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Canadian Natural (CNQ) Incurs Wider-than-Expected Q1 Loss

On May 5, Canadian Natural Resources LimitedCNQ reported wider-than-expected loss for first-quarter 2016 owing to lower production and oil and gas price realizations.

The company's first-quarter loss came in at 44 U.S. cents per share, wider than the Zacks Consensus Estimate of a loss of 27 U.S. cents and the year-ago quarter loss of 3 U.S. cents.

This independent explorer and producer reported quarterly revenues of C$2,178 million, substantially lower than the year-ago figure of C$3,034 million.

Canadian Natural's fourth-quarter cash flow from operations - a key metric to gauge its capability to fund new projects and drilling - was C$581 million, significantly below the first-quarter 2015 level of C$1,254 million.

Production

Canadian Natural reported production of 844,531 barrels of oil equivalent per day (BOE/d) in the first quarter, lower than the prior-year quarter level of 898,053 BOE/d.

Natural gas production increased to 1,786 million cubic feet per day (MMcf/d) from 1,771 MMcf/d in the first quarter of 2015. However, oil and natural gas liquids (NGLs) production saw a decline to 546,927 barrels per day (Bbl/d) from 602,809 Bbl/d in the year-ago quarter.

Realized Prices

As reported, the average realized liquid price (before hedging) was C$23.31 per barrel during the first quarter, down 37% from the corresponding quarter last year. Moreover, the average realized natural gas price (excluding hedging) for the three months ended Mar 31, 2016 was C$2.23 per thousand cubic feet (Mcf), considerably below the year-ago level of C$3.38 per Mcf.

Total Expenses

Total expenses came in at C$2,646 million, 28% less than C$3,673 million incurred in the year-earlier quarter.

Capital Expenditure & Balance Sheet

As of Mar 31, 2016, Canada's second-largest natural gas producer had C$15 million in cash and cash equivalents and long-term debt (including current portion) of C$16,564 million, representing a debt-to-capitalization ratio of approximately 38%.

Guidance

The company continues to anticipate capital expenditure in the range of C$3.5 billion to C$3.9 billion for 2016. Canadian Natural expects second-quarter liquid production of 504,000-529,000 Bbl/d and natural gas production in the 1,720-1,760 MMcf/d range.

For 2016, the company lowered its production expectation to a range of 802,000 BOE/d to 861,000 BOE/d from the prior guidance of 809,000 BOE/d and 868,000 BOE/d.

Zacks Rank

Canadian Natural currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are PetroChina Co. Ltd. PTR , Pembina Pipeline Corporation PBA and Braskem S.A. BAK . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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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.


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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