Entering text into the input field will update the search result below

Canadian Natural Resources: Surprisingly Good Q4 Results, Good Long-Term Dividend Candidate


  • Canadian Natural Resources was one of the few companies that saw its financial performance improve year-over-year.
  • The biggest reason for this is that the narrowing differential between WCS and WTI actually resulted in WCS trading higher this year than last.
  • The company managed to increase its production significantly as a result of the acquisition of Devon Energy Canada.
  • The improvement in free cash flow allowed it to ramp up its dividend and it now boasts more than a 7% yield.
  • The company could be a good long-term dividend candidate if you can stomach the likely volatility over the next year or so.
  • Looking for more stock ideas like this one? Get them exclusively at Energy Profits in Dividends. Get started today »

On Thursday, March 5, 2020, Canadian oil and gas giant Canadian Natural Resources (NYSE:CNQ) announced its fourth quarter 2019 earnings results. At first glance, these results were mixed as the company missed the expectations of its analysts in terms of bottom-line earnings but did beat their estimates on the top-line. A closer look at the actual results though shows that there was certainly a lot to like here as the company delivered record free cash flow along with some production growth. With that said though, the company was clearly affected by the weak macroeconomic conditions affecting the oil market just like all other companies in the industry. Despite the failure of the OPEC+ talks, it may be a good time to start buying high-quality oil companies like Canadian Natural Resources.

As my long-time readers are no doubt well aware, it is my usual practice to share the highlights from a company's earnings report before delving into an analysis of its results. This is because these highlights provide a background for the remainder of the article as well as serve as a framework for the resultant analysis. Therefore, here are the highlights from Canadian Natural Resources' fourth quarter 2019 earnings results:

  • Canadian Natural Resources brought in total revenues of C$5.901 billion in the fourth quarter of 2019. This represents a substantial 59.40% increase over the C$3.702 billion that the company brought in during the prior-year quarter.
  • The company reported an operating income of C$5.079 billion in the most recent quarter. This compares quite favorably to the C$4.601 billion that the company reported in the prior-year quarter.
  • Canadian Natural Resources reported average total production of 1.060 million barrels of oil equivalents per day in the current quarter. This represents a 5.16% increase over the 1.008 million barrels of oil equivalents per day that the

At Energy Profits in Dividends, we seek to generate a 7%+ income yield by investing in a portfolio of energy stocks while minimizing our risk of principal loss. By subscribing, you will get access to our best ideas earlier than they are released to the general public (and many of them are not released at all) as well as far more in-depth research than we make available to everybody. We are currently offering a two-week free trial for the service, so check us out!

This article was written by

Power Hedge profile picture
Power Hedge is an independent stock research and analysis firm with a passion for macro- and microeconomic analysis. Power Hedge focuses our research primarily on dividend-paying, international companies of all sizes with sustainable competitive advantages. Power Hedge is neither a permabear nor a permabull. However, we believe that, given the current structural problems in the United States, the best investment opportunities may lie elsewhere in the world. The firm's strategy is primarily buy and hold, but will stray from that strategy on occasion. Our ideal holding period is forever, however we realize that both internal and external forces can impact an investment. For this reason, we believe that it is vital to keep a close eye on all of your investments. We do not believe in changing an investment based on short-term market swings.

Traditionally, we have not always responded to comments but in order to improve the quality of our research, comments will be reviewed and we will respond to issues regarding errors or omissions. This does not include our premium service, "Energy Profits In Dividends" which is available from the Seeking Alpha Marketplace. This service does include detailed discussions with our team both on the reports themselves and in a private forum.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (11)

Oil sands have a higher breakeven point than conventional. I think it is comparable to shale. Hard to find the exact numbers but nobody was even talking about the sands twenty years ago when oil was cheap. If oil stays cheap and it probably will for quite a while, CNQ is royally screwed. TOT and Lukoy will be profitable even at $20, CNQ needs like >$50. So if you buy CNQ, you will be betting on oil to get expensive again. Hard to see how and when that will happen.
CNQ did not hedge any oil contracts for this year. This is probably the reason why it is down today big time, the traders figured that out. But looking at the long term we should remember that it has the most efficient oil sands operations and it should benefit from the coming demise of shale oil and unprofitable oil/tar sand operators.
Jamjack profile picture
"How low will she go". Wish I had that number, because then I would back up the truck!
11 Mar. 2020
Bought some more CNQ yesterday at a bargain price.
Jamjack profile picture
"Ditto" ( :
pgallop profile picture
If the new price war has Putin's desired effect of getting rid of a lot of the 'fly-by-night' US fracking operations, this will greatly benefit CNQ in the long run. Do you agree?

[p.s. I'm really surprised the Press isn't talking about Trump's 2 'best friends', Putin and the Saudi Prince, trying to screw up his bragging rights that US is the world's No. 1 producer, which was achieved mainly due to low cost fracing, a technique that's terrible for the environment. In addition the price war's effect on the economy will hurt Trump's re-election chances. As the saying goes, with friends like these who needs enemies!]
How does the company stand as far as debt?
I think CNQ, Suncor, Enbridge, and Royal Dutch Shell are all good buys, with a great opportunity to lock in decent dividend yields.
Deep Rock Holdings profile picture
Sold the Jan '21 put for $15 strike at $4.10 which puts breakeven at $10.90 should it close then under $15 and I allow myself to be assigned. That is 1/3 of the recent high and the last time it traded that cheap was in January of 2005. At $10.90 the yield is over 11% at the current dividend. Seems like a pretty good entry point to me.
Investor of the future profile picture
If the stock gets put to you, don’t expect the dividend to be the level it is at currently.
Thanks for the report. Added to my position on this crash. I think CNQ will be one of the long term survivors in the energy space
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.