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Canadian Natural Resources Limited (NYSE:CNQ) Q4 2024 Earnings Conference Call March 6, 2025 11:00 AM ET Corporate Participants Lance Casson - Manager of Investor Relations Scott Stauth - President Robin Zabek - Chief Operating Officer of E&P Mark Stainthorpe - Chief Financial Officer Conference Call Participants Greg Pardy - RBC Capital Markets Dennis Fong - CIBC Manav Gupta - UBS Financial Patrick O'Rourke - ATB Capital Markets Menno Hulshof - TD Securities Roger Read - Wells Fargo John Moyle - JPMorgan N ...

Core Viewpoint - The Cash Flow Kingdom Income Portfolio aims to achieve an overall yield in the range of 7% to 10% by combining various income streams to create a steady portfolio payout [1] Company Performance - Canadian Natural Resources Limited (NYSE: CNQ) reported strong Q4 results, highlighting excellent production growth [1] - The company is expected to have another record operational year in 2025 due to an asset swap that will drive production [1] Investment Focus - The Cash Flow Club, where the author contributes, focuses on company cash flows and access to capital, targeting a yield of over 6% [1] - The club offers features such as community chat, a "Best Opportunities" List, and coverage of sectors including energy midstream, commercial mREITs, BDCs, and shipping [1]

Group 1 - Canadian Natural Resources (CNQ) reported quarterly earnings of $0.66 per share, missing the Zacks Consensus Estimate of $0.69 per share, and down from $0.86 per share a year ago, representing an earnings surprise of -4.35% [1] - The company posted revenues of $6.77 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 5.88%, but down from $7.02 billion year-over-year [2] - Over the last four quarters, Canadian Natural Resources has surpassed consensus revenue estimates four times [2] Group 2 - The stock has lost about 11.1% since the beginning of the year, while the S&P 500 has declined by -0.7% [3] - The current consensus EPS estimate for the coming quarter is $0.69 on revenues of $6.66 billion, and for the current fiscal year, it is $2.48 on revenues of $26.26 billion [7] - The Zacks Industry Rank for Oil and Gas - Exploration and Production - Canadian is currently in the bottom 43% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]

Core Insights - Canadian Natural achieved record annual average production of over 1,363,000 BOE/d in 2024, with significant contributions from both oil sands and thermal in situ operations [1][6][17] - The company reported strong financial results, including adjusted net earnings of approximately $7.4 billion and adjusted funds flow of $14.9 billion for the year [4][17] - Canadian Natural's total proved reserves increased by 9% to 15.2 billion BOE, with a reserve life index of 33 years, indicating robust long-term growth potential [3][30] Operational Highlights - Record quarterly and annual Synthetic Crude Oil (SCO) production reached approximately 535,000 bbl/d and 472,000 bbl/d respectively, with an annual utilization rate of 99% [1][9][45] - Thermal in situ production also set records at approximately 271,000 bbl/d, with strong operating costs of $11.04/bbl (US$8.06/bbl) [1][41] - The company achieved industry-leading operating costs of $20.97/bbl (US$15.00/bbl) for SCO in Q4/24, reflecting a decrease of 6% from 2023 levels [4][21][46] Financial Performance - Canadian Natural returned approximately $7.1 billion to shareholders in 2024, including dividends and share repurchases, with a 4% increase in the quarterly dividend approved for 2025 [4][25] - The company maintained a strong balance sheet with a Debt to Book Capitalization of 32% and a Debt to Adjusted EBITDA of 1.1x [5][20] - Cash flows from operating activities totaled approximately $13.4 billion, supporting ongoing capital investments and shareholder returns [17][21] Growth and Acquisitions - Following the acquisition of Chevron's Alberta assets, Canadian Natural's working interest in the Athabasca Oil Sands Project (AOSP) will reach 100%, enhancing production capacity [2][20] - The company is targeting to increase total oil sands mining production capacity to approximately 592,000 bbl/d, up from 570,000 bbl/d, after completing various enhancement projects [2][10] - Canadian Natural's disciplined capital allocation strategy aims to maximize shareholder value while maintaining flexibility in its operations [28][32]

Group 1 - The Board of Directors of Canadian Natural Resources Limited approved a 4% increase in its quarterly cash dividend to C$0.5875 per common share, effective April 4, 2025 [1] - This marks the 25th consecutive year of dividend increases for the company, with a compound annual growth rate (CAGR) of 21% over this period, reflecting the Board's confidence in the sustainability of the business model and strong balance sheet [2] - Canadian Natural is a senior crude oil and natural gas production company with operations in Western Canada, the U.K. portion of the North Sea, and Offshore Africa [3]

Core Viewpoint - Canadian Natural Resources (CNQ) is expected to report quarterly earnings of $0.69 per share, reflecting a 19.8% decline year-over-year, with revenues forecasted at $6.39 billion, down 8.9% from the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised 1.5% higher in the last 30 days, indicating a collective reevaluation by analysts [2]. - Revisions to earnings projections are crucial for predicting investor behavior and are linked to short-term stock price performance [3]. Production Metrics - Total average daily production is estimated to reach 1,436,480 BOE/D, up from 1,419,313 BOE/D year-over-year [5]. - Primary Heavy Oil production is projected at 81.86 thousand barrels per day, compared to 80.1 thousand barrels per day last year [5]. - Thermal In Situ Oil production is expected to be 281.07 thousand barrels per day, an increase from 278.42 thousand barrels per day year-over-year [6]. - Oil Sands Mining and Upgrading production is forecasted at 507.12 thousand barrels per day, up from 500.13 thousand barrels per day [6]. - Pelican Lake Oil production is estimated at 45.71 thousand barrels per day, slightly down from 46.05 thousand barrels per day last year [7]. - North Sea Oil production is expected to be 11.98 thousand barrels per day, down from 12.62 thousand barrels per day [7]. - Offshore Africa Oil production is projected at 13.55 thousand barrels per day, up from 13.21 thousand barrels per day [8]. - Average daily production of Oil & liquids is estimated at 1,064,114 BBL/D, compared to 1,047,541 BBL/D last year [8]. - Natural gas average daily production is expected to reach 2,225.38 million cubic feet, slightly down from 2,231 million cubic feet year-over-year [9]. - North America Natural Gas production is forecasted at 2,214.17 Mcf/D, down from 2,218 Mcf/D last year [9]. - Offshore Africa Natural Gas production is estimated at 9.75 Mcf/D, down from 11 Mcf/D year-over-year [10]. - Light Crude Oil production is projected at 52.08 thousand barrels per day, up from 48.12 thousand barrels per day last year [10]. Stock Performance - Shares of Canadian Natural Resources have decreased by 11% over the past month, compared to a -2.3% change in the Zacks S&P 500 composite [11]. - The company holds a Zacks Rank of 3 (Hold), indicating it is expected to perform in line with the overall market in the near future [11].

Core Viewpoint - Canadian Natural Resources Limited (CNQ) is expected to report fourth-quarter results on March 6, with earnings estimated at 69 cents per share and revenues of $6.39 billion [1]. Group 1: Previous Quarter Performance - In the last reported quarter, CNQ achieved adjusted earnings per share of 71 cents, exceeding the Zacks Consensus Estimate of 69 cents, with total revenues of $6.5 billion, surpassing estimates by 1.9% [3]. - CNQ has beaten the Zacks Consensus Estimate three times in the last four quarters, with an average surprise of 3.87% [3]. Group 2: Fourth Quarter Estimates - The Zacks Consensus Estimate for fourth-quarter earnings indicates a 19.77% year-over-year decrease, while revenues are expected to decline by 8.92% compared to the previous year [4]. - Revenues are projected to decrease to $6,247.5 million from $7,018 million in the same quarter last year, primarily due to poor performance in the Exploration and Production segments [6]. Group 3: Revenue Breakdown - North America's revenues are anticipated to decline by 15.7% year-over-year, totaling C$3,735.5 million, while North Sea revenues are expected to decrease by 16.2% to C$138.2 million [7]. - Oil Sands Mining and Upgrading's revenues are projected to decrease by 7.3% year-over-year, amounting to C$4,190.9 million [7]. Group 4: Cost Management - CNQ's cost-reduction initiatives are expected to positively impact its bottom line, with total expenses projected to reach C$6,386.5 million, a 3.2% decrease from C$6,595 million in the previous year [8]. - Total depletion, depreciation, and amortization expenses are forecasted to decrease significantly to C$1,382.6 million, representing a 32.3% drop [9].

Group 1 - The article promotes iREIT on Alpha as a source for in-depth research on various income alternatives including REITs, mREITs, Preferreds, BDCs, MLPs, and ETFs [1] - It highlights the importance of considering "big picture" developments such as economic trends and geopolitical factors that may impact investment portfolios [1] Group 2 - There is a mention of analyst disclosures regarding beneficial long positions in specific companies, indicating a vested interest in the stocks of CNQ, TPL, and LB [2] - The article clarifies that it expresses the author's own opinions and does not involve compensation from the companies mentioned [2] Group 3 - Seeking Alpha emphasizes that past performance does not guarantee future results and that no specific investment recommendations are provided [3] - It notes that the views expressed may not reflect those of Seeking Alpha as a whole, highlighting the diversity of opinions among its analysts [3]

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Canadian Natural Resources (CNQ) due to lower revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - Canadian Natural Resources is expected to report quarterly earnings of $0.69 per share, reflecting a year-over-year decrease of 19.8% [3]. - Revenues are projected to be $6.39 billion, down 8.9% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 1.47% higher in the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Canadian Natural Resources is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -7.25% [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation of actual earnings from the consensus estimate, with a strong predictive power for positive readings [6][7]. - A positive Earnings ESP combined with a Zacks Rank of 1, 2, or 3 significantly increases the likelihood of an earnings beat [8]. Historical Performance - In the last reported quarter, Canadian Natural Resources exceeded the expected earnings of $0.67 per share, achieving $0.71, resulting in a surprise of +5.97% [12]. - Over the past four quarters, the company has beaten consensus EPS estimates three times [13]. Industry Comparison - Tourmaline Oil Corp. is expected to report earnings of $0.83 per share for the same quarter, indicating a year-over-year decline of 43.5% [17]. - Tourmaline Oil Corp. has an Earnings ESP of 6.45%, suggesting a likelihood of beating the consensus EPS estimate, despite not beating estimates in the last four quarters [18].