Company continues ‘evaluating’ deals after $12.7B purchase
Canadian Natural Resources Ltd., the largest upstream oil and gas producer in the country, is not ruling out more deals after its recent blockbuster $12.7-billion asset purchase as the company reported lower-than-expected earnings Thursday.
CNRL president Steve Laut said the massive deal he announced in March, for a 70-per-cent stake in the Albian oilsands project (AOSP) from Royal Dutch Shell Plc and Marathon Oil Corp., wouldn’t prevent his company from considering more deals. “That won’t stop us from evaluating everything that goes through our core area,” he said during a first-quarter earnings call.
“We bid on a few and we get even less.”
The oilsands has seen a flurry of deals this year, with BP Plc and Chevron Corp. seen as the latest among oil majors looking to divest their oilsands assets. Chevron has a 20 per cent stake in AOSP.
Canadian Natural reported its second-straight quarter of positive earnings, as a result of significantly higher oil and gas prices. The company’s realized price for oil was $47.05 per barrel in the first quarter, up 102 per cent from a year earlier, and realized price for gas was $3.25 per thousand cubic feet, up 45 per cent compared to a year earlier.
The Calgary-based company took in $245 million in net earnings in the first quarter, up sharply from a $105-million net loss at the same time a year before.
Those earnings numbers were slightly lower than financial analysts expected from CNRL.
“The bottom-line miss was also driven by lowerthan-expected commodity prices and slightly higher operating costs,” Robert Morris, analyst at Citi Group said in a research note.
The company would not make a quick decision to scale back planned capital expenditures based on the dip in oil prices, Laut said. “We don’t react based on the daily or weekly crude price or gas price,” he said, adding, “We look at the overall situation we’re in.”
Laut said CNRL is focused on completing the third phase of its Horizon oilsands mine expansion, closing its deal with Shell and Marathon, and paying down debt, and the company spent $500 million on debt reduction in the first quarter.
CNRL has also decided to embark on a debottlenecking project at Horizon, at an estimated cost of $70 million, which could boost the project’s oil production capacity between 5,000 and 15,000 bpd.
“The miss in financial results was the result of lower than expected production as well as higher than expected transportation costs,” AltaCorp Capital analyst Nicholas Lupick said in a research note.