Canadian Natural Resources Ltd. raised its quarterly dividend by 28 per cent Thursday, as it reported surging fourth-quarter profits against the backdrop of a commodity boom.
In a conference call with analysts, CNRL management acknowledged the company is in an “enviable” position right now given current commodity prices and the health of its balance sheet.
But chief financial officer Mark Stainthorpe said the company remains focused on keeping its dividend increases sustainable through all points in the market cycle.
“We look at that to make sure that once a dividend is declared, we’re not having to take it back,” Stainthorpe said. “That’s why you see a steady increase, predictable increases year after year.”
The Calgary-based company, one of the largest independent crude oil and natural gas producers in the world, said Thursday it earned $2.53 billion in the quarter ended Dec. 31, up from $749 million a year earlier. The result worked out to $2.14 per diluted share, up from 63 cents per diluted share in the last three months of 2020.
CNRL said it will now pay a quarterly dividend of 75 cents per share, up from 58.75 cents per share.
In the fourth quarter, CNRL generated approximately $3 billion in free cash flow, thanks to surging oil prices. Benchmark crude West Texas Intermediate (WTI) averaged US $76.66 per barrel in 2021, an increase of 72 per cent from 2020 levels.
Crude has continued to climb in 2022, hitting US$111 per barrel on Tuesday as the Russia-Ukraine war spurs fears of supply interruptions.
On a conference call with analysts, CNRL president Tim McKay said the company was able to decrease its net debt by approximately $1.9 billion from third quarter levels, and by the end of 2021 had reduced its debt to under $14 billion.
That means that moving forward, the company will allocate half of its free cash flow to its balance sheet, and half toward share repurchases.
CNRL’s revenue in the quarter totalled $9.21 billion, up from $5.02 billion a year earlier, as production in the quarter averaged 1,313,900 barrels of oil equivalent per day, up from 1,201,198 in the same quarter a year earlier.
On an adjusted basis, Canadian Natural said its profit from operations amounted to $2.21 per diluted share, up from 15 cents per diluted share a year earlier.
This report by The Canadian Press was first published March 3, 2022.
Companies in this story: (TSX:CNQ)
By Amanda Stephenson in Calgary
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