Canadian Natural reveals early-stage plans for new Joslyn, Laricina Energy assets

Image: Joey Podlubny/JWN

Oilsands powerhouse Canadian Natural Resources Limited is offering some early-stage details on its plans for two new assets in acquired during the third quarter.

The company realized a first for a Canadian company last year, reaching one million boe/d following its $12.74-billion oilsands acquisition from Shell and Marathon Oil.

This year it’s been buying again, and although its most recent purchases have no current production, the company says they offer significant future potential for its shareholders.

Laricina Energy

In September, Canadian Natural closed its acquisition of oilsands junior Laricina Energy, which at one point operated an early-stage 5,000 bbl/d capacity SAGD project as well as a bitumen carbonates pilot, both near Wabasca, Alta. The value of the purchase was not disclosed.

Laricina’s Saleski carbonate pilot ran from 2010 to 2015, and its Germain SAGD project from 2013 to 2015.

Both are in close proximity to Canadian Natural’s Pelican Lake heavy oil enhanced recovery project, which is part of what the company refers to as its Grand Rapids assets. Canadian Natural significantly expanded that position when it bought Cenovus Energy’s Pelican Lake properties in September 2017 for $975 million.

It says the Laricina buy is a great fit with existing lands and operations in the area. Its thermal team “sees the opportunity to improve the future performance of the Grand Rapids, which is targeted to be piloted through the existing facilities in the future,” the company said in its third quarter results.

It also “took over operatorship of a key road needed for operations in the area, which will result in immediate savings to the company. Canadian Natural’s lands combined with the acquired lands have total Grand Rapids bitumen in place potential of 15.9 billion barrels, adding significant future shareholder value.”

Joslyn

Also in September, Canadian Natural purchased the Joslyn oilsands package from Total and its partners, including Suncor Energy, for $225 million.

At Joslyn, Total has approval for a 100,000 bbl/d oilsands mine as well as for 42,000 bbls/d of SAGD development. The lands are located directly south of Canadian Natural’s Horizon mine.

“The Joslyn acquisition has the potential to add significant long-life low-decline reserves as well as cost savings through the extension of existing Horizon South Pit operations,” the company said in its third quarter results.

“The lease-line development opportunities reduce the need to relocate Horizon operations to the North Pit, to install new equipment, and construct new infrastructure. Over the next decade, synergies with Horizon are targeted to result in cost savings of over $500 million.”

Canadian Natural produced 1.06 million bbls/d in Q3/2018, up from 1.04 million bbls/d in Q3/2017, reporting net income of $1.8 billion, up from $684 million the previous year.