Canadian Natural Resources Ltd. reported a lower year-over-year net income of $1.33 billion (CAD 1.799 billion) in the first quarter on Thursday, despite rising production due to falling oil and natural gas prices.
But despite its core earnings per share of C$1.63 beating the Zacks consensus estimate of $1.2 per share, it traded weaker in New York and Toronto as its net debt increased about $1.04 billion (CAD 1.4 billion) to $8.8 billion (CAD 11.9 billion) in the previous quarter. quarter The company said last month that it will return 100 percent of free cash flow to shareholders when net debt falls to $7.39 billion (C$10 billion), from a previous threshold of $5.92 billion (C$8 million CAD).
“When the net debt level is reached, policy will be adjusted to define free cash flow as adjusted funds flow less dividends and less total capital expenditures for the year,” Canadian Natural said in its January-March 2023 results report.
It declared a quarterly dividend of CAD 0.9 per share, which will be paid in June.
The Calgary-based company reported average pre-royalty production of 1,319,391 barrels of oil equivalent per day (boed) with record quarterly natural gas production of 2.139 million of cubic feet per day. Canadian Natural produced 962,908 barrels (bbl) per day of oil and natural gas liquids. The figures were up on both the previous quarter and January-March 2022.
Despite stronger production, Canadian Natural’s profits fell from $2.29 billion (CAD 3.101 billion) in the first quarter of 2022, a year in which energy prices saw a spike attributed to the war between Russia and Ukraine. However, the lower figure for January-March 2023 was up from $1.12 billion (CAD 1.52 billion) in the previous quarter.
Despite weaker prices in the past three months, he noted: “Global benchmark crude oil prices remain at levels where the company can generate strong returns. Prices remain volatile as a result of geopolitical factors and concerns about demand driven by a greater risk of global recession due to persistent inflation and rising interest rates.
“WTI [West Texas Intermediate] prices remained strong in 1Q23 [2023 first quarter]averaging US$76.11/bbl in 1Q23, but this represents declines of 19% and 8% from 1Q22 and 4Q22, respectively.”
Canadian Natural forecasts production of about 1,330,000 boed to 1,374,000 boed by 2023. A near-term year-over-year addition of 70,000 boed is expected from this year’s capital injection of approximately 3.84 billion dollars (5.2 billion CAD).
It drilled 106 net producing crude oil and natural gas wells in the first quarter, up 27 from the same quarter last year. Canadian Natural expects 16 light oil wells in North America to start producing in the next quarter.
The company added: “Total thermal production on 4/23 is targeted to average approximately 280,000 bbl/d, representing growth of approximately 30,000 bbl/d from 4/22 levels, including the decline of the natural field”. Production is expected to increase with additional pads at its Jackfish, Kirby and Primrose projects.
“Following quarter-end, the company began planned turnarounds at Primrose East and Wolf Lake, which are intended to impact 2/23 production volumes by about 15,000 bbl/d reflected in annual production guidance from the previously announced company,” Canadian Natural said. .
Despite the positive outlook and a higher profit compared to 1.37 CAD in the first quarter of 2022, the value of its shares fell on Thursday, when the company released its performance. Canadian Natural closed down 2.957 percent at $74.18 on the Toronto Stock Exchange and 2.42 percent lower at $54.8 on the New York Stock Exchange.
It paid out about $1.18 billion (C$1.6 billion) in dividends and buybacks in the first quarter.
“Canadian Natural raised its sustainable and growing quarterly dividend in March 2023 to $0.90 [CAD] per common share, up 6% from $0.85 per common share, marking 2023 as the 23rd consecutive year of dividend increases,” he said.
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