Canadian Natural Lags on Both Lines - Analyst Blog
November 09 2012 - 4:20AM
Zacks
Independent oil and gas explorer
Canadian Natural Resources Ltd. (CNQ) reported
weak third-quarter 2012 results, owing to weak contributions from
North Sea and Offshore Africa and higher operating expense.
Earnings per share, excluding one-time and non-cash items, came in
at 32 Canadian cents (32 cents US) in the quarter, way behind the
Zacks Consensus Estimate of 46 cents US. The Calgary, Alberta-based
operator’s per share profits were also less than the third-quarter
2011 level of 65 Canadian cents (65 cents US), hurt by the lower
price realizations for oil and gas.
Quarterly revenue of C$3,536.0 million (US$3,559.3 million) was up
7.5% from the year-ago period. The result, however, missed our
projection of US$3,580.0 million.
Canadian Natural’s third quarter cash flow – a key metric to gauge
its capability to fund new projects and drilling – amounted to
C$1,431.0 million, which was 19.0% lower than that achieved in the
third quarter of 2011.
Production
Total production during the quarter was up 9.0% year over year at
667,616 oil-equivalent barrels per day (BOE/d). Oil and natural gas
liquids (NGLs) production hiked approximately 16.2% to 469,168
barrels per day (Bbl/d), primarily due to higher volumes from the
“Horizon” Oil Sands Project and some other fields.
Natural gas production declined 4.9% from the prior-year period to
1,191 million cubic feet per day (MMcf/d), due to weak natural gas
scenario.
Realized Prices
On a reported basis, the average realized crude oil price (before
hedging) during the third quarter was C$67.59 per barrel,
representing a drop of 8.4% from the corresponding quarter last
year. The average realized natural gas price (excluding hedging)
during the three months ended September 30, 2012 was C$2.28 per
thousand cubic feet (Mcf), down from the year-ago level of C$3.76
per Mcf.
Capital Expenditure & Balance Sheet
Canadian Natural's total capital spending during the quarter was
C$1,621.0 million, as against C$1,406.0 million in the year-ago
quarter.
As of September 30, 2012, Canada’s second largest oil producer had
C$21.0 million cash on hand and long-term debt of approximately
C$8,416.0 million, representing a debt-to-capitalization ratio of
25.9%.
Guidance
Management is guiding toward production of 467,000–495,000 Bbl/d of
liquids and 1,145–1,165 MMcf/d of natural gas during the fourth
quarter of 2012. The company is planning to drill 42 net thermal in
situ wells and 302 net crude oil wells in North America during the
quarter.
For 2012, the company guided toward production of 452,000–460,000
Bbl/d of liquids and 1,222–1,229 MMcf/d of natural gas.
Our Take
Canada’s largest natural gas producer Encana
Corporation (ECA) reported mixed third-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. We also maintain our long-term Neutral
rating on the stock.
CDN NTRL RSRCS (CNQ): Free Stock Analysis Report
ENCANA CORP (ECA): Free Stock Analysis Report
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