QS Research · Michael Burry's Scion Capital analyst template · 2006
CANADIAN NATURAL RESOURCES Ltd (CNQ)
As of 2026-11-11 · 10/15 boxes filled from SEC filings and market data
Report price $48.24 (close 2026-11-10)
Conclusion: PASS
Conviction low · base case +4% · downside -32% · upside +25%
CNQ is not a deep-value setup: at $48.24 (2026-11-10) it trades at 13.2x FY2025 net income and 6.7x FY2025 EV/EBITDA, near its 52-week high, while the Q3 2026 release (three months to 2026-09-30) shows net debt down to C$12.1B and 100% of free cash flow directed to buybacks at C$800M/month for Nov-Dec 2026. The code's independent peer-median P/E of 13.8x gives a base value of $50.43 (+5%), while today's 13.2x on a +25% earnings case gives a $60.5 upside (+25%) and a -20% earnings disappointment at a compressed ~11.2x gives about $32.9 (-32%). The business earns 18.4% ROIC against 5.7% WACC and returns real cash, but earnings are commodity-levered, Q3 2026 oil sands mining opex rose 21% y/y, and the stock already reflects much of the good news. Pass; wait for a wider margin of safety or a pullback in the shares/commodity price.
Key numbers
- Share price: $48.24
- Market cap: $100.42B
- Latest financial period: FY Dec 2025 to Dec 31, 2025
- Revenue (FY Dec 2025): C$38.76B
- EV / EBITDA (FY Dec 2025): 6.7x
- P/E (FY Dec 2025): 13.2x
- Price / book: 3.21x
- Revenue growth (latest fiscal year): +8.7%
- ROIC (FY Dec 2025): 18.4%
- WACC: 5.7%
- Economic profit spread: +12.7 pts
The 15 boxes
- ✓ 1. Long-form business notes
Canadian Natural is a Canadian senior independent producer (FY2025 AIF: crude oil, natural gas and NGLs in western Canada, the UK North Sea and Offshore Africa) whose FY2025 production mix by BOE was 36% SCO, 27% natural gas, 17% thermal bitumen, 11% light/medium crude plus NGLs, 6% primary heavy and 3% Pelican Lake heavy. Scale on the latest audited year (FY ended 2025-12-31, CAD): revenue C$38.76B, pre-tax income C$13.24B, net income C$10.82B, operating cash flow C$15.11B — up from FY2020 revenue C$16.89B and a C$435.0M net loss, so the history is commodity-cycle, not structural decline. Between the oldest AIF here (FY2020) and the newest (FY2025) the business was re-shaped by acquisition: the December 2024 Chevron Alberta deal (US$6.5B) plus the 2025 Shell asset swap took AOSP mines to 100% ownership/operatorship, and two 2025 bolt-ons added roughly 82,000 BOE/d of new production. No current (Q3 2026 / TTM) figures, share price, market cap or multiples appear in these sources, so this section cannot value the company.
- ○ 2. Competitive advantage
On the only figures available (FY2020–FY2025, in CAD), the case for a durable advantage rests on scale and a low cash-cost position rather than pricing power: revenue roughly doubled from C$16.89B (FY2020) to C$38.76B (FY2025) while net income swung from -C$435.0M to C$10.82B, and operating cash flow exceeded net income in every year of the window. But net income fell 26% in FY2024 (C$8.23B to C$6.11B) on a broadly flat top line (C$35.97B to C$35.66B), showing the earnings are levered to crude prices, not shielded from them. Nothing in the sources isolates unit costs, reserves life or licence position, so cost leadership cannot be proven from these numbers, and the sources name no competitors. The newest figures are FY2025, ten months before today's 2026-11-11 date, and no text or filing source is provided.
- ✓ 3. 10-Q takeaways
CNQ's Q3 2026 report (three and nine months ended September 30, 2026, filed 2026-11-05) shows strong year-over-year growth: product sales of $15,643 million versus $11,070 million in Q3 2025, net earnings of $2,997 million and adjusted net earnings from operations of $3,427 million (Q3 2025: $600 million and $1,801 million), with the net-to-adjusted gap driven by $430 million of after-tax non-operating losses. Cash flows from operating activities were $7,010 million and adjusted funds flow $5,522 million ($2.68 per share basic) in Q3 2026; the sequential decline from Q2 2026 ($17,214 million sales, $6,866 million adjusted funds flow) came on lower realized crude and SCO prices. The $13 billion net debt target was reached, net debt fell to $12.1 billion at September 30, 2026, and 100% of free cash flow is now targeted to share repurchases at $800 million per month for November and December 2026. The quarter carried a planned Horizon turnaround (SCO output down 7% and unit costs up 21% year over year), which was completed 28 days after quarter end, seven days early.
- ○ 4. Corporate governance
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ○ 9. Insider trading interpretation
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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