CALGARY – Two Calgary-based oilsands producers reported huge production gains in their most recent quarters after spending billions of dollars last spring to buy assets from foreign companies anxious to exit the northern Alberta heavy oil resource.
Canadian Natural Resources Ltd. (TSX:CNQ) said Thursday that for the first time, its output averaged more than one million barrels of oil equivalent per day during its third quarter ended Sept. 30. Production was up 41 per cent from the year-earlier period, thanks mainly to its deal to buy most of the Canadian oilsands mining assets of Royal Dutch Shell for about $11.1 billion.
Meanwhile, Cenovus Energy Inc. (TSX:CVE) reported more than doubling its output to 590,851 barrels of oil equivalent per day, up from 273,405 a year ago, as it absorbed Canadian assets of Houston-based ConocoPhillips, including its half interest in jointly owned oilsands assets, purchased for $17.7 billion.
The third quarter was the first full quarter since the two deals were completed.
The similarities didn’t extend to the strategic level, however, as Cenovus continued to focus on divesting assets to pay down debt and Canadian Natural announced it had achieved “the final step” in its transition to a sustainable business model with plenty of free cash to boost returns to shareholders and power potential acquisitions.
Thursday’s report was the last for Cenovus president and CEO Brian Ferguson, who is to be replaced by former TransCanada Corp. executive Alex Pourbaix next week, although he will remain an adviser until next March.
On a conference call, Ferguson said it had been a “great honour and privilege” to lead the company since it was launched in December 2009.
Ferguson said the company is well advanced in identifying “non-core” conventional oil and gas assets in the ConocoPhillips’ portfolio to be sold before year-end to reach its goal of between $4 billion and $5 billion in asset sales.
It has already raised $2.8 billion through sales of three asset packages — including the $975-million sale of its Pelican Lake heavy oil assets in northern Alberta to Canadian Natural, which closed at the end of September.
It expects to sell its stake in a Weyburn, Sask., oilfield in the current quarter, a deal analysts have estimated will bring in about $1 billion.
On its conference call, Canadian Natural CEO Steve Laut said the company is in a “strong and enviable position” after completing the construction of an 80,000-barrel-per-day expansion of its Horizon oilsands mine in October.
Horizon is expected to gradually ramp up to about 240,000 bpd of synthetic crude output by mid-December on the way to its rated capacity of 250,000 bpd.
Both oilsands companies reported stronger financial operating results on higher commodity prices and lower costs in the third quarter.
Cenovus had a net loss of $69 million or six cents per share, due mainly to a writedown of $440 million on the Pelican Lake asset sale, compared with a loss of $251 million or 30 cents per share in the same quarter last year.
Canadian Natural had a net profit of $684 million or 56 cents per share, versus a net loss of $326 million or 29 cents in the third quarter of last year. It said it had paid down $350 million in debt during the quarter.
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