Oilsands boost CNRL earnings
President calls Calgary firm's results 'stunning'
By Shaun Polczer, Calgary Herald August 6, 2010
Canadian Natural Resources Ltd. on Thursday credited its growing oilsands production for significantly higher second quarter financial and operating results that handily beat analyst expectations.
The Calgary-based oil and gas producer made $667 million or 61 cents a share compared to $162 million or 15 cents a share a year earlier. After one-time items, the company made $688 million or 63 cents a share compared to $637 million or 59 cents a share in the second quarter of 2009.
On a conference call with analysts, company president Steve Laut described the results as "stunning" and said the Horizon oilsands mine hit peak rates of 131,000 barrels per day before it was shut in for unplanned, preventive maintenance.
"Canadian Natural is in a great position," he said. "In today's environment, with our team, our strategy and our assets, I believe Canadian Natural is better positioned than ever before," Laut said.
"The efficiency of our operation has allowed us to drop costs in most sectors of the company," added chairman Allan Markin.
Despite the improvements at Horizon, the company lowered its full-year production guidance from Canada's newest oilsands mine to a range of 80,000 to 95,000 barrels per day after unplanned maintenance shut the entire facility until mid-August. For the full year, the company expects to produce 90,000 to 100,000 barrels per day.
Other bright spots in the quarter included the company's conventional heavy oil business, which pumped out a record 96,000 bpd, up about 53 per cent over the same period of last year.
By contrast, CNRL's natural gas production slipped about nine per cent, even though it came in slightly higher than expected at 1.24 billion cubic feet per day. The company attributed the decline to lower levels of gas drilling as it redeployed capital into higher-profit oil projects.
In an interview, Laut said the company hasn't determined when natural gas prices will improve but said the company would be able to quickly shift dollars back into its natural gas plays when they do.
Highlights in the second half of the year include a decision to sanction the Kirby thermal oilsands project, which is currently awaiting regulatory approval. The steam-assisted project will add 40,000 bpd when it comes on stream in 2013.
Analysts were ecstatic with the results, which beat expectations of about 55 cents per share according to Bloomberg.
Randy Ollenberger with BMO Nesbitt Burns credited CNRL's Western Canada operations -- including Horizon and the company's conventional heavy oil -- for beating the Street. Ollenberger said he didn't think lower production at Horizon would dent the company's performance in the second half of the year.
"It was a good quarter, they beat consensus and they beat us," he said in an interview. "They're ahead of guidance across the board. I don't think (Horizon's shut-in is) an issue. It's clearly working the way it's supposed to."
After opening strong, Canadian Natural shares finished at $36.59 on the Toronto Stock Exchange, up 17 cents on the day.
spolczer@theherald.canwest.com
http://www.calgaryherald.com/business/Oilsands+boost+CNRL+earnings/33658...
