Citing the new royalty system in Alberta, Canadian Natural Resources announces it will slash its exploration in the area.
"Our defined plan will be optimized to take into account the new royalty program that was announced by the Government of Alberta on October 25th and expected to take effect in 2009," said Canadian Natrual Chairman Allan Markin in a statement.
"The new royalty program will have a negative impact, which we are still attempting to fully define, on our development plans in 2008 and in the future," Markin continued. "As a result, we will carefully adjust our activity to ensure we are maximizing returns for our shareholders."
The company expects the royalty changes to impact the natural gas sector of its exploration and production the most and has adjusted its development plans in 2008 to reflect that.
Canadian Natural stated that it will cut by as much as 50% the number of Alberta gas wells it would have drilled in 2008 and years beyond had the royalties not changed.
"Right now we're in the process of fine-tuning the budget and high-grading all our gas prospects and oil prospects and deciding where we're going to allocate the capital," Canadian Natural President and COO Steve Laut said, according to Reuters. "Obviously with the royalty program, it has made a lot of our gas program uneconomic, particularly at these price levels."
The company's 2007 third quarter net earnings fell 37% from the same period last year to C $700 million.
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