Bloomberg News

Canadian Natural Considering Acquisitions as Peers Underperform

June 19, 2013

Canadian Natural Resources Ltd. (CNQ), the nation’s third-largest oil and natural gas producer by market value, is evaluating acquisitions as a lack of export conduits and financing keeps industry share prices depressed.

“There are opportunities out there” for Canadian Natural, Murray Edwards, chairman of the Calgary-based company, said at a meeting with investors today. A number of companies are “starved for capital” as Canadian producers have underperformed in the last five years, and there are “lots of properties for sale,” Edwards said.

Canadian energy companies have underperformed U.S. peers by 19 percentage points in the past five years, according to data compiled by Bloomberg. The number of assets for sale in Canada now is “the largest we have seen in several years,” Chris Feltin, a Calgary-based analyst at Macquarie Group Ltd., said in a phone interview today.

The Canadian oil and gas industry has performed below expectations because of a lack of transportation to get crude to market, depressed gas prices and poor results from outside financing of early-stage companies, Edwards said.

Canadian Natural probably won’t buy any oil-sands properties, Feltin said. “They may look at consolidating some of the liquids-rich gas and light oil in Alberta and northeast British Columbia” Feltin said.

“We like pools that have been undermanaged, underexploited or undercapitalized,” Edwards said.

The company ranks acquisitions fourth out of five uses of its cash flow, according to the investor presentation today. Resource development comes first, followed by dividends and share repurchases. Paying down debt falls last.

Suncor Energy Inc. (SU) and Imperial Oil Ltd. (IMO) are the largest Canadian producers by market value.

To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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