What's In The Offing For Canadian Natural (CNQ) Q4 Earnings?
Zacks Investment Research | Mar 02, 2020 06:26AM ET
Canadian Natural Resources Limited (TSX:CNQ) is set to release fourth-quarter 2019 results on Thursday Mar 5, before the opening bell.
The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at earnings of 54 cents per share on expected revenues of $4.55 billion. There has been no change in the bottom-line estimates over the past 30 days.
Let’s delve into the factors that are likely to have impacted the company’s December-quarter performance.
Factors Likely to Impact Q4 Results
Canadian Natural boasts a broad portfolio of low-risk exploration and development projects that yields long-term volume growth at above-average rates. This should further bode well for the firm. Its acquisition of stakes in the Athabasca Oil Sands project and Pelican Lake is boosting its operations, a trend that most likely continued in the fourth quarter as well. The ramp-up of activities at its Horizon and AOSP oil sands mining facilities are also likely to have driven revenues. Higher year-over-year expected volumes are likely to have driven the performance of the company. Notably, the Zacks Consensus Estimate for fourth-quarter production is pegged at 1,184,065 barrels per day (Bbl/d), indicating a 9.5% uptick from the year-ago reported figure of 1,081,368 Bbl/d.
Per the U.S. Energy Information Administration, WTI prices started the fourth quarter of 2018 at $75.3 per barrel and exited the same at a moderate rate of $45.41. Meanwhile, in 2019, prices were $53.62 a barrel at the onset of the fourth quarter and scaled up to $61.06 at the end of December, reflecting a steady improvement in the fundamentals.
However, the news is not rosy on the natural gas front.
In fourth-quarter 2018, natural gas prices were $3.09 per MMBtu in the beginning and fell gradually to end December at $2.94 per MMBtu. Coming to 2019, the fuel was trading even lower at $2.28 per MMBtu at the inception of October and struggled throughout the quarter to close at $2.18 per MMBtu.
Such divergent oil and natural gas prices in the fourth quarter cannot conclusively predict the company’s earnings trajectory this reporting cycle. Further, pipeline construction in Canada failed to keep pace with the rising domestic crude volumes — the heavier sour variety churned out of the oil sands — resulting in infrastructural bottlenecks. These are expected to impact Canadian Natural’s results this time around.
While we hope that higher year-over-year output will aid the company’s numbers this earnings season, volatile commodity price realization might reflect on its depressed margins.
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What Does Our Model Say?
The proven Zacks model does not conclusively predict an earnings beat for Canadian Natural this time around. The right combination of a positive Zacks Investment Research
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