So far, 2015 has not been kind to Canadian Natural Resources Ltd. (TSX:CNQ)(NYSE:CNQ) as its stock price is down about 30%. A lot of that has to do with oil prices. However, the company has also had to deal with tax issues in Alberta, and just last week its stock was downgraded by an analyst at JP Morgan.

In fact, it’s that downgrade that really pointed out that the company could be under even more pressure in 2016, which could be a lost year for the company.

Winding down at the wrong time

One thing the analyst mentioned in the downgrade was that Canadian Natural Resources could be under some balance sheet pressure next year. This is because the company’s oil hedges will start rolling off, therefore weakening its cash flow at a time when it needs the cash to fund capex. That funding need stems from the continued investments needed to bring its Horizon oil sands expansion projects online.

While the company has yet to put out a 2016 budget, JP Morgan estimates that the company will need to spend more money next year to fund Horizon. That puts it in a tough spot as it will become much more exposed to the full weakness in oil prices as its oil hedges dry up.

That leaves it with few options other than using even more of its balance sheet to fund the difference between cash flow and capex after expecting to fund $500 million of the expansion this year with its balance sheet. This is a concern as its balance sheet isn’t as strong as some of its peers.

Waiting for the turn

Having said that, once the next Horizon expansions are online by the end of 2017, Canadian Natural Resources will be in a very strong position.

On the company’s second-quarter conference call, it noted that in a $50 oil price world its Horizon expansions would add $1.6 billion in cash flow per year after capital requirements, while a $70 oil price would boost its cash flow by $3.3 billion per year.

Suffice it to say, if the company can just get through the next couple of years without overloading its balance sheet with debt, it should be fine. It certainly has options as it could slow down non-Horizon-focused growth capex next year, or even sell non-core assets to reduce the gap. Not to mention the fact that a meaningful rebound in the oil price would make its cash flow-to-capex gap vanish rather quickly.

Investor takeaway

If oil prices remain weak, Canadian Natural Resources could be in for a challenging 2016. Not only will its cash flow weaken as its oil hedges wind down, but it could weaken its balance sheet if it uses debt to fund the difference between capex and cash flow.

That said, even if oil prices don’t improve all that much, the company sees much better days on the horizon as it works towards finishing a major oil sands expansion phase.

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Fool contributor Matt DiLallo has no position in any stocks mentioned.