We continue to ensure our business remains balanced and our financial position remains strong by reallocating capital expenditures. We have adjusted our targeted capital expenditures for the year downward by almost $700 million. This reduction in CapEx, however, does not adversely affect our oil production guidance for the 2012 year. As Steve will show you, our balance asset base is very strong. We have tremendous opportunities to increase our reserves and production and most importantly we have a very defined plan to accomplish that. With that, I will hand the meeting over to Steve and then to Doug to discuss our financial position. Steve?
Thanks, John and good morning, everyone. As you can see in the second quarter our balanced and diverse assets, proven and effective strategy, executed by our strong teams delivered a very strong quarter. Production was up and operating costs were down across the board in North America. In addition, we’ve been nimble, effectively optimizing our capital allocation in the quarter in response to market conditions. We’ve reduced our capital spending in 2012 by roughly $700 million, a 10% reduction, and at the same time slightly increased our overall production guidance for 2012.
Canadian Natural’s ability to quickly and effectively reallocate capital and at the same time increase production, confirms the strength of Canadian Natural’s assets, our capital flexibility, the effectiveness of our strategies and the ability of our teams to effectively execute. Few, if any, companies in our peer group can effectively reduce capital spending and deliver a production increase.I’ll briefly comment on each of our areas, starting with gas. As you know, we’ve been bearish on gas prices and that’s not changed. In Q2, we proactively reduced our gas drilling program for the year by half, from 71 wells to 35 wells. As well, we deferred the well completions on our Septimus program and as a result we’ve deferred $110 million of gas capital out of the 2012 plan. This deferral of capital impacts gas and NGL production exit rates, since all these wells, especially at Septimus, were liquids-rich wells. We’ve also proactively shut in 20 million cubic feet of gas in 2012. Read the rest of this transcript for free on seekingalpha.com