Canadian Natural’s profit more than doubles as energy prices surge

Canadian Natural Resources Ltd (CNQ.TO)on Thursday reported quarterly profit more than doubled and announced a special dividend of C$1.50 a share, as crude prices soared on tighter energy supplies due to the Ukraine conflict.

The Calgary-based company also increased its 2022 capital spending and production guidance, echoing a similar move by rival Canadian producer Cenovus Energy (CVE.TO) last week.

Oil prices have scaled multi-year highs this year as Western sanctions against major exporter Russia squeeze an already under-supplied market. Brent crude, the global benchmark, was last trading at over $96 a barrel, having surged to more than $120 a barrel during the second quarter.

Canadian Natural said its average realized price for oil rose 88.3% to C$115.26 per barrel in the April-June quarter.

The company updated its 2022 capital budget to C$4.9 billion ($3.8 billion) from C$4.3 billion, in part due to inflationary pressures but also to grow production.

“A big part of spending is tied to backfilling the drilling program, which has been doing a great job of managing costs,” Canadian Natural President Tim McKay said in an interview.

2022 production will rise 1-2% from its previous forecast to 1.295 million-1.335 million barrels of oil equivalent (boepd), and upped its 2023 and 2025 output forecasts by 40,000 boepd and 96,000 boepd, respectively.

“We view the results and updates positively given the increased capital program was largely expected by the Street,” said BMO Capital Markets analyst Randy Ollenberger.

Still, Canadian Natural shares were down 0.6% at C$65.48 on the Toronto Stock Exchange, amid a broader selloff in energy stocks.

Second-quarter production stood at 1.2 million boepd, slightly above last year’s 1.1 million boepd.

The company posted net earnings of C$3.5 billion ($2.72 billion), or C$3 per share, for the second quarter ended June 30, compared with C$1.55 billion or C$1.30 per share, a year earlier.

($1 = 1.2845 Canadian dollars)