Independent oil and gas explorer
Canadian Natural Resources Ltd.
) reported weak fourth-quarter 2012 results, owing to lower
natural gas production.
CDN NTRL RSRCS (CNQ): Free Stock Analysis
EPL OIL&GAS INC (EPL): Free Stock Analysis
COMPRESSCO PTNR (GSJK): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
To read this article on Zacks.com click here.
Earnings per share, excluding one-time and non-cash items, came
in at 33 Canadian cents (33 US cents) in the quarter, way behind
the Zacks Consensus Estimate of 44 US cents. The Calgary,
Alberta-based operator's per share profits were also
significantly lower than the fourth-quarter 2011 number of
88 Canadian cents (89 US cents), hurt by lower price realizations
for oil and gas.
Quarterly revenue of C$3,700.0 million (US$3,732.2 million) was
down 12.3% from the year-ago period. The top line also missed our
projection of US$3,933.0 million.
Canadian Natural's fourth quarter cash flow - a key metric to
gauge its capability to fund new projects and drilling - amounted
to C$1,548.0 million, which was 28.3% lower than that achieved in
the fourth quarter of 2011.
Total production of Canadian Natural during the quarter was up
0.2% year over year to 658,973 oil-equivalent barrels per day
(BOE/d). Oil and natural gas liquids (NGLs) production increased
approximately 5.8% to 469,964 barrels per day (Bbl/d), primarily
due to successful drilling program of crude oil.
Natural gas production declined 11.4% from the prior-year period
to 1,134 million cubic feet per day (MMcf/d) due to the Canadian
Natural's decision to shut production volumes and to allocate
capital for oil projects that will provide higher return.
On a reported basis, the average realized crude oil price (before
hedging) during the fourth quarter was C$64.23 per barrel,
representing a drop of 24.7% from the corresponding quarter last
year. The average realized natural gas price (excluding hedging)
during the three months ended Dec 31, 2012 was C$3.16 per
thousand cubic feet (Mcf), down from the year-ago level of C$3.50
Capital Expenditure & Balance Sheet
Canadian Natural's total capital spending during the quarter was
C$1,767.0 million, as against C$1,909.0 million in the year-ago
As of Dec 31, 2012, Canada's second largest oil producer had
C$37.0 million cash on hand and long-term debt of approximately
C$8,736.0 million, representing a debt-to-capitalization ratio of
Management is guiding production of 471,000-495,000 Bbl/d of
liquids and 1,130-1,150 MMcf/d of natural gas during the first
quarter of 2013. Canadian Natural is planning to drill 132 net
thermal in situ wells and 1,022 net crude oil wells in North
America during 2013.
For 2013, Canadian Natural estimates production of
482,000-513,000 Bbl/d of liquids and 1,085-1,145 MMcf/d of
Canadian Natural has recently increased its quarterly cash
dividend payment by 19.0% to 12.5 Canadian cents per share.
The increased dividend will be paid on Apr 1, 2013, to
shareholders of record as on Mar 15, 2013.
Total proved reserves at the end of 2012 has increased by 4% to
5.02 billion BOE of which the proportion of liquid is 86.2% and
the remaining is natural gas.
Stocks to Consider
Canadian Natural currently carries a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
Meanwhile, one can look at other energy firms like
Compressco Partners LP
Range Resources Corporation
EPL Oil & Gas Inc
) as attractive investments. All these firms - sporting a Zacks
Rank #1 (Strong Buy) - offer value and are worth accumulating at