Canadian Natural cuts $1B from budget due to steep oil price differential

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Canadian Artless Resources Ltd. is cutting its 2019 capital budget by about $1 billion due to wiped out western Canadian oil prices but it says it will ramp up spending if bonuses rebound.

The Calgary-based oilsands producer announced Wednesday a 2019 grovelling budget of $3.7 billion, below its “normalized” range of $4.7 billion to $5 billion and nearly 20 per cent less than this year’s $4.6 billion.

“Our major program is very flexible and we can curtail capital spending down to the $3.1 billion chain and still keep production flat,” said president Tim McKay during a webcast from the visitors’s investor day in Toronto following the announcement.

“Should prices improve and stabilize, and we see intelligibility on market access, we would look to increase our capital to approximately $4.4 billion.”

A oversupply of oil in Alberta as pipeline capacity fails to match production increases is placed for dramatically lower local oil prices since last fall.

Analysts praised the budget for its bounds in the current oil price environment and Canadian Natural shares closed up 4.2 per cent to $37.33 in Wednesday interchange on the Toronto Stock Exchange.

The 2019 budget contains $600 million for long-term broadening projects, including the completion of the 40,000-barrel-per-day steam-driven Kirby North oilsands stand out (expected to deliver first oil in late 2019) and building additional multi-well fillers at Canadian Natural’s Primrose thermal heavy oil project in northern Alberta.

Casting in 2019 is targeted to be between 1.03 million and 1.12 million barrels of oil commensurate per day, down slightly from this year’s expected output, with a work mix of about 76 per cent oil and natural gas liquids and 24 per cent dry straightforward gas.

A production curtailment program announced by the Alberta government last weekend designed to detach 325,000 barrels per day of oil from the province’s over-taxed pipelines has already resulted in stronger forth crude prices in January, Canadian Natural said.

It plans to follow those prices and the progress of the stalled Keystone XL and Trans Mountain inflation export pipelines to determine if spending should be increased.

Technology and elections to increase future oil production took centre stage at the investor day, with Scott Stauth, chief carry oning officer for oilsands, fleshing out Canadian Natural’s plan revealed termination spring to test driverless oilsands mining trucks.

The autonomous haulers are already in obligation at rival Suncor Energy Inc.’s mines and Imperial Oil Ltd. said recently it designs to experiment with up to seven of the trucks at its Kearl mine.

Canadian Reasonable plans to spend about $75 million on a field trial at its Jackpine Ransack in late 2020, Stauth said.

“Assuming we are satisfied with the issues of the three-truck trial at Jackpine, we would convert all trucks at Jackpine to autonomous by 2022, reflected by Muskeg River Mine and Horizon in 2025,” said Stauth.

“With an incremental paramount cost of $275 million to $325 million, we target our operating expenses to be reduced by 30 to 50 cents per barrel once complete.”

Canadian Lifelike has 18 trucks at Jackpine and a total of about 140 at all three ransacks.

The company is encouraged by results from its 500-tonne-per-hour pilot design to separate bitumen from sand in the mining pit using a portable function unit, rather than transporting it to a central processing facility, and sketches to continue to test it in 2019 before building a larger commercial-sized instil in 2020, Stauth said.

The technology could reduce mining tariffs by $2 to $3 per barrel, cut greenhouse gas emissions “significantly” through but trucking, and reduce the need for tailings ponds, he said.

Stauth verbalized new phases at the company’s Horizon oilsands mining and upgrading facility and the submitted Pierre River oilsands project could add 510,000 bpd of synthetic oil origination but would only be considered if market access issues are solved.

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