CNRL NEARLY TRIPLED
Canadian Natural Resources Ltd. , Canada's largest producer of heavy oil and second largest producer of gas, on Thursday reported its net income nearly tripled in the first quarter on higher prices for oil and gas, increased output and a weakening in the Canadian dollar.
The Calgary-based company said its profit rose to 622 million Canadian dollars ($574 million), or 57 Canadian cents a diluted share, in the first three months of the year, up sharply from the C$213 million it reported a year earlier. The results were reported after the close of trading.
Excluding certain items, first quarter adjusted income rose to C$921 million, or 85 Canadian cents per share, more than double the C$401 million, or 37 Canadian cents, it earned in the year earlier period. That was above the 73 Canadian cents a share consensus analyst forecast, according to Nasdaq.
"Canadian Natural is in great shape," Chief Executive Steve Laut told shareholders Thursday at the company's annual meeting in Calgary. "We're delivering significant free cash flow," he said.
Like many other Canadian energy companies, CNRL benefited from an uptick in natural gas prices and a narrowing of an oil pricing gap between Western Canadian Select heavy crude and benchmark West Texas Intermediate light crude.
The company, which is a major oil-sands producer, said the WCS heavy oil differential as a percentage of WTI shrank to an average of 24% in the first quarter, down from 34% in the first three months of 2013. CNRL expects that gap with premium-priced WTI to continue narrowing to an average differential of 19% in May and 17% in June as a result of increased demand for heavier crudes as a result of third party refinery expansion and higher utilization rates.
Average natural gas pricing before risk management was C$5.69 in the quarter, up 55% from C$3.51 one year ago, the company said, citing colder than normal winter temperatures in North America that pushed down natural gas inventories to five-year lows.
CNRL's total production in the latest quarter rose slightly to an average of 684,647 barrels of oil equivalent a day, up from 680,844 boe a day in the year earlier period. Of that, crude oil and nongas liquids accounted for 488,788 boe a day.
Reflecting the C$3.1 billion acquisition of Devon Energy Corp.'s DVN -0.37% natural gas and light oil assets in Western Canada, which was announced in February, the company raised its annual production guidance to up to 574,000 barrels a day of crude oil and nongas liquids, and up to 1,570 million cubic feet a day of natural gas. In November, it forecast 2014 production of crude oil and NGLs of up to 560,000 barrels a day and up to 1,180 MMcf a day of natural gas.
The company also increased its quarterly dividend on Thursday to C$0.225 a common share from C$0.20 in the first quarter, continuing a 14-year streak of consecutive quarterly dividend increases.
Separately, Mr. Laut told reporters after the shareholder meeting that a report on the cause of mysterious oil seepages at one of CNRL's main oil-sands production sites was near completion and that he doesn't expect additional leaks, which the company has claimed stem from faulty casings at older wells.
The Alberta Energy Regulator imposed an indefinite ban on some of the company's operations at the facility, known as Primrose East, pending the results of its investigation into four separate leaks that surfaced. That has cut CNRL's production at the site by up to 15,000 barrels of oil a day.
"All four sites are completely cleaned up and well contained, so there'll be no further environmental damage," Mr. Laut said.
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