Evercore Downgrades Canadian Natural (CNQ) as Higher Spending May Pressure Shareholder Returns

Canadian Natural Resources Limited (NYSE:CNQ) is included among the 15 Dividend Growth Stocks with the Highest Growth Rates.

On January 6, Evercore ISI analyst Stephen Richardson downgraded Canadian Natural Resources Limited (NYSE:CNQ) to In Line from Outperform, while keeping his price target unchanged at C$50. In his note, Richardson said the company faces more risk going forward, mainly because rising capital spending could pressure the amount of cash it can return to shareholders.

Evercore said Canadian Natural is entering a major phase of organic investment and shifting more aggressively toward growth from the oil sands. The firm believes that this pivot, while strategic, could limit shareholder returns in the near term since more cash will be directed toward funding the growth program.

In other news, Reuters reported on January 14, citing The Globe and Mail, that Canadian Natural Resources Limited (NYSE:CNQ) is in talks to acquire a portfolio of natural gas assets from Tourmaline Oil Corp. valued at more than $1 billion. Competition Bureau Canada’s website showed that Canadian Natural filed paperwork on December 30 seeking approval for a transaction involving Tourmaline, though the details of the potential deal have not been publicly disclosed.

Tourmaline is one of the largest gas producers in Canada’s Montney basin, a major shale region that has seen increased deal activity as producers position for rising demand tied to Canada’s LNG export buildout. The region produces about 10 billion cubic feet of natural gas per day, roughly half of Canada’s total output.

The Globe and Mail report said Canadian Natural is seeking early regulatory feedback on a possible acquisition of Tourmaline assets in the Montney basin, located in Alberta’s Peace River region. Neither company immediately responded to requests for comment.

Canadian Natural Resources Limited (NYSE:CNQ) is a large crude oil and natural gas producer with core operations in Western Canada, the U.K. portion of the North Sea, and Offshore Africa.

READ NEXT: 13 Best Dividend Stocks Paying Over 6% and 14 Best Mid Cap Dividend Aristocrat Stocks to Buy Now

Disclosure: None.