CALGARY — Canadian Natural Resources Ltd. said Tuesday that it is selling synthetic crude oil again from its Horizon oilsands mine, which had been idle most of the year following a January fire.
Investors cheered the news, sending the company’s stock up nearly four per cent, or $1.28, to $34.15 in afternoon trading on the Toronto Stock Exchange.
On Jan. 6, an explosion ripped through part of Horizon’s oilsands upgrader, which processes tarry oilsands bitumen into a type of crude refineries can handle. The company has attributed the fire to a valve opening at the top of a coking drum at the wrong time. Five workers were injured in the blaze.
Frigid temperatures in the Fort McMurray, Alta., region at the time caused a great deal of freeze damage to the plant and forest fires throughout the region later in the spring slowed repair work.
Production at Horizon finally resumed on Aug. 16 and the first pipeline deliveries began two days later, Canadian Natural said in a statement before markets opened Tuesday.
The Calgary-based company (TSX:CNQ) said it’s ramping up production and expects to reach full capacity of 110,000 barrels per day of synthetic crude by next week. It has been averaging 75,000 barrels per day in the first four days after the restart.
Canadian Natural has previously estimated repair and rebuild costs will be between $400 million and $450 million. CNQ recouped about $136 million of that through insurance during the second quarter and more is expected later.
What the company won’t be able to get back, however, is the full benefit of a streak of robust oil prices, said Lanny Pendill, an analyst with Edward Jones.
“That’s lost cash flow, and that’s just left on the table and there’s not much you can do about it,” he said.
But with the Horizon outage now in the rear-view mirror, the outlook for Canadian Natural is very positive, Pendill added.
“They’ve got a huge, huge resource base. So to get stuck on an operational outage that might impact a quarter or two, I think, is a mistake,” he said.
“I think it’s very important to take a look from a 30,000-foot level and see what this company’s capable of over the next three to five years. And that picture looks very bright to us.”