Canadian (CNQ) Q3 Earnings Fall Y/Y, Sales Beat Estimates
Canadian Natural Resources Limited CNQ reported third-quarter 2023 net earnings per share of C$2.15, down from the prior-year quarter's level of C$2.52. This underperformance can be mainly attributed to low commodity prices and increased year-over-year expenses during the quarter.
Total revenues of $7.4 billion declined from $8 billion in the year-ago period. However, it beat the Zacks Consensus Estimate of $6.5 billion due to higher natural gas prices.
CNQ’s board of directors announced an 11% hike in quarterly cash dividend on its common shares of C$1 per unit. The dividend will be payable on Jan 5, 2024, to shareholders of record at the close of the business on Dec 8, 2023.
Canadian Natural Resources Limited Price, Consensus and EPS Surprise
Canadian Natural Resources Limited price-consensus-eps-surprise-chart | Canadian Natural Resources Limited Quote
Production & Prices
Canadian reported quarterly production of 1,393,614 barrels of oil equivalent per day (BOE/D), up 4.1% from the prior-year quarter’s level. The figure also beat our estimate of 1,336,745 BOE/D.
The oil and natural gas liquid (NGL) output (accounting for around 74.3% of total volumes) increased to 1,035,153 barrels per day (Bbl/d) from 983,678 Bbl/d recorded a year ago.
Exploration and production activities in North America, not including thermal in situ methods, had an average output of 232,496 barrels per day. This indicates a 1.9% year-over-year increase owing to drilling activity on CNQ's primary heavy crude oil assets.
Natural gas volumes totaled 2,151 MMcf/d, slightly up 0.9% from 2,132 MMcf/d recorded in the year-ago period. However, the figure missed our projection of 2,278 MMcf/d.
Production in North America amounted to 2,139 MMcf/d compared with 2,117 MMcf/d in the comparable quarter of 2022. The figure missed our prediction of 2,265 MMcf/d.
The realized natural gas price decreased 59% to C$2.26 per thousand cubic feet from the year-ago level of C$5.51. The realized oil and NGL price jumped 3.4% to C$87.83 per barrel from C$84.91 in the third quarter of 2022.
Costs & Capital Expenditure
Total expenses in the quarter were C$6.75 billion, up from C$6.69 billion recorded in the year-ago period.
Capital expenditure totaled C$1.02 billion compared with C$996 million in the prior-year quarter.
Balance Sheet
As of Sep 30, 2023, Canadian Natural had cash and cash equivalents worth C$125 million and long-term debt of C$10 billion, with a debt to total capital of about 20.2%.
Guidance
In 2023, the company anticipates total capital expenditures of C$5,410 million. Its budget has a designated amount of C$1,020 million for incremental strategic growth capital. This allocation is expected to expand CNQ’s Exploration and Production segment, as well as boost its production and capacity growth beyond 2023. The company’s annual projection for production lies in the 1,330,000-1,374,000 BOE/d range, up from the earlier guidance of 1,281,000 BOE/d.
Zacks Rank
Currently, CNQ carries a Zacks Rank #3 (Hold).
Key Picks
Investors interested in the energy sector might look at some better-ranked stocks like Liberty Energy Inc. LBRT, sporting a Zacks Rank #1 (Strong Buy), and CVR Energy, Inc. CVI and Delek US Holdings, Inc. DK, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Liberty Energy is valued at $3.41 billion. LBRT currently pays a dividend of 20 cents per share, or 0.99% on an annual basis.
LBRT is a leading provider of hydraulic fracturing and other auxiliary services to North American onshore exploration and production (E&P) companies.
CVR Energy is valued at $3.28 billion. In the past year, its shares have lost 19%.
CVI currently pays a dividend of $2 per share or 6.13% on an annual basis. Its payout ratio currently sits at 30% of earnings.
Delek US Holdings is worth approximately $1.69 billion. DK currently pays a dividend of 94 cents per share, or 3.61% on an annual basis.
The company operates in the integrated downstream energy business in the United States and it does so under three segments — refining, logistics and retail.
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