Oil sands producers await TMX price bump
Diluted bitumen started flowing through the expanded Trans Mountain Pipeline on Wednesday (even at a brisk walking pace, it’ll take weeks to reach its destination). This is raising hopes that at last Canada’s oil sands producers will be able to narrow the discount paid by a now-larger cohort of refiners for their product. Meanwhile, two of the largest shippers on the pipeline reported first-quarter earnings sans that hoped-for revenue bump.
Oilsands earnings highlights
Two producers released their financials this week.
- Cenovus Energy (CVE/TSX): Earnings per share rose to $0.62 (versus $0.54 predicted) on revenues of $13.4 billion.
- Canadian Natural Resources (CNQ/TSX): Earnings per share of $1.37 (versus $1.48 predicted) on revenues of $8.244 billion.
Cenovus output and profits both surprised on the upside, and the company further sweetened the pot by hiking its base dividend by 29% and announcing a variable dividend of 13.5¢ a share for this quarter. Production for the quarter exceeded 800,000 barrels of oil equivalent per day. At the same time the company modestly reduced its overall debt level.
Results for Canadian Natural Resources suffered from lower-than-expected production and realized prices, especially on the natural gas side. Output came in at 1.33 million barrels of oil equivalent per day.
Amazon, Apple still magnificent
Two more technology mega-caps reported first-quarter results this week, helping keep the Magnificent 7 bandwagon rolling.
U.S. earnings highlights
All amounts in U.S. dollars
- Amazon (AMZN/NASDAQ): Adjusted earnings per share were $0.98, exceeding the consensus estimate of 83¢, while revenue of $143.3 billion outstripped the $142.6 billion predicted.
- Apple (AAPL/NASDAQ): Earnings per share hit $1.53 (beating the estimate of $1.50) on revenue of $90.8 (versus expectations of $90.3 billion).
Amazon reported continued strong demand for its Web Services, as corporate customers signed longer-term deals with bigger commitments. Generative artificial intelligence (AI) components added to the overall spend, the company said. Advertising revenue also enjoyed strong growth, although there are signs consumers are turning more cautious with retail spending. Following the earnings release, the stock rose 3% Wednesday morning.
Amazon rival Walmart, meanwhile, opted to close 51 health clinics at U.S. stores and discontinue its virtual health services, the company announced Tuesday. It blamed high operating costs and “a challenging reimbursement environment” for poor profitability in the division first launched in 2020.
Apple’s revenues fell less than expected and earnings surpassed Wall Street estimates. The company also said it would boost its dividend to 25¢ a share and authorize $110 billion worth of share buybacks. Services revenue grew to nearly $24 billion, offsetting declines in sales of iPhones and other devices. Sales fell 8% in Greater China (including Taiwan, Singapore and Hong Kong), but that drop-off was not as severe as analysts anticipated. Apple shares surged nearly 6% before markets opened Friday, and more than a dozen analysts raised their target price on Apple.
Tipping on fast food
There’s no accounting for taste as fast-food purveyors moved in divergent ways in the first quarter; some were squeezed between cost inflation and consumer austerity while others continued to super-size their sales.
