CALGARY – Canadian Natural Resources Ltd. (TSX:CNQ) is once again cutting spending while awaiting a rebound in crude prices, the company said Thursday as it posted a $252-million first-quarter loss.
The oil-and-gas exploration company, one of the largest in the world, has already achieved significant savings, even slashing the pay of its senior managers. But it says it’s able to chop a further $300 million from its 2015 budget.
Crude prices have improved recently to around US$60 a barrel — after hovering around the US$50 market in the first quarter — but Canadian Natural president Steve Laut said the company wants to be cautious.
“At this point in time, we need to see some stability and we need to ensure that we’re not getting sort of a lift and fall back down in commodity prices,” Laut told analysts on a conference call.
“And as we get to that point, if we feel the pricing is solid, we’ll put capital back to work, but not before then.”
Canadian Natural’s loss in the first quarter ended March 31 was in stark contrast to the $622-million profit it had a year earlier. Adjusted earnings that strip out a number of factors also fell to $21 million, down from $921 million a year earlier.
Despite the spending cuts, Canadian Natural’s production outlook for this year remains unchanged and is targeted to deliver 11 per cent higher output than in 2014.
The Calgary-based company has reduced its 2015 capital budget to $5.7 billion, down $300 million from its most recent forecast. It had already cut the 2015 budget by $2.4-billion in January and $150 million in March, when it also announced a 10 per cent pay cut for senior managers.
One way in which Canadian Natural has improved its costs has been to lean on contractors and service providers, with that component making up 25 to 30 per cent of its overall cost savings. Once crude prices rise and activity picks up again, those savings aren’t expected to stick around for long, said Laut.
However, the rest of the savings should be more sustainable as they will come from improvements to productivity and project execution.
Laut said Canadian Natural performed well in the first quarter under the circumstances and had record production approaching the equivalent of 900,000 barrels a day from a combination of oil and natural gas.
At Canadian Natural’s massive Horizon oilsands mine north of Fort McMurray, Alta., operating costs have improved to $29.73 a barrel, down 28 per cent from the same period of 2014.
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