CNRL Announces 2019 Third Quarter Results

Net earnings of $1,027 million were realized in Q3/19, while adjusted net earnings of $1,229 million were achieved in Q3/19, a $187 million increase from Q2/19 levels.


Cash flows from operating activities were $2,518 million in Q3/19, a decrease of $343 million compared to Q2/19 levels.


Canadian Natural generated record quarterly adjusted funds flow of $2,881 million in Q3/19, an increase of 9% or $229 million over Q2/19 levels. The increase over Q2/19 was primarily due to higher production volumes from the Company’s Thermal in situ, Oil Sands Mining and Upgrading, Primary Heavy and Pelican Lake crude oil segments and strong operating costs which were partially offset by lower light crude oil and heavy crude oil pricing in the quarter.

Cash flows used in investing activities were $908 million in Q3/19.

Commenting on the Company’s third quarter 2019 results, Steve Laut, Executive Vice-Chairman of Canadian Natural stated,

“Canadian Natural’s third quarter results are an excellent example of how the Company’s effective and efficient operations can drive value creation for our shareholders as a result of execution excellence and economies of scale. We achieved record quarterly adjusted funds flow of approximately $2.9 billion as operating costs were below forecast and production was at the top end of quarterly corporate guidance, resulting in 12 month production per share growth of 14% from Q3/18 levels. Free cash flow of approximately $1.9 billion was significant following our disciplined capital expenditures in the quarter. Our free cash flow was used to strengthen our balance sheet and returned to our shareholders, through dividends and share purchases as we balance according to our defined free cash flow allocation policy.”

Canadian Natural’s President, Tim McKay, added,

“The third quarter of 2019 was an excellent operational quarter for the Company. Our continued focus on cost control and effective and efficient operations was evident as operating costs were reduced across most of our assets, resulting in higher netbacks and margin growth. Corporate operating costs per BOE were reduced by approximately 11%, including at our Pelican Lake asset where strong and sustainable operating costs of $6.10/bbl were achieved, a reduction of 5% year over year. Also on a year over year basis our Thermal in situ assets operating costs improved by approximately 14% to $9.77/bbl and our Oil Sands Mining and Upgrading assets delivered an approximate 12% reduction in operating costs to $20.05/bbl of Synthetic Crude Oil (“SCO”), comparable to the record low of $19.97/bbl of SCO in Q4/18.

The Company delivered strong performance in the third quarter, a reflection of our robust assets, effective and efficient operations and our operational flexibility, as we effectively executed our curtailment optimization strategy, delivering production at the top end of quarterly guidance. Oil Sands Mining and Upgrading achieved a record production month in the quarter, producing approximately 462,000 bbl/d of SCO in August 2019.

In September and October, as a part of our curtailment optimization strategy, we utilized available capacity from our flexible thermal in situ assets to coincide with the Horizon turnaround ensuring we maximized production within our curtailment allotment. This flexibility demonstrates the value of having a large, balanced and diverse asset base. As a result of top tier execution, the planned turnaround at Horizon was successfully completed on schedule with overall costs under budget.”

Canadian Natural’s Chief Financial Officer, Mark Stainthorpe, continued,

“Canadian Natural’s robust business model was on display in the third quarter as financial results were strong with net earnings of over $1.0 billion and adjusted net earnings of approximately $1.2 billion.

Canadian Natural delivered strong quarterly free cash flow of $1,471 million after net capital expenditures of $963 million, and dividend requirements of $447 million in Q3/19, reflecting the strength of our long life low decline asset base and our effective and efficient operations.
Balance sheet strength remains a focus and free cash flow was used to reduce debt levels in Q3/19 as the Company balances its free cash flow according to the defined free cash flow allocation policy.

As a result gross long-term debt was reduced in Q3/19 by $1,018 million from Q2/19 levels.


The Company utilized adjusted funds flow to repay and cancel $800 million of its $1,800 million non-revolving term loan facility; $1,000 million remained outstanding and fully drawn at quarter end.


Subsequent to quarter end the Company repaid and canceled an additional $500 million of the remaining $1,000 million non-revolving term loan; $500 million remains outstanding and fully drawn as at November 6, 2019.
Canadian Natural is committed to returns to shareholders, returning a total of $616 million to shareholders in Q3/19, $447 million by way of dividends and $169 million by way of share purchases. In the first nine months of 2019, the Company has returned a total of $2,100 million to shareholders, $1,299 million by way of dividends and $801 million by way of share purchases.


Share purchases for cancellation in the quarter totaled 5,050,000 common shares at a weighted average share price of $33.45.


Subsequent to quarter end, up to and including November 6, 2019, the Company executed on additional share purchases for cancellation of 1,350,000 common shares at a weighted average share price of $33.70.
Returns to shareholders have been significant as Canadian Natural has returned approximately $5.4 billion by way of dividends and share purchases between January 1, 2018 and November 6, 2019.
Subsequent to quarter end, the Company declared a quarterly dividend of $0.375 per share, payable on January 1, 2020.


The Company continues to manage within its curtailment optimization strategy which in addition to strong operational performance, contributed to production levels that are at the top end of guidance guidance.

The Company continues to execute operational flexibility through its curtailment optimization strategy as follows:


Mitigating production impacts, from lower production at Horizon due to planned maintenance activities, by increasing Athabasca Oil Sands Project (“AOSP”), conventional crude oil and thermal in situ crude oil production. As a result, strong production was realized at the Company’s North America Exploration and Production (“E&P”) and thermal in situ oil sands assets in Q3/19.
Modified timing of the Company’s planned turnaround activities to achieve its monthly curtailment allowable.
Maximizing value through production optimization of higher netback assets and reducing operating costs.


The Company achieved quarterly production volumes of 1,176,361 BOE/d in Q3/19, increases of 15% and 11% over Q2/19 and Q3/18 levels respectively, reflecting production additions from the Devon Canada asset acquisition that closed on June 27, 2019, together with strong operational performance at both Horizon and AOSP.


As a result of accretive acquisitions, effective and efficient operations and execution on the Company’s free cash flow allocation policy, annual production per share growth was significant at 14% when compared to Q3/18 levels.


The Company achieved record quarterly liquids production volumes of 931,546 bbl/d in Q3/19, increases of 21% and 16% over Q2/19 and Q3/18 levels respectively and at the top end of previously issued guidance.

Source / More : Canadian Natural Resources Limited

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