Canadian Natural Resources Ltd. has earmarked at least $7.7-billion in capital spending next year, plus another possible $400-million for a further Horizon oil sands project expansion, the latest sign of accelerating spending in the oil sands industry.
CNRL’s capital budget for next year is spread among its domestic and international oil and natural gas operations, including billions of dollars earmarked for the Horizon project and other oil sands operations. Last week, Suncor Energy Inc. and Royal Dutch Shell PLC, both unveiled their own oil sands expansion plans.
But as companies resume heavy spending on oil sands expansions, CNRL is mindful of the added pressure on industry costs. The company will decide whether to spend the additional $400-million at Horizon after evaluating “construction market conditions,” it said. “The company remains focused on cost certainty and is not schedule driven.”
CNRL on Thursday said it roughly tripled its third-quarter profit after record production results, even though it slowed bitumen extraction at one of its properties because of a continuing leak. CNRL also increased its dividend 60 per cent.
The company is sorting through troubles at its Primrose oil sands property. Bitumen is leaking at the surface, climbing upward through old wells and seeping through fissures in the rocks. The leak, first reported in May, has not stopped, although the company believes bitumen is no longer able to reach the fissures that allow it to reach the surface.
Steve Laut, CNRL’s president, said the seeping bitumen is “contained” with berms and other mitigation techniques. About 11,500 barrels reached the surface, and cleanup is 80 per cent complete, he said. About 15 barrels of bitumen a day are still reaching the surface, he said.
Mr. Laut, in a conference call to investors, called the problem “totally solvable” and says CNRL is inspecting other old wells that could present similar problems.
CNRL predicts its production will grow 7 per cent next year, with the company churning out between 711,000 and 757,000 barrels of oil equivalent a day. It expects about 75 per cent of this to come from oil and natural gas liquids like butane – products worth more than natural gas. The remaining 25 per cent of production will be natural gas, it said.
The company increased its quarterly dividend to 20 cents a share, up from 12.5 cents. Mr. Laut, in an interview, said he is confident the company will be able to further increase its quarterly payments to shareholders.
CNRL made $1.168-billion or $1.07 a share, in the third quarter, up from $360-million or 33 cents a year earlier. Daily production before royalties equalled 702,938 barrels of oil equivalent per day, up from 667,616 barrels a year earlier.Report Typo/Error
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- Updated August 18 4:02 PM EDT. Delayed by at least 15 minutes.