Shares of Canadian Natural Resources Limited CNQ have rallied almost 18% since its first-quarter 2020 earnings announcement on May 7. While the top and the bottom line came below the respective Zacks Consensus Estimate, investors welcomed the company’s decision to sustain its payout even in a difficult operating environment.
Let’s delve deeper.
Canadian Natural Resources reported first-quarter 2020 adjusted loss per share of 19 cents due to lower crude oil and natural gas price realizations as well as higher costs and expenses. The Zacks Consensus Estimate was of a profit of 4 cents per share. Also, in the year-ago period, the company posted an adjusted profit of 53 cents per share.
Total revenues of $3.36 billion also missed the Zacks Consensus Estimate of $3.61 billion. Further, the top line declined from first-quarter 2019 revenues of $3.95 billion.
Despite the depressing year-over-year revenues as well as earnings, the company’s first-quarter results offered something to buoy long-term investors’ optimism as free cash flow totaled C$55 million after adjusting capital expenditure and dividend payments.
Further, the company, which is committed to adding shareholder value, returned C$444 million and C$271 million via dividends and stock buybacks, respectively.
Canadian Natural declared a quarterly dividend of 42.5 Canadian cents a share, payable Jul 1, 2020 to its shareholders of record as of Jun12, 2020.
Canadian Natural Resources Limited Price
Canadian Natural Resources Limited price | Canadian Natural Resources Limited Quote
Production & Prices
Canadian Natural reported quarterly production of 1,178,752 barrels of oil equivalent per day (BOE/d), up 13.9% from the prior-year quarter. Oil and natural gas liquids (NGLs) output (accounting for more than 79.6% of total volumes) increased to 938,676 barrels per day (Bbl/d) from 783,512 Bbl/d a year ago. Crude oil and NGLs production from operations in North America including synthetic crude oil production of 438,101 Bbl/d and bitumen output of 228,303 Bbl/d totaled 666,404 Bbl/d, comparing favorably with the year-ago quarter’s 510,352 Bbl/d owing to synergies drawn from the buyout of Devon Energy Corporation’s (DVN) Canadian business.
Natural gas volumes recorded a 4.6% year-over-year decline from 1,510 million cubic feet per day (MMcf/d) to 1,440 MMcf/d in the quarter under review. Production in North America summed 1,407 MMcf/d compared with 1,454 MMcf/d in the prior year.
Canadian Natural’s realized natural gas price was C$2.22 per thousand cubic feet compared with the year-ago level of C$3.09. Realized oil and NGLs price plummeted 52% to C$25.90 per barrel from C$53.98 in the first quarter of 2019.
Costs & Capital Expenditure
Total expenses incurred in the quarter were C$5,941 million, higher than C$4,028 million recorded a year ago. Elevated transportation costs, foreign exchange loss and depreciation expenses flared up the overall costs. In the reported quarter, capital expenditure came in at C$838 million.
As of Mar 31, the company had C$1,071 million in cash and cash equivalents, and a long-term debt of C$19,884 million, representing total debt to total capital of 37.4%.
In response to the bearish oil environment resulting from the coronavirus pandemic, Canadian Natural reduced its 2020 capex further from the March update by an additional $280 million. Capital expenditures are now estimated to be around $2,680 million, indicating a $1,370 million cutback from the original 2020 outlook issued in December.
Zacks Rank & Peer Releases
Canadian Natural has a Zacks Rank #3 (Hold). Among other players in the energy sector that already reported first-quarter earnings, the bottom-line results of Cheniere Energy Inc. LNG, Murphy USA Inc. MUSA and Williams Companies Inc. WMB beat the respective Zacks Consensus Estimate by 204.3%, 4.3% and 4%. While Cheniere Energy and Williams Companies carry a Zacks Rank #2 (Buy), Murphy sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
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