Canadian Natural Resources Ltd.’s CNQ-T profits took a hit in the fourth quarter of 2022 as extreme winter weather forced the oil sands giant to reduce production.
The Calgary-based company reported Thursday that it earned $1.52-billion or $1.36 per diluted share for the quarter ended Dec. 31, down from $2.53-billion or $2.14 per diluted share in the last three months of 2021.
The profit missed the market’s expectations, as the average analyst estimate had been for a profit of $2.27 per share, according to estimates compiled by financial markets data firm Refinitiv.
CNRL’s production in the quarter averaged 1,294,679 barrels of oil equivalent per day, down from 1,313,900 in the same quarter a year earlier.
On a conference call with analysts, company president Tim McKay said the decrease in production was in part due to extreme cold in northern Alberta in December, which caused equipment failures at CNRL’s Horizon oil sands mine.
“We had to complete multiple mining equipment repairs, resulting in the reduced rate at Horizon for both December 2022 and January 2023,” McKay said, adding the weather is also expected to impact the company’s Q1 2023 production by approximately 25,000 barrels per day.
The company’s full-year 2023 thermal and oil sands mining and production guidance range remains unchanged, McKay said. CNRL is currently completing a “reliability enhancement” project at Horizon, which the company says will extend the major maintenance schedule at the oil sands mine to once every second year from the current once per year.
CNRL continues to expect total production of between 1,330,000 and 1,374,000 barrels of oil equivalent per day in 2023, an increase from 2022′s full-year production of 1,281,434 boe/d.
The company announced an increase to its quarterly dividend Thursday, from 85 cents per share to 90 cents per share.
McKay also used Thursday’s analyst call as an opportunity to highlight the progress the company has made on old oil well abandonment and reclamation.
The topic has been in the headlines lately after Alberta premier Danielle Smith floated her proposed RStar program, which would give tax breaks to energy companies for fulfilling their legal obligation to complete oil well cleanup work.
A report from Scotiabank last month named CNRL as a company that would be poised to benefit from such a program.
McKay said on Thursday’s call with analysts that the company believes it is an industry leader on abandonment and reclamation, adding it has successfully sealed and taken out of service more than 3,000 wells per year in each of the last two years.
“At this pace, we would be able to achieve 100 per cent abandonment of our current inventory of inactive wells in approximately 10 years,” he said.