CALGARY – Canadian Natural Resources Ltd. (TSX:CNQ) is pushing ahead with $2 billion in spending on its Horizon oilsands project this year even as the company cuts a billion dollars from its 2016 capital budget.
Calgary-based CNRL says completing the last two phases of the Horizon project by the end of next year is a priority. It will add 125,000 barrels a day of production and allow the company to further shift from conventional sources of oil and gas to long-life oilsands projects.
CNRL says it has cut back spending plans on conventional and international operations as well as drilling completions in trimming its 2016 capital budget to between $3.5 and $3.9 billion from $4.5 billion to $5 billion.
Future capital spending could be even lower, with only $1 billion in spending required next year to complete the Horizon project and no other major projects in the works.
Company president Steve Laut said it’s difficult to say when CNRL might start any new oilsands projects, but sees nothing likely in the near term.
“It’s based on the cost structure and the commodity price, so I would say in this environment you’re probably going to see a slow growth or a delay in growth, and so it may go more to that maintenance side,” Laut said in an interview.
Meanwhile, because of the long lead time on new projects, he doesn’t expect pipeline capacity to be a barrier to future expansion.
“We’re fairly confident that pipeline access will be available by the time we were to bring on any new project,” Laut said.
He said he supported the efforts of Alberta Premier Rachel Notley and Prime Minister Justin Trudeau to advance the pipeline debate and push forward projects like Energy East.
“I think they’re doing the best they can and they’re taking a strong approach to do what’s in the best interest of all Canadians,” said Laut. “It is a good project and it’s going to create a lot of value of all Canadians.”
His comments came as CNRL reported its latest quarterly results, which showed it eked out a small profit in the fourth quarter but ended 2015 with a full-year net loss of $637 million or 58 cents per share.
The loss came despite the company having slashed $3.4 billion in capital spending to end with a $5.2-billion capital budget.
CNRL also made significant operational budget cuts last year, including salary cuts for both management and ordinary employees, but remained one of only a few oil and gas producers not to have cut any staff in the downturn.
The three months ended Dec. 31 showed $131 million of net income or 12 cents per share, which was an improvement over the third quarter but down from nearly $1.2 billion or $1.09 per share from the fourth quarter of 2014.
Revenue dropped to $2.8 billion from $4.4 billion, but gains from the sale of properties increased to $690 million from $137 million.
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