CALGARY, Alberta (Reuters) - Canadian Natural Resources Ltd said on Thursday that it expected 2017 production to rise by 6 percent and set its capital budget for next year at C$3.89 billion ($2.92 billion), a slight increase from C$3.84 million in 2016.
Canada’s largest independent petroleum producer said overall production in 2017 is expected to be between 833,000 barrels of oil equivalent per day (boe/d) and 883,000 boe/d, from 808,000 boe/d in 2016.
Producers have been increasing their capital budgets and projected output for 2017 as oil prices recover from the crash of the past two years.
Last month, Canadian Natural became the first oil sands producer to re-sanction a deferred major project, its 40,000-barrel-per-day Kirby North thermal expansion, a positive sign for the battered industry.
But company executives also said in a conference call the budget for 2017 may change depending on commodity prices, and that they are prepared to roll back the figure by up to C$900 million.
“We’re fortunate that we have a lot of capital flexibility,” President Steve Laut said later in an interview. “If the past is any prediction of the future, there will be volatility.”
Canadian Natural said it would complete an expansion of its Horizon oil sands project located north of Fort McMurray in Alberta, in 2017, and the project’s third phase would be on stream in the fourth quarter.
The oil producer forecast synthetic crude oil production from the Horizon project of 170,000 barrels per day (bbl/d) to 184,000 bbl/d for 2017, which is an increase from 2016 of 44 percent.
Canadian Natural will spend C$1.7 billion on Horizon, down from C$2.7 billion this year, but will dole out C$1.79 billion on exploration and production projects, an increase of nearly half a billion dollars, the company said.
The company’s shares were down 0.4 percent at C$44.60 in midday trading on the Toronto Stock Exchange, in line with a broad drop in the energy sector as a whole.
Canadian Natural said on Monday it will sell its stake in the Cold Lake pipeline to Inter Pipeline Ltd for C$527.5 million in cash and stock, but will maintain access to the route to move its crude.
($1 = 1.3322 Canadian dollars)
Reporting by Ethan Lou in Calgary, Alberta, and Komal Khettry in Bengaluru; Editing by Martina D'Couto and Alan Crosby