Calgary — The Canadian Press Published on Thursday, Nov. 05, 2009 7:26AM EST Last updated on Thursday, Nov. 05, 2009 8:34AM EST
Profit at Canadian Natural Resources Ltd. CNQ-T tumbled from year-ago levels in the third quarter as the company felt the impact of a harsh natural gas market and high production costs.
The Calgary-based oil and gas company reported profit of $658-million or $1.21 per share in the quarter ended Sept. 30.
This was down from a year-ago profit of $2.8-billion or $5.25 cents per share.
Quarterly revenue totalled $2.82-billion, down from $4.6-billion last year.
Canadian Natural said the drop in its profit had to be put into context.
The company said its net earnings last year had included net unrealized after-tax income of $1.9-billion related to the effects of risk management activities, foreign exchange fluctuation and fluctuations in stock-based compensation.
After adjusting its net earnings, Canadian Natural said it earned $658-million or $1.21 per share this year compared to $963-million or $1.78 per share in 2008.
Analysts had expected this year's quarterly earnings per share to come in at $1.25, according to Thomson Reuters.
The decrease in net earnings was attributed to the impact of lower realized pricing, lower natural gas sales volumes, higher production expenses and higher interest expenses.
These were however partially offset by the impact of higher crude oil sales volumes, higher realized risk management gains, lower royalty expense and the impact of a weaker Canadian dollar.
Canadian Natural said its expects quarterly volatility to continue as the company feels the impacts of unrealized risk management activities, stock-based compensation, and fluctuating foreign exchange rates.
“The third quarter was strong for Canadian Natural as we met all of our production targets,” said company chairman Allan Markin.
Mr. Markin said the company will continue its defined growth plan in 2010 with all areas expected to provide positive free cash flow in the range of $2.6- to $3-billion.
Looking ahead, the company has budgeted capital spending to increase by 26 per cent over 2009 with 80 per cent of capital allocated to developing its crude oil assets.
Canadian Natural said it will complete development at its West African Olowi project and resume drilling in the North Sea, in addition to working on its crude oil Horizon project in Alberta.
“Our 2010 budget represents a prudent yet flexible approach to developing our world class assets,” said Steve Laut, the company's president and chief operating officer.
This capital budget provides us with the flexibility to react to fluctuations within the business environment,“ he said.
The company's shares closed at $68.6 Wednesday at the Toronto Stock Exchange.
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