June 30, 2010 / 1:00 PM / 7 years ago

UPDATE 2-Canadian Natural sees higher June production at Horizon

* Sees June production at Horizon up sequentially

* Reaffirms FY production outlook

* Reports May production of 81,400 bbl/d

* Shares rise 2 percent (Adds details, analyst comments, share movement)

By Arnika Thakur

June 30 (Reuters) - Canadian Natural Resources Ltd CNQ.TO, the country’s biggest independent oil explorer, said it expects June production volumes at its Horizon oil sands project to rise sequentially, and reported May volumes slightly above its expectations.

Canadian Natural, which produces oil and gas in Canada, the North Sea and West Africa, expects June production of synthetic crude oil at Horizon to range between 116,000 barrels per day (bpd) and 118,000 bpd.

First Energy Capital analyst Michael Dunn, who has a “top pick” rating on Canadian Natural stock, said good production rates were expected for June, after preventive maintenance was completed at Horizon in May.

Horizon, which was on planned maintenance outage in May, contributed 86,995 bpd of the company’s total production of 406,266 bpd in the first quarter.

Dunn, who termed the current second quarter as the best to date for Horizon, said production from Horizon should be about 99,000 bpd for the quarter, above the company’s previous outlook of 80,000 bpd to 95,000 bpd.

Canadian Natural said it aims to produce about 110,000 bpd for the remainder of 2010.

“They still haven’t posted consecutive months with 110,000 barrels a day plus, so the next thing to look for is if they can sustain these types of production levels over the longer term, hopefully they are close to sustaining that level,” Dunn said.

The company reported May production of 81,400 bpd from Horizon, up a sliver from its own forecast of 75,000 bpd to 80,000 bpd.

The company will continue to complete strategic maintenance and reaffirmed its 2010 production outlook for the project between 90,000 bpd and 105,000 bpd, it said.

“They are expecting the second half of the year to be better than the first half of the year, and they are already producing within the guidance, they should be able to meet their guidance,” analyst Dunn added.

Shares of the company were trading up 2 percent at C$35.91 Wednesday on the Toronto Stock Exchange. (Reporting by Arnika Thakur in Bangalore; Editing by Roshni Menon and Don Sebastian)

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