CALGARY, Alberta (Reuters) - Canadian Natural Resources Ltd (CNQ.TO), the country’s top independent oil producer, said on Thursday third-quarter profit more than tripled from a year earlier as a result of record quarterly production and strong oil prices.
Record production came even as steam restrictions remained in place at the company’s Primrose site in northern Alberta, as a result of an ongoing bitumen emulsion seepage.
Overall production in the quarter hit a record 703,000 barrels of oil equivalent per day, 5 percent above year prior levels. The company is targeting production growth of 7 percent in 2014, to reach a midpoint of 734,000 boepd.
President and CEO Steve Laut said a leak of tarry bitumen emulsion at CNRL’s Primrose project was contained, although less than 15 barrels a day were still seeping to the surface.
The company has so far mopped up 11,500 barrels of the emulsion comprised of bitumen mixed with water, and said the clean-up operations were 80 percent complete.
The leaks, first spotted on May 20, prompted the Alberta Energy Regulator to restrict the amount of steam the company can pump into the oil sands reservoir to extract bitumen.
Although a review into the cause of the seepage is still ongoing, Laut said the company was confident it was caused by mechanical failure of old well bores. The company has identified 31 wells that have potential for further failure and is investigating them for a report to be submitted to the AER.
“We have got to get the review completed, have got to get access to a bunch of wells, so we have still got some drilling to do. We are preparing the report and will submit it as quickly and effectively as we can,” Laut said.
“Our 2014 budget is set assuming we can get this finished here by the end of the year.”
The company previously cut its 2014 Primrose production forecast by 10,000 bpd to 100,000-110,000 bpd, the same level as 2013, and said on Thursday that forecast was unchanged.
Laut also said construction work is 30 percent complete on the next phase of the Horizon project in northern Alberta, which will boost capacity to 250,000 bpd.
Horizon produced 112,000 bpd in the third quarter, although CNRL said that would have been around 115,000 bpd if a TransCanada Corp (TRP.TO) gas pipeline outage in October had not temporarily slowed production.
It will shut for 20 to 25 days in September 2014 for a coker expansion, after which production will ramp up to 125,000 to 128,000 bpd.
CNRL targeted a capital budget of C$7.7 billion for next year, and said it could potentially allocate another C$400 million to the next phases of Horizon construction, depending on market conditions.
Net earnings were C$1.17 billion ($1.12 billion), or C$1.07 per share, up from C$360 million or 33 Canadian cents in the third quarter of 2012.
Excluding items, Canadian Natural earned C$1.01 billion, or 93 Canadian cents, up from C$353 million the year-prior quarter, or 32 Canadian cents per share. The result beat the average analyst forecast of 90 Canadian cents according to Thomson Reuters I/B/E/S.
The company had been tipped to report strong results after saying last month that it expected strong cash flow on record oil production and robust prices.
“As expected, Canadian Natural achieved strong price realizations with the tightening of both heavy oil differentials and Brent-WTI differentials in the third quarter of 2013, ” CNRL’s chief financial officer, Corey Bieber, said in a statement.
Cash flow, a key measure of the company’s ability to pay for new projects and drilling, rose 71 percent to C$2.45 billion.
The company also announced it would pay a quarterly cash dividend of 20 Canadian cents a share, a 60 percent increase on the previous quarterly dividend.
CNRL shares were up 0.8 percent at C$32.76 in early afternoon trading on the Toronto Stock Exchange.
($1 = 1.0415 Canadian dollars)
Reporting by Nia Williams and Scott Haggett; editing by Matthew Lewis and David Gregorio