Canadian Natural to cut heavy oil production as prices weaken

Canadian Natural Resources Ltd. plans to reduce its heavy oil production by some 55,000 barrels per day of production in response to lower prices for western Canadian crude oil, the company said Thursday.

"Due to the widening of price differences due to market access restrictions, the company has taken the proactive and strategic decision to close down, reduce and reduce production-related activity. heavy crude oil, "said the group in a statement announcing its third quarter results.

In October, crude oil production was reduced from 10,000 to 15,000 barrels per day (b / d) and is expected to reach 55,000 b / d in November and December.

Western Canadian oil sands producers are forced to accept significant discounts on their crude oil as lack of pipeline capacity and maintenance shutdowns at US refineries have led to an increase in Alberta's inventories .

The difference between Western Canada Select – the benchmark for diluted bitumen – and West Texas Intermediate, widely traded in North America, exceeded $ 50 earlier this fall and remains at $ 44 (per barrel).

Canadian Natural Resources is not the only company to react dramatically to the expansion of price reductions.

Cenovus Enegry Inc. said on Wednesday it was limiting production due to sharp cuts and expected the price of domestic heavy crude would increase by mid-2019, as rising rail volumes abate. the bottlenecks of transport.

The company did not specify the volume of production it was restricting, but indicated that it had slowed production at its Foster Creek and Christina Lake sites. Cenovus CEO Alex Pourbaix said the entire industry should do its part to reduce excess supply.

"We will not take the industry behind us. We will do this as long as we can justify creating value for our shareholders by postponing this production, "Pourbaix told badysts.

He added that the producers made no effort to coordinate the cuts.

CNRL said Thursday that, despite low crude prices, its third-quarter profit more than doubled and exceeded badysts' estimates, helped by higher production and average realized prices.

The company is seeking to produce more light crude oil, easier to extract and refine, in order to take advantage of an increase of over 20% in world oil prices over a year.

The oil and gas producer was able to sell its light crude to international buyers at $ 75.46 per barrel on average, generating significant adjusted cash flow, said Canadian Natural President Tim McKay .

The company's average realized oil price rose from $ 46.33 to $ 57.89 a barrel a year ago.

The Calgary-based company said its net profit reached $ 1.80 billion, or $ 1.47 per share, in the third quarter ended Sept. 30, up from $ 684 million or 56 cents a year earlier.

With a Reuters file