CALGARY, Alberta - The energy-industry downturn could last another year, providing Canadian Natural Resources Ltd with acquisition opportunities, Murray Edwards, the company's vice-chairman, said on Tuesday.
Canadian Natural, the country's second-largest independent oil company, has entered the meltdown in energy and credit markets with a strong balance sheet, which will give it the financial muscle to make strategic buys, Edwards said.
"As we move into 2009, there will be opportunities to acquire others who don't have the same flexibility and balance sheet, don't have the same undrawn bank lines, don't have the same ability to access credit markets," the billionaire investor told a company-sponsored investor conference.
The company's executives said they do not have a size of takeover or region in mind, only that the assets must fit with the its expertise and offer free cash flow.
Last week, Canadian Natural -- now starting up the C$9.7 billion ($8 billion) Horizon oil sands project -- said it will slash its spending by 47 percent in 2009 to C$4 billion.
The move is aimed at helping it weather weak crude prices and shaky financial markets, but the company said it has the ability to ramp spending up quickly should markets rebound.
Edwards, who is also known for his investments in Ensign Energy Services Inc (ESI.TO: Quote, Profile, Research, Stock Buzz), Magellan Aerospace (MAL.TO: Quote, Profile, Research, Stock Buzz), FirstEnergy Capital and the NHL's Calgary Flames, said he sees no quick end to the downturn that has cut oil prices to below $60 a barrel from more than $147 in July.
"I think you're looking at a year-plus," he told reporters.
The crisis, which began last year in the U.S. mortgage market, is only now spilling over from the credit and financial industries into other sectors of the economy, Edwards said.
"I think the risk is that the impact on Main St. is going to be far deeper and longer than we think, and I think that's one of the reasons we see governments being so proactive globally in trying to get in front of this thing as much as possible," Edwards said.
Canadian Natural has hunkered down by cutting spending and hedging up to 50 percent of its oil and gas production through the next 12 months and 25 percent in the following year.
"By doing that we feel we're going to have one of the stronger balance sheets, so to the extent there are others who aren't as prudent we'll be able to have opportunities to grow," he said.
Canadian Natural has grown in the past two decades through a series of acquisitions, most recently snapping up Anadarko Petroleum Corp's (APC.N: Quote, Profile, Research, Stock Buzz) Canadian assets in 2006. It produced 555,356 barrels of oil equivalent a day in the third quarter.
Chairman Allan Markin said one hot area where it will not shop is in U.S. shale gas, where a drilling boom has led to a recent jump in natural gas output in that country.
With its own British Columbia shale gas acreage, the company has the potential to unlock as much as 15 trillion to 20 trillion cubic feet of gas reserves, Markin said.
Meanwhile, Edwards said he does not foresee the world's major oil companies taking advantage of weak energy market conditions to make big takeovers in Canada.
"A lot of them were in Canada in earlier periods and left the country because they had a challenging time managing in the context of the capital constraints of Canada, people constraints
and the smaller base of the reserves," he said. "We've seen that movie and I don't think we're going to see a sequel."
Canadian Natural shares fell 7 percent to C$53.46 on the Toronto Stock Exchange, on a day when U.S. oil sank $3.08 to $59.33.
Canadian Natural, the country's second-largest independent oil company, has entered the meltdown in energy and credit markets with a strong balance sheet, which will give it the financial muscle to make strategic buys, Edwards said.
"As we move into 2009, there will be opportunities to acquire others who don't have the same flexibility and balance sheet, don't have the same undrawn bank lines, don't have the same ability to access credit markets," the billionaire investor told a company-sponsored investor conference.
The company's executives said they do not have a size of takeover or region in mind, only that the assets must fit with the its expertise and offer free cash flow.
Last week, Canadian Natural -- now starting up the C$9.7 billion ($8 billion) Horizon oil sands project -- said it will slash its spending by 47 percent in 2009 to C$4 billion.
The move is aimed at helping it weather weak crude prices and shaky financial markets, but the company said it has the ability to ramp spending up quickly should markets rebound.
Edwards, who is also known for his investments in Ensign Energy Services Inc (ESI.TO: Quote, Profile, Research, Stock Buzz), Magellan Aerospace (MAL.TO: Quote, Profile, Research, Stock Buzz), FirstEnergy Capital and the NHL's Calgary Flames, said he sees no quick end to the downturn that has cut oil prices to below $60 a barrel from more than $147 in July.
"I think you're looking at a year-plus," he told reporters.
The crisis, which began last year in the U.S. mortgage market, is only now spilling over from the credit and financial industries into other sectors of the economy, Edwards said.
"I think the risk is that the impact on Main St. is going to be far deeper and longer than we think, and I think that's one of the reasons we see governments being so proactive globally in trying to get in front of this thing as much as possible," Edwards said.
Canadian Natural has hunkered down by cutting spending and hedging up to 50 percent of its oil and gas production through the next 12 months and 25 percent in the following year.
"By doing that we feel we're going to have one of the stronger balance sheets, so to the extent there are others who aren't as prudent we'll be able to have opportunities to grow," he said.
Canadian Natural has grown in the past two decades through a series of acquisitions, most recently snapping up Anadarko Petroleum Corp's (APC.N: Quote, Profile, Research, Stock Buzz) Canadian assets in 2006. It produced 555,356 barrels of oil equivalent a day in the third quarter.
Chairman Allan Markin said one hot area where it will not shop is in U.S. shale gas, where a drilling boom has led to a recent jump in natural gas output in that country.
With its own British Columbia shale gas acreage, the company has the potential to unlock as much as 15 trillion to 20 trillion cubic feet of gas reserves, Markin said.
Meanwhile, Edwards said he does not foresee the world's major oil companies taking advantage of weak energy market conditions to make big takeovers in Canada.
"A lot of them were in Canada in earlier periods and left the country because they had a challenging time managing in the context of the capital constraints of Canada, people constraints
and the smaller base of the reserves," he said. "We've seen that movie and I don't think we're going to see a sequel."
Canadian Natural shares fell 7 percent to C$53.46 on the Toronto Stock Exchange, on a day when U.S. oil sank $3.08 to $59.33.
