Further to the announcement issued by North American Energy Partners Inc. (“NAEP” or “the Company”) (TSX:NOA) (NYSE:NOA) on Wednesday May 18th, the Company has now been notified by its customer, Canadian Natural Resources Limited (“Canadian Natural”), to suspend overburden removal activities at the Horizon Oil Sands project near Fort McMurray, Alberta. The suspension is being taken while Canadian Natural undertakes repairs to its primary upgrading facility, which was damaged in a fire in January 2011. The suspension of work notice was issued on May 18, 2011 at 2 pm and is effective until January 2, 2012.
“Although Canadian Natural is required to cover our fixed costs on equipment related to the contract that is left idle by this suspension of work, we will work closely with our customer to determine if we can minimize their costs by redeploying our resources to other projects in the region,” said Rod Ruston, President and CEO. “Fortunately the suspension comes at a time when demand for equipment and services is growing strongly both from other existing operations in the oil sands and from major new projects starting construction in the region.”
“Given our recently announced contract wins at Shell and Syncrude and the anticipated signing of a new five-year contract with Suncor for overburden, site reclamation and light civil construction, the availability of this equipment in the short term could provide a valuable and timely addition to our general contract fleet,” added Mr. Ruston.. “The work suspension at Canadian Natural effectively removes the only low-margin recurring services activity in our project mix for the next nine months. Accordingly, our cash flow and margins are expected to improve if we are able to increase service levels for other customers.”
Read the full news release here.