Canadian Natural First-Quarter Profit Increases on Fuel Prices

May 09, 2014 12:01 am ET

May 9 (Bloomberg) -- Canadian Natural Resources Ltd., the nation’s largest producer of heavy crude, reported an increase in first-quarter profit on higher oil and natural gas prices as output was little changed.

Net income almost tripled to C$622 million ($574 million), or 57 cents a share, from C$213 million, or 19 cents, a year earlier, the Calgary-based company said yesterday in a statement. Excluding one-time items, the per-share profit of 85 cents exceeded the 80-cent average of 17 analysts’ estimates compiled by Bloomberg.

Production from Canadian Natural’s Primrose oil-sands project has been hindered while Alberta regulators investigate the cause of bitumen leaks last year. The company has said it knows the cause of the leaks and wants to resume development in the affected part of the site. Canadian Natural also is integrating properties it acquired last month from Devon Energy Corp. for C$3.13 billion, its largest purchase in six years.

Investors already have factored in the higher oil and gas prices and are now focused on how Canadian Natural and regulators proceed at Primrose, as well as how the company incorporates its Devon purchase, Chris Cox, a Calgary-based analyst at Raymond James Ltd., said in a May 5 phone interview.

Sales excluding royalties rose 17 percent to C$4.4 billion. Daily production before royalties rose 0.6 percent to the equivalent of 684,647 barrels a day.

Capital Spending

To reflect the acquisitions, Canadian Natural boosted its capital budget and average daily output before royalties for 2014. The company expects to produce 537,000 to 574,000 barrels of oil and natural gas liquids a day and 1.53 to 1.57 billion cubic feet of gas a day.

Canadian Natural is looking to combine the Devon lands that generate royalty payments with its own for a sale or to create a new vehicle that would transfer cash flow to current shareholders later this year, the company said in the statement. The company put the pretax cash flow of the combined royalty lands in a range of $140 million to $150 million this year.

The review of the cause of bitumen leaks at Primrose is almost complete and the company’s annual production from the project and oil recovery over its life are expected to be little changed, Canadian Natural said in the release.

Spot prices of Canadian heavy crude rose 16 percent from a year earlier to average $77.76 a barrel in the first quarter, according to data compiled by Bloomberg. Canadian spot gas prices increased 75 percent to C$5.3013 a gigajoule.

Canadian Natural reported the results after the close of regular trading yesterday on North American markets. The stock, which has gained 20 percent this year, fell 3.3 percent to C$43 at the close in Toronto. Canadian Natural has 22 buy, five hold and one sell recommendations from analysts.