CALGARY, Alberta (Reuters) - Canadian Natural Resources Ltd (CNQ.TO) (CNQ.N) 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.
Canadian Natural Resources also said it expects to produce between 809,000 and 868,000 barrels of oil equivalent per day in 2016, about 2 percent less than 2015 annual production volumes.
Some industry experts have forecast a ramp up in takeover activity in the sector as many companies need to consolidate in order to survive but Laut said sellers of assets were still expecting higher prices than buyers were willing to spend.
"I think there's still too big a gap between sellers' expectations and what the buyer wants to pay. We look at every asset that comes through our core areas. I don't see us being that active although we do always look," he said.
Shares in Canadian Natural Resources were up 9 percent at 1425 ET.
Reporting by Arathy S Nair in Bengaluru; Editing by Shounak Dasgupta, Chris Reese and Marguerita Choy