Canadian Natural Resources Limited CNQ reported third-quarter 2024 adjusted earnings per share of 71 cents, which beat the Zacks Consensus Estimate of 67 cents. This outperformance can be attributed to decreased year-over-year expenses in the quarter. However, the bottom line declined from 97 cents in the year-ago quarter due to lower production and weaker commodity prices.
Total revenues of $6.5 billion depreciated from $7.4 billion recorded in the prior-year period due to reduced product sales. However, the figure beat the Zacks Consensus Estimate of $6.4 billion.
Canadian Natural Resources Limited Price, Consensus and EPS Surprise
Canadian Natural Resources Limited price-consensus-eps-surprise-chart | Canadian Natural Resources Limited Quote
On Oct. 7, CNQ’s board of directors approved a 7% increase in its quarterly cash dividend, raising the figure to 56.25 Canadian cents per common share, which was 52.5 Canadian cents previously. The new dividend will be payable on Jan. 3, 2025, to its shareholders of record as of the close of business on Dec. 13, 2024.
In the third quarter of 2024, the company delivered strong returns to its shareholders, totaling approximately C$1.9 billion. This included C$1.12 billion in dividends and C$0.74 billion through the repurchase and cancellation of around 15.6 million common shares at a weighted average price of C$47.70 per share.
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Year to date, as of Oct. 30, 2024, the company has returned approximately C$6.7 billion to its shareholders, consisting of C$4.4 billion in dividends and C$2.3 billion through the repurchase and cancellation of about 47.6 million common shares.
CNQ’s Production & Prices
Canadian Natural reported quarterly production of 1,363,086 barrels of oil equivalent per day (Boe/D), down 2.2% from the prior-year quarter’s level. The figure also missed our estimate of 1,402,141 Boe/D.
The oil and natural gas liquid (NGL) output (accounting for around 75% of total volumes) decreased to 1,021,572 barrels per day (Bbl/d) from 1,035,153 Bbl/d recorded a year ago. However, the figure beat our estimate of 1,016,181 Bbl/d.
Exploration and production activities in North America, not including thermal in situ methods, reported an average output of 228,221 barrels per day. This indicates a 1.8% year-over-year deterioration owing to a decline in the natural field.
Natural gas volumes totaled 2,049 million cubic feet per day (MMcf/d), down 4.7% from 2,151 MMcf/d recorded in the year-ago period. The figure also missed our estimate of 2,316 MMcf/d. Production in North America amounted to 2,039 MMcf/d compared with 2,139 MMcf/d in the year-ago quarter. The figure missed our prediction of 2,303 MMcf/d.
The realized natural gas price decreased 65.8% to 77 Canadian cents per thousand cubic feet from the year-ago level of C$2.25. The figure missed our prediction of C$1.88 per thousand cubic feet. The realized oil and NGL price reduced 9.9% to C$79.15 per barrel from C$87.83 in the third quarter of 2023.
In the third quarter, the natural gas price for North America’s gas decreased to 56 Canadian cents per thousand cubic feet, down from C$2.20 in the year-ago quarter. Similarly, the corporate natural gas price dropped to 62 Canadian cents per thousand cubic feet compared with C$2.25 in the same period.
Thermal in situ production volume decreased to 271,551 Bbl/d from 287,085 Bbl/d recorded a year ago. However, the figure beat our estimate of 236,615 Bbl/d. The company's Oil Sands Mining and Upgrading assets achieved strong production in the third quarter, averaging 497,656 Bbl/d of high-value SCO, approximately 7,000 Bbl/d higher than the prior-year quarter’s level, despite the impacts of planned turnaround activities at the non-operated Scotford Upgrade.
Oil Sands Mining and Upgrading set a new monthly production record of approximately 529,000 Bbl/d of SCO in August 2024, driven by high utilization at both Horizon and AOSP, as well as the completion of a reliability enhancement project at Horizon during the second-quarter planned turnaround.
CNQ’s Costs & Capital Expenditure
Total expenses in the quarter were C$6.08 billion, down from C$6.75 billion recorded in the year-ago period. The decrease was due to lower production costs, interest and other financing expenses.
Capital expenditure totaled C$1.3 billion compared with C$1.1 billion a year ago.
CNQ’s Balance Sheet
As of Sept. 30, CNQ had cash and cash equivalents worth C$721 million and long-term debt of C$8.4 billion, with a debt to total capital of about 20.1%.
CNQ’s Guidance
Canadian Natural expects to continue strengthening its market position in 2024, having increased the company’s contracted crude oil transportation capacity to 256,500 Bbl/d. This expansion boosts CNQ’s committed volumes to Canada’s West Coast and the US Gulf Coast, representing approximately 25% of its liquid production based on the midpoint of the company's 2024 corporate annual guidance. The additional egress capacity supports Canadian Natural’s long-term sales strategy by accessing expanded refining markets, improving netbacks and reducing exposure to egress constraints.
Starting Dec. 1, 2024, the company will further increase its capacity on the TMX pipeline by 75,000 Bbl/d, bringing the total capacity to 169,000 Bbl/d.
For 2024, CNQ anticipates total annual output to be between 1,330,000 Boe/d and 1,380,000 Boe/d. The company also expects total liquid production in the range of 977-1,008 thousand Boe/d. This estimate includes a natural gas production prediction of 2,120 -2,230 MMcf/d for 2024.
Breaking down the liquid production further, the company anticipates a range of 253-265 thousand Boe/d from conventional exploration and production operations, excluding thermal activities. The remaining liquid production, estimated between 724 thousand Boe/d and 743 thousand Boe/d, is expected to originate from thermal and oil sands mining and upgrading processes.
For 2024, the company anticipates a total of C$5,420 million in CapEx. Approximately C$2,540 million of this amount is reserved for conventional exploration and production activities (excluding thermal projects), while the remaining C$2,880 million is allocated to thermal operations and oil sands mining and upgrading.
CNQ currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Important Energy Earnings So Far
Right in the middle of earnings season, there have been a few key energy releases so far. Let us glance through a couple of them.
Liberty Energy LBRT, the Denver-CO-based oil and gas equipment company, announced an adjusted net income of 45 cents per share, which missed the Zacks Consensus Estimate of 55 cents. This was primarily due to poor equipment and services execution and lower activity in the reported quarter. Additionally, the bottom line declined from the year-ago quarter’s reported figure of 86 cents due to a year-over-year increase in costs and expenses.
Ahead of the earnings release, LBRT’s board of directors announced a dividend of 8 cents per common share payable on Dec. 20, to its stockholders of record as of Dec. 6. This dividend represents a 14% increase from the prior regular quarterly dividend of 7 cents per share. In the quarter, Liberty returned $51 million to its shareholders through a combination of share repurchases and cash dividends.
Energy infrastructure provider, Kinder Morgan, Inc. KMI reported third-quarter adjusted earnings per share of 25 cents, which missed the Zacks Consensus Estimate of 27 cents. The bottom line was flat year over year. The weakness in quarterly results was caused by lower contributions from the Products Pipelines and CO2 business segments.
KMI also announced a quarterly cash dividend of 28.75 cents per share for the third quarter of 2024 (annualized dividend of $1.15), implying a 2% increase from the third-quarter 2023 level. The dividend is payable on Nov. 15, 2024, to its shareholders of record as of Oct. 31.
Schlumberger Limited SLB, a Houston, TX-based oil and gas equipment and services provider announced third-quarter earnings of 89 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 88 cents. The bottom line also increased from the year-ago quarter’s 78 cents. The strong quarterly earnings were primarily driven by broad-based earnings growth and margin expansion, especially in the Middle East, Asia and offshore North America. Additionally, cost optimization, greater adoption of digital solutions and contributions from long-cycle deepwater and gas projects played significant roles.
SLB reported a free cash flow of $1.81 billion in the third quarter. As of Sept. 30, the company had approximately $4.46 billion in cash and short-term investments. At the end of the quarter, it registered a long-term debt of $11.86 billion.
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