(Reuters) - Canada’s Tourmaline Oil Corp (TOU.TO) cut its 2012 capital spending by 18 percent due to weak natural gas prices, but the intermediate oil and natural gas company raised its production forecast for the year citing strong drilling results.
Gas prices have been pummeled by an unyielding shale production boom, plunging to a decade low.
Weak gas prices have hurt oil and gas companies such as Enerplus Corp (ERF.TO), half of whose production is weighted towards natural gas. Many North American companies, including the second-largest U.S. natural gas producer Chesapeake Energy (CHK.N), have curtailed gas output to stem a selloff.
Others such as Talisman Energy TLM.TO, Canada’s fifth-largest independent oil explorer, has moved rigs away from the gas-rich Marcellus shale deposit in favor of liquid plays elsewhere.
For 2012, Tourmaline now expects to spend to C$400 million, down from its prior view of C$490 million.
The company, which is engaged in exploration, development and production activities in the Western Canadian Sedimentary Basin, sees natural gas prices to hit its cash flow too.
Cash flow for the year is expected to fall to C$429.6 million, from its earlier forecast of C$440.7 million.
The company now expects 2012 production to average 50,000 barrels of oil equivalent per day (boe/d), up from its earlier forecast of 47,000 boe/d.
Oil, condensate and natural gas liquids production is expected to reach 10,000 boe/d by the fourth quarter of 2012, the company said.
Shares of the Calgary, Alberta-based company were up 24 Canadian cents at C$23.60 on Wednesday on the Toronto Stock Exchange.
Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Supriya Kurane