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Canadian Natural Resources Limited Announces Record First Half Cash Flow and Strong 2003 Second Quarter Results, Part 2 of 2.

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Business Editors

Part 2

CALGARY, Alberta--(BUSINESS WIRE)--Aug. 6, 2003

The Company recognizes the need for a strong financial position in order to withstand volatile oil and natural gas commodity prices and the operational risks inherent in the oil and natural gas business environment. During the second quarter, long-term debt was reduced by $201 million through debt repayments and $211 million as a result of foreign exchange gains on the Company's US dollar denominated debt. In the first six months of 2003, $578 million of long-term debt was repaid. Long-term debt was also reduced by an additional $414 million as a result of foreign exchange gains. Higher than budgeted prices received for the Company's products during the first half of 2003 have resulted in increased cash flow to the Company in 2003 over the budget established in late 2002. The Company is continuing to monitor its expected cash flow surplus and at present intends to allocate a minimum of 50% of such amounts toward debt repayment. The remaining excess will be directed to the Company's authorized share buy-back program and additional expenditures on conventional oil and natural gas opportunities. These expenditures will only be incurred as excess cash flow is realized and will be subject to the same economic tests as regular budgeted expenditures. Should additional economic opportunities for share buy-back or capital activities not materialize to the extent allocated, such allocations of surplus cash flow would revert to debt repayment. To date an additional $40 million has been allocated to the North American natural gas capital program and an additional $40 million to the drilling of heavy oil wells.

During the quarter, the Company prepaid the US $50 million 6.5% senior unsecured notes due May 1, 2008 for US $56 million, which included an early prepayment premium as required under the Note Purchase Agreement.

On January 22, 2003, the Company announced the renewal of its Normal Course Issuer Bid through the facilities of the Toronto Stock Exchange and the New York Stock Exchange to purchase up to 6,692,799 common shares or 5% of the outstanding common shares of the Company on the date of announcement during the 12-month period beginning January 24, 2003 and ending January 23, 2004. As of August 5, 2003, the Company had purchased 1,409,800 common shares for a total cost of $69 million (June 30, 2003 - 1,329,800 common shares for a total cost of $65 million).

On June 16, 2003, the Company announced a small shareholder selling program ("the program") that enables registered and beneficial shareholders who own in aggregate 99 or fewer common shares of the Company as of June 13, 2003 ("Eligible Shareholders") to sell their shares without incurring any brokerage commission. The sale of shares will be executed through the facilities of the Toronto Stock Exchange. The voluntary program ends on September 2, 2003 and is designed to assist Eligible Shareholders in selling their shares in a convenient and inexpensive manner.

COMMITMENTS

Development of the Baobab field continues with three major contracts being awarded early in the third quarter of 2003. These contracts include the deepwater drilling agreement that will see eight producing and three water injector wells drilled in a water depth of approximately 4,000 feet; supply of subsea Xmas trees, manifolds, flowlines, controls and associated equipment; and the supply and operation of a Floating Production, Storage and Offtake vessel. A fourth major contract for the supply of pipelines, risers and installation of all of the subsea equipment is still to be awarded.

SENSITIVITY ANALYSIS (1)

Annualized sensitivities to certain factors that would influence the Company's financial results are estimated as follows:

Cash flow Cash flow from from Net Net operations(2) operations(2) earnings(2) earnings(2) (per common (per common share, share, ($ millions) basic) ($ millions) basic)

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Price changes Crude oil - WTI US $1.00/bbl(3) Excluding financial derivatives $89 $0.66 $63 $0.47 Including financial derivatives $81 $0.60 $57 $0.42 Natural gas - AECO Cdn $0.10/mcf(3) Excluding financial derivatives $33 $0.24 $19 $0.14 Including financial derivatives $31 $0.23 $18 $0.14 Volume changes Crude oil - 10,000 bbls/d $50 $0.37 $16 $0.12 Natural gas - 10 mmcf/d $16 $0.12 $6 $0.05 Foreign currency rate change $0.01 change in Cdn $ in relation to US $(3) Excluding financial derivatives $62 $0.46 $23 $0.17 Including financial derivatives $56 $0.41 $19 $0.14 Interest rate change - 1% $11 $0.08 $11 $0.08

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(1) The sensitivities are calculated based on 2003 second quarter results. (2) Attributable to common shareholders. (3) For details of financial derivatives in place, see the interim consolidated financial statement note 10.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in the Management's Discussion and Analysis for Canadian Natural Resources Limited may constitute forward-looking statements within...

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