CALGARY – The president of Canadian Natural Resources Ltd. (TSX:CNQ) says all options are on the table when it comes to squeezing more value out of its Alberta royalty acreage, but keeping the status quo is not at the top of the list.
The Calgary-based oil and gas giant could spin off the lands into a new publicly traded company or sell them outright. It hopes to make a move this year, company executives said on a conference call Thursday.
Canadian Natural makes money off the properties by charging other oil and gas companies to drill on them.
“We’re keeping all options open. What we’re really trying to do is maximize value for shareholders,” company president Steve Laut said in an interview.
“We’re still investigating all options and we’re not going to close off any at this time.”
Standing pat, he said, is “not a very likely option, but it is an option.” Much of the timing will depend on the outlook for oil prices, which have fallen by more than half from last summer’s peaks.
The royalty assets bring in about $186 million a year, Laut said. During the second half of last year, 268 wells were drilled on the properties, mostly by third parties.
CNRL peer Encana Corp. (TSX:ECA) raised about $1.67 billion last May by spinning off its royalty lands to create PrairieSky Royalty Ltd. (TSX:PSK). In September, Encana raised a further $2.6 billion by selling its remaining stake PrairieSky.
Cenovus Energy Inc. (TSX:CVE) is contemplating what to do with its royalty holdings.
Encana and Cenovus have been selling stock in order to shore up their finances, with bought deals announced recently worth $1.25 billion and $1.5 billion, respectively.
Canadian Natural is in strong enough shape that it doesn’t plan to go down that road, Laut said.
“We don’t see the need to issue equity. We think it dilutes our shareholders, especially with the strength of the company,” he told analysts.
Also Thursday, Canadian Natural posted sharply higher profits and hiked its quarterly dividend by half a cent to 23 cents a share.
Net income in the last three months of 2014 soared to nearly $1.2 billion, or $1.09 per share, from $413 million, or 38 cents, in the same 2013 quarter.
Adjusted net earnings from operations were $756 million, or 69 cents per share, up from $563 million, or 52 cents.
Meanwhile, the company is cutting a further $150 million from its 2015 capital spending program as planned work at its Horizon oilsands mine gets pushed into 2016. In January, the company had announced a whopping $2.4-billion cut in capital spending to $6.2 billion in the face of plummeting oil prices.
As well, members of the company’s management committee are taking a 10 per cent pay cut.
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