John Langille
Thank you, operator and good morning, everyone. Thank you for attending our conference call. We will discuss our 2009 results and also, update our plans for 2010.
Participating with me today are Allan Markin, our Chairman, Steve Laut, our President; Lyle Stevens, our Senior VP of Exploitation, who will discuss reserves, Real Doucet, our Senior Vice President of Oil Sands, who will talk about the progress we're making at Horizon and Doug Proll, our Senior Vice President of Finance, who will discuss our overall financial position.
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.
I'll just make some initial comments before I turn the call over to the other participants. I think you can see that, reflective of our disciplined allocation of capital over the last several years and the completion of our oil mining project, we can see Canadian Natural evolving into a very large, oil-weighted producer with a great amount of economic natural gas production.
In the fourth quarter of 2009, our oil production, including synthetic oil, amounted to 64% of production on a volume basis and almost 80% on a revenue basis. The last half of 2008 into 2009 saw a weakening in commodity prices. Crude oil prices in the last half of 2009 recovered to the $65 to $75 West Texas range. However, natural gas prices continued to be under pressure throughout the year. We were able to mitigate the resulting decline in our revenues through our very strong hedging strategy for about one half of our oil production.
As a result of our ability to generate strong cash flow and our disciplined approached to capital expenditures, we have repaid a significant amount of our long-term debt and exited 2009 with a debt-to-equity ratio of 33%, under the low end of our targeted level. At this time we are also targeting further debt reductions during 2010.
It appears crude oil pricing will continue to hold at recent levels of $70 to $80, West Texas, with accompanying differentials for heavy oil in the low-to-mid teens. Natural gas prices continue to be under pressure.
Accordingly, as Steve discusses our properties and developments, you will see a relatively small allocation of capital to natural gas projects and continued emphasis on our oil prospects. We have allocated some of our free cash flow with a 43% increase in dividends and potential for share buyback. In addition, we will be proposing to the shareholders at our upcoming AGM to split our shares on a two-for-one basis.
Before we turn the call over the Steve, I'd ask Allan to make some comments. Allan?
Allan Markin
Thanks, John. Good morning. Canadian Natural's defined growth plan continues to deliver value to our shareholders in all economic conditions. 2009 proved to be an unpredictable year for commodity prices as oil remained low through the first half of the year and natural gas prices continued to be unstable. However, with a large inventory of projects and by using our expertise within the company, we were able to deliver another solid year at Canadian Natural.
Production at Horizon commencing near the beginning of the year was a milestone for the company. The amount we have learned during construction and through ramp up is invaluable. And our team continues to apply their knowledge of the plant to ensure reliable production for years to come. We continue to unlock the enormous value of this resource.
Our conventional business delivered another quarter and full year of strong results. Our industry-leading position in heavy crude oil in Western Canada is allowing us to capture significant value as heavy oil differentials remain favorable. We continue to apply our marketing strategies to the business to make certain that we deliver the best return from our assets.
In our continued effort to generate returns for our shareholders, the board of directors has approved a quarterly dividend increase to $0.60 per common share, a 43% increase over '09. The company began paying dividends in 2001 and has subsequently increased the amount every year since, which, again, shows discipline in our approach and the ability to provide value creation to our shareholders.
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Thank you, operator and good morning, everyone. Thank you for attending our conference call. We will discuss our 2009 results and also, update our plans for 2010.
Participating with me today are Allan Markin, our Chairman, Steve Laut, our President; Lyle Stevens, our Senior VP of Exploitation, who will discuss reserves, Real Doucet, our Senior Vice President of Oil Sands, who will talk about the progress we're making at Horizon and Doug Proll, our Senior Vice President of Finance, who will discuss our overall financial position.
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.
I'll just make some initial comments before I turn the call over to the other participants. I think you can see that, reflective of our disciplined allocation of capital over the last several years and the completion of our oil mining project, we can see Canadian Natural evolving into a very large, oil-weighted producer with a great amount of economic natural gas production.
In the fourth quarter of 2009, our oil production, including synthetic oil, amounted to 64% of production on a volume basis and almost 80% on a revenue basis. The last half of 2008 into 2009 saw a weakening in commodity prices. Crude oil prices in the last half of 2009 recovered to the $65 to $75 West Texas range. However, natural gas prices continued to be under pressure throughout the year. We were able to mitigate the resulting decline in our revenues through our very strong hedging strategy for about one half of our oil production.
As a result of our ability to generate strong cash flow and our disciplined approached to capital expenditures, we have repaid a significant amount of our long-term debt and exited 2009 with a debt-to-equity ratio of 33%, under the low end of our targeted level. At this time we are also targeting further debt reductions during 2010.
It appears crude oil pricing will continue to hold at recent levels of $70 to $80, West Texas, with accompanying differentials for heavy oil in the low-to-mid teens. Natural gas prices continue to be under pressure.
Accordingly, as Steve discusses our properties and developments, you will see a relatively small allocation of capital to natural gas projects and continued emphasis on our oil prospects. We have allocated some of our free cash flow with a 43% increase in dividends and potential for share buyback. In addition, we will be proposing to the shareholders at our upcoming AGM to split our shares on a two-for-one basis.
Before we turn the call over the Steve, I'd ask Allan to make some comments. Allan?
Allan Markin
Thanks, John. Good morning. Canadian Natural's defined growth plan continues to deliver value to our shareholders in all economic conditions. 2009 proved to be an unpredictable year for commodity prices as oil remained low through the first half of the year and natural gas prices continued to be unstable. However, with a large inventory of projects and by using our expertise within the company, we were able to deliver another solid year at Canadian Natural.
Production at Horizon commencing near the beginning of the year was a milestone for the company. The amount we have learned during construction and through ramp up is invaluable. And our team continues to apply their knowledge of the plant to ensure reliable production for years to come. We continue to unlock the enormous value of this resource.
Our conventional business delivered another quarter and full year of strong results. Our industry-leading position in heavy crude oil in Western Canada is allowing us to capture significant value as heavy oil differentials remain favorable. We continue to apply our marketing strategies to the business to make certain that we deliver the best return from our assets.
In our continued effort to generate returns for our shareholders, the board of directors has approved a quarterly dividend increase to $0.60 per common share, a 43% increase over '09. The company began paying dividends in 2001 and has subsequently increased the amount every year since, which, again, shows discipline in our approach and the ability to provide value creation to our shareholders.
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