Canadian Natural Resources Limited

Canadian Natural Resources Limited (CNQ - Analyst Report), the oil exploration company, saw production rise in the first quarter even as crude prices fell sharply. The company has surprised on estimates 3 out of the last 4 quarters. It is trading with a forward P/E of 12.4.

Company Description

Canadian Natural Resources is an independent oil and natural gas exploration and production company. Based in Calgary, Canada, it has operations in Western Canada, the North Sea and Offshore West Africa.

The company is also invested in the Horizon project in the Canadian oil sands of Alberta.

Canadian Natural Resources Surprised by 111.76% in the First Quarter

On May 7, the company reported first quarter 2009 results which beat Wall Street estimates by 57 cents. The company reported $1.08 compared to analysts' estimates of 51 cents.

Adjusted net earnings fell 16.6% to C$727 million from C$872 million in the year ago period.

Production in both crude and NGLs rose 7% quarter over quarter to 330,017 bbl/d. It also rose slightly compared to the first quarter of 2008 where it was 327,217 bbl/d.

The increase reflects the initial production from Horizon, the project in the oil sands, and the first oil production at the Olowi Field in Offshore Gabon.

"Cash flow remained strong in Q1/09. We benefited from favorable heavy oil differentials and our substantial hedging program," said John Langille, Vice-Chairman.

Dividend Payout Continues

The company continued with its practice of paying a cash distribution. It declared a quarterly dividend of 10.5 cents Canadian per share which was payable on July 1.

The current yield is 0.80%.

Second Quarter Outlook

Canadian Natural Resources issued an optimistic forecast for production in the second quarter of between 321,000 and 359,000 bbl/d of crude oil and NGLs.

Estimates Rise

Analysts liked what they saw in the first quarter results and have been raising estimates on both the second quarter and the full year.

Second quarter consensus has jumped nearly 20% to $1.10 per share with 2 out of 2 covering analysts raising in the last 30 days.

There are 10 analysts covering the full year and 3 of those analysts have raised in the last month, including 2 in just the last week. Consensus estimates are up 7 cents to $3.83 per share.

Value Fundamentals

Canadian Natural Resources is a Zacks #1 Rank (strong buy) stock. It is trading with a price to book of 1.71. The company has an outstanding 5-year return on equity (ROE) of 24.43%.

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