More Raised TargetsNational Bank’s Travis Wood to $54 from $53 with a “sector perform” rating. “Starting to feel like a broken record, but CNQ continues to showcase what a diverse and top-tier asset base, combined with outstanding execution and continuous improvement, can deliver,” he said. “The Oil Sands assets continue to drive the bus on efficiencies, with the company recently achieving a new monthly SCO production record of ~ 529 mbbl/d in August. This milestone was partially driven by the recent reliability enhancement project at Horizon in Q2/24 coupled with strong utilizations at Horizon and AOSP post-turnaround. Additionally, the reduced turnaround duration at the Scotford Upgrader this past quarter decreased the annual net production impact to AOSP by 5.6 mbbl/d, while debottlenecking projects completed during the recent turnaround will increase gross AOSP capacity by 8 mbbl/d (pro forma with Chevron’s 20-per-cent W.I., should increase CNQ’s net capacity by 7.2 mbbl/d). This outperformance is further aided by an agile capital program, with management actively reallocating capital as commodity prices evolve towards different parts of the portfolio (saw a move away from gassier assets towards heavy oil in the year).”
* Raymond James’ Michael Barth to $51 from $50 with a “market perform” rating.
“CNQ continues to make it look easy with 3Q24 results that were more of the same; the company reported a modest production beat and notable headline AFFO beat (although part of the AFFO beat was from lower cash taxes),” said Mr. Barth. “Valuation has become slightly more attractive since we launched in late-May, but we still see the stock trading at around fair value on strip pricing and maintain our Market Perform rating. Despite our Market Perform rating, we do note that CNQ is one of the lowest risk ways to gain oil factor exposure in Canada with low sustaining free cash flow breakevens, a multi-decade 2P reserve life, reasonable leverage (even after the pending CVX deal),and best-in-class capital allocation.”