OTTAWA, March 18 /CNW Telbec/ - Higher prices and production will drive revenues to outpace costs, pushing pre-tax profits in Canada's oil extraction industry to $8 billion this year. This is a 66 per cent increase from 2009 levels, but well below the industry's 2008 peak, according to The Conference Board of Canada's Canadian Industrial Outlook: Canada's Oil Extraction Industry - Winter 2010.
"Higher prices have prompted increased investment in non-conventional activities. However, weaker conventional production and rising cost pressures mean industry profits will not return to pre-recession levels until the end of the forecast in 2014," said Todd Crawford, Economist.
Oil prices have risen significantly over the past 12 months, but remain well below their record highs of 2008. Global demand will continue to grow over the forecast, putting upward pressure on prices. Oil prices are forecast to increase to US$114 by 2014.
Given the current forecast for oil prices, Canadian companies are expected to invest significantly in non-conventional production capacity. Non-conventional production is expected to grow by 6.7 per cent this year and continue to expand over the forecast period, reaching 2.1 million barrels a day by 2014.
Industry revenues are expected to increase an average of over 14 per cent annually over the next four years, thanks to steady production growth and rising prices. However, rising material and labour costs in western Canada will slow the industry's pace of recovery in profitability.
SOURCE Conference Board of Canada
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