North Sea operator CNR International is poised to hand millions of dollars back to shareholders after a bountiful start to the year.
In its first half 2022 results, the oil and gas firm reported cash flows from operating activities of $8.7 billion, a sizeable increase on last year’s H1 figure of $5.5bn.
In recent days, energy companies have come under fire after posting eye-watering profits at a time when households are struggling to pay their bills.
CNR’s (NYSE:CNQ, TOR:CNQ) adjusted net earnings from operations for the first six months of 2022 were $7.2bn, compared with $2.7 in the same timeframe last year.
As a result of its bumper takings, the Canadian company has unveiled a “special dividend” of CAN$1.50 per common share.
That is on top of the quarterly cash dividend of CAN$0.75, CNR is paying on its common shares.
The New York and Toronto-listed firm said “substantial free cash flow generation”, as a result of “strong execution” across its operations, allowed it to deliver the special dividend.
In total CNR’s direct returns to shareholders in Q2 are about $2.9bn, $900 million of dividends and around $2bn of share repurchases.
CNR’s chief financial officer, Mark Stainthorpe, said: “Strong execution across the company’s operations year-to-date has resulted in substantial free cash flow generation driven by our top tier long life low decline assets with low maintenance capital requirements and our low cost structure.
“As a result, our financial position continues to strengthen, allowing for incremental returns to shareholders. Reflecting this, in August 2022, the Board of Directors approved an increase in returns to shareholders by declaring a special dividend of $1.50 per share, payable on August 31, 2022 to shareholders of record on August 23, 2022.
“This is a step towards the previously announced target to increase shareholder returns when net debt reaches $8 billion, which the Board of Directors see as a sustainable base level of corporate debt.
“When you combine our leading financial results with our top tier asset base, this provides unique competitive advantages which drive material free cash flow generation allowing for significant returns to shareholders.”
While the majority of CNR’s assets are Canadian-based, it also has operations in the UK section of the North Sea and offshore Africa.
The company is currently in the process of putting a decommissioning contract together to remove subsea kit from the Banff and Kyle fields.
Its producing assets in the North sea include the veteran Ninian field, as well as the nearby Lyell and Columba fields.
Despite its buoyant financial results, CNR’s international exploration and production crude oil production volumes averaged 25,907 barrels a day (bbl/d) in the second quarter, a 21% drop on Q1 2021.
The company says the decline is a result “unplanned maintenance” in the North Sea, as well as natural field declines.
Earlier this year CNR was blasted by the UK’s the safety watchdog after it was found to have delayed 36,000 hours of North Sea maintenance.
High oil prices and a widespread energy security drive mean the firm remains bullish on its future prospects though.
CNR president, Tim McKay said: “Our world class asset base is strategically balanced across commodity types so we can be flexible and capture opportunities throughout the commodity price cycle to maximize value for our shareholders. A substantial portion of our unique and diverse asset base consists of long life low decline assets which have significant, low risk, high value reserves that require lower maintenance capital than most other reserves, making Canadian Natural a truly robust and resilient energy company.”
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