How sustainable is Canadian oil & gas at $50 oil?

| January 14, 2015 | 11:11 pm

The Canadian oil & gas industry, as in every other country in the world, has been shaken by the continuing sharp decline in global oil prices. Market capitalization values for nearly all oil and gas companies have fallen dramatically as benchmark prices have tumbled; the widely accepted benchmark spot oil price in North America, West Texas Intermediate (WTI) fell from over $90 in September 2014 to around US$50 in January 2015.

CanOils has released a new study looking at 50 of Canada’s biggest oil and gas companies that quantifies just how healthy the industry is in this climate of falling prices. The study takes into account break even costs for all 50 companies as well as current debt levels and hedging contracts.

CANOILS STUDY

The full study can be downloaded for free here.

Key Conclusions of this CanOils Study:

  • Less than 20% of leading Canadian oil and gas companies will be able to sustain their operations long-term in a prolonged period of low oil prices.
  • In the immediate future however, expect minimal change to existing operations; many companies should continue to generate positive cash flow even at US$50 oil, but this is only acceptable in the very short-term.
  • A significant number of companies with high-debt ratios are particularly vulnerable right now.
  • Natural gas-weighted producers’ profits should be protected from the falling oil price, assuming gas prices hold up.
  • Expect to see more M&A activity as companies with the most liquidity upgrade their portfolios.

The CanOils database provides clients with efficient data solutions to oil and gas company analysis, with 10+ years financial and operating data for over 300 Canadian oil and gas companies, M&A deals, Financings, Company Forecasts and Guidance, as well as an industry leading oil sands product.