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Canadian Natural Gains on Q3 Earnings Beat; Lowers Capex

Canadian Natural Resources Ltd.CNQ reported third-quarter 2015 earnings of 14 cents per share that surpassed the Zacks Consensus Estimate of 11 cents. Substantial increase in oil production volumes and cost-improvement measures resulted in the beat. Shares of Canadian Natural gained nearly 6% following the beat and new guidance.

However, the bottom-line declined substantially from the year-ago quarter of 87 cents. A significant decline in both oil and natural gas prices hampered profits.

Canadian Natural Resources Limited (CNQ) - Earnings Surprise | FindTheCompany

This independent exploration and production company reported quarterly revenues of C$3,114 million, substantially lower than the year-ago figure of C$4,712 million.

Canadian Natural's third-quarter cash flow from operations - a key metric to gauge its capability to fund new projects and drilling - was C$1,533 million, significantly below the third-quarter 2014 level of C$2,440 million.

Production

Canadian Natural reported quarterly production of 848,701 barrels of oil equivalent per day (BOE/d), 6.5% higher than the prior-year quarter level.

Natural gas production decreased to 1,653 million cubic feet per day (MMcf/d) from 1,674 MMcf/d in the third quarter of 2014. However, oil and natural gas liquids (NGLs) production increased to 573,135 barrels per day (Bbl/d) from 518,007 Bbl/d in the year-ago quarter.

Realized Prices

As reported, the average realized liquid price (before hedging) was C$41.55 per barrel during the third quarter, down 48% from the corresponding quarter last year. Moreover, the average realized natural gas price (excluding hedging) during the three months ended Sep 30, 2015 was C$3.22 per thousand cubic feet (Mcf), considerably below the year-ago level of C$4.54 per Mcf.

Total Expenses

Total expenses came in at C$3,212 million, 5% lower than C$3,376 million in the year-earlier quarter.

Capital Expenditure & Balance Sheet

Canadian Natural's total capital spending during the reported quarter was C$1,240 million as against C$2,175 million in the year-ago quarter.

As of Sep 30, 2015, Canada's second-largest natural gas producer had C$30 million in cash and cash equivalents and long-term debt (including current portion) of C$16,510 million, representing a debt-to-capitalization ratio of approximately 37.5%.

Guidance

The company anticipates capital expenditure of C$5.44 billion in 2015, lower than the previous guidance of C$5.5 billion.

Canadian Natural expects fourth-quarter liquid production of 562,000-588,000 Bbl/d and natural gas production in the 1,735-1,775 MMcf/d range.

The upstream firm lowered its 2015 liquid production range from 562,000-602,000 Bbl/d to 555,000-591,000 Bbl/d. The company, however, reaffirmed 2015 natural gas production projection between 1,730 MMcf/d and 1,770 MMcf/d.

For 2016, the company expects production between 840,000 BOE/d and 850,000 BOE/d. Of this, 65% is expected to be crude oil and NGLs, while the remaining is likely to be natural gas.

Canadian Natural anticipates 2016 capex between $4.5 billion to $5 billion, substantially below this year's projection.

Zacks Rank and Key Stock Picks

Canadian Natural currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader energy sector are Seadrill Partners LLC SDLP , Sprague Resources LP SRLP and Northern Tier Energy LP NTI . All these stocks sport 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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