Opinions
Eric Nuttall
Canadian Natural Rsrcs
CNQ-T
STRONG BUY
Mar 11, 2025
Stock price when the opinion was issued
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Ottawa for the past 10 years hasn't given much clarity about exploration; the whole industry has been wondering what they can and cannot do. However, in this election, all parties are talking about using our natural resources, refine them here, then export them abroad. We need clarity to buy a stock like this. The dividend is high because they CNQ can't grow, a sit and wait situation where they're dying a slow death. He hopes regulatory clarity comes later this year. CNQ is the biggest and best of the group.
Sold off on concerns about Canada, what if another Liberal gets in, tariffs on energy, and exposure to the WCS differential. His fund has to be more sensitive to short-term moves, so he sold and harvested a decent tax loss. So you could sell and buy, say, CVE.
For most retail investors, it's a name you can just sit on. One of the deepest resource bases, rock-solid management team, yield is 6.1% (extremely sustainable). Usually it's defensive.
About 27% natural gas. Not sure exactly what their breakeven on oil price is, probably ~$52 or so. Oil's come down quite a bit on Saudi moves and global demand issues. Trades at a premium (7x) to peers (5x). Good production profile this year. Cashflow per share growth. Really good balance sheet, as is payout ratio.
If you think oil's going to $70-80, go ahead and buy. He's not so sure about that. Other places are easier to invest.
She'd "top pick" this one forever at these prices. A no-brainer. The premier Canadian oil stock. Rare opportunity to own a premium asset at a discount. Oil price may get weaker as international supply comes on. Still makes $$ with a low commodity price. Good mix between oil and gas.
Best-in-class assets with low decline rate overall of ~11%. Strong culture of maximizing shareholder value through buybacks and dividend increases. Yield is 5.45%, and dividend increases multiple times a year.
He's not bullish oil now (nat gas, yes), so he doesn't own CNQ, though it's run well. CNQ has a deep resource base. The value of the Oil Sands will rise because of its strategic value against the dwindling US shale producers. This is reaching the lows of this cycle. CNQ is more oil than nat gas. Pays a 5.5% dividend yield and strong balance sheet. Are paying down debt.
Won't find a single oil stock that will defy gravity if the price of oil drops. A bit more susceptible to the noise around tariffs, especially on energy, because they're not as integrated as other names. That risk has largely dissipated. About 27% gas, so not pure oil.
Best in class. Second-to-none for consistent per-share growth, profitability, FCF, returning capital to shareholders. Nice yield of 5.5%.
He owns a lot of shares. It's sold off because Canada is for sale since January due to Trump tariffs; energy is for sale again because of oil tariffs; CNQ is exposed to these factors. US shale production is peaking in the next 2 years, as will non-OPEC supply growth. So, there will be massive demand for companies with deep reserves as the demand for oil grows. It trades at 6.4x cash flow at $70 oil, an 11% free cash flow yield; and a 9% cash return (dividend + share buybacks). This is massively oversold.