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(Reuters) - Canadian Natural Resources Ltd (CNQ.TO), Canada's No. 2 oil and gas company, said on Thursday it has a solution for the problems that led to a months-long spill of tar-like bitumen at a northern Alberta oil sands property.
The company, which reported a 17 percent rise in fourth-quarter profit and hiked its dividend for the second time in four months, also said it expects to complete an expansion of its Horizon oil sands project earlier than expected.
Canadian Natural said it is working to clean up thousands of barrels of bitumen and water that seeped from old wells drilled at its Primrose East thermal oil sands project. The leaks raised the ire of environmental groups and a series of orders from Alberta's energy regulator specifying clean-up steps.
The company plans to lower the pressure of the steam injected into the wells to liquefy the tarry bitumen and repair the leaky wells.
"The clean-up is essentially complete," Steve Laut, the company's president, said on a conference call. "Our causation review is well under way and has not yielded any data that does not support the well bore failures are the root cause. We're confident in the solution going forward will prevent seepages from occurring in the future."
Canadian Natural also announced it has accelerated the start-up of a new coker unit at its Horizon oil sands plant. Originally scheduled for completion in 2015, the company expects to complete work on the unit, which processes heavy crudes, in September, adding 12,000 barrels per day of capacity to the 110,000 bpd project. The company expects to shut the project for 20 to 25 days to tie in the facility.
The coker is part of an expansion that will see output at Horizon rise in stages to 250,000 bpd by 2017. Canadian Natural said the budget for the project remains well under control, with costs currently running 10 percent below its estimates, a change from what such projects experienced prior to the recession, when costs often spiraled higher by billions of dollars.
"It's a combination of conservative guidance and success in the way they are allocating contracts," said Michael Dunn, an analyst at FirstEnergy Capital. "They're not beholden to a timeline so that probably gives them better negotiating power at the table with contractors."
Canadian Natural also announced its second dividend hike since November on Thursday. Its quarterly payout will rise to 22.5 Canadian cents from the prior 20 Canadian cents, beginning April 1.
Canadian Natural's net income rose to C$413 million ($373 million), or 38 Canadian cents per share, in the fourth quarter ended December 31 from C$352 million, or 32 Canadian cents per share, a year earlier.
The company earned 52 Canadian cents per share excluding items. Analysts on average had expected 56 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Canadian Natural agreed last month to pay about $2.8 billion for the bulk of Devon Energy Corp's (DVN.N) Canadian oil and gas properties, its largest acquisition since it bought Anadarko Petroleum Corp's (APC.N) Canadian unit for $4.1 billion in 1996.
The company, which also operates in the North Sea and offshore West Africa, said its average oil and gas production rose to 677,242 barrels of oil equivalent per day (boepd) from 658,973 boepd, a year earlier.
Cash flow, a key indicator of the company's ability to pay for new projects and drilling, jumped 15 percent to C$1.78 billion, or C$1.64 per share.
Canadian Natural's shares, which have risen by a third over the past 12 months, were up 0.4 percent to C$40.88 by midafternoon on the Toronto Stock Exchange.
($1 = 1.11 Canadian dollars)
Additional reporting by Ashutosh Pandey in Bangalore; Editing by Nick Zieminski