Bullboard - Stock Discussion Forum Canadian Natural Resources Ltd CNQ

Primary Symbol: T.CNQ

Energy Oil & Gas E&P

Canadian Natural Resources Limited is a Canada-based independent crude oil and natural gas exploration, development and production company. The Company's segments include exploration and production, oil sands mining and upgrading, and midstream and refining. The exploration and production segment are focused on North America, specifically in Western Canada; the United Kingdom portion of the... see more

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TSX:CNQ - Post Discussion

Canadian Natural Resources Ltd > RBC

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Post by retiredcf on Oct 31, 2024 9:14am

RBC

October 31, 2024

Canadian Natural Resources Limited
3Q First Glance—Looks Like Another Flawless Quarter

TSX: CNQ | CAD 47.50 | Outperform | Price Target CAD 62.00

Sentiment: Positive
CNQ reported strong third-quarter results that came in 11% above on AFFO/shr. and in line on production, amid 4% lower capital spending vis-a-vis Street consensus. Shareholder returns totalled circa $1.9 billion in the third-quarter.

CNQ is our favorite senior producer and on our Global Top 30 and Global Energy Best Ideas lists.

Conference Call

• Time: 11:00am ET, Thursday, October 31 • Dial-in: (800) 717-1738

Key Points

• The company achieved quarterly Synthetic Crude Oil (SCO) production of 497,700 bbl/d (2% above our estimate of 488,300 bbl/ d) amid operating costs of circa $21/bbl (7% below RBC at about $22/bbl).

CNQ achieved monthly SCO production of about 529,000 bbl/d in August supported by high utilization at both Horizon and AOSP in addition to the completion of the reliability enhancement project (REP) at Horizon.
At the Scotford Upgrader, a planned turnaround commenced on September 9, 2024, and was successfully completed on October 18, 2024 with an annual impact of 5,400 bbl/d, reduced from 11,000 bbl/d due to shorter maintenance time and stronger than budgeted production volumes. A planned debottleneck project was completed in the turnaround which increases AOSP’s capacity by 8,000 bbl/d (gross), 7,200 bbl/d (net, 90% wi after Chevron acquisition closing).
CNQ’s North America E&P third-quarter liquids production averaged 499,800 bbl/d (1% below RBC at 505,000 bbl/d). The company noted a quarterly production record at Jackfish of 128,000 bbl/d.
The company reported third-quarter North American natural gas production of 2.04 bcf/d (3% below RBC at 2.10 bcf/d).
Cash taxes of $389 million were 25% below our estimate of $519 million in the third-quarter ($0.06 per share impact).
Due to low natural gas prices in 2024, CNQ has decided to further reduce dry natural gas drilling activity, now targeting to drill a total of 74 net natural gas wells this year, 17 fewer wells than targeted in the company’s original 2024 budget.
CNQ reported net capital expenditures of $1.35 billion (excluding abandonment expenditures of about $204 million), 11% below RBC at $1.51 billion.
CNQ is currently paying 100% of free cash flow to shareholder returns until the closing of its US$6.5 billion ($8.8 billion) cash acquisition of Chevron’s assets. Upon closing, CNQ will shift to paying out 60% of free cash flow (adjusted funds flow less all capital and dividends) to shareholder returns and 40% to the balance sheet until its net debt reaches $15 billion. Once it reaches $15 billion of net debt, CNQ will pay 75% of free cash flow to shareholder returns with the balance earmarked for debt reduction until reaching $12 billion of net debt, upon which time the company will pay 100% of free cash flow to shareholder returns.

• Commencing on December 1, 2024, the company will increase its capacity on the Trans Mountain Pipeline Expansion (TMX) by 75,000 bbl/d to a total of 169,000 bbl d.

2024 Guidance

• There are no changes that we see to CNQ’s 2024 guidance, which points toward total equivalent production volumes of 1,330-1,380 mboe/d amid a $5.42 billion capital program (excluding abandonment expenditures). This does not include the company’s recently announced acquisition of Chevron’s assets.