Canadian Natural Resources slashes spending, defers oil sands project

Canadian Natural Resources slashes spending, defers oil sands project

CNRL Horizon Oil Sands  (Image courtesy of PCL Industrial Constructors Inc)

Canadian Natural Resources (TSX:CNQ), the country's largest independent oil producer, became Monday the first main domestic energy firm to slash its 2015 budget by $2.4 billion or about 30% as a result of plunging oil prices.

The Calgary-based oil and gas company revealed that its Kirby oil sands and conventional oil and gas project will the one bearing suffering the most with the cut. The firm is deferring the first phase of the 40,000-barrel-per-day project in northern Alberta, originally targeted for the fourth quarter of 2016, until crude prices stabilize.

U.S. benchmark crude was trading at around US$46 a barrel on Monday, less than half of where it was just six months ago.

Budget for its Horizon oil sands project has been left intact, said the company, as it expects the reduced capital spending will allow it to continue its dividend without changes.

CNRL expects to produce between 840,000 barrels of oil equivalent per day and 887,000 barrels of oil equivalent per day in 2015. It previously projected production between 869,000 barrels of oil equivalent per day and 916,000 barrels of oil equivalent per day.

The energy firm briefly addressed its dividend strategy in its press release.

“The company’s board of directors believes that returns to shareholders are important and the current dividend level is sustainable in the existing commodity price environment,” it said.