Energy sector rebounding: PWC survey

TORONTO: Canada’s oil and gas producers didn’t have a very good year in 2009. They logged their weakest earnings performance since 2002, but showing improvement in the second half of the year, according to a survey conducted by global consulting firm PricewaterhouseCoopers (PWC).

Here are some highlights from the Canadian Annual Energy Survey of the top 100 oil and gas companies:

• 2009 gross revenue slid 32% to $132.9 billion from $194 billion the prior year. Revenue from the top 20 operators accounted for more than 90% of total revenues.

• Combined profit was $8.5 billion, a decrease from $36.0 billion from 2008.

• Oil and gas production averaged 4.64 million barrels of oil equivalent (BOE) per day, up from 4.48 million BOE per day in 2008.

• Operating costs per BOE declined by 7% to $13.61 in 2009 from $14.67 the previous year.

“Soaring costs were brought back to earth in the face of a dramatic pullback in capital spending,” said Scott Bolton, partner and national leader of PWC’s energy practice.

The results show many producers proved that the combination of horizontal drilling and multi-stage fracturing could unlock new reserves in many different oil and gas formations across Western Canada. The combination of all of these factors has already helped to produce a notable increase in first quarter 2010 drilling activity. During the first three months of 2010, the rig release count of 3,634 wells increased 22% from the 2009 multi-year low of 2,970.

Oil sands production averaged 1.49 million barrels per day of raw crude bitumen from, according to the Energy Resources Conservation Board (ERCB). The annual total of 544 million barrels last year represents a 14% increase over Alberta’s 2008 production, and has pushed total oil sands production since 1967 to nearly 7 billion barrels.

By 2019, Alberta’s raw bitumen production is expected to increase to 3.2 million barrels per day based on announced expansions of existing projects and the start of new projects. Synthetic crude oil production is forecast to increase by approximately 77%, to 1.3 million barrels per day, according to the ERCB.

“The recovery in crude oil prices has revitalized new oil sands development, however the trend is towards smaller scale projects,” says Bolton. “And while projects appear to be moving ahead, the sector’s development is still a very expensive, capital-intensive initiative and the need for skilled labour and more efficient regulatory processes will continue to pose challenges.”

The survey is completed in partnership with JuneWarren-Nickle’s Energy Group.

Click here for a copy of the survey.