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Buy-recommended Canadian Natural Resources (NYSE:CNQ) offers unlevered appreciation potential of 25% to a McDep Ratio of 1.0 where stock price would equal estimated Net Present Value (NPV) of US$90 a share. We increase NPV from $80 on the basis of long life for oil sands, both from the new Horizon mine and upgrader as well as from expanding in situ projects.

Fourth quarter results released on March 4 disclosed progress approaching expectations and point to further oil volume gains in 2010. Favorable differentials for heavy oil, a third of oil production, boost cash flow, but are likely to recede as more normal economic activity resumes. Latest year-end reserves indicate an adjusted life of oil production of almost 20 years without counting probable reserves.

Oil futures prices for the next six years are in an uptrend signaled by latest settlements at $87 a barrel compared to the 40-week average of $83. CNQ stock also trades above its 200-day average of $63 a share. A 2 for 1 stock split has been proposed for approval of shareholders at the annual meeting on May 6.

Originally published on March 5, 2010.

Source: Canadian Natural Resources' Q4 Results Point to Further Oil Volume Gains in 2010