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Canadian Natural (CNQ) Slips to Q2 Loss on Lower Production

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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.

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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.

Production

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.

Realized Prices

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

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%.

Guidance

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.

Recent News

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.

Zacks Rank

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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MURPHY USA INC (MUSA): Free Stock Analysis Report

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NORTH ATL DRILG (NADL): Free Stock Analysis Report

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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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