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After Canadian Natural Resources reported its November results, we updated our fair value. We changed our rating to Watch and raised our projections for how much cash will be returned to shareholders. We added two new factors to what we track: the revenue contribution from sulphur and the longer maintenance cycles at the Horizon mine. We also updated our model to reflect the company's permanent net debt target of $13 billion and its higher costs for mining and upgrading oil sands.
The company reported earnings of $1.18 per share, which was better than the $1.05 analysts expected. This performance was fueled by record production in two key areas: thermal operations, which use steam to pump heavy oil, and conventional North American drilling. Total production reached about 1.65 million barrels of oil equivalent per day.
For a long-term owner, the most important part of this result is the company's ability to keep production high even while performing a planned maintenance turnaround at its Horizon oil sands site. Because the company has already reached its debt reduction targets, it is now in a position to return all of its excess cash to shareholders through dividends and buying back its own stock.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
The company declared a quarterly dividend of 62.5 Canadian cents per share, payable on January 5, 2027. This payout is a direct result of the company's policy to return 100 percent of its free cash flow, the cash left over after paying for operations and maintenance, to its owners now that it has hit its debt goals.
Source: Newsfile Corp
Management consistently sets reachable targets and clears them, delivering seven beats in the last eight quarters. This pattern makes their forecasts a reliable floor for what the business can produce.
| Expectation | |
|---|---|
| EPS | $1.32 |
| Revenue | $10.07B |
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