UPDATE 3-Canadian Natural mulls shale-gas property sale or partnership

Thu Mar 7, 2013 4:38pm EST

* Puts 250,000 acres of shale-gas land up for sale

* Will also consider joint venture with LNG partner

* Raises quarterly dividend by 19 percent

* Q4 net income C$0.32/shr vs C$0.76 in Q4/11

* Q4 adjusted profit C$0.33/shr vs C$0.39/shr expected

* Shares rise 3.7 pct

By Scott Haggett

March 7 (Reuters) - Canadian Natural Resources Ltd, Canada's largest oil producer, said on Thursday it may sell part of its massive British Columbia shale-gas holdings or find a partner to develop the property.

The company, which on Thursday reported a 58 percent drop in fourth quarter profit, said it will look for a buyer or find a partner with liquefied natural gas expertise for 250,000 acres of land it holds in the prolific Montney shale gas field in northeastern British Columbia, about a fourth of all its property in the region.

Canadian Natural said it decided to put a portion of its Montney holdings up for sale because the worth of the properties was not reflected in its share price.

Though its earnings failed to match analysts' expectations, Canadian Natural's shares rose 3 percent on news of the potential sale.

"It's something we don't think the market was giving them any value for," said Michael Dunn, an analyst at FirstEnergy Capital. "So I'm not surprised to see the stock up on the news today."

Canadian Natural said it has not decided if it would prefer an outright sale of the land to finding a joint-venture partner.

However, analysts were surprised the company would even consider a joint venture since it has always steered clear of alliances that would water down control of its properties.

"Historically we have not been keen on JV's," Steve Laut, the company president, said on a conference call. "we believe having a high degree of control ... allows us to maximize value."

Despite low natural gas prices, the Montney region has become attractive to the oil industry because it also produces high-value natural-gas liquids such as ethane and propane. The field also contains trillions of cubic feet of natural gas, which can be exported at a premium to Asian markets once a handful of LNG plants currently planned for British Columbia's northern coast are completed.

The company is the second in as many days to put Montney property up for sale.

Talisman Energy Inc said on Wednesday some of its Montney holdings would be included in an asset sale program as it looks to raise as much as $3 billion over the next 18 months to cut debt.

Gaining access to the Montney field was the key reason Malaysia's Petronas paid C$5.3 billion ($5.14 billion) for Progress Energy Resources Ltd last year. It was also one of the factors behind Exxon Mobil Corp's C$2.6 billion acquisition of Celtic Exploration Ltd last month.

PROFITS DROP

Canadian Natural said its net income in the fourth quarter fell to C$352 million, or 32 Canadian cents per share, from C$832 million, or 76 Canadian cents, a year earlier.

The company booked an unrealized foreign exchange loss of C$254 million, mainly related to its U.S. dollar-denominated debt. The company had a gain of C$117 million on foreign exchange in the year-earlier quarter.

Revenue fell 12 percent to C$3.70 billion.

On an adjusted basis, earnings were C$359 million, or 33 Canadian cents. Analysts on average had expected adjusted earnings of 39 Canadian cents per share, according to Thomson Reuters I/B/E/S.

The company raised its quarterly dividend for 2013 by 19 percent to 12.5 Canadian cents per share.

Crude oil and natural gas liquids output rose 6 percent to 469,964 barrels per day in the fourth quarter on increased drilling and a 19 percent rise in thermal production.

Total production of oil and gas was flat at 658,973 barrels of oil equivalent per day as natural gas production dropped 11 percent to 1,134 million cubic feet per day.

Canadian Natural's cash flow, a key measure of its ability to pay for new projects and drilling, fell 28 percent to C$1.55 billion.

Also on Thursday, Canadian Natural said Vice Chairman John Langille had decided to retire from the company. It promoted Doug Proll, currently its chief financial officer, to executive vice president while Corey Bieber, currently a vice president, will become CFO.

The company's shares rose 94 Canadian cents to C$32.10 on the Toronto Stock Exchange.

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