Record natural gas production and stronger commodity prices propelled Canadian Natural Resources Ltd. (CNRL) in the first three months of this year, enabling returns to shareholders and corporate debt reduction.

cnrl production

Natural gas production jumped by 25% in 1Q2022 from a year earlier to 2 Bcf/d, management noted. Liquids production hovered at 945,809 b/d, off from 979,352 because of plant maintenance and processing limits.

The gas gains followed a move last year to boost production from the Montney Shale, following a series of transactions that increased its holdings to 1.3 million acres.

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“Our unique, diverse, long life low decline asset base with large, low risk, high value reserves is a differentiating factor,” said President Tim McKay. “We are resilient through the commodity price cycle while generating substantial returns in today’s environment.”

The northern Alberta mainstay oilsands operations produced 691,569 b/d in the quarter, down from 736,333 b/d in 1Q2021. The flows were 62% upgraded synthetic crude oil (SCO) and 38% lower grade bitumen.

CNRL fetched an average natural gas price of to $5.26/Mcf in 1Q2022, versus $3.42 a year earlier. The price average for all grades of liquids nearly doubled to $93.54/bbl from $52.68.

The jump in liquids prices more than offset increased costs for the natural gas used in thermal oilsands processes, management noted. 

SCO production costs rose by 24% to $24.60/bbl, while  bitumen costs grew by 26% to $14.35.

The Calgary firm reports in Canadian dollars (C$1.00/US 80 cents).

Net profits increased to $3.1 billion ($2.63/share) from year-ago earnings of $1.37 billion  ($1.16). Corporate debt dropped by $1.5 billion to $13.8 billion.

CNRL paid $1.8 billion in dividends and share buybacks during the quarter. Total investor returns through early May had reached $3.1 billion.

While holding expenditures down to levels budgeted before the current oil and gas price highs, management promised more increases for investors after debt repayments cut the corporate burden further to $8 billion.