Co-owners,

We've spun the wheel for the North America bucket. The ticker has landed in Calgary, Alberta, on a company that produces more oil than almost anyone else on the continent, that sits quietly in your index fund, and that most people, even most Canadians, would struggle to describe.

Before we dive in, a reminder of what the index itself has delivered over time.

Every week, we pull one company at random from the FTSE All-World with ~4,200 companies representing 90% of global stock market wealth. We share the index's long-term returns since inception in 1986 as a reminder of why we're here: the long game. New to the newsletter? Start here.

Incorporated in 1973. Headquartered in Calgary, Alberta. Listed on the Toronto and New York stock exchanges (TSX / NYSE: CNQ).

Think about the last time you filled up your car, turned up the heat on a cold morning, or unwrapped something that arrived in plastic. The oil and gas behind all of it came from somewhere. A surprising amount of it comes from a company in Calgary that has spent thirty-five years quietly becoming one of the biggest energy producers in North America, without ever becoming a household name.

A few key facts:

In 1988, a group of Calgary financiers led by a Saskatchewan-raised lawyer named Murray Edwards took over a tiny, struggling oil company producing roughly 1,400 barrels a day. Edwards had made the leap into business a few years earlier, started a small merchant bank with partners, and promptly spent half their money drilling a natural gas well that came up dry. He learned a lesson from that hole in the ground: instead of gambling on exploration, buy oil and gas that already exists, then run it better than anyone else.

That single idea built everything that followed. In 2025, Canadian Natural produced a record 1.57 million barrels of oil equivalent a day. More than a thousand times the output it started with, from the same company, assembled almost entirely by buying assets and never selling them.

Edwards is still there, now as chairman and the largest individual shareholder. He also happens to co-own the Calgary Flames.

The product is oil and gas. The interesting part is the machine that produces it, which comes in four pieces.

Oil sands mining and upgrading. In northern Alberta, Canadian Natural digs up sand soaked in bitumen, a substance closer to tar than to the light crude that flows out of a Texas well. Bitumen is too thick to refine on its own, so the company runs it through its own upgraders, industrial plants that crack and rebuild the molecules into clean synthetic crude oil. The two mining complexes, Horizon and Albian, can turn out around 592,000 barrels a day, roughly 90% of it high-value synthetic crude. In late 2025 the company swapped assets with Shell to take full ownership of the Albian mines. These are the crown jewels: a mine does not deplete the way a well does, so it keeps producing at the same rate year after year.

Thermal in situ. Where the bitumen sits too deep to dig, the company reaches it by pumping steam underground to melt it loose, then pumping the softened oil back up. Around 275,000 barrels a day come from these projects, and like the mines, they decline very slowly.

Conventional oil and gas. The original business: light and heavy crude, natural gas liquids, and a very large natural gas operation that makes Canadian Natural the second-largest gas producer in the country. This is also where some genuinely clever engineering lives. In its heavy oil fields, the company drills wells that run sideways through the rock for up to eleven kilometres from a single point on the surface, branching underground like the roots of a tree to drain far more oil for far less money. Production from these wells has grown sixfold in five years.

A small international tail. A handful of ageing fields in the North Sea and offshore Africa, now being wound down.

One phrase explains why all of this matters: long life, low decline. A normal oil well can lose a fifth of its output every year, so a producer has to keep drilling frantically just to stand still. Canadian Natural's mines and thermal projects barely fade at all. Around 55% of what it produces comes from these slow-declining assets, so the company spends remarkably little just to keep the taps flowing. That is the quiet engine underneath everything else.

The growth story is a shopping list. Over three decades Canadian Natural bought the Canadian assets of BP, Anadarko, Devon, Chevron, and Shell, among many others, and folded each one into a business obsessed with cost. It is the same playbook we saw with the Danish freight forwarder DSV a few editions ago: buy a rival, absorb it, run it more efficiently, move to the next one.

The culture behind it is unusual for a company this size. Every employee is a shareholder, and management holds a far larger slice of the company than at most of its peers. When the people running the business own a meaningful piece of it, they tend to spend the company's money as if it were their own. It usually is.

Oil is a brutal business to be average in, because the price is set by the world, not by the producer. Canadian Natural's defense is to be the lowest-cost operator in the room. It reckons it can cover all its costs, including the dividend, with oil in the low-to-mid US$40s per barrel, a level that would put much of the industry underwater.

That resilience shows up in the one number long-term owners care about most. Canadian Natural has raised its dividend for 26 years in a row and crucially it kept raising it straight through the oil crashes when almost everyone else was cutting. The shares currently yield around 4.5%.

The payoff has been real, if bumpy. Over the past decade the shares compounded at around 18% a year with dividends reinvested, turning C$10,000 into roughly C$53,000. But oil is cyclical, and the years around 2014 to 2020 were brutal for anyone holding it. This has never been a smooth ride.

Two risks are worth naming plainly. The first is the oil price itself: when it falls, so do profits, as the softer start to 2026 has already shown. The second is geography. Canada struggles to get its oil to the coast, and until a new pipeline to the Pacific is built, Canadian Natural has paused an C$8.25 billion mine expansion rather than pour money into barrels it cannot easily ship.

And then there is the elephant that any honest account has to acknowledge. Oil sands are among the most carbon- and land-intensive ways to produce a barrel on earth, and the tailings ponds and reclamation obligations that come with mining are real, long-lived liabilities. The company points to its carbon-capture spending and slowly falling emissions per barrel; critics point out that the barrels keep coming. Both things are true. If you own a world index fund, you own this tension whether you have thought about it or not.

A few editions ago we told the stories of Schneider Electric and WEG, the companies wiring up the electrical, cleaner future the world says it wants. Canadian Natural sits at the other end of that same story. It pumps the oil and gas the transition is trying to move past. The world still runs on it though.

If you hold a broad world equity index, you quietly own both sides of that bet at once. The clean future in one hand, and one of Canada's largest oil producers in the other. It is worth knowing that both are in there.

Data and images sourced from Canadian Natural Resources 2025 Fourth Quarter and Year End Results and Corporate Presentation (July 2026). Share price and market cap as of early July 2026.

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Next week, we'll be looking at a company from Europe.