File photo shows pipelines at Canadian Natural Resources Ltd's Primrose Lake oil sands project near Cold Lake, Alberta, Aug. 8, 2013.Dan Riedlhuber/Reuters
Canada’s largest oil producer will reduce its oil sands capital budget by $100-million after missing fourth quarter estimates in the face of lacklustre crude prices and volatile market environment.
Canadian Natural Resources Ltd. president Tim McKay said the cut won’t affect 2020 production, telling The Globe and Mail in an interview the company is simply reprofiling spending to save money.
“We’re trying to look at how we can redo work in the oil sands to save money and be more efficient and effective,” he said.
Mr. McKay said the move doesn’t signal a change in CNRL’s future plans for its oil sands operations. Rather, it’s about managing long-term business and being “flexible and nimble" in the face of sector changes.
The $100-million cut in capital expenditures brings CNRL’s total expenditures this year to $3.95-billion.
Mr. McKay also said Thursday he wants the province of Alberta to consider eliminating restrictions on crude production during summer months.
Alberta has curtailed production for more than a year because of congested pipelines. Many producers reduce output anyway during summer to conduct maintenance.
For that reason, lifting government-ordered curtailments from May until October may make sense, Mr. McKay said in an interview with Reuters.
Last year, Alberta’s oil inventories steadily drained during the same period until a leak on the Keystone pipeline in late October backed up supplies again, Mr. McKay said.
Inventories are likely to similarly decrease this summer as oil sands companies conduct maintenance, he said.
“It might be an opportunity for the government to get extra revenues,” Mr. McKay said, referring to the royalties it collects.
Alberta Energy press secretary Kavi Bal said in an e-mail that the government is keeping a close eye on oil prices and wants to lift curtailment by the end of the year.
Quarterly production rose about 7 per cent to 1.2-million barrels of oil equivalent a day as producers were allowed exemptions on the cuts enforced by the Alberta government if they committed to move oil by rail instead of pipelines.
The company reported a net income of $597-million, or 50 cents a share, in the fourth quarter ended Dec. 31, compared with a net loss of $776-million, or 64 cents a share, a year earlier. It increased quarterly dividends by 13 per cent.
On an adjusted basis, the company earned 58 cents a share, missing analysts’ average estimate of 70 cents, according to Refinitiv IBES data.
With reports from Reuters
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