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One of Canada's largest oil and gas companies, Canadian Natural Resources, kept its dividend intact after swinging to a loss for Q1, while Canada's producers are scaling back production by around 1 million bpd amid low oil prices and demand.
Canadian Natural Resources reported a loss of US$918 million (C$1.28 billion) for the first quarter this year, compared to a profit of US$689 million (C$961 million) for Q1 2019. However, unlike its Canadian peers, the company maintained its dividend.
"The strength of the Company's assets and its ability to generate significant and sustainable free cash flow over the long term combined with strong liquidity, production flexibility, significant capital reductions and targeted operating costs savings provided the Board of Directors with the confidence that the Company's current dividend levels can be sustained through the commodity price cycle," Canadian Natural Resources said in a statement.
Canadian Natural Resources' approach differs from many other Canadian firms, which cut dividends after reporting Q1 losses due to the price crash. Earlier this week, Suncor Energy said it was axing its quarterly dividend by 55 percent to reduce its cash breakeven to a WTI Crude price of US$35 a barrel. Cenovus Energy announced last week a temporary suspension of the dividend after swinging to a Q1 loss, while Husky Energy slashed dividends by 90 percent as it also posted a loss.
While Canadian Natural Resources kept its dividend, it withdrew its production guidance for 2020. It also said it would curtail some production at high-cost conventional projects in North America and oil sands operations, and carry out planned turnaround activities at oil sands projects in the second half of 2020.
Related: U.S. Oil Companies Are Cutting Production Much Faster Than Expected
"[B]est we can tell is probably about 1 million barrels that is soft line here in Alberta, Western Canada. And if you look not only at ourselves, but many companies, we're all looking to look for creative ways to take barrels off the system," Canadian Natural's president Tim McKay said on the conference call.
"So I would suspect that you will see a larger amount of oil come off the system as every company looks for an opportunity to do maintenance during a low pricing period and take oil off the system," he said.
According to pipeline operator Enbridge, "Obviously, Western Canadian producers have been hit hard. Our estimate is that 1 million to 1.5 million barrels of production comes off in Q2, April was about 1 million," CEO Al Monaco said on Enbridge's call this week.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.