Canadian Natural Resources Limited (CNRL) has announced that it will exercise capital flexibility in its 2015 budget, as a result of changes in oil prices since its original budget was released in November 2014.
The price of a barrel of oil fluctuated between $70 US – $80 US per barrel in November, two months later the price has dipped below $50 US per barrel.
CNRL’s original capital budget targeted $8.6 billion in expenditures targeting an 11% production growth from the midpoint of 2014 production guidance levels.
The Calgary based company will reduce that budget by $2.4 billion to $6.2 billion lowering the production target by 4% to 7% growth.
Locally, the reductions in expenditures means that the approximately $470 million penned for the Kirby North Phase 1 terminal in situ project will be delayed until oil prices rebound.
Cuts to the budget relate primarily to reduced drilling activity and facility capital in North American and International projects.
New production targets to the Horizon Oil Sands project remain intact. CNRL looks to add an additional 125,000 bbl/d of light, sweet crude oil by 2017. The increase in production would bring Horizon to a 250,000 bbl/d project by the time it’s finished in late 2017. CNRL targets production costs at the project to fall between $25/bbl and $27/bbl.
Horizon averaged approximately 128,200 bbl/d in the fourth quarter of 2014, with December producing approximately 136,000 bbl/d a new record for the project. The projects capital remains untouched at $2.2 billion.
CNRL’s says production ramp up at its Pelican Lake project is progressing as targeted.
Cuts to the capital budget have also come with revisions to CNRL’s production targets. The oil company is hoping to produce 592,000 bbl/d of crude oil and Natural Gas Liquids (NGL).
