Canadian Natural Q3 Profit Falls

11/5/2009 6:36 AM ET

(RTTNews) - Canadian Natural Resources Ltd. (CNQ: News ,CNQ.TO: News ) reported Thursday a sharp fall in third-quarter profit due to a plunge in revenues impacted by weak natural gas prices as well as the absence of prior year's hefty risk management gain. The Calgary, Canada-based crude oil and natural gas explorer also provided production forecasts for the fourth quarter and fiscal years 2009 and 2010. Separately, Canadian Natural said its Board of Directors has declared a quarterly cash dividend.

Third-quarter net earnings were C$658 million or C$1.21 per share, much lower than prior year's C$2.84 billion or C$5.25 per share.

The latest quarter results included stock-based compensation expense of C$126 million, and unrealized risk management loss of C$217 million, offset by unrealized foreign exchange gain of C$343 million. Meanwhile, prior year results included stock-based compensation recovery of C$221 million and a hefty unrealized risk management gain of C$1.75 billion, partly offset by unrealized foreign exchange loss of C$99 million.

Adjusted net earnings from operations, excluding items, were C$658 million or C$1.21 per share, compared to C$963 million or C$1.78 per share in the prior year quarter.

Revenue, before royalties, declined to C$2.82 billion from C$4.58 billion in the same period last year.

The company produced approximately 575 thousand barrels of oil equivalent per day, or boe/d, in the quarter, higher than prior year's about 555 thousand boe/d. The quarterly production comprised of approximately 38% natural gas and 62% crude oil, with approximately 93% of production located in G8 countries.

Total crude oil and NGLs production was 359,269 barrels per day, or bbl/d, an increase of 17% from 306,970 bbl/d last year, driven by production increases from Horizon Oil Sands Mining and Upgrading, Baobab and Olowi, offset by the temporary curtailment of steaming/production at Primrose East and planned maintenance in the North Sea.

Natural gas production averaged 1,293 mmcf/d, down 13% from 1,490 mmcf/d last year, reflecting the continuing reallocation of capital towards higher return crude oil projects.

Quarterly cash flow from operations was C$1.51 billion, down 17% from the previous year, reflecting lower crude oil and natural gas price realizations, partially offset by higher crude oil production.

Canadian Natural pointed out that crude oil prices and the heavy oil differential remained favorable, and along with the company's hedging program, helped to mitigate the impact of weak natural gas prices.