Canadian Natural Resources barrels ahead with oilsands expansion

CALGARY -- Canadian Natural Resources Ltd. (TSX:CNQ) says it's committing $2 billion of this year's capital budget to advancing its Horizon project and then expects the oilsand operation's funding requirements to drop in 2017 and thereafter.

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The Calgary-based company views Horizon as a key part of its future business plan, as it depends less on conventional sources of oil and gas.

The full 2016 capital budget, including spending on Horizon Phases 2B and 3, has been set at between $3.5 billion and $3.9 billion.

CNRL says the Horizon expansion budget will drop to $1 billion in 2017 and to zero in 2018, after Phase 3 starts production in next year's fourth quarter.

The budget projection was contained in CNRL's latest financial report, which showed it eked out a small profit in the fourth quarter but ended 2015 with a full-year net loss of $637 million or 58 cents per share.

The three months ended Dec. 31 showed $131 million of net income or 12 cents per share, which was an improvement over the third quarter but down from nearly $1.2 billion or $1.09 per share in the fourth quarter of 2014.

The fourth quarter of 2015 included $181 million of favourable tax items and, without them CNRL would have had a loss.

Revenue dropped to $2.8 billion from $4.4 billion in the fourth quarter of 2014, but gains from the sale of properties increased to $690 million from $137 million.

After adjustments to exclude certain items, CNRL's operations lost $49 million or four cents per share in the fourth quarter and cash flow from operations dropped to $1.38 billion or $1.26 per share.

The company says the weakening of the Canadian dollar provided some buffer from the collapse of oil and gas prices that began in late 2014, since global commodity prices are in U.S. currency that's translated for the company's financial reports.

In the comparable period of 2014, Canadian Natural had $756 million of adjusted earnings from operations or 69 cents per share and cash flow from operations was $2.37 billion or $2.16 per share.

"Canadian Natural currently has in place sufficient liquidity to ensure the funding of all targeted activities in 2016 and 2017," CNRL chief financial officer said in a statement.

"By the fourth quarter of 2016, annualized cash flow will then be in a position to cover all base annual capital and current annualized dividend requirements."


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