Page 5 - NorthAmOil Week 10 2023

NorthAmOil COMMENTARY NorthAmOil

CNRL’s Horizon oil
sands project

the first quarter of 2023 of around 25,000 barrels were an estimated CAD120bn ($87bn).
per day (bpd) of oil, said the company. In Feb- Oil prices could remain strong this year,
ruary 2023, production from CNRL’s oil sands including in Canada, if not at the heights seen
mining and upgrading assets averaged about in 2022. China’s demand is forecast to surge as
483,000 bpd. COVID-19 restrictions are lifted, while Russia’s
oil production is anticipated to decline.
Bigger picture “Our view is that we’re still in a constructive
CNRL’s results come as profits have surged for pricing environment,” Suncor’s interim presi-
the oil and gas industry globally. Worldwide, oil dent and CEO, Kris Smith, told analysts in Feb-
and gas profits last year were about $4 trillion, ruary. “Obviously, [prices are] not going to be
up from an average of $1.5 trillion over the past what we saw in terms of the records of 2022.”
few years, the International Energy Agency’s Despite this, on March 1, the Canadian Asso-
(IEA) executive director, Fatih Birol, said in ciation of Petroleum Producers (CAPP) released
mid-February. a forecast that investment in Canada’s upstream
Rival Canadian oil sands companies Suncor production would hit CAD40bn ($29bn) in
Energy and Cenovus Energy have also posted 2023, surpassing pre-pandemic investment lev-
high profits. Suncor achieved adjusted operat- els. This would represent CAD4.0bn ($2.9bn)
ing earnings of CAD11.6bn ($8.4bn) in 2022, more in additional spending across Canada’s
up from CAD3.8bn ($2.7bn) in 2021. Suncor economy than the prior year, or an increase of If this plays
cut its debt by more than CAD2.5bn ($1.8bn), 11%, the trade association said.
down to CAD13.6bn ($9.8bn), and returned If this plays out, it will mark the third straight out, it will
CAD8bn ($6bn) to investors via dividends and year of consistent growth in upstream invest- mark the third
share buy-backs. ment, delivering more than 80% growth since
For its part, Cenovus earned CAD6.45bn the 2020 low of CAD22.0bn ($15.9bn) reached straight year of
($4.66bn) for the year, up from CAD587mn at the height of the COVID-19 pandemic, said
($424mn) a year earlier. The company reduced the CAPP. consistent growth
its net debt by more than half in 2022, to In Alberta, investment is expected to reach
CAD4.3bn ($3.1bn), a decline of more than CAD28.0bn ($20.2bn) in 2023, representing in upstream
CAD5.3bn (3.8bn) year on year. It provided about 70% of all upstream oil and natural gas investment.
annual common shareholder returns of more investment nationally. The growth in invest-
than CAD3.4 bn ($2.5bn), including more than ment is being driven both in the conventional
CAD2.5bn ($1.8bn) in share buybacks over the and oil sands sectors, the CAPP added.
year. This anticipated growth in investment would
come despite producers’ ongoing focus on
What next? shareholder returns and against the backdrop
In 2023, Canada’s oil and gas production is of lower oil prices than in the first half of last
expected to increase by about 4%, with total year. Nonetheless, on several fronts the operat-
profits amounting to CAD78bn ($56bn), ing environment remains more favourable than
according to the ARC Energy Research Insti- it has been in some time, and producers appear
tute. In 2022, the Canadian industry’s profits to be capitalising on that.™

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