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Canadian Natural Resources said Tuesday it is cutting its oil and natural gas capital spending, pinning the bulk of the reduction on Alberta's new royalties on energy. The Calgary company said its 2008 spending on Canadian conventional crude oil and natural gas will come in at about $1.7 billion, down one-third from 2007. Following the news, Canadian Natural shares tumbled $5.40 to close at $65.65 in TSX trading - a drop of 7.6 per cent. The company said about 78 per cent of the reduction - or about $645 million - is because of a reduced drilling program in Alberta largely as a result of the impact of the royalty review changes. The province said in October it planned to bring in a new royalty regime, which is expected to raise as much as $1.4 billion a year in additional government revenue. Prior to that announcement, several energy companies said they would cut spending in Alberta if the provincial government hiked royalty rates. "The new royalty regime introduced by the province of Alberta effective for 2009 will take the vast majority of any increases in natural gas prices for most of our natural gas wells," said Canadian Natural vice-chairman John Langille in a statement. "As such, the ability to increase natural gas drilling activity with increasing gas prices is severely impacted." Canadian Natural said it has a natural gas production target for 2008 of between 1,429 and 1,513 million cubic feet per day before royalties. The company said the midpoint of that range is down 12 per cent from the mid-range of its 2007 forecast. The cut in forecast gas production comes as natural gas prices remain weak while oil prices remain near record highs. On Monday, Alberta Finance Minister Lyle Oberg told members of the oilsands industry in Calgary that the province's new royalty regime isn't set in stone. He said the formula could eventually come in for a reworking.