Canadian Natural Third-Quarter Profit Declines 57%

(Corrects gas volumes in the fourth paragraph.)

Canadian Natural Resources Ltd. (CNQ), the nation’s third-largest oil and natural-gas producer, said quarterly profit declined 57 percent as fossil fuel prices fell. The shares dropped the most in more than four months.

Net income dropped to C$360 million ($360.9 million), or 33 cents a share, in the third quarter from C$836 million, or 76 cents, a year earlier, the Calgary-based company said today in a statement. Excluding a gain from derivatives contracts and other one-time items, per-share profit was 18 cents less than the 50- cent average of 18 analyst estimates compiled by Bloomberg. Sales rose 7 percent to $3.53 billion.

The “disappointing” results “were largely due to lower realized pricing for North American liquids production,” Randy Ollenberger, an analyst at BMO Capital Markets Ltd. in Calgary, said in a note today.

Canadian Natural is among producers that have cut spending and shut gas wells after prices in New York dropped to a 10-year low in April. Gas production fell 5 percent to 1.3 billion cubic feet a day from the year earlier after the company shut in 40 million cubic feet a day because of low prices, according to the statement.

Gas prices averaged $2.893 per million British thermal units on the New York Mercantile Exchange in the quarter, down 29 percent from a year earlier.

Lower Budget

The company lowered its capital budget for 2012 by 10 percent to C$6.7 billion in August, and reduced annual spending by an additional C$230 million in the quarter, it said in the statement.

Canadian Natural produced the equivalent of 667,616 barrels of oil a day in the quarter, an increase of 9 percent from a year earlier. It cut the mid-point of its full-year production guidance by 1 percent, lowering estimated production for 2012 from its Horizon upgrader in Alberta to 87,000 to 89,000 barrels a day.

The company will proceed with the 50,000 barrel a day North West Redwater upgrader and refinery, which will reduce its reliance on heavy crude oil prices, Steve Laut, Canadian Natural’s president, said in the release. Construction of the C$5.7 billion facility is expected to begin in 2013.

Canadian Natural fell 3.6 percent to C$28.02 at the close in Toronto. Earlier it declined 5.2 percent, the most intraday since June 21. The shares have fallen 27 percent this year.

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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