Canadian Natural Resources Prices C$1B Notes - Analyst Blog

On May 29, Alberta-based independent oil and gas explorer Canadian Natural Resources Ltd. CNQ reported the pricing of C$1.0 billion unsecured notes. Of this, C$500 million of notes with a coupon rate of 2.6% are expected to mature in Dec 3, 2019 and the remaining C$500.0 million of notes with a coupon rate of 3.55% will likely mature in Jun 3, 2024.

The 2019 notes were sold to Canadian investors at 99.822% of par value, resulting in a yield to maturity of 2.635%. The 2024 notes were sold at 99.633% of par, resulting in a yield to maturity of 3.594%. Canadian Natural intends to utilize the net proceeds for normal corporate activities and to pay debt.

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 companies in Canada, with extensive heavy crude oil and natural gas developments.

Moreover, the company has a broad portfolio of low-risk exploration and development projects that yield long-term volume growth at above-average rates. We also appreciate the company's diverse asset base both geographically and in terms of products, comprising approximately 30% natural gas and 70% crude oil with the bulk of production coming from the G8 countries.

As a result, Canadian Natural carries a Zacks Rank #1 (Strong Buy), implying that it is expected to significantly outperform the broader U.S. equity market over the next one to three months.

One can also consider players in the energy sector like Ultra Petroleum Corp. UPL, Pioneer Energy Services Corp. PES and Encana Corp. ECA. All these stocks share the same Zacks Rank as Canadian Natural.