Canadian Natural chairman says high costs hurt Canada oil sector

Wed Jun 19, 2013 4:51pm EDT
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* Canada oil stocks underperforming

* Weak productivity, costs seen as issue

* Canadian Natural to look at property acquisitions

* May also consider corporate purchases

CALGARY, Alberta, June 19 (Reuters) - Murray Edwards, chairman of Canadian Natural Resources Ltd, the country's No. 2 oil company, said on Wednesday Canada's oil exploration and production sector has underperformed its U.S. counterpart because much of the industry is plagued by high costs and low productivity.

Smaller Canadian producers have complained of a lack of available capital in recent months, while investors have seen weaker returns than from U.S. oil stocks. The Toronto Stock Exchange's main energy index has climbed just 6.4 percent over the past 12 months, compared with a 23 percent rise in the Dow Jones Energy Index

Edwards, a billionaire known for his stakes in the energy, financial, industrial and sports sectors, said low natural-gas prices and a pipeline shortage can take some blame, but other factors were chiefly responsible.

"The Canadian sector is very expensive and productivity has been very much below ... standard and I think that you're seeing that in the results," he told investors at a company conference. "When you're high cost and your productivity is in the lowest quartile, you're going to get disappointing returns."

Edwards said returns in the Canadian exploration and production sector were hampered by the funding given to what he called "power-point producers" in the oil sands who have yet to build their projects. He also cited unconventional oil and gas plays with underwhelming results.   Continued...