On May 27, Zacks Investment Research upgraded Calgary,
Alberta-based independent oil and gas explorer
Canadian Natural Resources Ltd.
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Canadian natural Resources' large reserve base, long-life
resources, steady production growth, disciplined capital allocation
and sustainable free cash flows make it a great stock to own.
Canadian Natural Resources has a broad portfolio of low-risk
exploration and development projects that yield long-term volume
growth at above-average rates. The company's diverse asset base
both geographically and in terms of products - comprising
approximately 30% natural gas and 70% crude oil with the bulk of
production located in G8 countries - significantly reduces its risk
profile and lends the results a high level of stability.
In addition to the conventional oil and gas production assets,
Canadian Natural is also a major oil sands player with several
projects in inventory. The company achieved a significant milestone
in Feb 2009 when it started the Horizon oil sands program.
Production of Synthetic Crude Oil (SCO) from the project has
averaged more than 100,000 barrels per day (Bbl/d) in 2013. The
company expects annual production to eventually ramp up to 500,000
Bbl/d by the next decade, thereby significantly augmenting Canadian
Natural's long-term production growth profile.
Canadian Natural Resources has recently bought certain liquids-rich
natural gas properties in western Canada from
Devon Energy Corp.
). The assets hold an estimated 272.2 MMBOE in proved reserves (70%
gas) and will likely boost growth in core areas, with scope for
Finally, Canadian Natural Resources displays a healthy financial
position, reflected by a debt-to-capitalization ratio of 28.2%,
making the company less susceptible to financial risks. Backed by
this strength, management has hiked dividend for 14 consecutive
Other Stocks to Consider
Apart from Canadian Natural Resources, investors interested in the
energy industry may consider stocks like
Athlon Energy Inc.
). Both these stocks carry a Zacks Rank #1 (Strong Buy).
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