Canadian Natural Resources Ltd CNQ

CIBC

[retiredcf]

They might raise their $59.00 target. GLTA

EQUITY RESEARCH
October 31, 2024 Flash Research
CANADIAN NATURAL RESOURCES LTD.

First Look: Q3/24 Results Ahead Of Our Expectations And
Consensus

Canadian Natural reported Q3/24 results that were above our expectations
and consensus on adjusted FFO per share (but in line on production).
Variances to our estimates stemmed primarily from higher-than-expected
production from the oil sands mining business unit, better-than-expected
realizations and moderately lower-than-expected operating costs. Key
takeaways from the quarter include stronger-than-budgeted production
volumes at the Scotford Upgrader given better-than-expected turnaround
timing, strong production levels at Jackfish of 128 MBbl/d and as previously
reported through the new and expanded committed capacity of ~257 MBbl/d
to tidewater including the West Coast and USGC.

Financial And Operating Takeaways:
• Q3/24 results. Production of 1,363 MBoe/d (75% liquids) was in line with
our estimate of 1,371 MBoe/d (74% liquids) and consensus of 1,355
MBoe/d (range of 1,332 MBoe/d to 1,371 MBoe/d). Adjusted FFO per
share of $1.84 was ahead of our estimate of $1.60 and consensus of
$1.68 (range of $1.54 to $1.77). Capex of $1,349 million was in line with
our estimate of $1,390 million and in line with consensus of $1,395
million (range of $1,235 million to $1,543 million).

• North America E&P update. North America E&P liquids production,
excluding thermal in situ, was 228 MBbl/d in Q3/24. The company
previously announced shifting natural gas development activity in 2024 to
multilateral heavy oil wells. The company further reduced dry natural gas
drilling capital and now targets a total of 74 net wells (17 fewer than
targeted in the original 2024 budget). FY24 natural gas production
guidance of 2,120 MMcf/d-2,230 MMcf/d remains unchanged.

• Oil sands mining and upgrading update. The company’s Q3/24 SCO
production was 498 MBbl/d, including impacts from planned turnaround
activities at the Scotford Upgrader. The company achieved record
monthly SCO production of ~529 MBbl/d in August primarily due to
higher utilization at both Horizon and AOSP as well as the completion of
the reliability enhancement project at Horizon in Q2/24. Stronger-than-
budgeted production volumes from Scotford concurrent with reduced
turnaround resulted in a reduced annual impact to ~5.4 MBbl/d from ~11
MBbl/d. The Scotford upgrader bottlenecking project was completed
during the turnaround and added ~8 MBbl/d incremental capacity at
AOSP (~7.2 MBbl/d net to Canadian Natural).

• Valuation. Canadian Natural Resources trades at a P/RNAV ratio of
97%, a 2025E EV/DACF of 7.1x and a 2025E FCF yield of 10% vs. the
large-cap group at 90%, 5.7x and 11%, respectively.

[Ocalaman]

rbc current target 62 op, theier break even price actually goes down from 40 with the Chevron assets and the wcs diff is narrowing and tmx is getting more oil west, I think the whole market oil and otherwise was looking for an excuse to correct from the  52 week highs.