* Gabon operations written down by C$672 million
* Drilling at field curtailed
* Net loss C$416 million, or C$0.38/shr, after writedown
* Shares fall 3 percent (New throughout with executive, analysts’ comments, details)
By Jeffrey Jones
CALGARY, Alberta, March 3 (Reuters) - Canadian Natural Resources Ltd (CNQ.TO), the country’s largest independent oil explorer, fell into the red in the fourth quarter after writing down the value of a failed African offshore oil play.
Canadian Natural said on Thursday it chopped the book value of its Olowi field in Gabon by C$672 million ($693 million) and opted to curtail drilling there after determining the reserves would not meet its economic threshold.
Shares in the company, which is also repairing its fire-damaged Alberta oil sands project, sank C$1.39, or 3 percent, to C$48.34 on the Toronto Stock Exchange, despite a 20 percent increase in the dividend to 9 Canadian cents a share.
“Those assets have been underperforming, so it’s not something that came out of left field. But I think it does question some of the success rates in some of their international operations,” Macquarie Capital Markets analyst Chris Feltin said.
Offshore West Africa production fell 17 percent in the fourth quarter, with much of the drop from Gabon. The company also operates offshore in Ivory Coast.
“We’re basically into production optimization and producing out the reserves, so I guess you could call that blow-down,” President Steve Laut said in an interview.
Laut said the experience is not typical of its other plays in the region.
Olowi is expected to pump 5,000-6,000 barrels a day this year. Canadian Natural did not anticipate high geological risks when it sanctioned the development, he said.
The company is reassessing how it evaluates international projects as a result.
Meanwhile, it raised its estimates for repairing the upgrading plant at its 110,000 barrel a day Horizon oil sands project from a Jan. 6 blaze, after finding more damage as a result of the freeze of some equipment afterward.
It now expects repairs to cost C$300 million to C$400 million, up from a previous estimate of C$250 million.
Insurance payouts are expect to cover the costs, Laut said.
Canadian Natural expects to resume half the normal production in the second quarter and return to full output in the third quarter. It has advanced some planned maintenance work during the outage.
In the fourth quarter, Canadian Natural lost a net C$416 million, or 38 Canadian cents a share, down from year-earlier net income of C$455 million, or 42 Canadian cents a share.
The results included unusual expenses of C$1 billion. Besides the Gabon writedown, items included unrealized hedging losses, currency fluctuations and stock-based compensation.
Adjusted earnings were C$618 million, or 57 Canadian cents a share, down 7 percent from C$667 million, or 61 Canadian cents a share, as natural gas prices weakened and taxes rose.
The company had been expected to earn 64 Canadian cents a share, the average estimate among analysts surveyed by Thomson Reuters I/B/E/S.
Cash flow, a glimpse into the company’s ability to pay for new project, fell 3 percent to C$1.6 billion, or C$1.51 a share, from C$1.7 billion, or C$1.57 a share.
Oil production averaged 439,000 barrels a day, up 20 percent from the fourth quarter of 2009. Natural gas output edged up slightly to 1.25 billion cubic feet a day.
Canadian Natural said it now expects oil production of 385,000 to 427,000 barrels a day for the year, down from its expectation of 449,000-488,000 before the Horizon fire.
$1=$0.97 Canadian Additional reporting by Isheeta Sanghi and Arnika Thakur; editing by Rob Wilson