CALGARY, Alberta (Bloomberg) -- Canadian Natural Resources Ltd. lowered its 2016 capital budget about 22%, joining peers in clawing back investments as price assumptions fall in the worst oil rout in a generation.

Canada’s largest heavy-crude producer now plans to spend C$3.5 billion ($2.6 billion) to C$3.9 billion this year, down from November’s estimate of between C$4.5 billion and C$5 billion, the Calgary-based company said Thursday in a statement. Analysts expect U.S. crude to average about $39.50/bbl in 2016, according to the median of 37 estimates compiled by Bloomberg.

Canadian Natural is among energy companies shelving projects and cutting costs to withstand an oil-price slump that’s lasted more than 20 months. The company, also the nation’s biggest gas producer, is contending with a drop in prices for that fuel as well. Canadian Natural continues to expand its Horizon oil-sands project to a target of 250,000 bpd in 2018 as it stays focused on long-term profits.

“In 2016, we are proactively managing capital spending to the current price environment and will maintain additional capital flexibility we can exercise if we choose,” CFO Corey Bieber said in the statement. “Horizon Phase 2B start up is 7 months away, at which time the nature of the Company’s production profile takes another step towards a long life, low decline profile.”

Output Forecast

The company expects total production of 809,000–868,000 boed this year, down from an initial forecast of 843,000–886,000 boed. It reported an 89% decline in fourth-quarter net income to C$131 million, or 12 cents a share. Excluding one-time items, its 4-cent-a-share loss beat the 14-cent loss expected by analysts, according to the average of 14 estimates compiled by Bloomberg.

The results and outlook are positive, according to Chris Cox, an analyst at Raymond James Ltd. in Calgary. The balance sheet and liquidity are in “much better shape” than some would expect and the free cash flow outlook from the Horizon expansion also looks better than most would expect, with the project cash neutral at $30 West Texas Intermediate even before the third expansion phase is complete, Cox said in a note Thursday.

West Texas Intermediate crude averaged $42.16/bbl in the fourth quarter, while North American gas prices averaged $2.235 per million British thermal unit. U.S. oil futures are still down about 70% from a high in mid-2014, trading around $34.70 on Thursday.

Canadian Natural, which has 20 buy and seven hold recommendations from analysts, rose 3.8% to C$31.29 at 9:32 a.m. in Toronto Thursday.