The federal government needs to do more to ensure a consistent and predictable regulatory environment across all economic sectors, says the president of Canada’s largest oil and gas producer, who is set to retire next year.
Canadian Natural Resources Ltd. CNQ-T on Thursday announced the exit of Tim McKay, who has spent 33 years at the Calgary-based company. In an interview, he said one of the biggest challenges during his tenure as president has been the speed of shifting government fiscal and environmental targets and policies.
Whether it’s the looming federal cap on oil and gas emissions or climate targets, rapid policy changes have become increasingly difficult to work with – particularly when governments lack familiarity with how changes will affect industry, Mr. McKay said in an interview Thursday.
“For businesses to operate effectively and efficiently, you need good regulatory policies that are stable and very conducive for all businesses to work within that framework,” he said.
Canadian Natural was one of the first oil and gas companies to commit to emission reductions, he added. But when “governments come in after the fact and give you a different target, it’s difficult to operate, because you’ve already set your plan in motion.”
Mr. McKay will hand the reins of Canadian Natural to Scott Stauth, currently the company’s chief operating officer of its oil sands operations, at its board meeting on Feb. 28. Mr. McKay will assume the role of vice-chair and support the management transition until his retirement in summer next year.
Investors can expect to see little change under the watch of Mr. Stauth, who has been with the energy giant for 26 years.
Unlike the wholesale shakeup at Suncor Energy Inc. with the instalment of chief executive officer Rich Kruger early this year, Mr. Stauth has a more even-keeled plan.
“Everything that we’ve done in the past, we’re going to continue to work on in the future,” Mr. Stauth told an investor call Thursday morning.
He wants Canadian Natural to “grow and be stronger,” he said, including increasing free cash flow and exercising discipline when it comes to spending. Canadian Natural would also continue developing an effective framework for the Pathways Alliance’s plan to bring oil sands production to net-zero emissions by 2050, Mr. Stauth told The Globe and Mail.
“If you just look at what we’re trying to do, it’s net zero by 2050. We’re going to stay focused on that. And that’s really what’s important to us at this time.”
And while Mr. McKay acknowledged that the oil and gas company consolidation happening in the U.S. could flow through to Canada, he told investors that Canadian Natural’s sizable reserves mean the company can “sit back, do what we do best and … be methodical with our growth plan.”
Mr. McKay also told The Globe that he was proud of Canadian Natural’s “excellent” financial results this past quarter, even though the company reported lower third-quarter profit despite record production.
Indeed, crude oil prices rose about 28 per cent in the quarter but still stayed well below the multiyear highs in the same period a year earlier, after Russia’s invasion of Ukraine.
“We are a price taker, so you have to look at the prices that we received basically a year ago,” he said. “We had strong operations and very good operating costs, so I think our teams did a really good job and I’m quite proud of it.”
Canadian Natural reported a net income of $2.34-billion, or $2.13 per share, for the quarter, down from $2.84-billion or $2.49 per share a year earlier.
Production rose to a record 1.39 million barrels of oil equivalent per day, up from 1.34 million boepd last year.
However, cash flows from operations fell about 43 per cent in the quarter to $3.5-billion.
The company’s chief financial officer, Mark Stainthorpe, told analysts Thursday on an earnings call that the company has returned approximately $6.1-billion to shareholders through dividends and share repurchases this year. Canadian Natural’s board also approved an 11-per-cent increase to its base quarterly dividend to $1 per common share from 90 cents, he said.
The company is forecasting to cut its net debt to $10-billion in the first quarter of 2024, at which time it will target returns to shareholders to 100 of free cash flow, Mr. Stainthorpe said.
With a report from Reuters
Emma Graney