A sample of oil and gas firms based in Canada shows that strong commodity prices substantially increased fourth quarter 2002 revenues and earnings. And while revenues also moved up for the entire year, net income declined slightly. TransCanada PipeLines Ltd., the only nonproducing company in the sample, reported slightly diminished earnings for the quarter.
All results are reported in Canadian dollars.
Company results
Calgary-based EnCana Corp. posted fourth quarter earnings of $429 million, up from $90 million a year earlier on stronger sales volumes. Natural gas sales increased 21% to 3.04 bcfd, as the company withdrew 149 MMcfd from storage to capitalize on strong seasonal prices. Sales of oil and NGLs were up 8%.
For the fourth quarter, EnCana's average realized gas price was $5.11/Mcf, up 42% from the same period a year earlier. The firm's fourth quarter oil and NGL realizations were up 26%.
Imperial Oil Ltd., Toronto, announced stronger quarterly results but narrowly weaker annual earnings. Net earnings decreased in 2002 as a result of lower prices for natural gas, decreased production of crude oil, and weak markets for petroleum products through the first 3 quarters. Higher prices for crude oil, particularly bitumen, largely offset these factors, though.
Imperial's fourth quarter earnings increased sharply to $454 million, primarily due to higher prices for crude oil and natural gas and improved industry margins for petroleum products. Earnings also received a boost from decreased planned maintenance activities and lower environmental expenses.
Earnings from Imperial's chemicals segment were up by $1 million to $10 million for the quarter. Decreased chemicals margins partially offset higher polyethylene sales, however. For 2002, chemicals earnings were $52 million compared with 2001 earnings of $23 million. Improved margins during the first 3 quarters and higher sales volumes drove this increase.
Nexen Inc., based in Calgary, posted stronger earnings for the quarter and for the year. The company attributes its improved annual results to attractive oil and gas prices and stable production.
The firm's 2002 oil and gas output was unchanged from 2001 due to the delayed start-up of production at Aspen field in the Gulf of Mexico, weather and program delays in its North American natural gas production, and lower productivity from increasingly mature assets in Canada. With average oil and gas realizations at $35.14/boe, Nexen generated a cash netback of $15/bbl after deducting royalties, cash taxes, and operating costs.
Commenting on quarterly earnings, Nexen Pres. and CEO Charlie Fischer said, "Good prices, narrow quality differentials on our Masila (Yemen) production, and strong performance by our marketing group all contributed to fourth quarter results."