Canadian Natural Resources urges Alberta to lift curbs on oil output in summer

(Reuters) - Canadian Natural Resources Ltd CNQ.TO, Canada's biggest oil producer, wants the province of Alberta to consider eliminating its restrictions on crude production during summer months, its president said on Thursday.

Alberta has curtailed production for more than a year because of congested pipelines. Many producers reduce output anyway during summer to conduct maintenance.

For that reason, lifting government-ordered curtailments from May until October makes sense, CNRL President Tim McKay said in an interview with Reuters.

Alberta’s oil inventories drained steadily during the same period last year until a leak on the Keystone pipeline in late October backed up supplies again, McKay said.

Inventories are likely to decrease similarly this summer during the maintenance period, he said.

“It might be an opportunity for the government to get extra revenues,” McKay said, referring to the royalties it collects.

The Alberta government is working toward a goal of lifting curtailment by the end of 2020, said Kavi Bal, senior press secretary to Energy Minister Sonya Savage. He added it was watching oil prices especially closely amid economic volatility.

Alberta is restricting production to 3.81 million barrels per day in March and April. It has not announced later production levels.

CNRL shares dipped 1.6% in Toronto to C$32.58, touching a nearly six-month low.

The Calgary, Alberta-based company missed fourth-quarter profit estimates because of lower oil prices.

It said Executive Vice Chairman Steve Laut would retire by May, but remain on the board of directors.

The company cut its 2020 capital expenditure by C$100 million to C$3.95 billion, citing volatile crude oil prices, and increased its quarterly dividend by 13%.

McKay said the main impact of the global spread of the novel coronavirus was in pressuring oil prices because of fears of lost demand, and CNRL had not noticed any sales reductions, he said.

“The pipelines are still full.”

Quarterly production rose 7% to 1.2 million barrels of oil equivalent per day (boepd) as producers were allowed exemptions on Alberta’s curtailments if they committed to move oil by rail instead of pipelines.

The company reported net income of C$597 million ($445.72 million), or 50 Canadian cents per share, in the fourth quarter, compared with a net loss of C$776 million, or 64 Canadian cents per share, a year earlier.

On an adjusted basis, the company earned 58 Canadian cents per share, missing analysts’ average estimate of 70 Canadian cents, according to Refinitiv IBES data.

($1 = 1.3394 Canadian dollars)

Reporting by Rod Nickel in Winnipeg, Manitoba, and Arunima Kumar in Bengaluru; Editing by Bernadette Baum and Peter Cooney