Lower oil and gas prices caused weaker year-on-year results for a sampling of Canadian producers, while earnings for other firms in Canada's petroleum industry fared much better during the fourth quarter.
Comparing earnings for the group shows a drop of more than 50% in the fourth quarter but a gain of 1% year-on-year for 2001. Revenues fell 18% during the quarter but were up 10% for the year compared with 2000.
All results reported are in Canadian dollars.
Company results
Imperial Oil Ltd., Toronto, and Nexen Inc., Calgary, announced lower earnings for the fourth quarter and for 2001. These earnings were measured against high benchmarks, though, as year-ago results were unusually strong.
Noting that it realized stronger industry margins on sales of petroleum products, increased production of oil and gas, and lower tax rates, Imperial attributed decreased full-year earnings to lower oil prices, increased expenses, and the absence of divestment gains recorded in 2000.
Imperial's fourth quarter earnings were down on lower oil and gas prices, weak refining margins, higher expenses, and the absence of divestiture gains. Net earnings from natural resources were $120 million compared with $383 million in the same quarter a year earlier.
Nexen announced record operating results for 2001. Production increased 5% from 2000, as oil production grew 4% to 219,000 b/d and gas production increased 8% to 295 MMcfd, but lower prices for both commodities offset the benefits of greater volumes in terms of revenue.
Westcoast Energy Inc., headquartered in Vancouver, BC, is the only company in the Canadian sample to have improved earnings for both the quarter and the year. For 2001, earnings were up 55%.
Fourth quarter results were 29% better than a year earlier, as Westcoast subsidiary Engage Energy Canada LP was able to capitalize on volatility in the North American natural gas and electricity markets. Westcoast also gained on the sale of two other subsidiaries, but earnings were hampered somewhat by significantly warmer-than-normal weather in the fourth quarter, especially when compared with colder-than-normal weather in the fourth quarter of 2000.
TransCanada PipeLines Ltd. reported improved earnings for the fourth quarter as a result of discontinued operations. The Calgary-based company closed separate agreements with Mirant Corp. and BP PLC unit BP Gas & Power during the quarter for the sale of the majority of its gas marketing and trading operations. TransCanada sees this as the final significant step in transforming itself into a focused natural gas transmission and power company.
