CALGARY, Alberta (Reuters) - Canadian Natural Resources Ltd , facing slumping oil prices and another jump in costs at its new oil sands project, said on Thursday it will slash spending by 47 percent in one of the most austere 2009 budgets detailed in the industry to date.
While releasing better than expected quarterly results, Canada's No. 2 independent oil explorer said its spending will fall to C$4 billion ($3.4 billion) next year, from C$7.6 billion in 2008.
The reduction affects Canadian Natural's Horizon oil sands project in Alberta, which is in start-up mode, and its conventional North American natural gas operations.
Canadian Natural shares fell C$6.41, or more than 10 percent, to C$54 on the Toronto Stock Exchange. That's a 46 percent drop from the beginning of the third quarter.
In that time, oil prices have been more than halved and were just above $60 a barrel on Thursday.
"They're wary, or even worried, about a whole bunch of the noncontrollables around them, so they're coming out with what I would say is a hyper-conservative capex program," FirstEnergy Capital Corp analyst Martin Molyneaux said. "They want to get their debt down and they want to get their flexibility up."
The budget will likely influence other large North American energy firms as they announce spending over the next two months amid shaky energy and credit markets, Molyneaux said.
Canadian Natural said stubborn delays have boosted Horizon's construction costs by C$441 million, bringing the first phase of the development to C$9.7 billion.
It is the third time this year it has had to increase the estimate, as it copes, along with the rest of the oil sands industry, with poor labor productivity due to a stretched workforce as well as higher costs for materials.
"For Canadian Natural, Horizon does not meet our criteria for success. We continue to set the bar higher," President Steve Laut told analysts. "That being said, Horizon will still create tremendous value for all stakeholders and is a world-class asset."