Analyst Actions: Credit Suisse Sets $47 Target Price on Canadian Natural Resources

CNQ Could Beat Credit Suisse but Doubt the Street

Q312 Preview: CNQ reports Q312 results on November 8 before market open. We estimate EPS/CFPS of C$0.43/C$1.39 vs. C$0.55/C$1.59 in Q212. Consensus is C$0.51/C$1.53 based on a company survey of 19 analysts. We forecast production averaged 664 kboe/d in Q312, down from ~680 kboe/d in Q212 and vs. company guidance of 662 kboe/d (midpoint). Consensus is 672.6 kboe/). The lower sequential production reflects lower natural gas volumes due to shut-ins and re-direction of capital, lower Horizon volumes and slightly lower UK + Africa production to reflect Q3 maintenance. While we recognize CNQ may report better results relative to our forecast owing perhaps to higher-than-expected wellhead pricing, we believe it is unlikely the company will materially beat consensus.

Look for Update at Horizon: On October 3, 2012, CNQ announced that planned maintenance at Horizon originally scheduled for Q312 had been shifted into Q412, however Q312 production guidance of 95-105 kboe/d was not revised upward. CNQ announced the maintenance was successfully completed on October 26 and reported that Horizon production averaged 99,200 b/d in Q312 and 2012 guidance of 90-98 kboe/d was left unchanged. Given the unplanned maintenance in Q112 and lower than expected production in Q312 despite the shift of maintenance, we will be looking for commentary on operations and the ramp back to full production of 115 kb/d.

Other Updates: We expect CNQ may provide updates on: (i) Woodenhouse heavy oil play which has produced above expectations YTD; (ii) Thermal in-situ production ramp up; (iii) status of natural gas shut-ins; (iv) North West Upgrader (target 2012 sanction) and, (iv) outlook for heavy oil differentials.

Valuation: CNQ currently trades at 4.6x 2013E EBIDAX vs. 5.1x for its North American peers. We apply 6.5x 2013E EBIDAX to derive our C$47 target price, in line with our C$46.90 NAV.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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