CALGARY, Alberta (Reuters) - Profit at Canadian Natural Resources Ltd
Still, Canadian Natural said it would boost capital spending by 26 percent to C$3.9 billion ($3.4 billion) in 2010, showing some optimism for industry fundamentals.
The 2010 budget still includes deep cuts in its natural gas business, however. It said it expects gas output to fall by 12 percent due to an 18 percent drop in drilling due to low prices and higher Alberta royalties.
The company plans to boost North American crude oil spending by 50 percent to take advantage of strong markets for heavy oil, where it is ramping up enhanced recovery operations, it said.
In the third quarter, Canadian Natural's net income fell to C$658 million, or C$1.21 a share, from a year-earlier C$2.8 billion, or C$5.25 a share. The 2008 figure included C$1.9 billion in net one-time gains.
Analysts on average were expecting profit of C$1.25 per share, according to Thomson Reuters I/B/E/S.
The company's shares were off C$1.70, or 2 percent, at C$66.90 on the Toronto Stock Exchange early on Thursday. They had risen 8.7 percent over the past 12 months.
Most oil companies have posted lower quarterly earnings as the recession cut prices and demand for oil and natural gas.
During the third quarter, benchmark oil prices averaged $68.24 a barrel, down 42 percent from a year earlier. Natural gas averaged $3.44 per million British thermal units on the New York Mercantile Exchange, down 62 percent.
Cash flow, a measure of the company's ability to pay for new projects and drilling, fell 17 percent to C$1.5 billion, or C$2.78 a share.
The company, which is working to boost output at the new C$9.7 billion Horizon oil sands project in northern Alberta, said its overall oil and gas liquids production rose 17 percent to 359,269 barrels a day.
However, Horizon output, at 66.907 barrels of synthetic crude a day, was under target due to equipment failure at the ore preparation plant and higher clay content in the raw oil sands during September, the company said.
It said it believes it has fixed the problems, but warned that the plant may face other struggles as it enters its first full winter of operations.
Third-quarter natural gas production averaged 1.3 billion cubic feet a day, down 13 percent as the company shifted spending to oil operations.
In 2010, Canadian Natural expects overall natural gas production to average 1.12 billion to 1.19 billion cubic feet a day and oil output to average 400,000-445,000 barrels a day.
($1=$1.06 Canadian)
(Reporting by Jeffrey Jones and Ajay Kamalakaran; editing by Peter Galloway)
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