UPDATE 3-African field woes push Canadian Natural into red

* Gabon operations written down by C$672 million

* Drilling at field curtailed

* Net loss C$416 million, or C$0.38/shr, after writedown

* Shares fall 3 percent
(New throughout with executive, analysts’ comments, details)

By Jeffrey Jones

CALGARY, Alberta, March 3 (Reuters) – Canadian Natural
Resources Ltd (CNQ.TO: Quote, Profile, Research), the country’s largest independent oil
explorer, fell into the red in the fourth quarter after writing
down the value of a failed African offshore oil play.

Canadian Natural said on Thursday it chopped the book value
of its Olowi field in Gabon by C$672 million ($693 million) and
opted to curtail drilling there after determining the reserves
would not meet its economic threshold.

Shares in the company, which is also repairing its
fire-damaged Alberta oil sands project, sank C$1.39, or 3
percent, to C$48.34 on the Toronto Stock Exchange, despite a 20
percent increase in the dividend to 9 Canadian cents a share.

“Those assets have been underperforming, so it’s not
something that came out of left field. But I think it does
question some of the success rates in some of their
international operations,” Macquarie Capital Markets analyst
Chris Feltin said.

Offshore West Africa production fell 17 percent in the
fourth quarter, with much of the drop from Gabon. The company
also operates offshore in Ivory Coast.

“We’re basically into production optimization and producing
out the reserves, so I guess you could call that blow-down,”
President Steve Laut said in an interview.

Laut said the experience is not typical of its other plays
in the region.

Olowi is expected to pump 5,000-6,000 barrels a day this
year. Canadian Natural did not anticipate high geological risks
when it sanctioned the development, he said.

The company is reassessing how it evaluates international
projects as a result.

Meanwhile, it raised its estimates for repairing the
upgrading plant at its 110,000 barrel a day Horizon oil sands
project from a Jan. 6 blaze, after finding more damage as a
result of the freeze of some equipment afterward.

It now expects repairs to cost C$300 million to C$400
million, up from a previous estimate of C$250 million.

Insurance payouts are expect to cover the costs, Laut
said.

Canadian Natural expects to resume half the normal
production in the second quarter and return to full output in
the third quarter. It has advanced some planned maintenance
work during the outage.

FOURTH-QUARTER LOSS

In the fourth quarter, Canadian Natural lost a net C$416
million, or 38 Canadian cents a share, down from year-earlier
net income of C$455 million, or 42 Canadian cents a share.

The results included unusual expenses of C$1 billion.
Besides the Gabon writedown, items included unrealized hedging
losses, currency fluctuations and stock-based compensation.

Adjusted earnings were C$618 million, or 57 Canadian cents
a share, down 7 percent from C$667 million, or 61 Canadian
cents a share, as natural gas prices weakened and taxes rose.

The company had been expected to earn 64 Canadian cents a
share, the average estimate among analysts surveyed by Thomson
Reuters I/B/E/S.

Cash flow, a glimpse into the company’s ability to pay for
new project, fell 3 percent to C$1.6 billion, or C$1.51 a
share, from C$1.7 billion, or C$1.57 a share.

Oil production averaged 439,000 barrels a day, up 20
percent from the fourth quarter of 2009. Natural gas output
edged up slightly to 1.25 billion cubic feet a day.

Canadian Natural said it now expects oil production of
385,000 to 427,000 barrels a day for the year, down from its
expectation of 449,000-488,000 before the Horizon fire.

($1=$0.97 Canadian)
(Additional reporting by Isheeta Sanghi and Arnika Thakur;
editing by Rob Wilson)