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Canadian Natural Resources hits record oil production amid rising U.S. demand

Canadian Natural Resources Ltd. drew on its abundant reserves to set a slew of production records last quarter, boosting its bottom line by 72 per cent.

The country's largest oil and gas producer by market capitalization churned out 1.42 million barrels of oil equivalent per day in the fourth quarter, up nearly 10 per cent year-over-year to break its all-time quarterly production record.

The Calgary-based company also achieved record quarterly natural gas production with 2.23 million cubic feet per day, capping off record oil and gas volumes for the full year.

The increase came as demand for oil in the United States rose 3.4 per cent year-over-year in October, according to a report from the U.S. Energy Information Administration. The U.S. imports far more Canadian petroleum and gas than all other countries combined.

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New export terminals along the Gulf of Mexico spurred demand, and helped drive an ongoing boom in oil and liquefied natural gas shipments out of the U.S.

The higher volumes saw Canadian Natural boost its net earnings by nearly three-quarters to $2.63 billion in its fourth quarter from $1.52 billion a year earlier.

The company also announced it will raise its quarterly dividend to $1.05 per share, up from $1 and the third time in a year the payment to shareholders has gone up.

Canadian Natural notched a net debt level of $10 billion in the fourth quarter, months earlier than forecast. It said it will now aim to funnel all free cash flow to shareholders through dividends and share buybacks.

Like other Canadian oil producers, the firm is awaiting the startup of the Trans Mountain pipeline expansion. It said Thursday it has committed to shipping 94,000 barrels per day on the twinned line, which will give Alberta oil producers additional export capacity to the West Coast.

The contents could be a mixture of heavy and light crude, said Scott Stauth, who took over as president on Wednesday. "I wouldn't lean for it to be all one way or the other way."

The project is about 98 per cent complete and expected to start service in the second quarter, Canadian Natural said.

The additional export capacity is also poised to shore up the Western Canada Select differential — the price discount Canadian heavy oil producers typically have to absorb on their product in part due to lack of pipeline egress.

Earlier this year, a cold snap in the Prairies hampered production slightly at Canadian Natural, but Stauth said the company bounced back quickly.

"In those extreme cold weather stretches like what we saw in January, there's always short-term challenges in our conventional and oil sands mining assets. But generally — and in this case — they're short lived," Stauth said.

"So no material impact."

Canadian Natural reported revenue for the quarter ended Dec. 31 of $9.55 billion, down from $9.69 billion.

On an adjusted basis, the company said it earned $2.34 per diluted share from operations, up from $1.96 per diluted share the year before. The outcome also beat analysts' expectations of $2.15 per share, according to financial markets data firm Refinitiv.

This report by The Canadian Press was first published Feb. 29, 2024.

Companies in this story: (TSX:CNQ)

Christopher Reynolds, The Canadian Press