On Aug 4, Canadian Natural Resources Limited CNQ reported second-quarter loss of 24 U.S. cents against the Zacks Consensus Estimate of earnings of 2 U.S. cents. The company had posted profit of 19 U.S. cents per share in the year-ago quarter. Lower production and reduced oil and gas price realizations led to the underperformances.
This independent explorer and producer's quarterly revenues of U.S$1,970 million was substantially lower than the year-ago figure of U.S$2,783 million.
CDN NTRL RSRCS Price, Consensus and EPS Surprise
Canadian Natural's second-quarter cash flow from operations - a key metric to gauge its capability to fund new projects and drilling - was C$938 million. The reported figure came in significantly below the second-quarter 2015 level of C$1,503 million.
Canadian Natural reported production of 783,988 barrels of oil equivalent per day (BOE/d) in the second quarter as against 805,547 BOE/d in the prior-year quarter.
Natural gas production decreased to 1,689 million cubic feet per day (MMcf/d) from 1,779 MMcf/d in the second quarter of 2015. Also, oil and natural gas liquids (NGLs) production declined to 502,410 barrels per day (Bbl/d) from 509,047 Bbl/d in the year-ago quarter.
As reported, average realized liquid price (before hedging) was C$39.98 per barrel during the second quarter, down 24.7% from the corresponding quarter last year. Moreover, the average realized natural gas price (excluding hedging) for the three months ended Jun 30, 2016 was C$1.50 per thousand cubic feet (Mcf) as against the year-ago level of C$3.06 per Mcf.
Total expenses came in at C$3,029 million, 8.3% less than C$3,302 million incurred in the year-earlier quarter.
Capital Expenditure & Balance Sheet
As of Jun 30, 2016, the company had C$24 million in cash and cash equivalents and long-term debt (including current portion) of C$17,236 million, representing a debt-to-capitalization ratio of approximately 39.8%.
The company, which is Canada's second-largest natural gas producer, continues to anticipate capital expenditure in the range of C$3.5 billion to C$3.9 billion for 2016. Canadian Natural expects third-quarter liquid production of 458,000-484,000 Bbl/d and natural gas production in the 1,645-1,685 MMcf/d range.
For 2016, the company's revised production expectation was 798,000 BOE/d to 852,000 BOE/d.
Canadian Natural Resources reported that it has priced C$1.0 billion principal amount of medium-term notes at a price of C$99.985, which will yield 3.31% to maturity. The notes will be sold in Canada. The proceeds from the sale will be used by the company to reduce debt and for general corporate purposes.
Canadian Natural currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are North Atlantic Drilling Limited NADL , Sasol Ltd. SSL and Murphy USA Inc. MUSA . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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