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Canadian Natural (TSE:CNQ)
TSX:CNQ
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Canadian Natural
(TSX:CNQ)
84Outperform
Positive Factors
Cost Management
The company's capital expenditures were significantly lower than expected, indicating effective cost management.
Financial Performance
Canadian Natural continues to deliver, providing another quarter of better-than-expected financial and operating performance.
Production Enhancement
CNQ's Jackfish SAGD pad production is expected to come online, enhancing production volumes.
Negative Factors
Debt Impact
The increase in debt due to the recent acquisition has led to changes in the free cash flow allocation policy.
Debt Targets
The company's shareholder return potential could be constrained until it reaches its new net debt targets.
Shareholder Returns
CNQ's total cash distributions to shareholders will fall slightly over the next several quarters due to the acquisition of Chevron's Canadian assets.
Canadian Natural (CNQ) vs. S&P 500 (SPY)
Market Cap
$93.35B
Dividend Yield5.01%
Average Volume (3M)18.68M
Price to Earnings (P/E)15.3
Beta (1Y)1.03
Revenue Growth-0.87%
EPS Growth-23.92%
CountryCA
Employees10,272
SectorEnergy
Sector Strength87
IndustryFossil Fuels
Share Statistics
EPS (TTM)2.87
Shares Outstanding2,100,007,000
10 Day Avg. Volume26,716,529
30 Day Avg. Volume18,682,393
Financial Highlights & Ratios
PEG Ratio1.18
Price to Book (P/B)N/A
Price to Sales (P/S)2.24
Price to Cash Flow (P/CF)6.80
P/FCF Ratio10.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$56.77Price Target Upside27.02% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Canadian Natural Business Overview & Revenue Model
Company DescriptionCanadian Natural Resources Limited acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids (NGLs). The company offers synthetic crude oil (SCO), light and medium crude oil, bitumen (thermal oil), primary heavy crude oil, and Pelican Lake heavy crude oil. Its midstream and refining assets include two crude oil pipeline systems; and a 50% working interest in an 84-megawatt cogeneration plant at Primrose. As of December 31, 2020, the company had total proved crude oil, bitumen, and NGLs reserves were 10,528 million barrels (MMbbl); total proved plus probable crude oil, bitumen, and NGLs reserves were 13,271 MMbbl; proved SCO reserves were 6,998 MMbbl; total proved plus probable SCO reserves were 7,535 MMbbl; proved natural gas reserves were 12,168 billion cubic feet (Bcf); and total proved plus probable natural gas reserves were 20,249 Bcf. It operates primarily in Western Canada; the United Kingdom portion of the North Sea; and Offshore Africa. The company was formerly known as AEX Minerals Corporation and changed its name to Canadian Natural Resources Limited in December 1975. Canadian Natural Resources Limited was incorporated in 1973 and is headquartered in Calgary, Canada.
How the Company Makes MoneyCanadian Natural Resources Limited makes money primarily through the exploration, production, and sale of crude oil and natural gas. The company's revenue streams include the extraction and sale of crude oil from its oil sands operations, conventional oil and gas production, and the sale of natural gas and natural gas liquids. Canadian Natural also generates income from its international operations and holds interests in various oil and gas properties. The company's earnings are influenced by factors such as commodity prices, production volumes, operational efficiencies, and strategic partnerships. Additionally, Canadian Natural invests in technology and innovation to enhance recovery rates and reduce costs, thereby maximizing profitability.
Canadian Natural Financial Statement Overview
Summary
Canadian Natural's financial performance is strong, with robust profitability and cash flow management. Despite a slight revenue decline, impressive free cash flow growth and a stable balance sheet indicate solid financial health.Income Statement
Canadian Natural demonstrates strong profitability with solid gross and net profit margins. The TTM gross profit margin is approximately 30.06%, and the net profit margin is about 21.25%, reflecting efficient cost management and profitability. However, there is a slight decline in revenue from the previous period, indicating a need to focus on revenue growth strategies.82
Very Positive
Balance Sheet
The company maintains a healthy balance sheet with a stable debt-to-equity ratio of 0.26, indicating manageable leverage. The return on equity (ROE) is robust at approximately 19.04%, showcasing efficient utilization of equity. However, the equity ratio of 53.14% suggests a moderate reliance on debt financing.75
Positive
Cash Flow
Canadian Natural exhibits strong cash flow performance with a solid free cash flow to net income ratio of 1.28 and an operating cash flow to net income ratio of 1.94. The free cash flow growth rate is impressive at 30.52%, indicating effective cash management and capacity to fund operations and investments.78
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 35.74B | 35.97B | 49.53B | 32.85B | 17.49B | 24.39B | Gross Profit |
| 10.74B | 11.41B | 16.26B | 10.58B | 69.00M | 6.35B | EBIT |
| 9.96B | 17.24B | 14.76B | 9.51B | -445.00M | 5.59B | EBITDA |
| 17.12B | 17.27B | 22.01B | 16.16B | 6.13B | 11.28B | Net Income Common Stockholders |
| 7.59B | 8.23B | 10.94B | 7.66B | -435.00M | 5.42B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 625.00M | 1.40B | 1.41B | 1.05B | 489.00M | 629.00M | Total Assets |
| 71.56B | 75.95B | 76.14B | 76.67B | 75.28B | 78.12B | Total Debt |
| 20.62B | 12.35B | 11.45B | 14.69B | 21.45B | 20.98B | Net Debt |
| 20.52B | 11.48B | 10.53B | 13.95B | 21.27B | 20.84B | Total Liabilities |
| 39.59B | 36.12B | 37.97B | 39.72B | 42.90B | 43.13B | Stockholders Equity |
| 31.97B | 39.83B | 38.17B | 36.95B | 32.38B | 34.99B |
| Cash Flow | Free Cash Flow | ||||
| 9.72B | 7.44B | 14.29B | 9.99B | 2.16B | 5.29B | Operating Cash Flow |
| 14.77B | 12.35B | 19.39B | 14.48B | 4.71B | 8.83B | Investing Cash Flow |
| -4.63B | -4.86B | -4.99B | -3.70B | -2.82B | -7.25B | Financing Cash Flow |
| -9.55B | -7.54B | -14.23B | -10.21B | -1.85B | -1.54B |
Canadian Natural Technical Analysis
Positive
44.69
Price Trends
42.59
Positive
43.90
Positive
45.08
Negative
Market Momentum
0.62
Negative
68.42
Neutral
89.22
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CNQ, the sentiment is Positive. The current price of 44.69 is above the 20-day moving average (MA) of 41.44, above the 50-day MA of 42.59, and below the 200-day MA of 45.08, indicating a neutral trend. The MACD of 0.62 indicates Negative momentum. The RSI at 68.42 is Neutral, neither overbought nor oversold. The STOCH value of 89.22 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CNQ.
Canadian Natural Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Performance Comparison
TSE:CNQ
Canadian Natural
44.28
-4.90
-9.97%
CVE
Cenovus Energy
14.09
-5.15
-26.77%
IMO
Imperial Oil
72.27
4.90
7.27%
SU
Suncor Energy
38.62
3.22
9.10%
TSE:TOU
Tourmaline Oil
68.85
8.81
14.67%
AETUF
ARC Resources
20.25
2.77
15.85%
Canadian Natural Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: 14.93% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call highlights Canadian Natural's record production levels, strong financial performance, substantial dividend increases, and successful acquisitions. However, challenges such as the stagnation in natural gas production and deferred activities due to lower prices were noted. The positive achievements significantly outweigh the lowlights.Highlights
Record Annual Production
Canadian Natural achieved record annual total production of approximately 1.36 million BOEs per day, including record liquids production of over 1 million barrels per day.
Operational Cost Reduction
Oil sands mining and upgraded operating costs averaged $22.88 per barrel in 2024, a reduction from previous levels.
Strong Financial Performance
Annual adjusted funds flow of $14.9 billion with $4.2 billion in Q4 2024. Returned approximately $7.1 billion to shareholders in 2024.
Significant Dividend Increases
Increased annualized quarterly dividend by 59% to $2.25 per share from $1.42 per share, with a subsequent 4% increase.
Successful Acquisitions
Acquired Chevron's 70% operator working interest in Duvernay, adding approximately 60,000 BOEs per day in 2025.
Robust Reserve Replacement
Replaced 2024 production by 365% on a total proved basis and 422% on a total proved plus probable basis.
Lowlights
Natural Gas Production Stagnation
North American natural gas production averaged 2.14 BCF in 2024, comparable to 2023, indicating stagnation in growth.
Deferred Dry Natural Gas Activity
Certain dry natural gas activities in 2024 were deferred due to lower natural gas prices.
Challenges in the North Sea
Operations in the North Sea continue to wind down without plans for significant new investments.
Company Guidance
During Canadian Natural's 2024 Fourth Quarter and Year-End Earnings Conference Call, several key metrics and achievements were highlighted. The company reported a record annual total production of approximately 1.36 million barrels of oil equivalent (BOE) per day, including over 1 million barrels per day of liquids. They achieved a record annual oil sands mining and upgrading production of 472,245 barrels per day, with a record quarterly production of 534,631 barrels per day. Operating costs for oil sands mining and upgrading averaged $22.88 per barrel in 2024, decreasing to $20.97 per barrel in Q4. Thermal in-situ operations saw a record production of over 271,000 barrels per day, with operating costs down 16% to $11.04 per barrel compared to 2023. The company completed strategic acquisitions, including Chevron's assets in the Duvernay, contributing to a 9% increase in proved and proved plus probable reserves. Financially, Canadian Natural achieved an annual adjusted funds flow of $14.9 billion and returned approximately $7.1 billion to shareholders, including dividends and share repurchases. The company's debt-to-EBITDA ratio was 1.1x, and liquidity stood at $4.7 billion at the end of the quarter.Canadian Natural Corporate Events
Stock BuybackBusiness Operations and Strategy
Canadian Natural Announces Share Repurchase Plan
Positive
Mar 11, 2025
Canadian Natural Resources Limited has announced a Normal Course Issuer Bid (NCIB) approved by the Toronto Stock Exchange, allowing the company to repurchase up to 178,738,237 shares over a 12-month period starting March 13, 2025. This move is part of Canadian Natural’s strategy to manage free cash flow allocation, with a focus on shareholder returns and maintaining a strong balance sheet. The company plans to implement an automatic share purchase plan to facilitate these repurchases, even during blackout periods, highlighting its commitment to enhancing shareholder value.
M&A TransactionsBusiness Operations and Strategy
Canadian Natural Enhances Oil Sands Position with Shell Asset Swap
Positive
Jan 30, 2025
Canadian Natural Resources Limited has announced an asset swap with Shell Canada Limited, increasing its working interest in the Athabasca Oil Sands Project (AOSP) mines to 100% and boosting production by approximately 31,000 bbl/d. This move, which is expected to close by the end of Q1 2025 pending regulatory approval, strengthens Canadian Natural’s market position by enhancing its oil sands mining and upgrading operations. The swap will also see Canadian Natural holding an 80% working interest in the Scotford Upgrader and Quest facilities, aligning with its strategy to diversify sales and access global markets.
Other
Canadian Natural Cautions Against TRC Capital’s Mini-Tender Offer
Negative
Jan 23, 2025
Canadian Natural Resources Limited has issued a warning to its shareholders regarding an unsolicited mini-tender offer by TRC Capital Investment Corporation to purchase 2.5 million of its shares at a price below market value. The company emphasizes that the offer is not recommended, highlighting the risks associated with such offers which lack investor protections and could lead to investors selling shares without understanding the actual market price. Canadian Natural advises shareholders to seek current market quotes and consult financial advisors, and suggests those who have tendered shares withdraw them before the deadline.
Canadian Natural Resources Sets Ambitious 2025 Growth and Financial Targets
Jan 9, 2025
Canadian Natural announced its 2025 operating capital budget of approximately $6 billion, aiming for production growth of 12% over 2024 levels. The company’s strategy includes leveraging its strategic acquisitions and maintaining a balanced production mix to enhance shareholder returns. The company plans to continue its strong financial performance with a focus on generating significant free cash flow, supporting shareholder returns through dividends and share repurchases while reducing net debt.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.