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    CNQ   CA1363851017

CANADIAN NATURAL RESOURCES LIMITED

(CNQ)
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Delayed Toronto Stock Exchange  -  05/27 04:15:19 pm EDT
84.99 CAD   +1.09%
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Canada watchdog says funds for inactive oil well clean-up may fall short

01/25/2022 | 09:32am EDT

(Adds Cenovus comment)

CALGARY, Alberta/OTTAWA, Jan 25 (Reuters) - Funds allocated by the Canadian government to help clean up the country's orphan oil and gas wells may fall short if the main oil-producing province of Alberta continues to allocate the money to financially viable companies, the parliamentary budgetary watchdog said on Tuesday.

About half the funds in Alberta went to 10 companies that are expected to remain financially viable over the next few years, including some of Canada's largest energy producers - Canadian Natural Resources Ltd, Imperial Oil, and Cenovus Energy, budgetary officials said. All have benefited from surging oil prices in recent months.

Canada is the world's fourth-largest oil producer and sixth-largest natural gas producer and its western provinces are dotted with hundreds of thousands of oil and gas wells. Some of those wells are orphans, meaning the companies that owned them have gone bankrupt or ceased to exist.

In April 2020, the federal Liberal government allocated C$1.7 billion ($1.3 billion) to clean inactive oil and gas wells.

There are approximately 225,000 inactive and plugged wells in Alberta and Saskatchewan, the two largest energy-producing provinces. Around 11,000 are orphans and the watchdog estimates the clean-up cost for those wells will reach C$1.1 billion by 2025.

While the amount set aside by Ottawa should be enough to cover the orphan well clean-up cost, Parliamentary Budget Officer Yves Giroux warned the funding could fall short if Alberta continued to allocate federal money to firms that are not in financial trouble.

"If that trend continues, it's possible that the funding set aside would not be sufficient to clean up all of the inactive orphan wells into the future," Giroux told a conference call.

Canada has a "polluter pays" principal, in which the companies that extract natural resources are expected to set aside funds to cover the cost of clean-up.

Giroux noted the federal funding was set up to clean up inactive wells, not necessarily orphan wells, and it was up to Alberta to determine which companies received funding.

Alberta government spokesperson Jennifer Henshaw said the funds went directly to oilfield services companies specializing in well clean-up, rather than the well licensees.

"The program has accelerated the cleaning up of inactive sites and has created more than 1,900 jobs," Henshaw added.

A Cenovus spokesperson said in a statement the company had accessed Alberta's site rehabilitation program during the economic downturn in 2020, and would continue doing so until its completion this year.

Canadian Natural and Imperial did not immediately respond to request for comment. ($1 = 1.2639 Canadian dollars) (Reporting by David Ljunggren Editing by Mark Potter, Marguerita Choy, Bernard Orr and Aurora Ellis)


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
CANADIAN NATURAL RESOURCES LIMITED 1.09% 84.99 Delayed Quote.59.01%
CENOVUS ENERGY INC. 2.20% 28.8 Delayed Quote.85.69%
IMPERIAL OIL LIMITED 2.97% 71.05 Delayed Quote.55.74%
LONDON BRENT OIL 1.52% 119.2 Delayed Quote.50.58%
S&P GSCI NATURAL GAS INDEX -1.89% 408.6057 Real-time Quote.133.97%
WTI 0.94% 115.083 Delayed Quote.51.34%
All news about CANADIAN NATURAL RESOURCES LIMITED
05/27WTI Crude Oil Closes Higher as the US Sets to Enter the Summer Driving Season Amid Reco..
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Financials
Sales 2022 40 820 M 32 027 M 32 027 M
Net income 2022 13 025 M 10 219 M 10 219 M
Net Debt 2022 9 254 M 7 261 M 7 261 M
P/E ratio 2022 7,49x
Yield 2022 3,43%
Capitalization 98 107 M 76 973 M 76 973 M
EV / Sales 2022 2,63x
EV / Sales 2023 2,81x
Nbr of Employees 9 735
Free-Float 98,5%
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Last Close Price 84,99 CAD
Average target price 91,62 CAD
Spread / Average Target 7,80%
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Tim Shawn McKay President, Chief Operating Officer & Director
Mark A. Stainthorpe Chief Financial Officer & Senior VP-Finance
Norman Murray Edwards Executive Chairman
Stephen C. Suche Vice President-Information & Corporate Services
David Arnold Tuer Independent Director
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