Canadian oil and gas firms announced robust year-on-year second quarter and first half earnings, primarily the upshot of strong natural gas prices and increased production volumes. Also contributing to earnings was a reduction in Alberta and Ontario provincial tax rates enacted during the second quarter.
A sampling of earnings comparisons shows earnings increases of 46% in the second quarter and 68% in the first half compared with the same periods a year ago (see table).
All results are in Canadian dollars, and all firms cited here are headquartered in Calgary unless otherwise noted.
Company results
PanCanadian Petroleum Ltd. reported second quarter net earnings of $432 million compared with $213 million during the same period last year. The company attributes these improved results to a substantial increase in natural gas production and strong realized prices for natural gas compared to the previous year.
For the first half of 2001, PanCanadian's capital spending totaled $831 million, and 1,212 wells were drilled at a 94% success rate.
The firm's board recently approved a $418 million increase in the 2001 budget. PanCanadian plans to direct about 51% of this additional investment toward gas and oil exploration and development in the Western Canadian Sedimentary Basin, while 26% is earmarked for high-impact exploration.
Vancouver-based Westcoast Energy Inc. said that second quarter profits were $103 million, up from $70 million for the same period a year ago.
Second quarter revenues increased to $2.09 billion from $1.76 billion last year partially on the strength of incremental revenues from Engage Energy Canada LP, which the firm acquired in October, as well as from the transmission and field services segment of Westcoast. The British Columbia pipeline and field services divisions and Maritimes & Northeast Pipeline turned in strong performances that were offset in part by merchant capacity losses on the Alliance and Vector pipelines and losses from the Aux Sable liquids facility.
Enbridge Inc. posted a second quarter earnings increase to $270.4 million from $193.7 for the same period last year. The firm attributes the higher earnings to the tax rate reduction; the May 11 acquisition of Midcoast Energy Resources Inc., Houston; and strong results from both Enbridge Consumers Gas and international activities. Like Westcoast, the positive effects of these factors were partially offset by a loss from Aux Sable and lower earnings by Vector.
Shell Canada Ltd. announced earnings of $314 million for the second quarter compared with $168 million for the same period in 2000. First half earnings this year were $668 million vs. $336 million last year.
Shell Canada Pres. and CEO Tim Faithfull said, "Market conditions and good operating performance enabled us to achieve strong first half results. However, natural gas prices and refining margins declined considerably in the second quarter, indicating potentially weaker market conditions in the second half."
Alberta Energy Co. Ltd. announced second quarter earnings of $215 million, an 84% increase from the same 2000 period. AEC Pres. and CEO Gwyn Morgan said this improvement in performance was led by increased gas production and higher gas prices, which more than offset the dampening effect of weaker Canadian heavy oil prices.
Morgan added, "Operating performance in the second half is expected to be even stronger," citing anticipation of a further increase in oil and gas sales, lower unit operating costs, and completion of scheduled maintenance.
