Page 4 - NorthAmOil Week 49 2022

NorthAmOil COMMENTARY NorthAmOil

Oil sands giants plan

to ramp up spending

Canada’s leading oil producers have unveiled plans

to step up capital spending in 2023 as rising costs

continue to pose a challenge for the industry

CANADA CANADA’S leading oil producers have been leading producers. The company anticipates that
unveiling more details of their capital expend- its production guidance range will only grow at
WHAT: iture and production growth plans for 2023. the upper end, reaching 740,000-770,000 barrels
Canada’s leading oil Their announcements point to a mix of rela- of oil equivalent per day, compared with 740,000-
producers are planning tively favourable market conditions and ongoing 760,000 boepd a year earlier. Meanwhile, Suncor
to boost capital spending challenges such as rising operational costs. And has raised its capex forecast for a second time,
next year. it appears that the companies will continue to to CAD5.4-5.8bn ($4.0-4.3bn), compared with
pursue a balance between increased shareholder 2022 guidance of CAD4.9-5.2bn ($3.6-3.8bn).
WHY: returns and production growth. At the midpoint, this represents an almost 11%
While some of the Debt reduction also remains important, as increase.
increase is down to producers seek to bounce back from the oil There are certain drivers behind this that are
favourable market price downturns of the past decade. unique to Suncor. The company said its higher
conditions, rising costs Suncor Energy’s guidance for 2023 is particu- capex budget includes costs related to the
continue to pose a larly illustrative of the challenges the industry expansion of its stake in the Fort Hills oil sands
challenge. as a whole – and the company in particular – mine in Alberta as it buys out Teck Resources’
faces, given that its production growth is lim- stake in the project, with that transaction set to
WHAT NEXT: ited while its capex guidance has risen again. close in 2023.
Seeking to strike a Cenovus Energy, meanwhile, is more bullish on Suncor is also raising its spending in an effort
balance between its longer-term production growth and antici- to improve performance at Fort Hills, which
increased shareholder pates that this will eventually be in line with the has been running into operational issues. The
returns and higher increases in its capex. company previously warned that it anticipated
production is a popular Imperial Oil has not yet made an announce- lower production than previously expected over
strategy. ment on its guidance for next year, but earlier the next three years as a result of the challenges
comments suggest that the company will seek at that facility and the efforts being made to turn
to strike a balance between reinvesting in its its performance around. It has also previously
business and returning cash to shareholders, as noted that inflationary pressures were playing
will Canadian Natural Resources Ltd (CNRL). into its rising capex guidance.
Indeed, this is a trend among all four producers.
Cenovus
Suncor Cenovus, meanwhile, appears to be more opti-
Suncor’s guidance for 2023 shows perhaps most mistic over its production growth eventually
clearly that it is not all plain sailing for Canada’s catching up with the rise in capital spending,

Suncor has been
struggling with
operational issues at
its Fort Hills oil sands
mine that are having a
negative impact on its
production growth.

P4 www. NEWSBASE .com Week 49 08•December•2022