Canadian Natural Resources targets more spending cuts

Thu Mar 3, 2016 2:56pm EST
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By Matt Scuffham

CALGARY, Alberta (Reuters) - Canadian Natural Resources Ltd (CNQ.TO: Quote) (CNQ.N: Quote) slashed its capital expenditure plan for 2016 and targeted further cuts in 2017 and 2018 in response to the slump in oil prices which has hit its profits.

Canada's second-biggest oil and gas producer reported an 89 percent fall in quarterly profit and lowered its estimated 2016 capital spending to between C$3.5 billion ($2.6 billion) and C$3.9 billion, from C$4.5 billion to C$5 billion previously.

"In 2017, we're looking to spend around C$2.5 to C$2.6 billion dollars. Getting to 2018, we expect to spend about the same. Those are the numbers that keep our production flat. We're assuming we have a low oil price throughout that time," President Steve Laut told analysts on a conference call.

Capital required to expand the company's Horizon oil sands project in Alberta will drop by C$1 billion next year, Laut said.

North American oil and gas producers are slashing budgets, costs and streamlining operations as profits fall in the wake of a 70 percent drop in crude oil prices since mid-2014.

Unlike may peers, the Calgary, Alberta-based company has so far resisted job cuts, instead choosing to impose salary cuts on its workers.

"We have had no layoffs and it’s not our intention to lay off people," Laut said in an interview with Reuters.

The company's net earnings fell to C$131 million ($97.48 million), or 12 Canadian cents per share, in the fourth quarter ended Dec. 31 from C$1.20 billion, or C$1.09 per share, a year earlier. That was ahead of analysts' expectations of 9 Canadian cents a share.   Continued...

Pipelines at Canadian Natural Resources Limited's (CNRL) Primrose Lake oil sands project are seen near Cold Lake, Alberta August 8, 2013.   REUTERS/Dan Riedlhuber