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Released May 08, 2023 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--A slide in oil prices earlier this year has been brutal for oil and gas producer Canadian Natural Resources Limited (NYSE:CNQ) (CNRL) (Calgary, Alberta), which is no longer enjoying the benefits of last year's energy crunch brought on by the start of the war in Ukraine. The ongoing U.S. banking crisis and slowing recovery in China also contributed to a roughly 20% drop in oil prices year-over-year, but CNRL executives are optimistic that operational factors will prove beneficial for the company for the rest of 2023. Industrial Info is tracking more than US$30 billion worth of active projects from CNRL, more than half of which is attributed to oil sands production in Alberta.
Click on the image at right for a graph detailing CNRL's active projects, by industry sector.
CNRL reported a first-quarter profit of US$1.8 billion, down from US$3.1 billion in the same quarter last year. Revenues totaled US$8.6 billion, down from nearly US$10.7 billion in first-quarter 2022. This comes despite production of 1.32 million barrels of oil equivalent per day, up from 1.28 million barrels in the same period last year.
Tim McKay, the president of CNRL, said in a quarterly earnings-related conference call that the company is optimistic about the expected completion of the Trans Mountain pipeline expansion later this year, which CNRL executives believe will boost the price of Alberta crude. McKay noted CNRL is contracted to ship 94,000 barrels per day (BBL/d) on Trans Mountain when the expansion is completed, which will account for about 16% of the pipeline's total capacity.
CNRL's ongoing upstream projects reflect its upbeat outlook. At the massive Jackfish bitumen production field near Conklin, Alberta, the company is finishing up an US$80 million well pad addition at its Jackfish II development, which involves building 20 new bitumen-production wells, and is preparing to begin work on a US$70 million well pad addition at Jackfish I, which involves 16 new wells. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can read detailed reports on the Jackfish II and Jackfish I additions.
"At Jackfish, the production has been very strong, averaging approximately 115,000 barrels a day with minimal capital since acquiring the asset," McKay said in the conference call. "The company is currently drilling two SAGD [steam-assisted gravity drainage] pads. Production from these pads is targeted to ramp up to full production capacities in the third quarter of 2024 and the fourth quarter of 2024, respectively, supporting our continued high utilization at that facility." CNR acquired Jackfish from Devon Energy Corporation (NYSE:DVN) (Oklahoma City, Oklahoma) in 2019.
McKay also noted CNRL is targeting an additional 25,000 barrels per day of production at its Primrose development near Cold Lake, Alberta, by the fourth quarter, when compared with levels from fourth-quarter 2022, primarily from the US$75 million addition of two well pads that began construction in 2022 and are expected to wrap up in the coming months. "The first production cycle from these pads is targeted to begin in third-quarter 2023, which targets strong quarterly production at Primrose of approximately 100,000 barrels a day in the fourth quarter of this year," McKay said in the earnings call.
CNRL also is seeking permits to begin construction on another well pad at Primrose in the summer of 2024. Subscribers can read detailed reports on the ongoing and proposed well-pad additions.
In its downstream business, CNRL is preparing for US$80 million in upgrades to heavy gas-oil and naphtha hydrotreater units at its Horizon Oil Sands complex near Fort McMurray, Alberta. The company expects to achieve better processing and quality at the 45,000-BBL/d heavy gas-oil hydrotreater and 33,000-BBL/d naphtha hydrotreater, both of which use technology from Honeywell International's (NASDAQ:HON) (Charlotte, North Carolina) UOP LLC. Subscribers can learn more from Industrial Info's project report.
On the natural gas side, CNRL finished drilling a five-well light oil pad late in the first quarter at the Wembley Field near Wembley, Alberta, which is to be brought online later this month, with initial production rates of about 4,000 BBL/d of liquids and 14 million cubic feet per day of natural gas. McKay says the project is part of a longer-term program in the greater Wembley area that includes multiple well-pad additions in 2023, which began construction in April, and in 2024. Subscribers can read detailed reports on the 2023 and 2024 additions in Wembley.
Greg Pardy, an analyst at RBC Capital, joined the CNRL executives on the earnings call and emphasized that CNRL's capital spending on natural gas exploration is highly unlikely to approach the company's spending on oil exploration anytime soon: "I would suspect that from a capital allocation point of view, gas will not compete relative to oil in the short-term. And so, we may end up doing a few less gas wells and then doing a few more oil wells. But that's still to be determined. But just looking at the commodity prices today, that could be what we'll end up doing."
Subscribers to Industrial Info's GMI Project Database can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.
Subscribers can click here for a full list of reports for active CNRL projects.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Click on the image at right for a graph detailing CNRL's active projects, by industry sector.CNRL reported a first-quarter profit of US$1.8 billion, down from US$3.1 billion in the same quarter last year. Revenues totaled US$8.6 billion, down from nearly US$10.7 billion in first-quarter 2022. This comes despite production of 1.32 million barrels of oil equivalent per day, up from 1.28 million barrels in the same period last year.
Tim McKay, the president of CNRL, said in a quarterly earnings-related conference call that the company is optimistic about the expected completion of the Trans Mountain pipeline expansion later this year, which CNRL executives believe will boost the price of Alberta crude. McKay noted CNRL is contracted to ship 94,000 barrels per day (BBL/d) on Trans Mountain when the expansion is completed, which will account for about 16% of the pipeline's total capacity.
CNRL's ongoing upstream projects reflect its upbeat outlook. At the massive Jackfish bitumen production field near Conklin, Alberta, the company is finishing up an US$80 million well pad addition at its Jackfish II development, which involves building 20 new bitumen-production wells, and is preparing to begin work on a US$70 million well pad addition at Jackfish I, which involves 16 new wells. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can read detailed reports on the Jackfish II and Jackfish I additions.
"At Jackfish, the production has been very strong, averaging approximately 115,000 barrels a day with minimal capital since acquiring the asset," McKay said in the conference call. "The company is currently drilling two SAGD [steam-assisted gravity drainage] pads. Production from these pads is targeted to ramp up to full production capacities in the third quarter of 2024 and the fourth quarter of 2024, respectively, supporting our continued high utilization at that facility." CNR acquired Jackfish from Devon Energy Corporation (NYSE:DVN) (Oklahoma City, Oklahoma) in 2019.
McKay also noted CNRL is targeting an additional 25,000 barrels per day of production at its Primrose development near Cold Lake, Alberta, by the fourth quarter, when compared with levels from fourth-quarter 2022, primarily from the US$75 million addition of two well pads that began construction in 2022 and are expected to wrap up in the coming months. "The first production cycle from these pads is targeted to begin in third-quarter 2023, which targets strong quarterly production at Primrose of approximately 100,000 barrels a day in the fourth quarter of this year," McKay said in the earnings call.
CNRL also is seeking permits to begin construction on another well pad at Primrose in the summer of 2024. Subscribers can read detailed reports on the ongoing and proposed well-pad additions.
In its downstream business, CNRL is preparing for US$80 million in upgrades to heavy gas-oil and naphtha hydrotreater units at its Horizon Oil Sands complex near Fort McMurray, Alberta. The company expects to achieve better processing and quality at the 45,000-BBL/d heavy gas-oil hydrotreater and 33,000-BBL/d naphtha hydrotreater, both of which use technology from Honeywell International's (NASDAQ:HON) (Charlotte, North Carolina) UOP LLC. Subscribers can learn more from Industrial Info's project report.
On the natural gas side, CNRL finished drilling a five-well light oil pad late in the first quarter at the Wembley Field near Wembley, Alberta, which is to be brought online later this month, with initial production rates of about 4,000 BBL/d of liquids and 14 million cubic feet per day of natural gas. McKay says the project is part of a longer-term program in the greater Wembley area that includes multiple well-pad additions in 2023, which began construction in April, and in 2024. Subscribers can read detailed reports on the 2023 and 2024 additions in Wembley.
Greg Pardy, an analyst at RBC Capital, joined the CNRL executives on the earnings call and emphasized that CNRL's capital spending on natural gas exploration is highly unlikely to approach the company's spending on oil exploration anytime soon: "I would suspect that from a capital allocation point of view, gas will not compete relative to oil in the short-term. And so, we may end up doing a few less gas wells and then doing a few more oil wells. But that's still to be determined. But just looking at the commodity prices today, that could be what we'll end up doing."
Subscribers to Industrial Info's GMI Project Database can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.
Subscribers can click here for a full list of reports for active CNRL projects.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
