Back to top

Analyst Blog

Independent energy explorer Canadian Natural Resources Ltd. (CNQ - Analyst Report) has agreed to acquire certain liquids-rich natural gas properties in western Canada from Oklahoma City-based Devon Energy Corp. (DVN - Analyst Report) for C$3.125 billion ($2.86 billion) in cash.

The market reacted positively to the news, which was announced before market hours on Wednesday, Feb 19. Shares of Canadian Natural ended at $36.69 on that day – up 2.6% from Tuesday’s close.

The to-be-bought assets – adjacent to Canadian Natural’s existing fields in the region – hold an estimated 272.2 million oil-equivalent barrels (MMBOE) in proved reserves (70% gas) and will add 86,633 BOE to the nation’s largest heavy oil outfit’s daily production. Other constituents of the deal include 2.2 million acres of undeveloped land, 2.7 million acres of royalty lands, six natural gas plants and added infrastructure

The potential acquisition – which is likely to be sealed by Apr 1 subject to customary closing conditions – is expected to be immediately accretive to Calgary, Alberta-based Canadian Natural’s production, cash flows and profits. Importantly, the addition of the acreage and infrastructure will boost growth prospects of the company in its core areas, with possibility to further enhance value in the future.

Canadian Natural is engaged in the acquisition, development and exploration of crude oil and natural gas properties. It is one of the largest independent exploration and production companies in Canada, with extensive heavy crude oil and natural gas developments.

The company’s large, diversified oil and gas asset bases, together with international exposure and a well-balanced blend of conventional and unconventional prospects, provides a buffer against sectoral uncertainties.

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

However, some better-ranked Canadian upstream energy stocks include Crescent Point Energy Corp. (CPG - Snapshot Report) and Bellatrix Exploration Ltd. (BXE). Both these entities – sporting a Zacks Rank #2 (Buy) – have solid secular growth stories with potential to rise from current levels.

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

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
ERBA DIAGNO… ERB 3.80 +7.04%
BANCO DO BR… BDORY 14.74 +5.66%
AIR INDUSTR… AIRI 9.99 +4.15%
EQT MIDSTRE… EQM 98.14 +3.38%
WEATHERFORD… WFT 23.64 +3.10%