Page 4 - NorthAmOil Week 49 2022
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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
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