(Updates with executive comments)
By Rod Nickel and Karan Nagarkatti
May 3 (Reuters) - Canadian Natural Resources Ltd (CNRL) , one of Canada’s biggest oil and gas producers, will produce less than expected this spring, it said on Thursday, as transport bottlenecks pressure prices of Canadian heavy crude.
Tight capacity on pipelines and rail lines from the province of Alberta early this year led to the biggest discount in four years on Canadian heavy crude compared to U.S. benchmark light oil. The space crunch has since abated, shrinking the discount closer to normal levels.
It has, however, hampered shipments to U.S. Gulf of Mexico refiners that depend on heavy crude instead of the U.S. light oil being produced in abundance from shale rock.
Calgary-based CNRL forecast production in the current second quarter of 1.054 million barrels of oil equivalent per day, missing analysts’ average estimate of 1.134 million, investment bank Tudor, Pickering, Holt & Co said in a note. Forecast output would still exceed that of a year earlier.
“We are in a very strong, enviable position to be able to curtail natural gas and heavy oil volumes when pricing anomalies arise due to Western Canada’s pipeline constraints,” said CNRL President Tim McKay on a conference call.
Canadian Natural shares fell 3.9 percent in Toronto to C$44.68.
Canadian crude production is expanding even though production costs exceed those in U.S. shale oil basins, but capital spending has declined sharply.
Suncor Energy Inc Chief Executive Officer Steve Williams said on Wednesday that company would not make further major investments in Alberta’s oil sands until market access improves.
Kinder Morgan Canada has paused work on its Trans Mountain pipeline expansion, citing opposition in British Columbia, and said it would decide by May 31 whether to proceed.
Fellow producer Cenovus Energy Inc, also struggling with transport constraints, has operated at lower capacity this year.
Production limits are also due to downtime at the Horizon mine, where CNRL is carrying out debottlenecking work to raise capacity, Eight Capital said in a note.
The company’s first-quarter profit beat forecasts, boosted by higher overall oil production.
CNRL, which operates in Western Canada, the North Sea and offshore West Africa, said overall production rose to 1.12 million barrels of oil equivalent per day (boepd) in the first quarter from 876,907 boepd a year earlier.
Net income rose to C$583 million, or 47 Canadian cents per share, from C$245 million, or 22 Canadian cents, a year earlier.
Excluding items, the company earned 71 Canadian cents per share, beating the average forecast of 66 Canadian cents, according to Thomson Reuters I/B/E/S. (Reporting by Rod Nickel in Winnipeg, Manitoba and Karan Nagarkatti in Bengaluru; Editing by Amrutha Gayathri and David Gregorio)