Although their first-half 2005 earnings declined, a sample of oil and gas firms based in Canada reported a collective increase in second-quarter earnings compared with the same 2004 period.
Collectively, the 11 Canadian producers and transporters posted a 29% increase in earnings during the second quarter of 2005 on 19% stronger revenues as compared with the same period a year earlier.
First-half earnings for the group declined 11%, though revenues were up 16%. All results are reported in Canadian dollars, and all companies discussed here are based in Calgary.
Company results
Canadian Natural Resources Ltd. posted $219 million in second-quarter earnings. This was down from net income of $259 million for the same 2004 quarter. The company recorded a $205 million loss for the first 6 months of this year.
The company reported that its second-quarter production, up 3% from the same 2004 quarter, was a record.
CNRL attributes its first half 2005 loss to its risk-management activities, stock-based compensation plans, and foreign exchange. This included an $800 million after-tax charge for the unrealized mark-to-market of the company’s commodity hedge position and a $300 million after-tax charge for revaluation of its stock option liability to reflect appreciation in CNRL’s stock price.
EnCana Corp.’s second-quarter earnings grew as its production declined. The company’s second-quarter combined output of oil, gas, and NGLs declined 1% from the same 2004 period. Total gas production was up 6% during the quarter. But EnCana’s oil and NGL sales were down 15%, mainly due to divestitures of conventional oil properties in Canada and the UK North Sea.
Talisman Energy Inc. reported higher second-quarter and first-half earnings on larger production volumes. During the second quarter its North American natural gas production moved up 3% from a year earlier, and in Indonesia the company’s gas production climbed 30% to 177 MMcfd. Worldwide, Talisman’s gas production increased 4% from the second quarter of 2004, while the company’s oil and liquids production was little changed.
TransCanada Corp. announced net income for the second quarter of $200 million, compared with $388 million for second-quarter 2004. The decrease was primarily due to the recording in the 2004 second quarter of $187 million of after-tax gains relating to the sale of assets to TransCanada Power LP and previously deferred gains, as well as a $7 million after-tax gain on the sale of the company’s equity interest in the Millennium Pipeline project.
For the first 6 months of this year, TransCanada earned $432 million, compared with $602 million for the same period in 2004. The decrease was mainly the result of much higher net income in the company’s power business in 2004.
