On Sep 18, Zacks Investment Research upgraded Calgary, Alberta
based independent exploration and production (E&P) company,
Canadian Natural Resources Ltd.
) to a Zacks Rank #2 (Buy).
CDN NTRL RSRCS (CNQ): Free Stock Analysis
DRIL-QUIP INC (DRQ): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
SM ENERGY CO (SM): Free Stock Analysis Report
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Why the Upgrade?
Canadian Natural possesses a diverse asset base both
geographically and in terms of product, comprising approximately
30% natural gas and 70% crude oil with the bulk of production
located in G8 countries. We believe this significantly reduces
the company's risk profile and consequently results in 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 initiated 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 the
Canadian Natural's strong, balanced and diverse asset portfolio,
combined with its focus on low cost operations, allowed it to
generate substantial free cash flow even in a low price
Moreover, Canadian Natural displays a healthy financial position,
reflected by a debt-to-capitalization ratio of 29.0%, making the
company less susceptible to financial risk. Backed by this,
management has hiked dividend for 13 consecutive years with a
compounded annual growth rate of 21%.
Lastly, on Aug 8, 2013, Canadian Natural reported strong
second-quarter 2013 results owing to decline in E&P operating
costs and higher natural gas price realizations. Earnings per
share, excluding one-time and non-cash items came at 42 Canadian
cents (41 US cents), surpassing the Zacks Consensus Estimate of
39 U.S. cents.
Owing to these positive developments, the tendency for an upward
estimate revision has been obvious in recent times. In fact, the
Zacks Consensus Estimate for the third quarter has increased by
16.1% to 72 cents per share over the last 60 days. Additionally,
for 2013, most of the estimates (7 out of 9 estimates) were
revised higher over the same time frame, lifting the Zacks
Consensus Estimate by 9.0% to $2.31 per share.
Other Stocks to Consider
In addition to Canadian Natural, one can look at energy firms
Range Resources Corp.
SM Energy Co.
) that offer value. All the stocks sport a Zacks Rank #1 (Strong