OGFJ, CanOils present 2008 year-end data, analysis on Canadian firms
Despite last year’s high oil prices, the top 100 Canadian producers barely managed to maintain output levels in 2008. Production from the group hovered just above 4.5 million boe/d, an increase of only 2,734 boe/d on 2007. What’s more, for the initial six months of 2008 output actually fell, only recovering again in the second half of the year when some major oil sands projects came on-stream.
Canadian Natural Resources succeeded in maintaining its position as Canada’s largest producer for the second year running. This was despite its production falling by 6% or 31,453 boe/d in 2008. It looks as though that position will not last into 2009 however, as the acquisition of Petro-Canada by Suncor will create Canada’s largest new energy company. Based on 2008 production levels, this major will dominate the home market with 525,933 boe/d, 7% more than CNRL.
Fuelled by its acquisitions of Vault Energy, Canetic Resources, and Endev Energy, Penn West was the only firm to improve its ranking inside the top ten, increasing production by 33%. Foreign operators such as ConocoPhillips, Shell, and Devon still continue to dominate top positions. Production for the top ten companies totalled 2.9 million boe/d in 2008, down 3% on last year, while still contributing almost two thirds of the Canadian top 100 output. Devon and ConocoPhillips were the only other top ten companies to increase their production from 2007 with the progression of their oil sands projects Jackfish and Christina Lake, Foster Creek, and Surmont respectively.
A number of oil sands producers benefited from large new projects coming on-stream in 2008. OPTI Canada Inc. with its share in Long Lake recorded its first production, entering the top 100 for the first time with 2,969 boe/d. French giant Total, one of the most substantial movers in 2008, similarly increased its production three fold after ramping up Surmont from the beginning of the year. Tracked by the CanOils oil sands service, Alberta oil sands production totalled 1,058,000 in 2008, 23% of total Canadian top 100 production. Despite a number of projects starting up in 2008, including Long Lake and Christina Lake Regional, average oil sands output was unchanged compared with 2007.
It was a year of consolidation for the Trusts in 2008, with little of acquisition activity that characterised 2007. Baytex invested in the largest of the Trusts purchases of 2008, with the $187 million acquisition of Burmis Energy. With the 2011 deadline for the dissolution of the Trusts approaching, their influence with the top 20 is undiminished, with total group production growing 10% to 551,680 boe/d in 2008 as acquisitions from 2007 and 2008 start to show through.
TransGlobe and Pioneer were the only companies to drop out of the top 100 on a production basis, both selling off their Canadian assets. There were ten new entrants who made it into the top 100 in 2008: Angle Energy, Buffalo Resources, Crocotta Energy, Culane Energy, Ember Resources, Fortress Energy, Ironhorse Oil & Gas, OPTI, Profound Energy, and Reece Energy. Angle came in highest at No. 58, producing 6,585 boe/d. Buffalo Resources, producing 3,281 boe/d, was the second highest entry at No. 73 thanks to its acquisition of Deep Energy which closed last July.
Mergers and acquisitions amongst the top 100 fell sharply in the second half of the year, despite low company share prices. Twelve corporate acquisitions over 1,000 boe/d took place in the first half of 2008 compared to only seven in the second half. Canadian M&A the first quarter of 2009 has actually been less active than in the same period in 2008. CanOils’ M&A database shows the top 100 spent $646 million in the first quarter of 2009, down 58% on last year’s figure, but still up from 2007 spending of $207 million. In the first quarter of 2009, the price paid by the top 100 per boe/d of production was just $37,000 compared to $51,000 and $60,000 in 2008 and 2007 respectively.
In contrast, financings within the top 100 soared in the first quarter of 2009, as firms seek additional capital. According to the CanOils Financing Service, which tracks all equity financings within the Canadian energy market, 11 deals totalling $1,355 million were recorded in the first quarter of 2008, compared to 12 deals in the same period of 2009, totalling just $337 million.
Note that financial data are for the entire company (in Cdn$), not just the Canadian operations, and the list excludes private companies. Some firms (mainly US-based) report production after royalties while the majority of Canadian companies report production before royalties. Financing deals and mergers and acquisitions have been included as of their announced date and not completion date, including some 2009 deals which have not yet been completed. The Suncor acquisition of Petro-Canada has also been excluded from mergers and acquisitions metrics to prevent distorting 2009 figures. Contact CanOils for further information on company performance, M&A deals, financings, and oil sands projects.