Sunday, May 15, 2022

Canadian Natural Resources Limited Announces 2022 First Quarter Results

[Previously regarding Canadian Natural Resources (CNQ) (one of the Canadian oil majors along with Cenovus and Suncor): Canadian Natural Resources Limited - Q4 and FY 2021 Results and Canadian Natural Resources Limited ($CNQ).]

Canadian Natural Resources (CNQ) reported results last week. Highlights from the results:

  • In Q1/22 net earnings and adjusted funds flow were strong at approximately $3.1 billion and approximately $5.0 billion respectively, and our balance sheet continued to strengthen. So far in 2022 up to and including May 4, 2022, returns to shareholders have been significant as we have returned a total of approximately $3.1 billion through dividends and share repurchases. 
  • Canadian Natural delivered net earnings of approximately $3.1 billion and adjusted net earnings from operations of approximately $3.4 billion in Q1/22. Cash flows from operating activities were approximately $2.9 billion in Q1/22. Canadian Natural generated strong quarterly adjusted funds flow of approximately $5.0 billion in Q1/22, an increase of approximately $2.3 billion from Q1/21 levels.
  • Direct returns to shareholders in Q1/22 were strong, totaling approximately $1.8 billion, comprised of approximately $0.7 billion of dividends and approximately $1.1 billion of share repurchases.
  • Year-to-date up to and including May 4, 2022, the Company has returned approximately $3.1 billion to shareholders through approximately $1.6 billion in dividends and $1.5 billion from the repurchase and cancellation of 21.5 million common shares.

The current market capitalization of CNQ (at a $60 share price) is US$70 billion, and the enterprise value based on the March 31st balance sheet is about US$81 billion. So the earnings yield is 18% and the AFFO/EV yield is 25% (annualized Q1 numbers).

Their proved reserves of liquids at the end of the 2021, net of royalties, were 9 billion barrels, calculated based on a $66 price for WTI. You are paying about US$9 per barrel of proved reserves of liquids at the current share price. That does not count the 11 trillion cf of natural gas reserves.

The PV-10 of proved reserves, again assuming a $66 oil price and a $3.70 Henry hub natural gas price, was $65 billion at the end of 2021. So you're paying 1.25x the PV-10, but of course that is at a much lower oil and gas price.

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