Canadian Natural Prices $1B Notes - Analyst Blog

Independent energy explorer Canadian Natural Resources Ltd. CNQ announced the pricing of fixed rate and floating rate notes, totaling $1 billion.

The $500 million unsecured floating rate notes are due to mature in Mar 30, 2016. These 2 year notes offer an interest of 0.375% above the 3-month London Interbank Offered Rate (LIBOR). The $500 million unsecured fixed rate notes have a 3.805% yield to maturity and are due in Apr 15, 2024. These 10 year notes are priced at 99.957%.

Canadian Natural intends to use the funds generated from this offer to settle loans that it has taken under the company's credit facility.

Calgary, Alberta-based Canadian Natural is engaged in the acquisition, development and exploitation of crude oil and natural gas properties. It is one of the largest independent exploration and production (E&P) companies in Canada, with extensive heavy crude oil and natural gas developments.

Earlier this month, Canadian Natural reported fourth-quarter 2013 earnings (excluding one-time and non-cash items) of 52 Canadian cents (49.5 US cents) ahead of the year-ago quarter's adjusted profit of 33 Canadian cents, owing to increased liquid and natural gas production. However, the bottom line missed the Zacks Consensus Estimate of 56 US cents, hampered by increased expenses.

As of Dec 31, 2013, Canada's second-largest oil producer had C$16.0 million cash in hand and long-term debt (including current portion) of approximately C$9,661.0 million, representing a debt-to-capitalization ratio of 27.3%. The sale of these notes would further increase the debt burden for the company.

Canadian Natural currently retains a Zacks Rank #3 (Hold). This implies that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked Canadian E&P firms like Baytex Energy Corp. BTE, TransGlobe Energy Corp. TGA and ARC Resources Ltd. (AETUF). All these stocks currently sport a Zacks Rank #1 (Strong Buy).