Canadian Natural Misses, Tops Rev - Analyst Blog
August 10 2012 - 11:18AM
Zacks
Independent oil and gas explorer Canadian Natural
Resources Ltd. (CNQ) reported mixed second-quarter 2012
results, reflecting robust crude oil and natural gas liquids sales
volumes in North America, partially offset by poor performing North
Sea region and steeper production costs.
Earnings per share, excluding one-time and non-cash items, came in
at 55 Canadian cents (54 cents US) in the quarter lagging the Zacks
Consensus Estimate of 59 cents US. The Calgary, Alberta-based
operator’s per share profits were also slightly lower than the
second-quarter 2011 level of 56 Canadian cents (55 cents US), hurt
by the lower price realizations for oil and gas.
Quarterly revenue of C$3,826.0 million (US$3,864.2 million) was up
14.8% from the year-ago period. The result also surpassed our
projection of US$3,504.0 million.
Canadian Natural’s second quarter cash flow – a key metric to gauge
its capability to fund new projects and drilling – amounted to
C$1,754.0 million, which was 13.3% higher than that achieved in the
second quarter of 2011.
Production
Total production during the quarter was up 22.1% year over year at
679,607 oil-equivalent barrels per day (BOE/d). Oil and natural gas
liquids (NGLs) production hiked approximately 34.5% to 470,523
barrels per day (Bbl/d), primarily due to higher volumes from the
“Horizon” Oil Sands Project and increased drilling activities.
Natural gas production also improved 1.2% year over year to 1,255
million cubic feet per day (MMcf/d), with strong contributions from
the acquired natural gas producing properties.
Realized Prices
On a reported basis, the average realized crude oil price (before
hedging) during the second quarter was C$69.99 per barrel,
representing a drop of 15.2% from the corresponding quarter last
year. The average realized natural gas price (excluding hedging)
during the three months ended June 30, 2012 was C$1.90 per thousand
cubic feet (Mcf), down from the year-ago level of C$3.83 per
Mcf.
Capital Expenditure & Balance Sheet
Canadian Natural's total capital spending during the quarter was
C$1,324.0 million, as against C$1,405.0 million in the year-ago
quarter. The decrease in spending reflects slower property
acquisitions and a drop in drilling expenditures.
As of June 30, 2012, Canada’s No. 2 oil producer had C$10.0 million
cash on hand and long-term debt of approximately C$7,501.0 million,
representing a debt-to-capitalization ratio of 23.9%.
Guidance
Management is guiding toward production of 451,000–480,000 Bbl/d of
liquids and 1,170–1,190 MMcf/d of natural gas during the third
quarter of 2012. The company is planning to drill 42 net thermal in
situ wells and 290 net crude oil wells in North America during the
quarter.
For 2012, the company guided toward production of 454,000–474,000
Bbl/d of liquids and 1,220–1,235 MMcf/d of natural gas.
Outlook
Canada’s largest natural gas producer Encana
Corporation (ECA) also reported mixed second-quarter 2012
results, with earnings per share, beating the Zacks Consensus
Estimate and revenue failing to match our projection.
Canadian Natural 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
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