
   – diluted (thousands of shares)
1,119,571 1,185,833 1,149,182 1,186,557 
Net earnings$1,520 $2,534 $10,937 $7,664 
Net earnings per common share– basic$1.37 $2.16 $9.64 $6.49 
 – diluted$1.36 $2.14 $9.52 $6.46 
Canadian Natural Resources Limited
14
Three months and year ended December 31, 2022

16. FINANCIAL INSTRUMENTS
The carrying amounts of the Company's financial instruments by category were as follows:
 Dec 31, 2022
Asset (liability)Financial
 assets at
amortized
 cost		Fair value
 through
profit or loss		Derivatives
 used for
 hedging		Financial
 liabilities at
 amortized
cost		Total
Cash and cash equivalents$920 $— $— $— $920 
Accounts receivable3,555 — — — 3,555 
Investments— 491 — — 491 
Other long-term assets— 9 — — 9 
Accounts payable— — — (1,341)(1,341)
Accrued liabilities— — — (4,209)(4,209)
Other long-term liabilities (1)
— (3)— (1,540)(1,543)
Long-term debt (2)
— — — (11,445)(11,445)
 $4,475 $497 $— $(18,535)$(13,563)
 Dec 31, 2021
Asset (liability)Financial
 assets at
amortized
 cost		Fair value
 through
profit or loss		Derivatives
 used for
 hedging		Financial
 liabilities at
 amortized
cost		Total
Cash and cash equivalents$744 $— $— $— $744 
Accounts receivable3,111 — — — 3,111 
Investments— 309 — — 309 
Other long-term assets— — 140 — 140 
Accounts payable— — — (803)(803)
Accrued liabilities— — — (3,064)(3,064)
Other long-term liabilities (1)
— (64)(21)(1,632)(1,717)
Long-term debt (2)
— — — (14,694)(14,694)
 $3,855 $245 $119 $(20,193)$(15,974)
(1)Includes $1,540 million of lease liabilities (December 31, 2021 – $1,584 million).
(2)Includes the current portion of long-term debt.

Canadian Natural Resources Limited
15
Three months and year ended December 31, 2022

The carrying amounts of the Company's financial instruments approximated their fair value, except for fixed rate long-term debt. The fair values of the Company's investments, recurring other long-term assets (liabilities) and fixed rate long-term debt are outlined below:
 Dec 31, 2022
 Carrying amount Fair value
Asset (liability) (1) (2)
 Level 1Level 2Level 3
Investments (3)
$491 $491 $— $— 
Other long-term assets$9 $— $9 $— 
Other long-term liabilities$(3)$— $(3)$— 
Fixed rate long-term debt (4) (5)
$(11,445)$(10,796)$— $— 
 Dec 31, 2021
 Carrying amountFair value
Asset (liability) (1) (2)
 Level 1Level 2Level 3
Investments (3)
$309 $309 $— $— 
Other long-term assets$140 $— $140 $— 
Other long-term liabilities$(133)$— $(85)$(48)
Fixed rate long-term debt (4) (5)
$(13,554)$(15,420)$— $— 
(1)Excludes financial assets and liabilities where the carrying amount approximates fair value due to the short-term nature of the asset or liability (cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities).
(2)There were no transfers between Level 1, 2 and 3 financial instruments.
(3)The fair values of the investments are based on quoted market prices.
(4)The fair value of fixed rate long-term debt has been determined based on quoted market prices.
(5)Includes the current portion of fixed rate long-term debt.
Risk Management
The Company periodically uses derivative financial instruments to manage its commodity price, interest rate and foreign currency exposures. These financial instruments are entered into solely for hedging purposes and are not used for speculative purposes. The following provides a summary of the carrying amounts of derivative financial instruments held and a reconciliation to the Company's consolidated balance sheets.
Asset (liability)Dec 31
2022		Dec 31
2021
Derivatives held for trading  
Natural gas (1)
$3 $(41)
Crude oil and NGLs (1)
— (10)
Foreign currency forward contracts3 (13)
Cash flow hedges 
Foreign currency forward contracts— (21)
Cross currency swaps— 140 
 $6 $55 
Included within:  
Current portion of other long-term assets$3 $5 
Current portion of other long-term liabilities(3)(72)
Other long-term assets 6 135 
Other long-term liabilities— (13)
 $6 $55 
(1)Commodity financial instruments assumed in the acquisitions of Storm Resources Ltd. ("Storm") and Painted Pony in the fourth quarter of 2021 and 2020, respectively.
Canadian Natural Resources Limited
16
Three months and year ended December 31, 2022

The estimated fair values of derivative financial instruments in Level 2 at each measurement date have been determined based on appropriate internal valuation methodologies and/or third party indications. Level 2 fair values determined using valuation models require the use of assumptions concerning the amount and timing of future cash flows and discount rates. In determining these assumptions, the Company primarily relied on external, readily-observable quoted market inputs as applicable, including crude oil and natural gas forward benchmark commodity prices and volatility, Canadian and United States interest rate yield curves, and Canadian and United States forward foreign exchange rates, discounted to present value as appropriate. The resulting fair value estimates may not necessarily be indicative of the amounts that could be realized or settled in a current market transaction and these differences may be material.
The changes in estimated fair values of derivative financial instruments included in the risk management asset (liability) were recognized in the financial statements as follows:
Asset (liability)Dec 31
2022		Dec 31
2021
Balance – beginning of year$55 $(24)
Net change in fair value of outstanding derivative financial instruments recognized in:  
Risk management activities70 (12)
Foreign exchange(119)82 
Other comprehensive income— 9 
Balance – end of year6 55 
Less: current portion— (67)
 $6 $122 
Net loss (gain) from risk management activities were as follows:
Three Months EndedYear Ended
 Dec 31
2022		Dec 31
2021		Dec 31
2022		Dec 31
2021
Net realized risk management (gain) loss$(2)$(6)$(7)$17 
Net unrealized risk management loss (gain)15 8 (28)19 
 $13 $2 $(35)$36 
Financial Risk Factors
a)     Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company's market risk is comprised of commodity price risk, interest rate risk, and foreign currency exchange rate risk.
Commodity price risk management
The Company periodically uses commodity derivative financial instruments to manage its exposure to commodity price risk associated with the sale of its future crude oil and natural gas production and with natural gas purchases.
The Company's outstanding commodity derivative financial instruments are expected to be settled monthly based on the applicable index pricing for the respective contract month.
Interest rate risk management
The Company is exposed to interest rate price risk on its fixed rate long-term debt and to interest rate cash flow risk on its floating rate long-term debt. The Company periodically enters into interest rate swap contracts to manage its fixed to floating interest rate mix on long-term debt. Interest rate swap contracts require the periodic exchange of payments without the exchange of the notional principal amounts on which the payments are based. As at December 31, 2022, the Company had no significant interest rate swap contracts outstanding.
Canadian Natural Resources Limited
17
Three months and year ended December 31, 2022

Foreign currency exchange rate risk management
The Company is exposed to foreign currency exchange rate risk in Canada primarily related to its US dollar denominated long-term debt, commercial paper and working capital. The Company is also exposed to foreign currency exchange rate risk on transactions conducted in other currencies and in the carrying value of its foreign subsidiaries. The Company periodically enters into cross currency swap contracts and foreign currency forward contracts to manage known currency exposure on US dollar denominated long-term debt, commercial paper and working capital. As at December 31, 2022, the Company had no cross currency swap contracts outstanding.
During the second quarter of 2022, the Company settled the US$550 million cross currency swap designated as a cash flow hedge of a portion of the US$1,100 million 6.25% US dollar debt securities due March 2038. The Company realized cash proceeds of $158 million on settlement.
As at December 31, 2022, the Company had US$1,017 million of foreign currency forward contracts outstanding, with original terms of up to 90 days, all of which were designated as derivatives held for trading.
b)     Credit risk
Credit risk is the risk that a party to a financial instrument will cause a financial loss to the Company by failing to discharge an obligation.
Counterparty credit risk management
The Company's accounts receivable are mainly with customers in the crude oil and natural gas industry and are subject to normal industry credit risks. The Company manages these risks by reviewing its exposure to individual companies on a regular basis and where appropriate, ensures that parental guarantees or letters of credit are in place to minimize the impact in the event of default. As at December 31, 2022, substantially all of the Company's accounts receivable were due within normal trade terms.
The Company is also exposed to possible losses in the event of nonperformance by counterparties to derivative financial instruments; however, the Company manages this credit risk by entering into agreements with counterparties that are substantially all investment grade financial institutions. As at December 31, 2022, the Company had net risk management assets of $7 million with specific counterparties related to derivative financial instruments (December 31, 2021 – $140 million).
The carrying amount of financial assets approximates the maximum credit exposure.
c)     Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
Management of liquidity risk requires the Company to maintain sufficient cash and cash equivalents, along with other sources of capital, consisting primarily of cash flow from operating activities, available credit facilities, commercial paper and access to debt capital markets, to meet obligations as they become due. The Company believes it has adequate bank credit facilities to provide liquidity to manage fluctuations in the timing of the receipt and/or disbursement of operating cash flows.
As at December 31, 2022, the maturity dates of the Company's financial liabilities were as follows:
 Less than
1 year		1 to less than
2 years		2 to less than
5 years		Thereafter
Accounts payable$1,341 $— $— $— 
Accrued liabilities$4,209 $— $— $— 
Long-term debt (1)
$404 $1,009 $3,757 $6,344 
Other long-term liabilities (2)
$247 $156 $416 $724 
Interest and other financing expense (3)
$584 $577 $1,410 $3,790 
(1)Long-term debt represents principal repayments only and does not reflect interest, original issue discounts and premiums or transaction costs.
(2)Lease payments included within other long-term liabilities reflect principal payments only and are as follows; less than one year, $244 million; one to less than two years, $156 million; two to less than five years, $416 million; and thereafter, $724 million.
(3)Includes interest and other financing expense on long-term debt and other long-term liabilities. Payments were estimated based upon applicable interest and foreign exchange rates as at December 31, 2022.
Canadian Natural Resources Limited
18
Three months and year ended December 31, 2022

17. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company has committed to certain payments. The following table summarizes the Company's commitments as at December 31, 2022:
 
2023
2024202520262027Thereafter
Product transportation and processing (1)
$1,171 $1,349 $1,168 $1,102 $1,052 $11,095 
North West Redwater Partnership service toll (2)
$151 $152 $151 $133 $118 $4,884 
Offshore vessels and equipment
$44 $35 $— $— $— $— 
Field equipment and power$36 $27 $24 $23 $22 $215 
Other$23 $24 $21 $16 $— $— 
(1)Includes commitments pertaining to a 20-year product transportation agreement on the Trans Mountain Pipeline Expansion.
(2)Pursuant to the processing agreements, the Company pays its 25% pro rata share of the debt component of the monthly fee-for-service toll. Included in the toll is $2,863 million of interest payable over the 40-year tolling period, ending in 2058 (note 8).
In addition to the commitments disclosed above, the Company has entered into various agreements related to the engineering, procurement and construction of its various development projects. These contracts can be cancelled by the Company upon notice without penalty, subject to the costs incurred up to and in respect of the cancellation.
The Company is defendant and plaintiff in a number of legal actions arising in the normal course of business. In addition, the Company is subject to certain contractor construction claims. The Company believes that any liabilities that might arise pertaining to any such matters would not have a material effect on its consolidated financial position.

Canadian Natural Resources Limited
19
Three months and year ended December 31, 2022

18. SEGMENTED INFORMATION
 North America
North SeaOffshore AfricaTotal Exploration and Production
Three Months EndedYear EndedThree Months EndedYear EndedThree Months EndedYear EndedThree Months EndedYear Ended
Dec 31Dec 31Dec 31Dec 31Dec 31Dec 31Dec 31Dec 31
(millions of Canadian dollars,
unaudited)
2022202120222021202220212022202120222021202220212022202120222021
Segmented product sales
Crude oil and NGLs4,124 4,431 20,755 14,478 228 197 623 607 153 39 694 420 4,505 4,667 22,072 15,505 
Natural gas1,234 901 4,931 2,484 4 2 13 5 8 11 55 31 1,246 914 4,999 2,520 
Other income and revenue (1)
19 38 217 119 (3)(1)— (1)2 1 8 7 18 38 225 125 
Total segmented product sales5,377 5,370 25,903 17,081 229 198 636 611 163 51 757 458 5,769 5,619 27,296 18,150 
Less: royalties(725)(566)(3,918)(1,694)— — (1)(1)(21)(3)(71)(21)(746)(569)(3,990)(1,716)
Segmented revenue4,652 4,804 21,985 15,387 229 198 635 610 142 48 686 437 5,023 5,050 23,306 16,434 
Segmented expenses      
Production983 794 3,754 2,963 196 130 437 383 36 14 114 91 1,215 938 4,305 3,437 
Transportation, blending and feedstock1,505 1,459 6,394 4,772 1 2 6 7 — — 1 1 1,506 1,461 6,401 4,780 
Depletion, depreciation and amortization (note 5)949 939 3,595 3,569 1,653 33 1,747 160 41 19 173 142 2,643 991 5,515 3,871 
Asset retirement obligation accretion51 25 171 101 10 5 33 21 2 2 7 6 63 32 211 128 
Risk management activities (commodity derivatives)12 (3)18 29 — — — — — — — — 12 (3)18 29 
Gain on acquisitions— — — (478)— — — — — — — — — — — (478)
Income from North West Redwater Partnership— — — — — — — — — — — — — — — — 
Total segmented expenses3,500 3,214 13,932 10,956 1,860 170 2,223 571 79 35 295 240 5,439 3,419 16,450 11,767 
Segmented earnings (loss)1,152 1,590 8,053 4,431 (1,631)28 (1,588)39 63 13 391 197 (416)1,631 6,856 4,667 
Non–segmented expenses
Administration      
Share-based compensation      
Interest and other financing expense      
Risk management activities (other)      
Foreign exchange (gain) loss      
Gain from investments
Total non–segmented expenses      
Earnings before taxes      
Current income tax      
Deferred income tax      
Net earnings      
Canadian Natural Resources Limited
20
Three months and year ended December 31, 2022

 Oil Sands Mining and UpgradingMidstream and Refining
 Inter–segment
elimination and other
 
Total
Three Months EndedYear EndedThree Months EndedYear EndedThree Months EndedYear EndedThree Months EndedYear Ended
Dec 31Dec 31Dec 31Dec 31Dec 31Dec 31Dec 31Dec 31
(millions of Canadian dollars,
unaudited)
2022202120222021202220212022202120222021202220212022202120222021
Segmented product sales
Crude oil and NGLs (2)
4,935 4,408 20,804 14,033 21 17 80 78 47 (113)53 (360)9,508 8,979 43,009 29,256 
Natural gas— — — — — — — — 41 44 237 196 1,287 958 5,236 2,716 
Other income and revenue (1)
(2)18 149 73 205 200 906 681 (4)(3)5 3 217 253 1,285 882 
Total segmented product sales4,933 4,426 20,953 14,106 226 217 986 759 84 (72)295 (161)11,012 10,190 49,530 32,854 
Less: royalties(577)(408)(3,242)(1,081)— — — — — — — — (1,323)(977)(7,232)(2,797)
Segmented revenue4,356 4,018 17,711 13,025 226 217 986 759 84 (72)295 (161)9,689 9,213 42,298 30,057 
Segmented expenses
Production1,017 871 4,076 3,414 63 42 271 234 14 18 60 67 2,309 1,869 8,712 7,152 
Transportation, blending and feedstock (2)
867 527 2,652 1,505 155 165 691 550 73 (88)229 (231)2,601 2,065 9,973 6,604 
Depletion, depreciation and amortization (note 5)481 478 1,822 1,838 5 4 16 15 — — — — 3,129 1,473 7,353 5,724 
Asset retirement obligation accretion19 14 70 57 — — — — — — — — 82 46 281 185 
Risk management activities (commodity derivatives)— — — — — — — — — — — — 12 (3)18 29 
Gain on acquisitions— — — — — — — — — — — — — — — (478)
Income from North West Redwater Partnership— — — — — — — (400)— — — — — — — (400)
Total segmented expenses2,384 1,890 8,620 6,814 223 211 978 399 87 (70)289 (164)8,133 5,450 26,337 18,816 
Segmented earnings (loss)1,972 2,128 9,091 6,211 3 6 8 360 (3)(2)6 3 1,556 3,763 15,961 11,241 
Non–segmented expenses
Administration      108 97 415 366 
Share-based compensation      319 191 804 514 
Interest and other financing expense      76 171 549 711 
Risk management activities (other)      1 5 (53)7 
Foreign exchange (gain) loss      (185)(106)738 (127)
Gain from investments(93)(5)(196)(141)
Total non-segmented expenses226 353 2,257 1,330 
Earnings before taxes      1,330 3,410 13,704 9,911 
Current income tax      399 683 2,906 1,848 
Deferred income tax      (589)193 (139)399 
Net earnings      1,520 2,534 10,937 7,664 
(1)Includes the sale of diesel and other refined products and other income, including government grants and recoveries associated with the joint operations partners' share of the costs of lease contracts.
(2)Includes blending and feedstock costs associated with the processing of third party bitumen and other purchased feedstock in the Oil Sands Mining and Upgrading segment.
Canadian Natural Resources Limited
21
Three months and year ended December 31, 2022

Capital Expenditures (1)
Year Ended
 Dec 31, 2022Dec 31, 2021
 Net expenditures
Non-cash
and fair value changes (2)
Capitalized
 costs
Net expenditures (proceeds)
Non-cash
and fair value changes (2)
Capitalized
 costs
Exploration and evaluation assets      
Exploration and
   Production
      
North America
$28 $(59)$(31)$(7)$(36)$(43)
Offshore Africa 5 — 5 8 — 8 
Oil Sands Mining and Upgrading — — — — (150)(150)
 33 (59)(26)1 (186)(185)
Property, plant and equipment      
Exploration and
   Production
      
North America (3)
3,105 136 3,241 2,486 1,351 3,837 
North Sea126 177 303 173 38 211 
Offshore Africa119 (44)75 54 (6)48 
 3,350 269 3,619 2,713 1,383 4,096 
Oil Sands Mining and
   Upgrading (4)
1,719 (843)876 1,747 (601)1,146 
Midstream and Refining 9 (1)8 9 — 9 
Head Office25 — 25 23 — 23 
 5,103 (575)4,528 4,492 782 5,274 
$5,136 $(634)$4,502 $4,493 $596 $5,089 
(1)This table provides a reconciliation of capitalized costs, reported in note 4 and note 5, to net expenditures reported in the investing activities section of the statements of cash flows. The reconciliation excludes the impact of foreign exchange adjustments.
(2)Derecognitions, asset retirement obligations, transfer of exploration and evaluation assets, and other fair value adjustments.
(3)Includes cash consideration paid of $771 million for the acquisition of Storm in the fourth quarter of 2021.
(4)Net expenditures includes the acquisition of a 5% net carried interest on an existing oil sands lease in the second quarter of 2021.
Segmented Assets
 Dec 31
2022		Dec 31
2021
Exploration and Production  
North America$31,135 $30,645 
North Sea378 1,561 
Offshore Africa1,322 1,332 
Other54 40 
Oil Sands Mining and Upgrading42,102 42,016 
Midstream and Refining979 886 
Head Office172 185 
 $76,142 $76,665 
Canadian Natural Resources Limited
22
Three months and year ended December 31, 2022

SUPPLEMENTARY INFORMATION
INTEREST COVERAGE RATIOS
The following financial ratios are provided in connection with the Company's continuous offering of medium-term notes pursuant to the short form prospectus dated July 2021. These ratios are based on the Company's interim consolidated financial statements that are prepared in accordance with accounting principles generally accepted in Canada.
Interest coverage ratios for the twelve month period ended December 31, 2022:
Interest coverage (times)
   Net earnings (1)
26.0x
   Adjusted funds flow (2)
42.3x
(1)Net earnings plus income taxes and interest expense; divided by the sum of interest expense and capitalized interest.
(2)Adjusted funds flow plus current income taxes and interest expense; divided by the sum of interest expense and capitalized interest.
Canadian Natural Resources Limited
23
Three months and year ended December 31, 2022