Canadian Natural (CNQ) Q4 Earnings Lag Estimates, Revenues Beat
Canadian Natural Resources Limited CNQ reported fourth-quarter 2022 adjusted earnings per share (EPS) of $1.44, missing the Zacks Consensus Estimate of $1.61. The bottom line also fell from the year-ago quarter’s figure of $1.76. This underperformance can be attributed to lower production and an increase in expenses.
Total revenues of $7.1 billion declined from $7.4 billion in the year-ago period. However, it beat the Zacks Consensus Estimate of $7 billion on higher natural gas prices.
CNQ’s board of directors announced a 6% hike in quarterly cash dividend on its common shares of 90 Canadian cents per unit. The dividend will be payable on Apr 5, 2023, to shareholders of record at the close of the business on Mar 1, 2023.
Canadian Natural Resources Limited Price, Consensus and EPS Surprise
Canadian Natural Resources Limited price-consensus-eps-surprise-chart | Canadian Natural Resources Limited Quote
Production & Prices
Canadian Natural reported quarterly production of 1,294,679 barrels of oil equivalent per day (BOE/D), down 1.5% from the prior-year quarter’s level. The oil and NGL output (accounting for around 72.8% of total volumes) reduced to 942,258 barrels per day (Bbl/d) from 1,004,425 Bbl/d a year ago.
In 2022, exploration and production (E&P) activities in North America, not including thermal in situ methods, had an average output of 227,953 barrels per day. This indicates a 7% increase from the year-ago level. The increase in production was due to higher levels of drilling and acquisitions. However, this growth was partly offset by natural declines and the effects of extremely cold weather in December 2022.
Natural gas volumes were 2,115 MMcf/d in the quarter, up 13.9% from 1,857 MMcf/d in the year-ago period. Production in North America totaled 2,105 MMcf/d compared with 1,841 MMcf/d in the prior year.
Canadian Natural’s realized natural gas price was C$6.39 per thousand cubic feet, up 19.4% from the year-ago quarter’s level of C$5.35. The realized oil and NGL price was $69.34 per barrel, down 4.8% from $72.81 in the fourth quarter of 2021.
Costs & Capital Expenditure
Total expenses in the quarter were C$8,359 million, significantly higher than C$5,803 million recorded in the year-ago period. An increase in production expenses, transportation, blending, feedstock costs and depreciation contributed to the overall cost.
Capital expenditure totaled C$1,317 million compared with C$1,804 million in the prior-year period.
As of Dec 31, Canadian Natural had cash and cash equivalents of C$920 million and long-term debt of C$11,041 million, representing debt to total capital of about 22.4%.
In 2023, the company anticipates total capital expenditures of C$4,190 million. Its budget has a designated amount of C$1,020 million for incremental strategic growth capital. This allocation is expected to expand the company's Exploration and Production segments, as well as boost production and capacity growth beyond 2023. The targeted areas for growth are the long-life low decline thermal in situ, and Oil Sands Mining and Upgrading assets, which are expected to yield substantial returns in the long run.
Canadian Natural anticipates to maintain and grow its production levels by allocating low-maintenance capital. The company is dedicated to strengthening its balance sheet while focusing on increasing returns for shareholders. The company is also committed to advancing projects that add value and help achieve a production of 56,000 barrels of oil equivalent per day (BOE/D). Through these efforts, the company aims to deliver long-term value for its shareholders while maintaining its position as an industry leader.
Zacks Rank and Key Picks
Currently, CNQ carries a Zacks Rank #3 (Hold). Investors interested in the energy sector might look at some better-ranked stocks like NGL Energy Partners (NGL), sporting a Zacks Rank #1 (Strong Buy), and Energy Transfer ET and Helix Energy Solutions Group HLX, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NGL Energy Partners: The company is worth approximately $451.75 million. Its shares have increased 48.8% in the past year.
NGL is a limited partnership company that operates a vertically-integrated propane business with three segments — retail propane, wholesale supply and marketing, and midstream.
Energy Transfer LP: The company is valued at around $38.99 billion. It delivered an average earnings surprise of 11.43% for the last four quarters and its current dividend yield is 9.48%.
ET currently has a forward P/E ratio of 9.17. In comparison, its industry has an average forward P/E of 9.40, which means the company is trading at a discount to the group.
Helix Energy Solutions Group: The company is valued at around $1.20 billion. In the past year, its stock has increased by 63.3%.
HLX currently has a forward P/E ratio of 12.02. In comparison, its industry has an average forward P/E of 12.50, which means the company is trading at a discount to the group.
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