​Canadian Natural boosts light oil drilling as heavy oil prices dive

Image: Joey Podlubny/JWN

Canadian Natural Resources significantly increased its light oil drilling activity in the third quarter as it moved spending away from lower-return primary heavy oil production.

The company began reducing investment in primary heavy crude in the second quarter. In Q3 it reduced heavy oil production by 10,000 to 15,000 bbls/d and plans to further reduce this up to 55,000 bbls/d in Q4.

Meanwhile, the company drilled 27 net light crude wells in the third quarter, which is 19 more than its original plan, or a 237 percent increase.

In Southeast Saskatchewan the company drilled nine net light crude oil wells in Q3/2018, with some wells on production late in the quarter and the remaining wells expected to come on production in Q4.

“These light crude oil wells were drilled as a result of the strategic decision to shift capital to light crude oil and were not originally budgeted,” Canadian Natural said. “Production from these Saskatchewan wells is less impacted by the apportionment issues and price differentials experienced in Alberta.”

In the Montney play near Grande Prairie, Canadian Natural said production remained strong at approximately 500 bbls/d per well from wells drilled earlier in 2018.

“With this success, an additional four net wells were drilled in Q3/2018 with production targeted to come on in Q4/2018,” the company said.

On the B.C. side of the Montney play, near Fort St. John, operations are currently ramping up with six out of seven net wells on production, Canadian Natural said. With positive results on the first wells, it sees the potential for an additional 41 net wells that would leverage off the existing facility over time, adding value.

Meanwhile, the company drilled 63 less wells in its primary heavy crude assets in Q3/2018, and 83 less than planned year-to-date. Canadian Natural also delayed completion of 33 net primary heavy crude oil wells as well as shut in production. The company tastes to bring on the delayed and shut in production when primary heavy crude oil netbacks improve.

The company’s total North American light oil and NGL production averaged 92,956 bbls/d in Q3/2018, compared to 92,676 bbls/d in Q3/2017.