Canadian (CNQ) Q2 Earnings Fall Y/Y, Sales Beat Estimates
Canadian Natural Resources Limited CNQ reported second-quarter 2023 net earnings per share of $1.34, down from the prior-year quarter's level of $3.04. This underperformance can be mainly attributed to low production and low commodity prices during the quarter.
Total revenues of $5.87 billion depreciated from $8.99 billion recorded in the prior-year period due to reduced oil and natural gas prices. However, the figure beat the Zacks Consensus Estimate of $5.44 billion.
CNQ’s board of directors announced a quarterly cash dividend of 90 Canadian cents per common share. The dividend will be payable on Oct 5, 2023, to shareholders of record at the close of business on Sep 16, 2023.
Production & Prices
Canadian reported quarterly production of 1,194,326 barrels of oil equivalent per day (BOE/D), down 1.4% from the prior-year quarter’s level. The figure also missed our estimate of 1,345,623BOE/D.The oil and natural gas liquid (NGL) output (accounting for around 70.9% of total volumes) decreased to 846,909 barrels per day (Bbl/d) from 860,338 Bbl/d recorded a year ago.
Exploration and production activities in North America, not including thermal in situ methods, reported an average output of 226,202 barrels per day. This indicates a 0.6% year-over-year deterioration owing to a decline in the natural field.
Natural gas volumes totaled 2,085 MMcf/d, down 1% from 2,105 MMcf/d recorded in the year-ago period. The figure also missed our projection of 2,233 MMcf/d.
Production in North America amounted to 2,072 MMcf/d compared with 2,089 MMcf/d in the comparable quarter of 2022. The figure missed our prediction of 2,220 MMcf/d.
The realized natural gas price decreased 62.7% to C$2.22 per thousand cubic feet from the year-ago level of C$5.95. The realized oil and NGL price reduced 48.9% to C$58.85 per barrel from C$115.26 in the second quarter of 2022.
Costs & Capital Expenditure
Total expenses in the quarter were C$6.12 billion, down from C$6.94 billion recorded in the year-ago period.
Capital expenditure totaled C$1.67 billion compared with C$1.45 billion a year ago.
Balance Sheet
As of Jun 30, Canadian had cash and cash equivalents worth C$112 million and long-term debt of C$9.8 billion, with a debt to total capital of about 20.3%.
Guidance
Despite the Western Canadian wildfires and the third-party pipeline outage in the first half of 2023, the company anticipates total annual production between 1,330,000 BOE/d and 1,374,000 BOE/d for the entire year.
Important Energy Earnings So Far
While we have discussed CNQ’s second-quarter results in detail, let’s take a look at some other key energy reports of this season.
SLB SLB, the largest oilfield contractor, announced second-quarter 2023 earnings of 72 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate by a penny. The bottom line also increased from the year-ago quarter’s level of 50 cents.
SLB’s strong quarterly earnings resulted from higher stimulation services and strong activities across all areas. As of Jun 30, 2023, the company had approximately $3.2 billion in cash and short-term investments. It had a long-term debt of $11.3 billion at the end of the second quarter.
Another oil service biggie, Halliburton HAL, reported second-quarter 2023 adjusted net income per share of 77 cents, which surpassed the Zacks Consensus Estimate of 75 cents. The figure was also well above the year-ago quarter’s registered profit of 49 cents (adjusted) per share. The outperformance reflects stronger-than-expected profit from both its divisions.
Halliburton, the world’s biggest provider of hydraulic fracking, noted that the strong second-quarter performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, HAL expects this strategy, and long-term oil and gas demand, to drive a strong and sustained upcycle.
Meanwhile, energy infrastructure provider Kinder Morgan KMI reported second-quarter adjusted earnings per share of 24 cents, which beat the Zacks Consensus Estimate by a penny. The bottom line was primarily aided by higher gathering and transport volumes. However, KMI’s second-quarter DCF was $1.1 billion, down from $1.2 billion recorded a year ago.
As of Jun 30, 2023, Kinder Morgan reported $497 million in cash and cash equivalents. Its long-term debt amounted to $28.5 billion at the quarter-end. For 2023, KMI projects a net income of $2.5 billion and a dividend of $1.13 per share, which increased 2% from the previous year’s reported figure.
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