Canadian Natural Resources Ltd., the country’s largest heavy-oil producer, is deepening efforts to reduce expenses as slumping crude prices contributed to a second-straight quarterly loss.
The plan is now to spend C$5.5 billion ($4.2 billion) this year, down from a May estimate of C$5.75 billion and 36 percent less than its original forecast in November, the company said in an earnings report Thursday.
Canadian Natural is among oil-sands producers shelving projects and negotiating with suppliers for better prices to withstand U.S. crude prices that have fallen to less than half the 2014 high.
“We’ve taken out over C$3 billion from our original 2015 budget,” including project deferrals and cost cuts, President Steve Laut said on a conference call Thursday. The latest cut stems from savings with technology, better execution and productivity, as well as lower energy and material costs, Laut said.
To bring in more cash, Canadian Natural has been considering selling or spinning off its so-called royalty lands, which generate about C$186 million in annual income from drilling payments by other producers. The company is seeing rising interest in the lands from potential buyers and still targets a deal this year, though it’s flexible on timing, Laut said.
Second-quarter net loss was C$405 million, or 37 cents a share, compared with a profit of C$1.07 billion, or 97 cents, a year earlier, the Calgary-based producer said before the start of regular trading on North American markets. That followed a loss of C$252 million in the first quarter.
Per-share income adjusted for items such as a C$579 million charge for a 20 percent tax increase in Alberta, was 6 cents more than the 10-cent average of 16 analysts’ estimates compiled by Bloomberg.
Canadian Natural reported double-digit declines in operating costs from the prior year, including a 20 percent cut at the Horizon oil-sands project to produce crude at C$29.25 a barrel.
The company’s production averaged the equivalent of 805,547 barrels of oil a day, down from about 817,471 barrels a day a year earlier. Maintenance work at Horizon and forest fires in Alberta curbed output in the quarter.
West Texas Intermediate crude, the U.S. benchmark, fell 44 percent from a year earlier to average about $58 a barrel in the quarter.
Canadian Natural traded almost unchanged at C$32.31 at 12:46 p.m. in Toronto after earlier falling as much as 1.8 percent, the most since July 27. The stock, which has 24 buy, four hold and two sell recommendations from analysts, has lost 10 percent this year.