CALGARY – The potential hit to Canadian Natural Resources Ltd. (TSX:CNQ) from a border tax proposed by U.S. Republicans could be offset by the fall in the Canadian dollar that would likely follow, the energy company’s president said on Thursday.
Some Republicans have proposed adding a tax on imports as part of broader U.S. tax reform, but it’s unclear whether the proposal will go ahead.
“Almost all of our costs are in Canadian dollars. So the border tax would probably have a big impact on the Canadian dollar, would drop our costs, and what would happen to our actual profitability and netbacks after that? We may be indifferent,” Steve Laut said on an earnings conference call.
Lower costs and higher oil prices helped lift net income in the quarter ending Dec. 31 to $566 million, up from $131 million a year earlier.
Canadian Natural said its adjusted earnings during the quarter equalled 40 cents per share, which was above analyst estimates of 12 cents per share, according to data compiled by Thomson Reuters. The news helped send Canadian Natural’s stock up 5.7 per cent in mid-afternoon trading to $40.66.
Laut said the company is focused on reducing its environmental footprint as it ramps up production at its key operations.
“We really believe that technology is a very important factor,” he said in an interview. “We’ve done a great job of that so far and I think there’s lots more to come.”
The company said the balance sheet will continue to improve this quarter with cash flow expected to exceed capital spending by $230 million per month, prompting it to raise its dividend by 10 per cent to $0.275 per share.