If you’re looking for one Canadian stock to own as oil prices surge, Canadian Natural Resources (TSX:CNQ) is the answer, and the numbers make a pretty convincing case.
- The Middle East conflict has rattled global energy markets in recent weeks.
- Oil prices have climbed sharply, and investor sentiment around energy stocks is swinging wildly.
- That kind of volatility can create opportunity, especially for investors willing to hold quality energy names through the short-term noise.
CNQ is a long-term compounder dressed up as an oil company. Let me explain.
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A strong performance in 2025
The 2025 fiscal year was, in the words of CNQ President Scott Stauth on the company’s Q4 earnings call, “the best operational year in the company’s long history.”
- CNQ posted record annual production of 1,571,000 barrels of oil equivalent per day (BoE/d) last year, up 15% from 2024.
- Total liquids production hit approximately 1,146,000 barrels per day, a 14% increase.
- Natural gas production reached a record 2.5 billion cubic feet per day, rising 19% year-over-year.
CNQ did all of this while cutting costs. Primary heavy oil operating costs fell 8% in 2025. Oil Sands mining and upgrading costs came in at just US$22.66 per barrel, an industry-leading figure.
The fourth quarter was even stronger. CNQ hit record quarterly production of approximately 1,659,000 BoE/d, with Oil Sands mining and upgrading running at 105% utilization.
Adjusted funds flow for the full year totaled $15.5 billion, or $7.39 per share. The balance sheet looks solid too, with debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) at 0.9 times as of year-end.
Given an annualized dividend of $2.50 per share, CNQ’s payout ratio is well covered at roughly 30%.
CNQ offers an unmatched dividend record
The CNQ board just approved a 6.4% increase to the quarterly dividend. That marks 2026 as the 26th consecutive year of dividend increases, a compound annual growth rate of 20% over that period,
And it gets better. CNQ has also updated its free cash flow allocation policy. Under the new terms, when net debt falls below $16 billion, the company will direct 75% of free cash flow back to shareholders.
When net debt reaches $13 billion, that rises to 100%. At year-end 2025, net debt was approximately $16 billion, meaning CNQ is essentially at the threshold for that higher payout level right now.
CNQ’s reserve base is another pillar of this story. Total proved reserves stand at 15.9 billion BoE, with a reserve life index of 31 years.
Around 73% of those reserves are long-life or zero-decline assets. For investors, that means predictable production and cash flows for decades.
What makes CNQ stock attractive
Oil is political. And right now, geopolitics are pointing upward for prices.
As Stauth noted on the earnings call, developments in the Middle East have already tightened heavy crude differentials by about $1.50 to $1.60 compared to just a month ago.
Venezuelan barrels that briefly pressured the market have been partially offset by supply disruptions elsewhere.
For CNQ, which sells approximately 256,000 barrels per day into diversified markets, including the U.S. Gulf Coast and Western Canada, higher oil prices mean fatter margins on an already low-cost structure.
The key insight here is that CNQ doesn’t need $100 oil to thrive. Its cost discipline means it generates real cash flow across a wide range of price environments. Higher prices are just icing on the cake.
Investing in oil stocks purely on short-term price moves is a losing game. But buying a company like CNQ, with record production, 26 years of dividend growth, industry-leading costs, and a 31-year reserve life, and holding it for years is a very different proposition.
