Energy Companies

Aenert news. Energy Companies
Canada has immense oil reserves, with volumes well over 160 billion barrels. However, more than 95% of this volume comes from oil sands, which are a special type of unconventional oil that are the extremely difficult to extract and further refine. Canada is one of the five largest oil producing countries in the world, if we consider production of synthetic crude oil, which is a product of enrichment of oil sands. To produce this oil, mining and subsequent enrichment or thermal stimulation methods (Steam-assisted gravity drainage – SAGD or Cyclic Steam Stimulation – CSS) are used. Obviously, this significantly increases the operating costs as compared to conventional oil production and results in a pronounced dependence of the financial results of the local companies on the oil exchange quotations. In this connection the analysis of indicators of the Canadian oil industry and the financial position of the most significant companies are of practical interest as one of the indicators of the state of the world oil market.

According to the data below, overall Canadian oil production is alive and well, with no major setbacks or upsurges. Heavy crude oil production in 2022 increased noticeably, as well as conventional light crude oil. Upgraded bitumen production was down slightly by 20,000 b/d.

Production of Canadian crude oil and equivalent (b/d)

Source: Canada Energy Regulator

However, the data for March 2023 is not yet available for some positions, which does not allow us to see the full picture for the 2023Q1. But at least for Upgraded Bitumen there is an increase to 1.245 mln b/d for the first full quarter compared to 1.219 mln b/d in 2022Q4. At the same time, significant fluctuations in the number and cumulative length of Development Wells drilled (primarily Horizontal Wells) are concerning. For example, in 2022Q1 the total length of wells drilled was 1,691,651 m, in 2022Q4 – 2,666,536 m, and in 2023Q1 – 2,083,535 m.

Below are the financial and operating results of Canada's three largest companies specializing in the production and processing of mostly oil sands - Suncor Energy Inc., Genovus Energy Inc., and Imperial Oil Limited.  It is worth mentioning that when comparing the financial results of the companies in different time intervals, we should recall the changes in the oil market quotations, which in turn affect the prices of Bitumen, Heavy crude oil and Synthetic crude oil. Thus, the annual average price quotes of WTI (dollars per barrel) are: 39.16 in 2020, 68.13 in 2021 and 94.90 in 2022. In the first quarter of this year average monthly quotations of WTI fluctuated in the range of 78.12 - 73.28 dollars per barrel.

Suncor Energy Inc.

Suncor Energy is the world's largest bitumen production and processing company. Its main facilities are based in the Athabasca Region in the Fort McMurray area. The company produces both by mining methods and In-Situ (SAGD). Suncor Energy is consistently ranked among the top 100 largest public companies by Forbes Global.

During Q1 2023, the company's total oil sands production was 675,100 b/d, of which Bitumen accounted for 177,300 and Synthetic crude oil for 497,800 b/d. This is slightly less than in Q4 2022 when it was at 688,100 b/d or compared to Q1 2022's 685,700 b/d. At the same time bitumen production was up 6,700 b/d from the previous quarter.

Suncor Energy Refinery. Edmonton



Revenue grew substantially following global prices in 2022 and declined markedly in the first quarter of this year. Nevertheless, the company managed to generate good profits and get support from the stock market, which lets us look to the future with confidence.

Suncor Energy. Revenue, net income and share price



Source: Suncor Energy Inc.

In Q1 2023, Suncor Upgrader Refinery productivity dropped significantly to 367,700 b/d, which was only 79% of the previous quarter's processing volume. It should be noted that this is the lowest volume compared to all quarters of 2022. The company notes that this is due to the repair and restart of the refinery in southern Alberta.

Cenovus Energy Inc.

Cenovus Energy was formed in 2009 after the separation of Encana Corporation. The company is headquartered in Calgary, Alberta. Cenovus Energy mainly produces oil through Steam-assisted gravity drainage in the Fort McMurray area. As of the end of 2022, the company has three oil projects - Foster Creek, Christina Lake, and Sunrise - with Foster Creek and Christina Lake being the most productive. In addition, Cenovus Energy acquired a 50% stake in Sunrise oil sands asset last year, and a year ago acquired Husky Energy, an oil producer, for C$3.9 billion.

Cenovus Energy's first quarter 2023 Upstream Production Volumes of Oil Sands was 587,500 b/d, down 3.6% from the previous quarter, nevertheless about the same as the average annual production for 2022.

Cenovus Energy. Revenue, net income and share price



Source: Cenovus Energy Inc.

As in the case of Suncor Energy, Cenovus Energy's Revenue reached its peak in the middle of last year, primarily due to high oil exchange prices at that time. Then Revenue and Net Earnings declined significantly especially in the first quarter of this year. Despite this, the value of the company's shares on the stock market increased significantly.

Imperial Oil Limited

Imperial Oil is another of the leaders in bituminous oil production and refining. About 70% of the company is owned by ExxonMobil, the largest U.S. oil company. In addition to bituminous oil production and refining activities, Imperial Oil is active in natural gas production and petrochemicals production.

Imperial Oil. Revenue, net income and share price



Source: Imperial Oil Limited

Imperial Oil is involved in such projects as Kearl, Cold Lake and Syncrude. Oil production is carried out by both mining method and In-Situ through Cyclic Steam Stimulation. Kearl produced 184,000 b/d in Q1 2023 (132,000 b/d a year earlier), Cold Lake produced 141,000 b/d (140,000 b/d) and Syncrude produced 76,000 b/d (77,000 b/d in Q1 2022). Refinery throughput in Q1 2023 reached 417,000 b/d or was by 4.5% higher than a year earlier. The company's press release notes that the strong production growth at Kearl "...was primarily driven by the absence of extreme cold weather, and reduced unplanned downtime...", and that the processing growth "...was primarily driven by lower planned maintenance".

The consolidated revenues of Imperial Oil in Q1 2023 were 12,121 and net income was 1,248 million Canadian dollars (a year earlier the income was 1,173 million Canadian dollars). And of the total profit in the first quarter of this year 330 million of Canadian dollars were attributable to the division Upstream and 870 to Downstream.

This data thus shows that the Canadian oil sands production and processing complex is on a solid footing. Both at the national level and for the leading oil companies, the production and financial results have been good without any major disruptions or cataclysms.

By the Editorial Board