Low oil and gas prices continued beating down the revenues of Canadian oil and gas producers in 2016, with this year’s top 100 companies reporting a combined revenue decline of $6.4 billion, or 10 per cent, from 2015.
Cash flows declined by $7.9 billion, or 23 per cent.
Yet, despite the declines, the top 100 managed to cut their losses substantially compared to 2015. The combined group reported losses of $31.8 billion in 2015. In 2016, that came in at only $3.7 billion.
Integrated/senior producers with production of more than 100,000 boe/d managed to eke out a combined profit of around $700 million in 2016, compared with a $12.7-billion loss in 2015. Intermediate operators with production between 25,000 and 100,000 boe/d cut their losses from $14.5 billion in 2015 to just $1.3 billion in 2016.
How did the industry do it?
By driving down costs.
Service companies were hit with the brunt of the cost-cutting effort. The top 50 service and supply companies saw their revenues decline by $8.8 billion, or 30 per cent, in 2016 compared with the previous year. But even here, through their own cuts and improved productivity, losses were pared. The top 50 reported a combined loss of $ 2.9 billion in 2016, compared to a loss of $3.6 billion in 2015.
In the first half of 2017, commodity prices have improved, providing some needed relief for Canada’s industry. Operators are now reporting positive net incomes for the first time in almost two years. Service companies are now looking to raise prices to get back in the black.
The key for the industry as a whole will be finding a balance where all sectors can be profitable at current prices. Oil and gas prices are expected to remain volatile for the foreseeable future. Flexibility will be crucial as 2017 unfolds.
To download the Oilweeek 2017 Top 100 data tables, click here.
Image: Canadian Natural Resources