Canadian Natural reports $1.38B Q1 profit, plans to reduce debt
Higher oil and gas prices, record production and a restrained capital spending budget will result in bountiful free cash flow for Canadian Natural Resources Ltd. this year, the oilsands company said Thursday.
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Nia Williams
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A truck drives down a street at Syncrude s oil sands operation on May 23, 2006 near Fort McMurray, Alberta. REUTERS/Todd Korol
The Canadian province of Alberta said on Thursday it will allow oil sands mining companies to change how they calculate environmental liabilities this year, to take into account the wild swings of 2020, when oil prices turned negative.
Producers would be on the hook for billions of dollars in extra security payments if they calculated liabilities under the old formula, Alberta government officials told a news conference. However, that cash would likely have to be repaid to companies next year because oil prices have recovered.
In keeping with other big oilsands producers, however, Canadian Natural says it plans to spend the money mainly on reducing debt, not taking on big projects to increase oil and gas production. If we do anything, I suspect it will be very small, we ll leverage off of our facilities. We re doing drill-to-fill (processing plants) on the gas side, you know; with the oil side, it would be essentially brownfield, small developments, president Tim McKay told a conference call with analysts. I just don t really see … anybody in the industry really getting aggressive on any kind of major capital program.
Most of its capital budget for 2021 is aimed at sustaining operations, but about $200 million is considered growth capital and is expected to result in a five per cent increase in output, McKay said.
Canadian Natural reports $1.38B Q1 profit, plans to use cash flow to reduce debt
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Canadian Natural Resources Ltd. logo is shown at the company s annual meeting in Calgary on May 3, 2012. THE CANADIAN PRESS/Jeff McIntosh
CALGARY – Higher oil and gas prices, record production and a restrained capital spending budget will result in bountiful free cash flow for Canadian Natural Resources Ltd. this year, the oilsands company said Thursday.
In its first-quarter results, the Calgary-based company said it expects to generate between $5.7 billion and $6.2 billion of positive cash flow in 2021 after paying for a $3.2-billion capital budget and about $2.2 billion in dividends.
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CALGARY – Advantage Oil and Gas Ltd. is trading at “essentially cash value” right now, but the company’s president Michael Belenkie believes spinning out a clean tech subsidiary into a frothy carbon capture market will boost the natural gas producer’s value.
Stocks of Canadian oil and gas companies have rallied sharply since the depths of the market crash that coincided with the first wave of the COVID-19 pandemic last year. Advantage shares have risen 160 per cent to trade at $3.18 per share since bottoming at $1.22 each on March 27, 2020. Still, executives at Advantage are hoping to unlock more value from the company’s assets, including a modular carbon capture and storage system the company has developed in partnership with Calgary-based Allardyce Bower Consulting Ltd. to sequester carbon at a cost of $26 per tonne compared to the $50 current price of carbon in the country.