CALGARY - The president of Canadian Natural Resources Ltd. says bitumen leaks at its Primrose oilsands project are "totally solvable" and that the cleanup there is about 80 per cent complete.

The company is convinced that the only way the emulsion of bitumen and water could have seeped to the surface is through faulty wellbores at the property near Cold Lake, Alta., Steve Laut said Thursday.

"This is a technical, operational challenge that is totally solvable," he said on a conference call with analysts.

Laut provided the update on the same day Canadian Natural hiked its dividend by 60 per cent, posted stronger third-quarter earnings and announced it plans to increase capital spending next year.

So far, the Alberta Energy Regulator has not come to the same conclusion as Canadian Natural about what's behind the Primrose problems, which were made public in late June. A probe is underway into the root cause.

Following a similar event in 2009 at Primrose, the provincial energy watchdog raised the question of whether geologic weakness could be to blame, rather than faulty wellbores.

But Laut said there are three major geologic formations that should prevent fluids from escaping to the surface when Canadian Natural injects steam deep into the underground reservoirs.

"To date, we have not seen any evidence that would indicate any other possible route to surface" than through an old wellbore, he said.

Laut added the company's conclusion "is sound and it is governed by rock mechanics and the basic laws of physics."

Canadian Natural says it has identified four legacy wells that are the likely culprits behind the leaks. It has found mechanical failures in two, is in the process of reviewing one and waiting to get approval to access the site of another.

Canadian Natural has determined there are 31 old wells throughout the site that could pose a risk, although they meet regulatory requirements for abandoned wells.

Of those, 16 are within one kilometre of areas where Canadian Natural intends to inject steam underground next year. The steam is used to soften the bitumen so it can flow to the surface in a method called high pressure cyclic steam stimulation.

So far, Canadian Natural has fixed one of those wells, confirmed that another is OK and will check the remaining 14 once it is able to access those locations.

Laut says the company also intends to enhance monitoring, so it has an early warning if something is amiss underground.

Also Thursday, Canadian Natural announced it's hiking its quarterly dividend to 20 cents per share on Jan. 1 from its current payout of 12.5 cents. It said the increase reflects confidence in its ability to generate higher cash flow.

The Calgary-based company said it expects to increase annual cash flow by 14 per cent in 2014 to $8.7 billion as production output grows by seven per cent over this year's level.

Part of Canadian Natural's cash flow will be used to fund a 2014 capital budget of at least $7.7 billion, with an additional $400 million potentially available during the year for the Horizon oilsands project.

That marks an increase over Canadian Natural's expected 2013 capital spending of nearly $7.2 billion.

Third-quarter adjusted earnings rose to $1.01 billion or 93 cents per share — beating the average analyst estimate of 90 cents per share. At the same time last year, Canadian Natural posted adjusted earnings of $353 million, or 32 cents per share.

Production was 702,938 barrels of oil equivalent per day, up from 667,616 a year earlier.

Its Horizon oilsands mine north of Fort McMurray, Alta., churned out nearly 112,000 barrels of oil per day, an improvement from 99,205 a year earlier.

Overall construction on an expansion to Horizon is about 30 per cent complete.

Loading Slideshow...
  • Oil level is over two feet high.

  • Lack of regeneration show oil has been leaking for over four months.

  • The Alberta Energy Regulator has confirmed that this photo originated from Canadian Natural Resources Limited.

  • Oil seeping to the surface from underground.

  • <em><strong>More facts about the CNRL spill at its Primrose operation near Cold Lake. </strong></em>

  • CFB Cold Lake, CNRL

    A bitumen leak was reported at a Canadian Natural Resources oilsands operation in the weapons range part of the RCAF base in June 2013.

  • CFB Cold Lake, CNRL

    Company officials said the leak - at what it calls its Primrose operation - was caused by faulty machinery at one of the wells, affected an area of approximately 13.5 hectares and released as much as 3,200 litres of bitumen each day.

  • CFB Cold Lake, CNRL

    Preliminary tallies put the death toll from the leak at 16 birds, seven small mammals and 38 amphibians. Dozen were rescued and taken to an Edmonton centre for rehabilitation.

  • CFB Cold Lake

    As of early August 2013, more than 1.1 million litres of bitumen had been pulled from marshlands, bushes and waterways.

  • CFB Cold Lake, CNRL

    Although CNRL could not say when the leak may finally be stopped, it estimates it will likely cost more than $40 million to clean up.

  • <em>Click through for other recent spill in Alberta</em>

  • Plains Midstream

    Little Buffalo band member Melina Laboucan-Massimo scoops up July 13, 2012 what appears to oil from the pond shoreline near the site of a 4.5 million-litre Plains Midstream pipeline leak detected April 29, 2011. Photos taken at the site and released by Greenpeace of Alberta's second-worst pipeline spill suggest at least part of the site remains heavily contaminated despite company suggestions that the cleanup is complete.

  • Plains Midstream Canada

    A boat passes by a boom stretching out to contain a pipeline leak on the Gleniffer reservoir near Innisfail, Alta., Tuesday, June 12, 2012. Plains Midstream Canada says one of their non-functioning pipelines leaked between 1,000-3,000 barrels of sour crude near Sundre, Alberta, on June 7 and flowed downstream in the Red Deer river to the reservoir.

  • Plains Midstream Canada

    Debris pushes up against a boom as it stretches out to contain a pipeline leak on the Gleniffer reservoir near Innisfail, Alta., Tuesday, June 12, 2012.

  • Plains Midstream Canada

    A boom stretches out to contain a pipeline leak on the Gleniffer reservoir near Innisfail, Alta., Tuesday, June 12, 2012. Plains Midstream Canada says one of their non-functioning pipelines leaked between 1,000-3,000 barrels of sour crude near Sundre, Alberta, on June 7 and flowed downstream in the Red Deer river to the reservoir.

  • Plains Midstream

    A boom stretches out to contain a pipeline leak on the Gleniffer reservoir near Innisfail, Alta., Tuesday, June 12, 2012. Plains Midstream Canada says one of their non-functioning pipelines leaked between 1,000-3,000 barrels of sour crude near Sundre, Alberta, on June 7 and flowed downstream in the Red Deer river to the reservoir.

  • Plains Midstream Canada

    A photographer snaps a boom stretching out to contain a pipeline leak on the Gleniffer reservoir near Innisfail, Alta., Tuesday, June 12, 2012. Plains Midstream Canada says one of their non-functioning pipelines leaked between 1,000-3,000 barrels of sour crude near Sundre, Alberta, on June 7 and flowed downstream in the Red Deer river to the reservoir.

  • Plains Midstream Canada

    A boom stretches out to contain a pipeline leak on the Gleniffer reservoir near Innisfail, Alta., Tuesday, June 12, 2012. Plains Midstream Canada says one of their non-functioning pipelines leaked between 1,000-3,000 barrels of sour crude near Sundre, Alberta, on June 7 and flowed downstream in the Red Deer river to the reservoir.

  • Plains Midstream Canada

    A worker slows traffic while a boom stretches out to contain a pipeline leak on the Gleniffer reservoir near Innisfail, Alta., Tuesday, June 12, 2012. Plains Midstream Canada says one of their non-functioning pipelines leaked between 1,000-3,000 barrels of sour crude near Sundre, Alberta, on June 7 and flowed downstream in the Red Deer river to the reservoir.

  • Plains Midstream Canada

    A no swimming sign along the banks of the Gleniffer reservoir while a boom stretches out to contain a pipeline leak on the lake near Innisfail, Alta., Friday, June 12, 2012. Plains Midstream Canada says one of their non-functioning pipelines leaked between 1,000-3,000 barrels of sour crude near Sundre, Alberta, on June 7 and flowed downstream in the Red Deer river to the reservoir.

  • Plains Midstream Canada

    Oil from a pipeline leak coats a pond near Sundre, Alta., Friday, June 8, 2012. Plains Midstream Canada says one of their non-functioning pipeline leaked between 1,000-3,000 barrels of oil.

  • Plains Midstream Canada

    Oil from a pipeline leak coats a pond near Sundre, Alta., Friday, June 8, 2012. Plains Midstream Canada says one of their non-functioning pipeline leaked between 1,000-3,000 barrels of oil.

  • Plains Midstream Canada

    Oil from a pipeline leak coats a pond near Sundre, Alta., Friday, June 8, 2012. Plains Midstream Canada says one of their non-functioning pipeline leaked between 1,000-3,000 barrels of oil.

  • Plains Midstream Canada

    Tracks pass through oil on the banks of the Gleniffer reservoir after a pipeline leak near Sundre, Alta., on Friday, June 8, 2012. Plains Midstream Canada says one of their non-functioning pipelines leaked between 1,000-3,000 barrels of oil.

  • Enbrige's Athabasca pipeline

    Approximately 1,450 barrels of oil spilled from a pumping station along Enbridge’s Athabasca pipeline in June 2012. The spill occurred approximately 24 kilometres from Elk Point, Alta., a village located 200 kilometres northeast of Edmonton.

  • Lake Wabamun

    Wreckage from the August 3rd train derailment and subsequent oil spill is seen lining the shore of Lake Wabamun on Monday, August 8, 2005, as clean-up continues.

  • Lake Wabamun

    Wreckage and black oil from the August 3rd train derailment and subsequent oil spill are seen lining the shore and waters of Lake Wabamun on Monday, August 8, 2005, as clean-up continues.

  • Lake Wabamun

    White absorbent boom is seen lining the shores of Lake Wabamun, Alberta, as the clean-up effort from the August 3rd train derailment and subsequent oil spill continues on Monday, August 8, 2005.

  • Lake Wabamun

    Wreckage and black oil from the August 3rd train derailment and subsequent oil spill are seen lining the shore and waters of Lake Wabamun on Monday, August 8, 2005, as clean-up continues.

  • Lake Wabamun

    Wreckage and black oil from the August 3rd train derailment and subsequent oil spill are seen lining the shore and waters of Lake Wabamun on Monday, August 8, 2005, as clean-up continues. Lake Wabamun was severely polluted when a train carrying heavy oil derailed on August 3, 2005, spilling much of it's load into the lake.

  • Lake Wabamun

    Rail cars leak bunker fuel oil, meters from summer homes bordering Lake Wabamun, after a freight train derailed, in this August 3, 2005 file photo, near the town of Wabamun, Alta. Canadian National Railway faces an environmental charge stemming from the train derailment and oil spill at a popular Alberta lake last summer.