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Canada oil sands 2024 Q1. Quarterly Results

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 the absolute leader in the extraction and processing of oil sands, successfully competing with other producers. It should be taken into account that the costs of developing heavy and bituminous oil deposits are significantly higher than those for conventional oil. In this regard, the profitability, or at least break-even, of Canadian producers is a relative threshold beyond which, in most cases, the rest of the oil market is relatively stable. Of course, this cannot apply to local events or stressful situations.
Last year's growth in bitumen production and processing in Canada accelerated significantly in the first quarter of 2024. Production figures for Conventional light crude oil and Heavy Crude Oil in 2024Q1 changed slightly (based on the results of the first two months of the quarter).

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

Time/OilConventional Light Crude OilUpgraded BitumenHeavy Crude Oil
2024Q1659 096 (Jan+Feb)1 285 0772 564 317 (Jan+Feb)
2023665 4781 222 0092 565 916
2022663 3481 168 1492 562 420
2021654 0811 180 7462 455 984

Source: Canada Energy Regulator

Traditionally, we comment on the quarterly operating results of a number of Canadian companies whose production and processing of bituminous oil prevails over other types of hydrocarbons.

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.

In the first quarter of this year, Suncor Energy achieved a record oil sands production in the company's history, which amounted to 785.0 mbbls/d, which is 3.6% more than in the fourth quarter of 2023 and 14% more than in the same quarter a year earlier. Total upstream production, including exploration and production, amounted to 835.3 mbbls/d, which is also a historical record. Refinery crude oil processed stabilized at 455.3 mbbls/d.

However, the growth in physical production indicators did not affect the growth in financial indicators. Compared to the previous quarter, Revenue decreased by 11.4% to $12,529 million, and Net earnings decreased significantly more, by 43% to $1,610 million.

Suncor Energy. Revenue, net income and share price

Source: Suncor Energy Inc.

To be fair, Suncor Energy's financial performance in 2024Q1 was higher than in the same quarter last year. The price of Synthetic crude oil (per barrel) in the starting quarter of 2024 decreased by 8.94 Canadian dollars, which obviously affected financial results.
The company's share price continued its consistent growth.

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.

After peak financial results in 2022Q2, Cenovus Energy's Revenue and Net earnings have declined significantly, however, in certain quarters there have been noticeable spikes in profitability. In 2024Q1 Revenue was $13,397 million, including $7,117 million from Total Upstream and $8,567 million from Total Downstream.

Cenovus Energy. Revenue, net income and share price

Source: Cenovus Energy Inc.

Costs for activities related to Corporate and Eliminations amounted to $2,287 million. Net earnings in 2024Q1 grew to $1,176 million, which is 58% more than in the previous quarter and 85% more than a year earlier.
The price of Cenovus Energy shares has been subject to strong fluctuations over the past two years, however, a positive trend is clearly visible.

Imperial Oil Limited

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

An alarming factor for Imperial Oil at the end of 2024Q1 is another decline in Net income, which continues for the third quarter in a row. Compared to last year, this decrease was just over 4%. On the other hand, Total Revenue increased slightly to $12,283 million.

Imperial Oil. Revenue, net income and share price

Source: Imperial Oil Limited

Traditionally, the Kearl division - 196 thousands of barrels per day (Imperial’s share), made the largest contribution to the total production at Imperial Oil. The share of Cold Lake and Syncrude was 34.5% and 17.7%, respectively.

Imperial Oil has a well-defined growth trend in the value of the company's shares. Over the past three years, the share price has more than doubled.

Judging by the information presented, the production and processing of bituminous oil in Canada over the past three years has demonstrated good stability. This was facilitated by the relative stability of the global oil market. However, in the near future, turbulent movements associated with contradictions in OPEC and a decrease in demand will increase. This will inevitably lead to increased international competition, where Canada will be a mandatory participant.

By the Editorial Board