BMO Capital Markets has adjusted its outlook on Canadian Natural (NYSE:) Resources Limited (CNQ: CN) (NYSE: CNQ), increasing its price target to C$60.00 from the previous C$57.50.
The firm has retained its Outperform rating on the stock. The adjustment follows Canadian Natural’s announcement of the acquisition of Chevron (NYSE:)’s remaining interests in the Western Canadian Sedimentary Basin (WCSB).
The analyst from BMO Capital highlighted that Canadian Natural is the natural buyer for Chevron’s stake in the Athabasca Oil (OTC:) Sands Project (AOSP) and secured the deal at an appealing price.
Additionally, the acquisition includes the Duvernay asset, which is considered a bonus due to recent improvements in well productivity and its location near Canadian Natural’s Montney assets.
Despite the positive acquisition news, BMO Capital noted that Canadian Natural’s potential for near-term shareholder returns might be limited as the company works towards achieving its new net debt targets.
In other recent news, Canadian Natural Resources Limited reported a notable 8% increase in production in the second quarter of 2024. The company’s production reached 1.29 million barrels of oil equivalent per day, a significant increase from the previous year.
The boost in production was largely due to the exceptional performance of the company’s thermal assets and the Horizon project, which achieved a milestone of 1 billion barrels of bitumen production since its inception.
The commissioning of the TMX pipeline played a positive role in the Canadian economy, enhancing market access and pricing for Western Canadian crude. In terms of financial performance, Canadian Natural posted adjusted funds of $3.6 billion and net earnings of $1.9 billion. The company also showed its commitment to its shareholders, planning to allocate all of its free cash flow to them in 2024.
InvestingPro Insights
Canadian Natural Resources Limited’s recent acquisition aligns well with its strong financial position and growth strategy. According to InvestingPro data, the company boasts a market capitalization of $77.46 billion and a P/E ratio of 13.96, suggesting a relatively attractive valuation compared to its peers. The company’s revenue growth of 14.71% in the most recent quarter indicates robust operational performance.
InvestingPro Tips highlight that Canadian Natural has maintained dividend payments for 24 consecutive years, demonstrating a commitment to shareholder returns. This track record is particularly noteworthy given BMO Capital’s observation about potential near-term limitations on shareholder returns due to the recent acquisition.
Another relevant InvestingPro Tip indicates that the company operates with a moderate level of debt, which could provide flexibility for future strategic moves similar to the Chevron asset acquisition. For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips for Canadian Natural Resources, providing a deeper understanding of the company’s financial health and market position.
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