Canadian Natural Resources Q1 Performance Overview
Canadian Natural Resources reported Q1 earnings of C$1.37/share, falling short of analyst consensus, leading to share fluctuations. Despite a slight production increase to 1.33M boe/day, oil sands mining production declined 3% due to maintenance. The company also faced a decline in average realized natural gas price and synthetic crude oil prices. However, CEO Scott Stauth outlined plans for a potential 195K bbl/day expansion at the Horizon mining and upgrading plant, contingent upon new pipeline capacity and government financial support for a carbon capture project.
Key Takeaways
- Q1 earnings of C$1.37/share missed analyst consensus of C$1.48/share.
- Production slightly rose to 1.33M boe/day, with a 3% decrease in oil sands mining production.
- Average realized natural gas price in Q1 fell 40% Y/Y to C$2.55/Mcf, synthetic crude oil prices dropped by 8% to C$88.84/bbl.
- CEO Scott Stauth considering a 195K bbl/day expansion at Horizon mining and upgrading plant.
- Expansion depends on new pipeline export capacity and government financial support for carbon capture project.
Analysis
The Q1 earnings miss had a short-term impact on Canadian Natural Resources' share value, driven by lower natural gas and synthetic crude oil prices, but the long-term implications may be more significant. The proposed expansion at the Horizon mining and upgrading plant could contribute to increased production and job opportunities in Alberta, benefiting the local economy. However, the failure to secure necessary support may hinder the company's growth potential and indirectly affect entities like Enbridge, TransCanada, and countries like the USA through trade relations. Government entities and financial institutions should closely monitor this situation.
Did You Know?
- C$1.37/share vs. C$1.48/share: The C$1.37/share represents the actual earnings per share (EPS) reported by Canadian Natural Resources for Q1 2023, falling short of the consensus estimate of C$1.48/share from financial analysts.
- Boe/day: Stands for Barrels of Oil Equivalent, reflecting the total daily oil and gas production, with one Boe approximately equivalent to 6,000 cubic feet of natural gas.
- Oil sands mining production: Oil sands mining is a method of extracting bitumen, a heavy form of crude oil, from the Athabasca oil sands in Alberta. The 3% Y/Y decrease in CNQ's oil sands mining production in Q1 2023 was due to routine maintenance activities.
- Carbon capture project: This technology aims to capture and store carbon dioxide emissions, contributing to efforts to combat climate change. Canadian Natural Resources aims to incorporate this as part of their planned expansion.