Canadian (CNQ) Q4 Earnings Rise Y/Y, Sales Beat Estimates
Canadian Natural Resources Limited CNQ reported fourth-quarter net earnings per share (EPS) of C$2.41, up from the prior-year quarter's level of C$1.36. This outperformance can be mainly attributed to higher production and decreased year-over-year expenses during the quarter.
Total revenues of $7 billion declined from $7.1 billion in the year-ago period due to a reduction in product sales from crude oil and NGLs and natural gas. However, the figure beat the Zacks Consensus Estimate of $6.7 billion.
CNQ’s board of directors announced a 5% hike in quarterly cash dividend on its common shares of C$1.05 per unit. The dividend will be payable on Apr 5, 2024, to shareholders of record at the close of the business on Mar 15, 2024.
During the quarter, this Oil and Gas Exploration and Production company generated C$4.8 billion in operating cash flow and about C$4.4 billion in adjusted funds flow.
CNQ extracted C$2.5 billion in free cash flow after paying C$1.0 billion in dividends, C$0.8 billion in capital expenditures and C$0.1 billion in abandonment expenses, during the same time frame.
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 1,419,313 barrels of oil equivalent per day (BOE/D), up 9.6% from the prior-year quarter’s level. However, the figure was lower than our estimate of 1,421,398 BOE/D.
The oil and natural gas liquid (NGL) output (accounting for around 74.3% of total volumes) increased to 1,047,541 barrels per day (Bbl/d) from 942,258 Bbl/d recorded a year ago.
Exploration and production activities in North America, not including thermal in situ methods, had an average output of 243,157 barrels per day. This indicates a 4.2% year-over-year increase owing to drilling activities on CNQ's primary heavy crude oil assets.
Natural gas volumes totaled 2,231 MMcf/d, up 5.5% from 2,115 MMcf/d recorded in the year-ago period. However, the figure fell short of our estimate of 2,326 MMcf/d.
Production in North America amounted to 2,218 MMcf/d compared with 2,105 MMcf/d in the comparable quarter of 2022. However, the figure did not meet our prediction of 2,313 MMcf/d.
The realized natural gas price decreased 52.4% to C$2.52 per thousand cubic feet from the year-ago level of C$5.29. The realized oil and NGL price slightly jumped 0.1% to C$69.39 per barrel from C$69.34 in the fourth quarter of 2022.
Costs & Capital Expenditure
Total expenses in the quarter were C$6.6 billion, down from C$8.36 billion recorded in the year-ago period.
Capital expenditure totaled C$975 million compared with C$1.2 billion in the prior-year quarter.
Balance Sheet
As of Dec 31, 2023, Canadian Natural had cash and cash equivalents worth C$877 million and long-term debt of C$9.8 billion, with a debt to total capital of about 27.1%.
Guidance
In December 2023, the company already announced an ambitious growth plan for 2024. CNQ expects to achieve production growth of 1,455 MBOE/d by the end of 2024, indicating a 40% increase from that anticipated at the end of 2023.
Canadian also aims to increase production in its thermal and oil sands mining sectors in the range of 724,000-743,000 barrels per day in 2024, higher than the previous year's guidance. The company has set an average annual production growth target of 4-5% for 2025.
Zacks Rank and Key Picks
Currently, CNQ carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Murphy USA Inc. MUSA and Energy Transfer LP ET, both sporting a Zacks Rank #1 (Strong Buy), and Subsea 7 S.A. SUBCY, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is valued at around $8.72 billion. In the past year, its shares have risen 61.5%.
MUSA is involved in the marketing of retail motor fuel products and convenience merchandise, operating retail stores under the brands Murphy USA, Murphy Express and QuickChek.
Energy Transfer is valued at $50.45 billion. The company currently pays a dividend of $1.26 per share, or 8.41%, on an annual basis.
ET is an independent energy company, principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
Subsea 7 is valued at $4.22 billion. The company currently pays a dividend of 38 cents per share, or 2.77%, on an annual basis.
SUBCY offers offshore project services for the energy industry. It specializes in subsea field development, covering project management, design, engineering, procurement, fabrication, survey, installation and commissioning of seabed production facilities.
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