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Canadian Natural review into Primrose leak almost done: CNQ president

CALGARY - Any solution to a prolonged leak at Canadian Natural Resources Ltd.'s (TSX:CNQ) Primrose oilsands project will have to address all possible ways the bitumen-water mixture could have travelled to surface, company president Steve Laut said Thursday.

The company says all its data points to the culprit being faulty wellbores at the site near Cold Lake, Alta. The Alberta Energy Regulator has not yet come to the same conclusion, and pointed to geological weaknesses as a potential cause for a past incident in the same area.

Even though Canadian Natural has a good idea of what went wrong, Laut said: "We're going to be open."

"It doesn't make sense for us to say that's the one," he told reporters following the company's annual general meeting. "We'll have a solution for all potential pathways to the surface."

The company has almost completed a review into the root cause of the leaks, which were discovered about a year ago in four separate locations.

Once it's finished, the work will be handed over to the Alberta Energy Regulator's technical experts.

"We're still working on it. We're not putting ourselves under a timeline. We're going to make sure it's done right," Laut said.

All of the bitumen has been cleaned up and contained, he added, and most of the old wells across the site have been checked for mechanical problems.

Last month, the regulator approved a request by Canadian Natural to resume steaming wells near where the leaks occurred, causing alarm from environmental groups.

Also Thursday, CNRL said it virtually tripled its year-over-year net earnings in the first quarter.

The Calgary-based oil and natural gas producer reported after markets closed that net income in the quarter totalled $622 million or 57 cents per share compared with $213 million or 19 cents in the prior-year period.

Revenue for the three months ended March 31 rose to almost $4.4 billion from $3.76 billion in the prior-year period.

Laut added that as a result of recent acquisitions and ongoing development opportunities, the company's 2014 development capital budget has been raised by $425 million and its 2014 annual production guidance has also been increased. Capital allocated to natural gas has increased by $210 million.

In February, Canadian Natural snagged land in Western Canada from Devon Canada for $3.1 billion, adding more gas to its portfolio.

The company had in the past curbed gas production during periods of low prices, but the picture is looking brighter, said Laut, who expects natural gas to hover in the US$4 to US$5 range for the next year or two. Many of the company's gas operations are economically viable at those levels "to varying degrees."

"But that being said, we have a large, diverse portfolio so it always has to compete with oil projects."

The midpoint of expected crude oil and natural gas liquids production for 2014 has been raised by three per cent or 15,000 barrels a day, while the midpoint of natural gas production has been increased by 30 per cent or 360 million cubic feet per day, he said.

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