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Canadian Natural's (CNQ) Q1 Earnings Fall Y/Y, Sales Beat
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Canadian Natural Resources Limited (CNQ - Free Report) reported first-quarter 2024 net earnings per share (EPS) of C$0.91, down from the prior-year quarter level of C$1.62. This underperformance can be mainly attributed to low commodity prices and higher year-over-year expenses during the quarter.
Total revenues of $6.1 billion declined from $6.4 billion in the year-ago period due to a reduction in product sales. However, the figure beat the Zacks Consensus Estimate of $6 billion.
CNQ’s board of directors announced a quarterly cash dividend on its common shares of C$1.05 per unit on a pre-stock split basis or 52.5 Canadian cents per common share after giving effect to the two-for-one stock split of the common shares, subject to approval at the CNQ's Annual and Special Meeting of Shareholders on May 2, 2024. The dividend is payable on Jul 5, 2024, to shareholders of record at the close of the business on Jun 17, 2024.
During this reported quarter, CNQ distributed strong returns to shareholders, amounting to approximately C$1.7 billion. This sum consisted of C$1.1 billion in dividends and C$0.6 billion from the repurchase and cancellation of roughly 6.7 million common shares at a weighted average price of C$90.78 per share.
Up to May 1, 2024, the company distributed a total of roughly C$3.1 billion directly to shareholders, comprising C$2.2 billion in dividends and C$0.9 billion through the repurchase and cancellation of approximately 9.6 million common shares.
During the quarter, this Oil and Gas Exploration and Production company generated C$29 billion in operating cash flow and about C$3.1 billion in adjusted funds flow.
CNQ extracted C$787 million in free cash flow after paying C$1.1 billion in dividends, C$1.1 billion in capital expenditures and C$162 million in abandonment expenses during the same time frame.
Canadian Natural Resources Limited Price, Consensus and EPS Surprise
Canadian Natural Resources reported quarterly production of 1,333,502 barrels of oil equivalent per day (BOE/D), up 1.1% from the prior-year quarter level. The figure was higher than our estimate of 1,322,100 BOE/D.
The oil and natural gas liquid (NGL) output (accounting for around 73.2% of total volumes) increased to 975,668 barrels per day (Bbl/d) from 962,908 Bbl/d recorded a year ago.
Exploration and production activities in North America, not including thermal in situ methods, had an average output of 237,481 barrels per day. This indicates a 1.3% year-over-year increase owing to drilling activities on CNQ's primary heavy crude oil assets.
Natural gas volumes totaled 2,147 MMcf/d, up 0.4% from 2,139 MMcf/d recorded in the year-ago period. The figure beat our estimate of 1,852 MMcf/d.
Production in North America amounted to 2,135 MMcf/d compared with 2,127 MMcf/d in the year-ago quarter. The figure beat our prediction of 1,841 MMcf/d.
The realized natural gas price decreased 52.4% to C$1.94 per thousand cubic feet from the year-ago level of C$4.12. The realized oil and NGL price jumped 19% to C$70.01 per barrel from C$58.85 in the first quarter of 2023.
Costs & Capital Expenditure
Total expenses in the quarter were C$6.8 billion, up from C$6.3 billion recorded in the year-ago period.
Capital expenditure totaled C$1.1 billion compared with C$1.3 billion in the prior-year quarter.
Balance Sheet
As of Mar 31, 2024, Canadian Natural had cash and cash equivalents worth C$767 million and long-term debt of C$10.3 billion, with a debt to total capital of about 21.8%.
Key Updates
The company achieved the successful completion of the planned turnaround at Jackfish ahead of schedule in April 2024 and had an upcoming turnaround at Kirby North scheduled for May 2024. Due to the early completion of the turnaround at Jackfish, the total impact on the second quarter of 2024 average production is expected to be approximately 15,300 bbl/d, an improvement from the previous target of 17,100 bbl/d.
In the second half of 2024, CNQ anticipates output from its Oil Sands Mining and Upgrading assets as it continues to optimize turnaround operations, finalizes tie-ins and moves forward with the reliability enhancement project's commissioning in the second quarter of 2024.
To maximize value for shareholders, the company's 2024 development plan places a strategic emphasis on conventional activities in the second half of 2024, coinciding with improved crude oil pricing and increased market egress. After the Trans Mountain Expansion pipeline is finished, crude oil products will have plenty of egress and optionality.
The company is currently in the process of drilling two CSS pads at Primrose, with the aim of bringing them into production in the second quarter of 2025. Additionally, at Wolf Lake, the company recently completed the drilling of one SAGD pad, which is targeted to commence production in the first quarter of 2025.
Guidance
In December 2023, the company announced an ambitious growth plan for 2024. CNQ expects to achieve production growth of 1,455 MBOE/d by the end of 2024, indicating a 40% increase from that anticipated at the end of 2023.
The Zacks Rank #3 (Hold) company also aims to increase production in its thermal and oil sands mining sectors in the range of 724,000-743,000 barrels per day in 2024, higher than the previous year's guidance. The company has set an average annual production growth target of 4-5% for 2025.
Important Energy Earnings So Far
While we have discussed Canadian Natural Resources Limited’s first-quarter results in detail, let’s take a look at some other key energy reports of this season.
EOG Resources, Inc. (EOG - Free Report) , an American energy company engaged in hydrocarbon exploration, announced first-quarter 2024 adjusted earnings per share of $2.82, which beat the Zacks Consensus Estimate of $2.70. The bottom line also increased from the year-ago quarter’s level of $2.69. Strong quarterly results were primarily driven by higher total production volumes.
Total quarterly revenues of $6.1 billion beat the Zacks Consensus Estimate of $5.9 billion. The top line also surpassed the prior-year quarter’s level of $6.04 billion. As of Mar 31, 2024, EOG had cash and cash equivalents worth $5.3 million and long-term debt of $3.8 billion.
SLB (SLB - Free Report) , the largest oilfield contractor, announced first-quarter 2024 earnings of 75 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 74 cents. The bottom line also increased from the year-ago quarter’s level of 63 cents.
SLB’s strong quarterly earnings resulted from higher evaluation and stimulation activities in the international market. As of Mar 31, 2024, the company had approximately $3.5 billion in cash and short-term investments and a long-term debt of $10.7 billion.
Independent oil refiner and marketer Valero Energy (VLO - Free Report) reported first-quarter adjusted earnings of $3.82 per share, which beat the Zacks Consensus Estimate of $3.18, driven by a decline in total cost of sales. Adjusted operating income in the Refining segment totaled $1.7 billion, down from $4.1 billion in the year-ago quarter. The figure surpassed our estimate of $1.6 billion.
Valero’s total cost of sales declined to $29.8 billion from the year-ago figure of $32.1 billion. It was also below our estimate of $30.4 billion, primarily due to lower material costs and operating expenses. The first-quarter capital investment totaled $661 million, of which $563 million was allotted for sustaining the business.
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Canadian Natural's (CNQ) Q1 Earnings Fall Y/Y, Sales Beat
Canadian Natural Resources Limited (CNQ - Free Report) reported first-quarter 2024 net earnings per share (EPS) of C$0.91, down from the prior-year quarter level of C$1.62. This underperformance can be mainly attributed to low commodity prices and higher year-over-year expenses during the quarter.
Total revenues of $6.1 billion declined from $6.4 billion in the year-ago period due to a reduction in product sales. However, the figure beat the Zacks Consensus Estimate of $6 billion.
CNQ’s board of directors announced a quarterly cash dividend on its common shares of C$1.05 per unit on a pre-stock split basis or 52.5 Canadian cents per common share after giving effect to the two-for-one stock split of the common shares, subject to approval at the CNQ's Annual and Special Meeting of Shareholders on May 2, 2024. The dividend is payable on Jul 5, 2024, to shareholders of record at the close of the business on Jun 17, 2024.
During this reported quarter, CNQ distributed strong returns to shareholders, amounting to approximately C$1.7 billion. This sum consisted of C$1.1 billion in dividends and C$0.6 billion from the repurchase and cancellation of roughly 6.7 million common shares at a weighted average price of C$90.78 per share.
Up to May 1, 2024, the company distributed a total of roughly C$3.1 billion directly to shareholders, comprising C$2.2 billion in dividends and C$0.9 billion through the repurchase and cancellation of approximately 9.6 million common shares.
During the quarter, this Oil and Gas Exploration and Production company generated C$29 billion in operating cash flow and about C$3.1 billion in adjusted funds flow.
CNQ extracted C$787 million in free cash flow after paying C$1.1 billion in dividends, C$1.1 billion in capital expenditures and C$162 million in abandonment expenses during the same time frame.
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 Resources reported quarterly production of 1,333,502 barrels of oil equivalent per day (BOE/D), up 1.1% from the prior-year quarter level. The figure was higher than our estimate of 1,322,100 BOE/D.
The oil and natural gas liquid (NGL) output (accounting for around 73.2% of total volumes) increased to 975,668 barrels per day (Bbl/d) from 962,908 Bbl/d recorded a year ago.
Exploration and production activities in North America, not including thermal in situ methods, had an average output of 237,481 barrels per day. This indicates a 1.3% year-over-year increase owing to drilling activities on CNQ's primary heavy crude oil assets.
Natural gas volumes totaled 2,147 MMcf/d, up 0.4% from 2,139 MMcf/d recorded in the year-ago period. The figure beat our estimate of 1,852 MMcf/d.
Production in North America amounted to 2,135 MMcf/d compared with 2,127 MMcf/d in the year-ago quarter. The figure beat our prediction of 1,841 MMcf/d.
The realized natural gas price decreased 52.4% to C$1.94 per thousand cubic feet from the year-ago level of C$4.12. The realized oil and NGL price jumped 19% to C$70.01 per barrel from C$58.85 in the first quarter of 2023.
Costs & Capital Expenditure
Total expenses in the quarter were C$6.8 billion, up from C$6.3 billion recorded in the year-ago period.
Capital expenditure totaled C$1.1 billion compared with C$1.3 billion in the prior-year quarter.
Balance Sheet
As of Mar 31, 2024, Canadian Natural had cash and cash equivalents worth C$767 million and long-term debt of C$10.3 billion, with a debt to total capital of about 21.8%.
Key Updates
The company achieved the successful completion of the planned turnaround at Jackfish ahead of schedule in April 2024 and had an upcoming turnaround at Kirby North scheduled for May 2024. Due to the early completion of the turnaround at Jackfish, the total impact on the second quarter of 2024 average production is expected to be approximately 15,300 bbl/d, an improvement from the previous target of 17,100 bbl/d.
In the second half of 2024, CNQ anticipates output from its Oil Sands Mining and Upgrading assets as it continues to optimize turnaround operations, finalizes tie-ins and moves forward with the reliability enhancement project's commissioning in the second quarter of 2024.
To maximize value for shareholders, the company's 2024 development plan places a strategic emphasis on conventional activities in the second half of 2024, coinciding with improved crude oil pricing and increased market egress. After the Trans Mountain Expansion pipeline is finished, crude oil products will have plenty of egress and optionality.
The company is currently in the process of drilling two CSS pads at Primrose, with the aim of bringing them into production in the second quarter of 2025. Additionally, at Wolf Lake, the company recently completed the drilling of one SAGD pad, which is targeted to commence production in the first quarter of 2025.
Guidance
In December 2023, the company announced an ambitious growth plan for 2024. CNQ expects to achieve production growth of 1,455 MBOE/d by the end of 2024, indicating a 40% increase from that anticipated at the end of 2023.
The Zacks Rank #3 (Hold) company also aims to increase production in its thermal and oil sands mining sectors in the range of 724,000-743,000 barrels per day in 2024, higher than the previous year's guidance. The company has set an average annual production growth target of 4-5% for 2025.
Important Energy Earnings So Far
While we have discussed Canadian Natural Resources Limited’s first-quarter results in detail, let’s take a look at some other key energy reports of this season.
EOG Resources, Inc. (EOG - Free Report) , an American energy company engaged in hydrocarbon exploration, announced first-quarter 2024 adjusted earnings per share of $2.82, which beat the Zacks Consensus Estimate of $2.70. The bottom line also increased from the year-ago quarter’s level of $2.69. Strong quarterly results were primarily driven by higher total production volumes.
Total quarterly revenues of $6.1 billion beat the Zacks Consensus Estimate of $5.9 billion. The top line also surpassed the prior-year quarter’s level of $6.04 billion. As of Mar 31, 2024, EOG had cash and cash equivalents worth $5.3 million and long-term debt of $3.8 billion.
SLB (SLB - Free Report) , the largest oilfield contractor, announced first-quarter 2024 earnings of 75 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 74 cents. The bottom line also increased from the year-ago quarter’s level of 63 cents.
SLB’s strong quarterly earnings resulted from higher evaluation and stimulation activities in the international market. As of Mar 31, 2024, the company had approximately $3.5 billion in cash and short-term investments and a long-term debt of $10.7 billion.
Independent oil refiner and marketer Valero Energy (VLO - Free Report) reported first-quarter adjusted earnings of $3.82 per share, which beat the Zacks Consensus Estimate of $3.18, driven by a decline in total cost of sales. Adjusted operating income in the Refining segment totaled $1.7 billion, down from $4.1 billion in the year-ago quarter. The figure surpassed our estimate of $1.6 billion.
Valero’s total cost of sales declined to $29.8 billion from the year-ago figure of $32.1 billion. It was also below our estimate of $30.4 billion, primarily due to lower material costs and operating expenses. The first-quarter capital investment totaled $661 million, of which $563 million was allotted for sustaining the business.