CALGARY, April 7 /CNW/ - Outwardly, the financial health of the Canadian
oil and gas industry looks positive over the next five years, says
Peter Tertzakian, Chief Energy Economist of ARC Financial Corp. (ARC)
and best-selling author of A Thousand Barrels a Second and The End of Energy Obesity.
"But aches, pains and vulnerabilities are still to be found beneath the
collective veneer of multi-billion dollar financial statements - on the
natural gas side of the industry, for example," Tertzakian said. "And
the potential for economic trauma always looms large in this acutely
capital-intense, competitive business."
ARC's research focused on analysis of the major trends and changes in
capital flow in Canada's largest industry over the past five years,
with implications projected to 2015.
After 150 years of growth, the scale of what's going on in the Canadian
oil and gas industry is impressive by any world standard. From British
Columbia to Newfoundland, the upstream oil and gas industry will
generate an estimated $115 billion in annual revenue, $20 billion in
royalties, land sales and taxes, and $50 billion of investment into
infrastructure and jobs in 2011.
ARC's detailed analysis and findings are published in a new report
titled, Turmoil and Renewal: The Fiscal Pulse of the Canadian Upstream Oil and
Gas Industry - A Five-Year Review and Outlook.
"All Canadians are stakeholders in the future of this business," said
Tertzakian, "And whether you are a corporate leader, policy maker,
investor or interested citizen, it is important to develop a broad
understanding of the forces affecting Canada's oil and gas industry."
Some of the many findings of the report include:
Oil and gas companies are expected to generate more than $600 billion in
sales over the next five years. The multiplicative effect of these
dollars circulating in Canada's economy means the stakes for ensuring a
healthy oil and gas industry are high for all Canadians.
For the benefit of all stakeholders, maintaining financial health amid
the many challenges will require industry and government to work doubly
hard on key issues that cannot be addressed by each independently.
Important matters include accessing skilled labour, preserving the
environment and reaching out to new global markets for both oil and
The industry's revenue stream is becoming "oilier and oilier," on a path
to be 80 per cent reliant on oil by 2015. Only five years ago the
oil/gas percentage mix was a more balanced 55/45.
Embracing new technologies, processes and strategies will be paramount
for companies seeking insulation from rising costs, environmental
pressures and competitive threats.
Canada's oil and gas industry continues to grow. Profits are likely to
increase but not always profitability. How well the industry copes with
many internal and external challenges to profitability, including
volatile commodity prices, will determine whether value will be created
and whether an expected $55 billion a year will continue to be invested
back into Canada over the course of the decade.
The work was commissioned in part by the Canadian Association of
Petroleum Producers (CAPP).
"The report provides a broad context for CAPP's ongoing focus on
education, communication and 3E policy advocacy - economic growth,
energy security and environmental protection. It recognises industry
will continue to generate significant revenue and jobs, and highlights
the ongoing importance of the industry's contribution to the Canadian
economy," said CAPP President Dave Collyer.
The report assesses the diversity of businesses - including conventional
oil, oil sands, and natural gas - that comprise the overall upstream
oil and gas sector. At any given time, some segments of the industry
may be more robust and while others may be facing challenges.
"Though the ARC projections suggest a generally positive outlook for the
Canadian oil and gas industry, continued success is not assured
throughout the forecast period or beyond," said Collyer. "A strong
focus on technology and innovation, a competitive fiscal and regulatory
regime, diversification of markets and continuous improvement in
environmental and social performance are among the key success factors
for our industry. Continued growth in the oil and gas sector benefits
Read the report at: www.arcfinancial.com or www.capp.ca/library/reports.
ARC Financial Corp. (ARC) is an energy-focused private equity firm based
in Calgary, Canada, with $2.7 billion of capital across six ARC Energy
Funds. Leveraging off the experience, expertise and industry
relationships of more than 20 investment professionals, ARC invests in
upstream oil and gas, oilfield services, energy infrastructure and
renewable energy. Employing best practices in corporate governance and
business processes, ARC fosters the building of successful companies by
offering macroeconomic research, strategic planning, transactional
advice, deal-sourcing and evaluation support.
The Canadian Association of Petroleum Producers (CAPP) represents
companies, large and small, that explore for, develop and produce
natural gas and crude oil throughout Canada. CAPP's member companies
produce more than 90 per cent of Canada's natural gas and crude oil.
CAPP's associate members provide a wide range of services that support
the upstream crude oil and natural gas industry. Together CAPP's
members and associate members are an important part of a national
industry with revenues of about $100 billion-a-year. CAPP's mission is
to enhance the economic sustainability of the Canadian upstream
petroleum industry in a safe and environmentally and socially
responsible manner, through constructive engagement and communication
with governments, the public and stakeholders in the communities in
which we operate.
SOURCE Canadian Association of Petroleum Producers
For further information:
Chief Energy Economist and Managing Director, ARC Financial Corp.
Phone: (403) 292-0809
Media Relations, Canadian Association of Petroleum Producers