Shares in natural gas producer Birchcliff Energy Ltd. fell by as much as 13.7 per cent on Thursday after it announced a higher-than-expected $350-million 2020 capital spending budget.
The Calgary-based company’s stock slipped to as little as $1.77, down 28 cents from its $2.05 close on Wednesday. In the past year, its shares have ranged from $4 in March to $1.70 in August.
In its updated five-year plan released Wednesday after markets closed, Birchcliff says it aims to grow production to 96,500 barrels of oil equivalent per day by the end of 2021 to better utilize and realize more profits from its Pouce Coupe natural gas processing plant in northeastern B.C.
It says it will budget to spend between $340 million and $360 million this year to boost output by about 13 per cent to about 88,000 boe/d in the fourth quarter.
Analyst Darrell Bishop of Haywood Capital Markets says observers had expected Birchcliff to spend about $300 million this year, predicting the market would not welcome a bigger budget.
But CEO Jeff Tonken says spending more now will pay off later for the company’s shareholders.
“We are focused on maximizing efficiencies and continuing to improve our drilling results on our Montney/Doig resource play and we look forward to the next five years as we execute on our plan,” he said in a news release.