Canadian oil production could increase slightly in 2023
If analysts predict strong profits for Canadian oil companies in 2023, they add that these revenues are more likely to be invested in dividends to shareholders than in major projects.
Canadian oil and gas companies plan to increase spending in 2023, but analysts believe it will still be another year of modest growth.
For the country's energy industry, 2022 was finally the year that restored prosperity. With the lifting of health restrictions around the world, the war in Ukraine and the cumulative impact of years of underinvestment in oil and gas, energy prices have reached levels records in 2022, allowing Canadian companies to generate record profits.
Most of this income, however, was used to pay down debt and reward shareholders, so they weren't redirected to big construction or infrastructure projects. Even if commodity prices were to remain strong in 2023, this trend of minimal investments should continue.
Oil producers have become much more financially disciplined over the past six or eight years, said IG Wealth Management chief investment strategist Philip Petursson. According to him, the threat of a recession in 2023 is one of the factors that makes companies hesitate before embarking on a spending spree.
We know that during an economic downturn, the demand for oil drops, recalls Mr. Petursson. I think [companies] will want to be a little more careful.
In Alberta alone, in the first 10 months of 2022, crude oil production averaged 3.7 million barrels per day, an all-time high that was broken due to the global demand on the rise, according to ATB Financial.
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Experts expect production to be even higher in 2023. They make this prediction in light of previously published capital budgets and production forecasts from oil and gas companies.
Many companies were able to pay down significant parts of their debt in 2022, which means they will have more cash next year if commodity prices hold around of US$75 per barrel.
In addition, the Trans Mountain pipeline expansion is expected to be completed by the end of this year. year, which will provide additional transportation capacity for oil companies and increase the potential for export growth.
The Canadian Association of Petroleum Producers also expects investment in natural gas and liquefied natural gas to increase, in 2023.
Philip Petursson goes as far as #x27;to predict that Canadian oil production in 2023 will surpass the record set in 2022, but only by a hair.
I think there is going to be a very small increase, because there are new projects that are currently under construction, he underlines, while doubting that this increase will be frenetic.
In 2023, the industry will likely continue to focus on shareholder returns and maintaining corporate financial viability.
In addition to global economic uncertainty, Canada's oil and gas sector faces increasingly aggressive greenhouse gas emission reduction targets. The federal government is currently in the process of developing a legislative cap on emissions from the sector, which the industry opposes.
The President- Advantage Energy CEO Mike Belenkie says his company expects a growth rate of about 10% to 12% over the next few years.
We don't We've probably never been in a stronger position than we are today. Our debt is very low, our production is increasing and our team is stable, he assures.
However, he disputes the recent orientations of the federal government, including the carbon pricing system , to whom he blames the end of the era of major projects in the Canadian oil industry.
Over the past decade, most companies that were not not in good shape had to close. The companies that have remained are quite strong and have the ability to withstand a lot of volatility, believes Mike Belenkie all the same.