Canadian Natural Resources boosts output by 9% after expanding stake in Athabasca oil sands
Canadian Natural Resources Ltd. (CNRL) has finalized a $6.5bn acquisition from Chevron Corp., strengthening its position as the largest oil producer in Canada.
This deal, as reported by BNN Bloomberg, brings Alberta’s oil sands deposits further under local control.
Over the past decade, CNRL has acquired oil sands assets from foreign energy producers such as Devon Energy Corp. and Shell Plc, as they shifted focus away from the higher-cost, higher-emissions oil sands sector.
Investors have supported this strategy, which has enabled CNRL to increase output and improve operational efficiency.
On Monday, CNRL shares rose by over 4 percent following the acquisition, which expanded its stake in a key oil sands mine and a connected upgrading facility. The deal also added natural gas assets in the Duvernay formation.
CNRL President Scott Stauth stated, “These assets build on the robustness of Canadian Natural’s assets,” during a conference call. The acquisition increased CNRL's stake in the Athabasca oil sands project to 90 percent, up from 70 percent, after initially purchasing its stake from Shell in 2017.
This acquisition boosts CNRL’s oil and gas production by approximately 9 percent, adding the equivalent of 122,500 barrels of oil per day.
According to Phil Skolnick, an analyst from Eight Capital, “It’s just been a matter of time,” noting that CNRL was expected to be the logical buyer for Chevron’s oil sands business.
Despite the positive reception, some caution remains. While CNRL increased its dividend by 7 percent on Monday, Desjardins analyst Chris MacCulloch highlighted concerns about the company’s additional debt to finance the acquisition.
He mentioned that the need to slow capital returns temporarily “may disappoint some investors.” However, MacCulloch acknowledged the overall positive impact of the deal, consolidating CNRL’s assets in the region, adding, “There’s no place like home.”
Chevron’s sale aligns with a broader trend of US and international oil companies, such as BP Plc, TotalEnergies SE, and Equinor ASA, exiting Canada’s oil sands. This shift has resulted in Canadian firms like CNRL, Suncor Energy Inc., and Cenovus Energy Inc. taking control of the region.
Eric Nuttall, a partner at Ninepoint Partners, which owns 3.1 million shares in CNRL, remarked, “There’s no remaining, obvious assets available,” after the deal. He further commented, “It’s Canada’s time to shine,” suggesting that foreign investors may return to the country’s oil producers in the future.
The consolidation of oil sands assets by Canadian companies has reduced costs and boosted returns, with many deals struck at prices that favour Canadian buyers.
