Partial production will resume in mid-June at an oil sands plant downed by a fire that helped drop earnings for Canadian Natural Resources Ltd. by 94 per cent.
The company has also substantially pared down its investment in the North Sea after recording a substantial loss from a major new U.K. tax, and reported new problems at a troubled African offshore field that forced a production halt there.
The biggest impact to the company, however, came from a halt to output at its Horizon project ever since a blaze crippled its facilities in early January. CNRL says repairs to part of the plant's fire-damaged upgrader, which acts like a pre-refinery for the heavy oil sands bitumen, will be complete by mid-June. Several weeks of startup will follow, allowing the company to produce 55,000 barrels per day of crude from Horizon.
The full repair will not be finished until midway through the third quarter.
The fire substantially decreased CNRL's overall first-quarter crude production, which fell to 356,988 barrels per day, a 12 per cent decrease from the year before and down 19 per cent from the last three months of 2010.
Quarterly earnings fell to $46-million, a 94 per cent tumble from the year before, while cash flow was down 28 per cent to $1.07-billion. Earnings were up substantially from the fourth-quarter of 2010, however, a period that saw the company book a $309-million loss.
CNRL took a $104-million hit at its U.K. operations, which saw the tax rate increase to 62 per cent from 50 per cent. The tax hike "will result in a 24 per cent reduction in the U.K. North Sea after-tax profits," the company said in a statement. "Consequently, [CNRL]has immediately curtailed reinvestment activity in the North Sea due to reduced economics."
It is cutting in half the number of drilling strings it has planned, cancelling drilling at its Murchison field and spiked plans to contract a subsea vessel in 2012.
The company is also experiencing new problems at its Olowi Field in offshore Gabon, which has been a source of enough trouble that it halted further drilling there and recorded a writedown in the fourth quarter of 2010.
"Subsequent to quarter end, production at the Olowi Field has been temporarily suspended as a result of a failure of its mid water arch, a support buoy which provides support for production and gas lift flowlines and the main power line," CNRL said in a statement. The company has now trimmed the high end of its projected crude volumes from that field by 2,000 barrels per day in 2011.
Still, CNRL sought to reassure investors that it remains financially sound in the face of the numerous hurdles it is facing.
"We exited the quarter in a solid financial position on the back of strong production and cash flow from our operations," vice-chairman John Langille said in a statement. "The size and breadth of our operations resulted in no material change in debt position despite the curtailment of sales at Horizon."