Q2 FY2026
Filed Aug 6, 2026Canadian Natural Resources Limited announces record Q2/26 production, adjusted net earnings from operations and adjusted funds flow, while increasing 2026 production guidance.
Record quarterly production of 1,676,754 BOE/d, net earnings of $ 4,503 million, record adjusted net earnings from operations of $ 4,568 million and record adjusted funds flow of $ 6,866 million were accompanied by increased annual production guidance and approximately $4.0 billion of shareholder returns.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net earningsother | $ 4,503 | – | – |
| Net earnings per common share - basicother | $ 2.17 | – | – |
| Net earnings per common share - dilutedother | $ 2.15 | – | – |
| Adjusted net earnings from operationsnon-GAAP | $ 4,568 | – | – |
| Adjusted net earnings from operations per common share - basicnon-GAAP | $ 2.20 | – | – |
| Adjusted net earnings from operations per common share - dilutednon-GAAP | $ 2.19 | – | – |
| Cash flows from operating activitiesother | $ 6,823 | – | – |
| Adjusted funds flownon-GAAP | $ 6,866 | – | – |
| Adjusted funds flow per common share - basicnon-GAAP | $ 3.30 | – | – |
| Adjusted funds flow per common share - dilutednon-GAAP | $ 3.28 | – | – |
| Cash flows used in investing activitiesother | $ 2,468 | – | – |
| Net capital expendituresnon-GAAP | $ 2,405 | – | – |
| Net capital expenditures, excluding net acquisitionsnon-GAAP | $ 1,643 | – | – |
| Abandonment expendituresother | $ 182 | – | – |
| Free cash flownon-GAAP | $ 2,975 | – | – |
| Daily natural gas production, before royaltiesother | 2,567 MMcf/d | – | – |
| Daily crude oil and NGLs production, before royaltiesother | 1,248,889 bbl/d | – | 23% |
| Daily equivalent production, before royaltiesother | 1,676,754 BOE/d | – | 18% |
| Oil Sands Mining and Upgrading synthetic crude oil productionother | 624,754 bbl/d | – | 35% |
| Thermal in situ bitumen productionother | 275,607 bbl/d | – | – |
| North America E&P crude oil and NGLs production, excluding Thermal In Situ Oil Sandsother | 338,138 bbl/d | – | 25% |
| North America natural gas productionother | 2,563 MMcf/d | – | 7% |
| International E&P crude oil productionother | 10,390 bbl/d | – | 9% |
| International E&P natural gas productionother | 4 MMcf/d | – | – |
| Long-term debtother | $ 17,144 | – | – |
| Cash and cash equivalentsother | $ 2,618 | – | – |
| Long-term debt, netother | $ 14,526 | – | – |
2026 outlook
- NoteTotal annual capital expenditures: $ 7,641
- NoteTotal operating capital expenditures: $ 5,990
- NoteCarbon Capture: $ 125
- NoteNet acquisitions: $ 1,526
- NoteNatural Gas: 2,595 - 2,635 MMcf/d
- NoteConventional E&P Crude Oil & NGLs: 352 - 360 Mbbl/d
- NoteThermal and Oil Sands Mining & Upgrading: 852 - 883 Mbbl/d
- NoteTotal Liquids: 1,204 - 1,243 Mbbl/d
- NoteTotal MBOE/d: 1,637 - 1,682
- NoteApproximately $993 million of abandonment expenditures, before recoveries, is excluded from 2026 capital expenditures.
Capital returns
- Returns to shareholders totaled approximately $4.0 billion in Q2/26.
- Direct returns to shareholders totaled approximately $2.4 billion, comprised of $1.3 billion in dividends and $1.1 billion in share repurchases.
- Year to date, up to and including August 5, 2026, the Company returned approximately $5.7 billion directly to shareholders through $3.8 billion in dividends and $1.9 billion in share repurchases.
- The Company repurchased and cancelled approximately 30.7 million common shares at a weighted average price of $61.49 per share year to date, up to and including August 5, 2026.
- On August 5, 2026, the Board approved a quarterly cash dividend of $0.625 per common share, payable on October 2, 2026 to shareholders of record at the close of business on September 11, 2026.
- The dividend represents an annualized dividend of $2.50 per common share.
What drove it
- Record total production of 1,676,754 BOE/d increased 256,000 BOE/d, or 18%, from Q2/25 levels.
- Record liquids production of 1,248,889 bbl/d increased 230,000 bbl/d, or 23%, from Q2/25 levels.
- Oil Sands Mining and Upgrading SCO production of 624,754 bbl/d and upgrader utilization of 106% supported record production.
- SCO averaged a US$8.37/bbl premium to WTI, while Oil Sands Mining and Upgrading operating costs averaged $22.19/bbl (US$16.03/bbl).
- North America E&P liquids production excluding thermal in situ operations rose approximately 67,000 bbl/d, or 25%, from Q2/25, reflecting opportunistic acquisitions and organic growth from heavy crude oil multilaterals, light crude oil and NGLs.
- Net revenue from sulphur sales was approximately $270 million in Q2/26.
- The Baobab FPSO returned to production in June 2026 following refurbishment, contributing to higher International E&P volumes.
Concerns
- A planned 35 day turnaround at Horizon is scheduled to begin on September 8, 2026 and is targeted to impact annual average production by approximately 29,000 bbl/d.
- Medium- and long-term growth projects remain on hold until definitive agreements related to the trilateral MOU are finalized, targeted in November 2026.
- Natural gas realized price was $ 2.05 per Mcf, compared with $ 2.58 per Mcf in Q2/25 and $ 3.32 per Mcf in Q1/26.
- Thermal in situ operating costs averaged $11.89/bbl (US$8.59/bbl), an increase of approximately 8% compared to $11.05/bbl in Q2/25.
- North America light crude oil and NGL operating costs averaged $13.29 /bbl (US$9.60/bbl), an increase of $2.35/bbl from Q2/25, primarily reflecting higher NGL processing costs.
What to watch
- Execution of the Horizon turnaround beginning September 8, 2026 and its targeted impact of approximately 29,000 bbl/d on annual average production.
- Finalization of definitive agreements under the trilateral MOU, targeted in November 2026, and the implications for projects currently on hold.
- Delivery against updated 2026 total production guidance of 1,637 - 1,682 MBOE/d.
- Mechanical completion of the NRUTT project in Q3/27, with targeted incremental production of approximately 6,300 bbl/d of SCO.
- Progress toward the next targeted net debt level of $13 billion, at which the Company stated shareholder returns would increase to 100% of free cash flow.
- Commodity pricing, including the SCO premium to WTI and AECO natural gas pricing.
Balance sheet and cash flow
- Cash flows from operating activities were $ 6,823.
- Adjusted funds flow was $ 6,866.
- Free cash flow was $ 2,975.
- Cash flows used in investing activities were $ 2,468.
- Net capital expenditures were $ 2,405, including $ 1,643 excluding net acquisitions.
- Long-term debt was $ 17,144 and cash and cash equivalents were $ 2,618 at June 30, 2026.
- Long-term debt, net was $ 14,526 at June 30, 2026, compared with $ 16,153 at March 31, 2026 and $ 16,979 at June 30, 2025.
- The Company acquired additional Peace River assets in Q2/26 for approximately $761 million, net of closing adjustments.
Analysis
Canadian Natural reported a record operating and financial quarter under IFRS Accounting Standards. Net earnings were $ 4,503 million, compared with $ 2,459 million in Q2/25 and $ 1,348 million in Q1/26. Adjusted net earnings from operations reached $ 4,568 million and adjusted funds flow reached $ 6,866 million, both identified by the Company as quarterly records. Cash flows from operating activities were $ 6,823 million, while free cash flow was $ 2,975 million.
Production was the central contributor. Equivalent production was 1,676,754 BOE/d, up 18% from Q2/25, and crude oil and NGL production was 1,248,889 bbl/d, up 23%. Oil Sands Mining and Upgrading SCO output was 624,754 bbl/d, up 35% from Q2/25, with upgrader utilization of 106%. The production result also reflected record North America E&P liquids output excluding thermal in situ operations of 338,138 bbl/d, supported by acquisitions and drilling. International E&P crude oil production increased 9% from Q2/25 following Baobab's return to production in June.
Pricing and operating execution supported cash generation. SCO priced at a US$8.37/bbl premium to WTI, and the Company cited an approximately $78.00/bbl Oil Sands Mining and Upgrading per-barrel netback. Oil Sands Mining and Upgrading operating costs averaged $22.19/bbl (US$16.03/bbl), down 16% from Q2/25 primarily due to higher production. This was partly offset by weaker natural gas realization, with natural gas realized price at $ 2.05 per Mcf versus $ 2.58 per Mcf in Q2/25.
Capital allocation combined direct shareholder distributions and debt reduction. The Company reported approximately $2.4 billion of direct shareholder returns in Q2/26, including $1.3 billion of dividends and $1.1 billion of share repurchases, plus approximately $1.6 billion of indirect returns through net debt reduction. Long-term debt, net declined to $ 14,526 at June 30, 2026 from $ 16,153 at March 31, 2026. The Board approved a quarterly dividend of $0.625 per common share, or $2.50 annualized.
The 2026 production outlook was raised to 1,637 - 1,682 MBOE/d, while total operating capital expenditures remain $ 5,990. Total capital expenditures increased to $ 7,641 because net acquisitions increased to $ 1,526. The company cited its Peace River acquisition and strong conventional drilling results for the production increase. Execution priorities include the planned Horizon turnaround, which is targeted to impact annual average production by approximately 29,000 bbl/d, and definitive trilateral MOU agreements targeted in November 2026; until then, identified medium- and long-term growth projects remain on hold.
Management, verbatim
We had a very strong 2026 second quarter, reflecting our continued focus on operational excellence, capital efficiency and continuous improvement, which drove eight new operational and financial records in the quarter.
Scott Stauth, President
Along with strong operational performance, we delivered impressive financial performance in Q2/26, generating quarterly results that were the highest in the Company's history for both adjusted net earnings of $4.6 billion, or $2.20 per share, and adjusted funds flow of $6.9 billion, or $3.30 per share.
Victor Darel, Chief Financial Officer
Our financial strength allows us to deliver substantial returns to shareholders, accelerate net debt reduction, and move more quickly toward our next targeted net debt level of $13 billion.
Victor Darel, Chief Financial Officer
Not in the filing
stated, not guessed- Total revenue was not reported in the provided filing text.
- Segment revenue was not reported in the provided filing text.
- Gross profit and gross margin were not reported in the provided filing text.
- Operating income, operating margin and operating expenses were not reported in the provided filing text.
- Income tax expense and tax rate were not reported in the provided filing text.
- GAAP financial statements were not provided; the filing states that financial statements were prepared in accordance with IFRS Accounting Standards.
- Forward revenue, gross margin, operating expenses and tax-rate guidance were not reported in the provided filing text.
- A previous earnings release outlook was not provided, so versus-prior-guidance comparisons are unavailable.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.