|
|
|
|
||
Canadian Natural prepared to make cuts to deal with sustained crude collapse from SNL Energy Finance Daily Canadian Natural prepared to make cuts to deal with sustained crude collapseByline: Gene Laverty Canadian Natural Resources Ltd., Canada's biggest oil company by volume, is prepared to slash spending to remain profitable even if a price collapse brought on by the new coronavirus lingers for months. The Calgary, Alberta-based company could pare capital costs by as much as C$400 million in the short term if prices appear to be headed for a prolonged downturn, President and Director Tim McKay said on a March 5 conference call. "We could reduce our capital anywhere from C$300 million to C$400 million," McKay said. "We have very little spend here for the next few months. So we'll just evaluate after in kind of the April, May time frame how it's looking into [the third and fourth quarters] to make those decisions on the various products depending on commodity prices." COVID-19, the disease caused by the new coronavirus, has disrupted crude markets as companies and individuals cut travel and as other parts of the world economy have slowed. Demand for oil is expected to decrease dramatically, and OPEC nations have said they will cut production to support prices. Canadian Natural had average production of approximately 1.1 million barrels per day in 2019. McKay said the company does not plan to change its policy of minimal hedging against changes in commodity prices. "We've never been a big hedger," McKay said. "We look at the products on a daily basis to maximize value, and I don't think our position on hedging has changed." A construction photo of the Sturgeon refinery. Canadian Natural owns a 50% stake in the facility and expects it to start processing oil sands bitumen later in 2020.Source: North West Refining Inc. Canadian Natural, which as a dedicated exploration and production company does not sell retail gasoline or other products, expected to see an increase in its capacity to process oil sands crude internally as expansions among its joint venture partners come into service. The company plans to up the capacity of its bitumen upgrader at Scotford, Alberta, to 325,000 bbl/d in the third quarter while partner Royal Dutch Shell PLC, which owns an adjacent refinery, is increasing capacity at that facility. The increases will bring refining capacity in line with the output of the Canadian Natural-operated Albian Sands oil sands facility. "That expansion piece was planned by our partner Shell for many years," McKay said. "It was part of the execution plan." Canadian Natural also expects North West Refining Inc.'s Sturgeon refinery near Edmonton, Alberta, to start taking as much as 40,000 bbl/d in oil sands bitumen in 2020. Canadian Natural has a 50% stake in the facility, which has been dogged by years of technical problems that have interfered with its capacity to process tar-like bitumen. Separately on March 5, Canadian Natural reported adjusted net earnings from operations of C$686 million, or 58 Canadian cents per share, for the fourth quarter of 2019, compared with an adjusted net loss of C$255 million, or 21 cents per share, in the prior-year period. The S&P Global Market Intelligence consensus normalized EPS estimate for the fourth quarter of 2019 was 72 cents. |
return to message board, top of board |