Canadian Natural Resources’ gain outpaces higher oil demand and boosts dividend

Nov 4 (Reuters) – Canadian Natural Resources Ltd (CNQ.TO), the country’s largest oil and gas producer, on Thursday reported third-quarter earnings that beat analysts’ estimates, indicating a recovery in oil demand and was due to higher production.

Calgary-based Canadian Natural also announced a 25% increase in its quarterly dividend, echoing similar moves by rival oil sands conglomerates Suncor Energy (SU.TO) and Cenovus Energy (CVE.TO).

Global oil prices have soared to multi-year highs in 2021, but investors are rewarding companies that spend excess money on dividends and buybacks rather than output growth.

“We don’t think there would be too many companies today who want to sanction anything big (in the tar sands),” Tim McKay, Canadian Natural’s president, said in an interview with Reuters. “We’re looking at smaller extensions, similar to what we’ve been able to do in the past.”

The company has adjusted its capital allocation plan to allow for strategic acquisitions and growth spending once it reaches CA$15 billion (US$12.03 billion) in absolute debt. However, analysts said Canadian Natural is unlikely to change its overall strategy of returning cash to shareholders.

“The overhaul of the capital allocation plan provides management with additional flexibility to create long-term value for shareholders, but we expect cash returns to remain the focus in 2022,” said George Huang, an analyst at Raymond James, in a notice to customers.

Canadian Natural said it remains on track to meet its full-year 2021 investment goal of approximately CA$3.48 billion.

On an adjusted basis, the company earned CA$2.1 billion from operations, or CA$1.77 per share, in the third quarter, compared to estimates of CA$1.58, according to data provider Refinitiv IBES.

Canadian Natural, which produces in Canada, the North Sea and offshore Africa, produced 1.24 million barrels of oil equivalent per day (boepd) in the third quarter, compared to 1.1 million barrels of oil equivalent per day a year earlier.

($1 = 1.2467 Canadian dollars)

Reporting by Sahil Shaw in Bengaluru; Edited by Subhranshu Sahu, Shounak Dasgupta and Marguerita Choy

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