Canadian Natural Resources Ltd.’s profit beat analyst estimates after it deepened cost cuts to cope with crude prices near the lowest in six years.
It reported adjusted earnings of 10 cents a share, compared with the average 9-cent loss estimated by 16 analysts surveyed by Bloomberg. The third-quarter net loss was C$111 million ($84.3 million), or 10 cents a share, compared with profit of C$1.04 billion, or 94 cents, a year earlier, the Calgary-based company said in a statement Thursday.
“We continue to make significant progress in reducing costs,” Steve Laut, President of Canadian Natural, said in the statement. “At the same time, our average production has increased 11% despite a very significant drop in capital program spending.”
Canadian Natural, the country’s largest heavy-oil producer, is among energy companies shelving projects and cutting costs to withstand a price slump that has dragged on for 16 months. Even amid the rout, Canadian Natural has stayed focused on expanding its Horizon oil-sands project to a target of 250,000 barrels a day of output in 2018. The company has been considering selling or spinning off so-called royalty lands that generate revenue from drilling by other producers, and it has also been buying properties.
“CNQ’s most important potential catalysts revolve around operating performance at its Horizon Oil Sands project and plans to monetize the value of its royalty production,” Greg Pardy, an analyst at RBC Capital Markets in Toronto, wrote in an Oct. 20 note.
Canadian Natural expects 2016 cash flows to cover next year’s capital spending of between C$4.5 and C$5 billion, which includes about C$2.1 billion for the Horizon expansion, according to the statement. To date, the company has reduced its targeted capital spending by about C$3.2 billion in 2015 from the original budget, it said.
The company was among buyers of western Canadian properties being sold this year by Houston-based ConocoPhillips. Canadian Natural agreed to purchase four asset packages located in northeast British Columbia, northwest Alberta, southern Alberta and southwest Saskatchewan, Julie Woo, a Canadian Natural spokeswoman, said last month in an e-mail. She declined to give a price.
Canadian Natural’s production averaged the equivalent of 848,701 barrels of oil a day in the third quarter, up from about 797,000 barrels a day a year earlier. West Texas Intermediate crude, the U.S. benchmark, fell 52 percent from a year earlier to average about $46.50 a barrel in the quarter. WTI closed at a six-year low on Aug. 24 at $38.24.
The company released their financial results before the start of regular trading on North American markets. Canadian Natural shares, which have 21 buy, five hold and one sell recommendations from analysts, have lost 11 percent this year. The stock fell 1 cent to C$31.95 on Wednesday in Toronto.
