Optimism flowing in the global oil and gas sector: Ernst & Young

    How do Canada's expectations measure up?

    TORONTO, Aug. 24 /CNW/ - Nearly half of the global oil and gas industry
executives surveyed by Ernst & Young believe that their businesses have been
less severely impacted by the economic downturn than other sectors. A similar
number even reported business improvements while highlighting a focus on cost
and risk management.
    Ernst & Young's report, Opportunities in adversity, surveyed 569 C-suite
executives globally and across all industry sectors. Oil and gas industry
executives proved to be more optimistic than other respondents about the
economic outlook.
    "Whether Canadian oil and gas companies share in this global optimism is
dependent primarily on their size and bias towards oil," said Barry Munro,
leader of Ernst & Young's Canadian oil and gas practice. "Over the past two to
three years, the larger, well-capitalized firms really have achieved an
advantage over the smaller players in Canada - a difference that's only been
exacerbated by the downturn."
    Munro also noted that many Canadian exploration and production (E&P)
companies are much more susceptible to the myriad challenges continuing to
plague the natural gas business.
    Meanwhile, oil prices have rebounded strongly from their early 2009 lows,
and the industry has moved very quickly to operate leaner and more
efficiently. As a result, many Canadian E&P companies are well poised to take
advantage of opportunities when the recovery comes.
    "Despite the turbulent energy market, there's a strong case for optimism
right now in Canada," said Munro. "Cost structures have become more
favourable, there's an inflow of money to new management teams, a reduction in
staff turnover levels and greater access to top talent, as well as multiple
acquisition prospects for cash-rich players."
    The report states that global oil and gas executives believe
acquisitions, divestitures and strategic alliances will help them emerge
stronger from the economic downturn. Munro expects that Canada will be no
exception to these trends.

    Other key findings from the global survey:

    
    -   Global oil and gas companies are moving swiftly to position
        themselves ahead of the competition for the upturn. Eighty-eight
        percent of executives said they had been "responsive" or "very
        responsive" to cost-management issues over the past 12 months,
        compared to 76% of executives from other industries.

    -   Executives in the global oil and gas sector were more inclined to say
        business had improved over the past 12 months (43%, versus 35% of
        executives overall).

    -   A majority of respondents reported that their company had been
        "effective" or "very effective" at achieving overall cost savings.

    -   Global oil and gas respondents were more likely to report that they
        had scrutinized their relationships with customers and suppliers more
        closely over the past 12 months, and negotiated contracts with
        suppliers over the last six months (60% of oil and gas respondents,
        versus 43% of overall respondents).
    

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For further information:

For further information: Amanda Olliver, amanda.olliver@ca.ey.com, (416)
943-7121; Brooke McLachlan, brooke.mclachlan@ca.ey.com, (604) 899-3597;
Marie-Eve Graniero, marie-eve.graniero@ca.ey.com, (514) 874-4313