Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Calgary, Alberta based independent exploration and production (E&P) company, Canadian Natural Resources Ltd. (CNQ - Analyst Report) reported strong second-quarter 2013 results on the back of factors such as a decline in E&P operating costs and higher natural gas price realizations.

Earnings per share, excluding one-time and non-cash items, of 42 Canadian cents (41 US cents) surpassed the Zacks Consensus Estimate of 39 US cents.

However, CNQ’s per share profits came lower than the second quarter 2012 level of 55 Canadian cents due to reduction in crude oil and SCO (Synthetic Crude Oil) volumes in the North American and Oil Sands Mining and Upgrading segments.

Quarterly revenues of C$3,784.0 million (US $3,697.7 million) also surpassed our projection of US $3,568.0 million. However, it failed to cross the prior year quarter revenue of C$3,826.0 million.  

CNQ’s second-quarter cash flow from operations – a key metric to gauge capability to fund new projects and drilling – amounted to C$1,670.0 million, down 4.8% year over year.   

Production

Total production of CNQ during the quarter was down 8.3% year over year at 623,315 barrels of oil-equivalent per day (BOE/d).

Oil and natural gas liquids (NGLs) production fell approximately 7.3% year over year to 436,363 barrels per day (Bbl/d) and natural gas production declined 10.6% from the prior-year quarter to 1,122 million cubic feet per day (Mmcfe/d). The volume levels were within CNQ’s guidance and the decline was primarily due to planned maintenance activity and production timing cycle. It was partially offset by intensive heavy crude oil drilling activity.

Realized Prices

The average realized crude oil price (before hedging) during the second quarter was C$75.10 per barrel, representing a rise of 4.1% from the corresponding quarter last year. The average realized natural gas price (excluding hedging) during the three months ended Jun 30, 2013 was C$4.05 per thousand cubic feet (Mcf), up 88.7% year over year.

Capital Expenditure & Balance Sheet

CNQ’s total capital spending during the quarter was C$1,792.0 million against C$1,324.0 million in the year-ago quarter.

As of Jun 30, 2013, Canada’s second-largest oil producer had C$17.0 million cash in hand and long-term debt of approximately C$10,033.0 million, representing a debt-to-capitalization ratio of 29.0%.

Guidance

Management is guiding towards production of 506,000–529,000 Bbl/d of liquids and 1,135–1,155 MMcf/d of natural gas during the third quarter of 2013. The company plans to drill 47 net thermal in-situ wells and 255 net crude oil wells in North America during the Jul-Sep period of 2013.

For 2013, CNQ estimates production of 482,000–513,000 Bbl/d of liquids and 1,085–1,145 MMcf/d of natural gas.

Stocks to Consider

CNQ currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at other companies in the energy sector such as ARC Resources Ltd. (AETUF), Canadian Oil Sands Limited (COSWF) and Enerplus Corp. (ERF - Snapshot Report) as good investment opportunities. All three firms sport a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
BITAUTO HOLD BITA 33.21 +7.92%
E COMMERCE C DANG 12.50 +4.52%
E*TRADE FINA ETFC 21.23 +4.25%
BIO PATH HOL BPTH 2.87 +4.18%
DIXIE GROUP DXYN 14.58 +3.70%