Canadian Natural Rises After Profit Beats Estimates

Canadian Natural Resources Ltd. (CNQ), the nation’s third-largest oil company by market value, rose to the highest in more than two months after second-quarter earnings beat analysts’ expectations.

Canadian Natural gained 4.8 percent to C$30.99 at 1:13 p.m. in Toronto, the highest intraday price since May 30. The company had the third-biggest increase among the 64 members of the Standard & Poor’s/Toronto Stock Exchange Energy Index.

Excluding one-time items, second-quarter earnings were 55 cents, beating the 53-cent average of 15 analysts’ estimates compiled by Bloomberg. Net income dropped to C$753 million ($758 million), or 68 cents a share, from C$929 million, or 84 cents, a year earlier, the Calgary-based company said in a statement today.

Lower-than-expected royalties and cash taxes contributed to the beat, Phil Skolnick, a New York-based research analyst with Canaccord Genuity Corp., said in a note to clients today.

Sales rose 12 percent to C$4.19 billion from C$3.73 billion a year earlier. Canadian Natural produced a record amount of oil and natural gas during the quarter, boosting output 22 percent to the equivalent of 679,607 barrels a day. Lower prices for the fuels contributed to the drop in income for the quarter, the company said.

“Commodity prices continue to be volatile with a mixed outlook,” Vice Chairman John Langille said on a conference call with analysts today. The company is “bullish” on heavy oil while it sees continued low prices in gas markets, President Steve Laut said on the call.

Cutting Spending

In response, Canadian Natural is cutting its 2012 capital spending plan by C$680 million, or 5 percent, to C$4.8 billion. Most of the spending reductions will be at its Horizon oil-sands plant in Alberta and in North American gas operations, the company said in the release.

Canadian Natural narrowed its forecast for oil and natural gas liquids production this year to 454,000 to 474,000 barrels a day from 440,000 to 480,000. It reduced its gas output estimate to as much as 1.235 billion cubic feet of gas a day, from May 3 guidance of as much as 1.26 billion cubic feet.

The company cut its 2012 gas drilling program in half during the second quarter, reducing the number of wells drilled to 35 from 71. Canadian Natural has also shut in 20 million cubic feet of gas a day this year, Laut said.

The stock, which has declined 19 percent this year, has 20 buy and five hold ratings from analysts.

Suncor Energy Inc. (SU) and Imperial Oil Ltd. (IMO) are the largest Canadian crude companies.

To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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