Canadian oil and Gas CEOs avoid rash decisions during the price crash
On Tuesday, CEOs of Canadian producers of oil and gas said they were trying to avoid taking sudden decisions as the global oil price hovers around four-year lows.
Doug Bartole said that his Calgary-based company, InPlay Oil, does not expect to reduce production or capital expenditures in the near future, despite recent oil price drops due to tariffs.
Don't take any rash decision. Bartole stated in an interview that it was best to take a long-term view and wait for the outcome.
He said this could change, however, if the price of oil continues to fall.
Bartole stated, "I believe $50 oil would make a difference in the world a little more. "We are able to withdraw capital easily. We are a small business, so we can be nimble. We make decisions quick."
InPlay closed on Monday a previously-announced C$321 million acquisition of Alberta oil assets by Obsidian Energy. ATB Capital Markets cut its price target on InPlay shares by C$321 million on Tuesday. They cited "the current WTI prices environment."
Brent and West Texas Intermediate crude prices have fallen since U.S. president Donald Trump announced broad tariffs on April 2.
Tuesday's oil prices dropped, with a trade of over $60 per barrel. They remain near their four-year lows due to recession fears that were exacerbated by the US-China trade war. This offset an improvement in the equity markets.
ATB stated in a recent research note that it expects Canadian production will grow this year. However, the company warned that sustained low oil prices could force companies to cut back on spending and limit output growth.
Peter Tertzakian is an economist and the founder of Studio.Energy. He said that it was still too early to predict where oil prices will go. He said that Canada's largest oil sands firms can still be profitable even at lower prices. However, smaller and higher-cost operators may have to revise their capital budgets in the event of a decline in commodity prices.
Tertzakian stated that if the $61-$62 range is maintained for the remainder of the year we are unlikely to see much growth.
Chris Carlsen is the CEO of Canadian natural-gas producer Birchcliff Energy. He said that the sector was concerned about a possible global recession.
He said that the decline in oil prices may benefit natural gas producers if it results in a reduction of drilling in North America.
Carlsen stated that "when they drill less oil, the associated gas is less, so we may be short of natural gas." (Reporting and editing by Rod Nickel; Amanda Stephenson)
(source: Reuters)
