By November 16, 2017 Read More →

CNRL to boost Alberta oil sands production 50% in 2018

CNRL

Sturgeon Refinery, joint venture between North West Refining and CNRL.

2018 production targeted between 1,090,000 BOE/d and 1,170,000 BOE/d

Canadian Natural Resources Ltd. announced its 2018 budget, with a capital investment of $4.3 billion, $500 million less than 2017, and a 50 per cent increase in oil sands production, according to a press release.

“Canadian Natural’s transition to a long life low decline asset base is complete, as the Horizon Phase 3 expansion has been successfully executed. The strength of the company is reflected in the 2018 budget as we target overall production between 1,090,000 and 1,170,000 BOE/d,” said Steve Laut, president of CNRL.

“This represents a 17 per cent increase over 2017 production levels with a capital program targeted at $4.3 billion, $0.5 billion less than 2017, excluding the Athabasca Oil Sands Project acquisition capital.”

CNRL’s 2018 funds flow from operations is targeted to be approximately $7.9 billion to $8.3 billion.

“This allows the company significant capital flexibility to allocate capital to the highest return projects and to
maximize shareholder value. Free cash flow is targeted to be in the $2.3 billion to $2.7 billion range, after the
company’s current dividend,” said Laut.

The free cash flow number of 2.3 to 2.7 range is after the capital budget of $4.3 billion and the current dividend, based upon average annual WTI (West Texas Intermedia) strip pricing of US$52.03/bbl and AECO (Alberta natural gas price) strip pricing of C$2.11/GJ.

“The company will focus on reliability across our diverse asset base and continue to integrate and optimize the assets acquired in 2017. Modest drilling programs will ensure cost control, which is essential in this commodity price environment. Project development at our Steam Assisted Gravity Drainage project, Kirby North will continue in 2018 as we advance the project for ultimate completion in Q4/19,” said Cory Beiber CNRL’s CFO.

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Overall production in 2018 is targeted to be between 1,090,000 BOE/d and 1,170,000 BOE/d, with a product mix
of approximately 75 per cent crude oil and NGLs and 25 per cent natural gas.

In 2018 approximately 55 per cent of the company’s production is targeted to come from long life low decline assets.

“In 2018, the company targets to continue to strengthen our balance sheet metrics with increasing free cash flow. Ample liquidity and significant capital flexibility in 2018 will allow us to effectively manage our financial position in a volatile commodity price environment,” concluded Beiber.

North America – Exploration & Production

  • CNRL is targeting a capital program of $1,555 million for North American E&P in 2018. Plans for 2018 are summarized as follows:
  • North American crude oil and NGL production estimates range from 253,000 bbl/d to 263,000
    bbl/d, representing a 7% increase from 2017 production levels.
  • CNRL targeting 67 net producing wells in its North America light crude oil operations, a significant part of a balanced portfolio. Representing an increase of 28 net producing wells from 2017 targeted levels.
  • The company is targeting trong capital efficiencies and high returns with a right-sized primary
    heavy crude oil drilling program of 377 net producing wells, a 6% decrease compared to 2017 targeted
    levels.
  • CNRL targeting drilling program of 22 net producing wells in 2018 at Pelican Lake. This represents an increase of 5 net producing wells from 2017 targeted levels. In 2018, Canadian Natural will integrate and optimize operations at its recently acquired Pelican Lake lands to maximize shareholder value.
  • Corporate natural gas production is targeted to range from 1,650 MMcf/d to 1,710 MMcf/d, in-line with 2017 levels, as natural gas prices are expected to continue to be challenged in 2018.
  • CNRL targets a modest natural gas drilling program of 17 net producing wells representing a decrease of 3 net producing wells compared to 2017 targeted levels.
  • The company targets to continue its focused drill to fill strategy in its liquid rich assets in the Montney and the Deep Basin, where the company owns and operates significant infrastructure.

carbon capture

North America – Thermal in Situ Oil Sands

  • Thermal in situ oil sands assets provide a substantial, low risk production profile that can generate significant
    sustainable free cash flow.
  • Thermal in situ production is targeted to be in line with 2017 levels in the range of 107,000 bbl/d to
    127,000 bbl/d in 2018.
  • Total thermal in situ capital in 2018 is targeted to be $960 million, as the Company targets to drill 119 net producing thermal wells. In 2018, CNRL will initiate high value pad additions at Primrose, which will add long life low decline production commencing in Q4 of 2019. Additionally, drilling at the company’s 40,000 bbl/d Kirby North SAGD project will begin in 2018.
  • Primrose drilling activity is targeted to be 64 net producing wells in 2018. First production from this drilling program is targeted in Q4 of 2019 with exit 2019 production of 25,000 bbl/d.
  • Canadian Natural will advance its development of the Kirby North SAGD project in 2018. In the year, project capital of approximately $465 million to complete 49 net producing wells, 44 injector wells and facility construction. First steam injection is targeted for late 2019 and first production is targeted in Q1 of 2020. Overall targeted productive capacity at Kirby North is 40,000 bbl/d.
  • Drilling activity at Kirby South will be minimal with 6 net producing wells targeted.

North America – Oil Sands Mining and Upgrading

  • Canadian Natural’s transition to a long life low decline asset base is complete. Oil Sands Mining & Upgrading
    production is targeted to increase significantly in 2018 due to the successful completion of the Phase 3 expansion at Horizon and a full year of production at the AOSP.
  • Oil Sands Mining and Upgrading production is targeted to increase by greater than 50% in 2018 from 2017
    levels. The 2018 production guidance range for Oil Sands Mining and Upgrading is 415,000 bbl/d to 450,000 bbl/d of synthetic crude oil.
  • The 2018 targeted production range includes a 21 day planned turnaround at the Horizon operations and includes planned pit stops at the AOSP in the spring and fall of 2018.
  • 2018 Oil Sands Mining and Upgrading targeted capital includes approximately $500 million for completion of environmental work related to the Phase 3 expansion, technology and project development.
  • Sustaining capital is targeted to be $660 million, while $220 million is targeted for turnarounds and reclamation activities.

CNRL

International – Exploration & Production

  • International light crude oil production is targeted to range from 40,000 bbl/d to 45,000 bbl/d, a decrease of approximately 8% from 2017 production levels, reflecting natural production declines.
  • 2018 capital at the Company’s International assets is targeted to be in-line with 2017 levels at approximately $410 million, which includes approximately $70 million for decommissioning activities.
  • The Company targets to drill 4.6 net producing wells in the North Sea and 1.7 net producing wells at the Baobab field in Cȏte d’Ivoire.

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