Independent oil and gas explorer Canadian Natural Resources Ltd. (CNQ) reported robust third-quarter results, buoyed by higher liquids prices amid the successful resumption of Synthetic Crude Oil (“SCO”) sales from its ‘Horizon’ project in the Athabasca oil sands play of northern Alberta.
Earnings per share, excluding one-time and non-cash items, came in at 65 Canadian cents (63 U.S. cents), above the Zacks Consensus Estimate of 59 U.S. cents. The Calgary, Alberta-based operator’s per share profits also came higher than the third-quarter 2010 level of 52 Canadian cents (51 U.S. cents).
Revenue of C$3,290.0 million (U.S.$3,185.0 million) was up 8.7% from the year-ago period and also ahead of our guidance of U.S.$3,143.0 million.
Canadian Natural’s third quarter cash flow – a key metrics to gauge its capability to fund new projects and drilling – amounted to C$1,767.0 million, which is 14.4% higher than that achieved in the third quarter of 2010.
Production
Total production during the quarter was down 1.4% year-over-year to 612,575 oil-equivalent barrels per day (BOE/d). Oil and natural gas liquids (NGLs) production dipped approximately 1.9% to 403,900 barrels per day (Bbl/d), primarily due to the suspension of production from its “Horizon” Oil Sands Project during the first half of the reported quarter.
However, natural gas production remained flat year over year at 1,252 million cubic feet per day (MMcf/d), as volumes from the Septimus Montney development in Northeast British Columbia and other recently acquired producing properties were offset by the company’s strategic decision to cut gas drilling and focus on more lucrative oil projects.
Realized Prices
The average realized crude oil price (before hedging) during the third quarter was C$73.80 per barrel, representing an increase of 16.8% from the corresponding period of the previous year. The average realized natural gas price (excluding hedging) during the three months ended September 30, 2011 was C$3.76 per thousand cubic feet (Mcf), almost flat from the year-ago level of C$3.75 per Mcf.
Capital Expenditure & Balance Sheet
Canadian Natural's total capital spending during the third quarter of 2011 was C$1,406.0 million, as against C$917.0 million in the year-ago period. The increase in spending reflects higher property acquisitions, rise in drilling expenditures and costs related to the coker fire incident at Horizon.
As of September 30, 2011, Canada’s No. 2 oil producer had cash on hand of C$18.0 million and long-term debt of approximately C$9,327.0 million, representing a debt-to-capitalization ratio of 29.6%.
Guidance
Management is guiding towards a production of 430,000 – 461,000 Bbl/d of liquids and 1,279 – 1,304 MMcf/d of natural gas during the fourth quarter of 2011. The company is planning to drill 23 natural gas wells and 368 crude oil wells in North America during the period.
For 2011, Canadian Natural expects oil and NGLs production to be 385,000 – 393,000 Bbl/d, while natural gas volumes for the year are likely to be 1,256 – 1,263 MMcf/d.
Looking ahead to next year, the company guided towards a production of 464,000 – 504,000 Bbl/d of liquids and 1,265 – 1,334 MMcf/d of natural gas. Capital spending for 2012 is budgeted at C$7.2 billion, 18% above this year’s target.
Rank
Canadian Natural, which competes with other Canadian behemoths like EnCana Corp. (ECA) and Suncor Energy Inc. (SU) – currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
CDN NTRL RSRCS (CNQ): Free Stock Analysis Report
ENCANA CORP (ECA): Free Stock Analysis Report
SUNCOR ENERGY (SU): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment