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CALGARY - Canadian Natural Resources Ltd. (TSX:CNQ) plans to spend 26 per cent more next year than it did in 2009, directing the lion's share of that capital toward oil developments and continuing to shy away from natural gas.
Of the Calgary-based energy company's planned $3.9 billion 2010 budget, 80 per cent will be targeted toward its crude oil operations, which include the $9.7-billion Horizon oilsands mine in northern Alberta and heavy oil properties in western Canada.
On the other hand, fewer natural gas wells will be drilled next year than this year, which was itself a very slow period for the natural gas industry in general.
Canadian Natural. a major natural gas producer, expects to end 2009 having drilled 114 gas wells.
By contrast, at its peak in 2005, the company drilled just under 900.
The only reasons Canadian Natural drilled for gas this year was to offset drainage and hold on to its land position.
"With the current gas price and cost environment it makes no sense to drill any gas wells for any other reason," said chief operating officer Steve Laut on a conference call with analysts Thursday.
In 2010, Canadian Natural expects to drill only 93 gas wells, as abundant supplies paint a bearish picture for that commodity throughout next year.
Next year about 55 per cent of the drilling will be geared toward deep, tight unconventional areas, compared to 35 per cent in 2009.
"The greater emphasis to deeper, longer life and more expensive wells will result in a decline of our gas production effectively bottoming out in Q4 2010 and positioning us to return to gas growth in 2011," Laut said.
Natural gas was trading at around US$4.84 in New York on Thursday, well below what most producers need to make drilling economically viable but still a significant rebound to the seven-year lows below US$3 the commodity hovered around months ago.
On Horizon, which suffered a series of mechanical setbacks between August and October, Canadian Natural plans to spend $785 million next year, up 40 per cent from 2009.
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