Canadian Natural Resources (TSX:CNQ) stock ticked up as much as 2% in premarket trading on the New York Stock Exchange after announcing its better-than-expected quarterly earnings on October 31. In the last session, the TSX-listed shares of the Calgary-headquartered oil and gas giant settled at $47.50 per share with a market cap of $100.3 billion, reflecting a year-to-date gain of 9.4%. With an impressive annualized dividend yield of 4.7%, CNQ stock remains a top pick for income-focused investors. However, is now the right time to buy CNQ?
Before I try to answer that question later in this article, let’s first delve into the key highlights from CNQ’s recent earnings report to understand the company’s current position.
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Key highlights from Canadian Natural’s latest earnings report
If you don’t know it already, Canadian Natural generates most of its revenue from a mix of oil and gas production for the North American market, and its recent quarterly performance clearly reflects the strength of its diversified asset base.
During the third quarter of 2024, the company recorded robust average production volumes, achieving about 1.36 million barrels of oil equivalent per day (BOE/d), up about 6% from the previous quarter. This growth was largely driven by its oil sands mining and upgrading operations, which produced an impressive 498,000 barrels of synthetic crude oil daily.
These strong operational results helped CNQ deliver adjusted quarterly earnings of $0.97 per share, exceeding Street analysts’ expectations of $0.90 per share. Similarly, the company’s adjusted net profit of $2.1 billion for the quarter surpassed consensus estimates of $1.9 billion. This could be the main reason why CNQ stock inched up after its earnings release.
Continued focus on expansion and strategic acquisitions
Beyond strong production numbers, Canadian Natural recently announced two strategic acquisitions to expand its asset portfolio. The company plans to purchase Chevron’s 20% stake in the Athabasca Oil Sands Project, bringing its total interest in the project to 90%. This acquisition is likely to add 62,500 barrels per day to its SCO production, solidifying Canadian Natural’s position in Canada’s oil sands sector.
In addition, the company announced that it will acquire Chevron’s 70% interest in Alberta’s Duvernay play, which is expected to contribute roughly 60,000 BOE/d of light crude oil and liquids-rich natural gas starting in 2025. Both of these assets align with Canadian Natural’s strategy to drive consistent free cash flow and reward its loyal shareholders with increasing dividends.
Is CNQ stock a buy now?
Given Canadian Natural’s strong production growth in recent quarters, strategic acquisitions, and commitment to shareholder returns, CNQ stock could be an attractive stock for long-term investors in Canada. Moreover, CNQ stock’s attractive 4.7% dividend yield, coupled with the company’s history of dividend growth, makes it even one of the most reliable dividend stocks in the energy sector.
Besides attractive dividends, as Canadian Natural Resources continues to expand its asset base with new acquisitions, its financial growth trends should improve in the coming years, which could also drive its share prices higher.
