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.
- 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.
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.