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CNRL on track for a record 2017

CNRL on track for a record 2017

Canadian Natural Resources released a rather exuberant quarterly update this week. President Steve Laut called 2016 a "milestone year for the company" as it continues to drive costs lower and boost production.

Work at the Horizon Mine and Upgrader is progressing better than planned. Among this week's key updates:

  • Horizon achieved record Synthetic Crude Oil (SCO) production of 178,000 bbl/day in Q4 at record low operating costs of $22.53/bbl.
  • For the full year 2016, Horizon averaged 123,265 bbl/day, a small increase from the previous year thanks to the start-up of Phase 2B last October.
  • Operating costs were $25.20/bbl for the full year, 12% lower than 2015.
  • Another $1.05 billion in capital is earmarked for the remainder of Horizon's Phase 3 expansion, which will add 80,000 bbl/day of SCO capacity. Phase 3 is targeted to start-up sometime in the fourth quarter. This final phase of expansion was reported 89% complete by the end of December.
  • Work on tailings management Directive 085 (formerly Directive 074) was 68% physically complete at the end of last year.
  • Production levels in December, January and February averaged 184,000, 195,000 and 202,600 bbl/day respectively, higher than Horizon's nameplate capacity of 182,000 bbl/day.
  • Despite a strong start to the year, 2017 guidance remains unchanged at 170,000 to 184,000 bbl/day SCO, reflecting in part a 24-day shutdown sometime this fall to tie-in Phase 3 components.

The company is still considering a $70 million debottlenecking project, which will add 5,000 to 15,000 of SCO capacity but require a much longer shutdown. A decision is expected sometime in the second quarter.

VIEW OF HORIZON'S NST (NON-SEGREGATING TAILINGS) FACILITY CURRENTLY UNDER CONSTRUCTION. THE FACILITY IS PART OF CNRL'S COMMITMENT TO THE AER'S DIRECTIVE 085 FOR MANAGEMENT OF FINE FLUID TAILINGS.

PHOTO COURTESY CDN NATURAL RESOURCES.

Horizon's light/sweet SCO product sold for an average of US$43.94/bbl, about 1.4% higher than the average selling price of West Texas Intermediate (WTI).

CNRL's thermal in-situ facilities also had a decent 2016:

  • Production at Primrose's low-pressure steamflood is back up to 32,000 bbl/day after a bitumen leak to surface forced the company to turn down its steam pressure.
  • Kirby South produced a record 37,714 bbl/day, a 28% increase over 2015. Steam-to-oil ratios (SOR) at the facility were reported at 2.6 while operating costs fell to a record low of $9.22/bbl, down 25% from 2015.
  • CNRL's in-situ facilities produced an average of 111,000 bbl/day in 2016. For the full year 2017, the company expects production to hold steady in a range of 105,000 to 115,000 bbl/day.

Total annual production volumes across the company's entire portfolio averaged 805,782 boe/day, down 5% from the previous year on lower drilling activity on the conventional side of the business. The company plans to spend a total of $3.9 billion in capital this year and increase overall production by another 6%.

CNRL posted a fourth quarter profit of $566 million, narrowing full year losses to $204 million, much improved from a $637 million loss reported in 2015. The company also boosted its quarterly dividend 10% to $0.275 a share, the 17th consecutive year of dividend increases.

Creating the good kind of jobs

Creating the good kind of jobs

Pengrowth submits plan to expand Lindbergh expansion

Pengrowth submits plan to expand Lindbergh expansion

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