May 2 (Bloomberg) -- Canadian Natural Resources Ltd., the nation’s third-largest oil and natural gas producer, reported a 50 percent drop in first-quarter profit as losses related to foreign currency exchange and other expenses offset higher output and prices.
Net income fell to C$213 million ($211 million), or 19 cents a share, from C$427 million, or 39 cents, a year earlier, the Calgary-based company said in a statement today. Excluding C$188 million in expenses tied to fluctuating foreign exchange rates, hedging and compensation, profit was 36 cents, less than the 43-cent average of 17 analysts’ estimates compiled by Bloomberg.
The results were “slightly negative,” Phil Skolnick, a New York-based analyst with Canaccord Genuity Corp., said in a note. Though output was higher than expected, per-share earnings and cash flow missed analysts’ estimates, he said.
Production rose 11 percent to the equivalent of 680,844 barrels of oil a day, from last year. The Horizon oil-sands plant, where the company is focused on improving reliability after periods of unplanned maintenance, met the upper end of the quarter’s target, at about 109,000 barrels a day. The project accounts for about one-sixth of the company’s output.
“Reliability at Horizon has been a key theme for investors in the company over the last couple of years,” Chris Feltin, a Calgary-based analyst at Macquarie Group Ltd., wrote in an April 14 note. Prices for crude produced by oil-sands projects are poised to rise “and Canadian Natural is our top pick for participating in this upside.”
Canadian Natural said its 24-day planned maintenance shutdown of the Horizon plant began on April 30.
The 40,000 barrel a day Kirby oil-sands project is ahead of schedule, as the company will begin injecting steam underground to produce oil in the third quarter, compared with its previous target of November, according to the statement.
Canadian Natural found a partner it won’t yet identify pending regulatory approvals to drill its offshore holdings in South Africa, the company said.
Sales increased 12 percent to C$3.84 billion.
Gas prices rose in the quarter while the price of Canadian heavy crude fell 12 percent to average $66.99 a barrel, from a year earlier, according to data compiled by Bloomberg.
The spread between Canadian heavy crude and the U.S. benchmark began narrowing after the quarter, “resulting in more favorable price realizations for Canadian Natural,” Corey Bieber, Canadian Natural’s chief financial officer, said in the statement. The price difference was a record $42.50 a barrel on Dec. 14, according to figures compiled by Bloomberg.
Canadian Natural said in March it may sell some of its holdings in the Montney Shale in British Columbia, one of the nation’s largest gas finds, as it awaits higher demand.
The company, which has just hired an adviser for the Montney sale, doesn’t yet have a deadline for a deal, Steve Laut, president of Canadian Natural, told reporters in Calgary. It has seen “unofficial interest” in the properties, he said.
The results were released after regular trading on North American markets. Canadian Natural gained 1.7 percent to C$29.49 in Toronto. The stock, which has 18 buy and 7 hold recommendations from analysts, has risen 3 percent this year.
Suncor Energy Inc. and Imperial Oil Ltd. are Canada’s largest oil and gas producers by market value.
(Canadian Natural has a conference call planned at 11 a.m. New York time tomorrow, available at EVTS <GO>.)
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