The end of Alberta’s oil production curtailment program and purchase of natural gas producer Painted Pony Energy Ltd. earlier this year will help Canadian Natural Resources Ltd. increase production by about five per cent in 2021, it said Wednesday.
The Calgary-based producer said it hopes to grow natural gas output next year by 11 per cent to about 1.65 billion cubic feet per day, while oil and petroleum liquids output will grow by four per cent to about 950,000 barrels per day.
It unveiled a capital budget of about 19 per cent larger than the $2.7 billion budgeted for the current year.
“Our 2021 capital budget of $3.2 billion is targeted to deliver five per cent year-over-year boe (barrels of oil equivalent) production growth,” said chief financial officer Mark Stainthorpe on a conference call to discuss the company’s 2021 budget.
“The strong production increase is a result of our low corporate (resource) decline rate, effective and efficient operation and a modest but increased drilling program as a result of no curtailment and a current improved outlook for commodity prices in 2021.”
Canadian Natural, one of the largest natural gas producers in Canada, added about 279 million cf/d of gas and 4,400 bpd of liquids with its $111-million buyout of Painted Pony which closed in October.
It said only about $200 million in the 2021 budget will be devoted to growth.
On the call, Canadian Natural president Tim McKay was asked about Enbridge Inc.’s start of construction of its Line 3 replacement project through Minnesota and the anticipated completion in the third quarter of 2021, thus increasing its capacity to 760,000 bpd from about 390,000 bpd.
The additional oil export capacity into the United States is welcome, he said, but added there are too many unknowns, including demand and price impacts of the COVID-19 pandemic, to say how the company will react.
“I think we can be very patient on those and, what’s really good is we’re very nimble, if we see those opportunities to come to fruition in terms of egress and pricing, we’re nimble enough to adjust,” McKay said.
“Today, it’s hard to speculate with the variables we’re seeing.”
CNQ is forecasting $2 billion to $2.5 billion in free cash flow after paying its dividend next year, assuming a West Texas Intermediate price of US$45 per barrel. The money will be primarily used to reduce debt.
Canadian Natural’s guidance met expectations, several analysts said in reports.
© 2020 The Canadian Press