Tudor, Pickering, Holt on Thursday reiterated its buy rating on the shares of Canadian Natural Resources (CNQ.TO) with a C$58.00 price target after the country's No.1 oil producer completed a swap of oil-sands assets with Shell (SHEL), securing full control of the Athabasca Oil Sands Project (AOSP).

"Yesterday afternoon CNQ announced an asset swap with SHEL pursuant to a 2017 agreement whereby CNQ will receive the remaining 10% interest in AOSP (bringing CNQ's ownership to 100% following the recent CVX transaction) in exchange for 10% of CNQ's working interest in the Scotford upgrader and Quest Carbon Capture and Storage facilities. With neither action included in CNQ's budgeted production guidance for 2025, we'll look for revised guidance following the expected close at the end of Q1'25, though the headline moving pieces per the release are to include (i) a ~31mbpd increase in CNQ's production and (ii) pro-forma working interest of 80% in the Scotford upgrader and Quest. On capex, we'd anticipate a rotation from the previous Scotford upgrader allocation into AOSP with a minimal (if any) impact to the capital program or 2025. Big picture, while this screens TPHe neutral to our FCF/EV (the added volumes will receive a lower cost bitumen netback, realizing benchmark WCS prices instead of the premium we would have otherwise seen vs. SCO), we view this as positive for both counterparties, as (i) for CNQ, the pro-forma full ownership will allow the company to further push optimization at the mine both on increased production and cost reductions over time and (ii) for SHEL, the Quest working further boosts its carbon capture asset base," analyst Jeoffrey Lambujon wrote.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

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