Canadian Oil Companies Faces Nightmare As Oil Crashes To $5

Canadians Companies Nightmare : Oil Price Crashes To $5

U.S. 20% low oil price shale gas laments paralyzed companies whose debt and liquidity conditions have weakened. But further north, Canada’s oil outlook is even more bleak. Affected by pandemic-driven demand shocks and supply shocks triggered by price wars, Canadian oil prices have fallen below $ 10 a barrel.

Analysts say that this year’s plunge in oil prices will have a bigger impact on Canadian oil than in 2014.

After a double shock of supply and demand in the past few weeks, the industry has had to quickly return to the survival mode. As it expected, upstream investment will increase this year, for the first time in five years.

Canada’s oil and gas sector is now facing survival threats — even losing almost no competitiveness after the last oil crisis.

The pain in the coming months could get worse before companies that can survive this plummeting oil price start to make money.

There are growing calls for the federal government to bail out. But environmentalists are also calling on the government to help workers who are (or are already) unemployed, instead of investing billions of dollars to rescue companies that damage the environment through oil sands operations.

Canadian Oil Companies Faces Nightmare As Oil Crashes To $5

Canadian Oil Companies

The Alberta government, the core of Canada’s energy industry, has taken some emergency relief measures to help the industry.

Kelly Cryderman wrote for The Globe and Mail that the federal government may take action to support this sector.

Environmental groups wrote to Canadian Prime Minister Justin Trudeau this week, calling on the government to focus on helping workers, not on companies.

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“Billions of dollars in funding to bankrupt oil and gas companies will not help workers, it will only extend our dependence on fossil fuels,” including Public Justice Citizenship (CPJ), the Canadian Climate Action Network, the Canadian Greenpeace and Organizations including the Extinction Rebellion wrote.

“Oil and gas companies have received substantial subsidies in Canada, and the public cannot continue to support them with tax breaks and permanent direct support. Environmentalists say the benefits of these measures to the company’s bottom line far outweigh their benefits to workers facing public health and the economic crisis And community help.

Canada’s Treasury Secretary, Bill Morneau, said at a Senate committee meeting on Wednesday that Canada’s energy sector would be supported within “hours or even days.”

Without the support of the provincial and federal governments, many industries that survived the 2014 price slump may not be spared this time due to the plunge in oil prices, near full capacity of storage, and plummeting demand in the United States, Canada ’s major oil export market. .

As a result, the price of Western Canada Select Oil (WCS), the benchmark oil price for Canadian oil sands delivered from Hardisty, Alberta, this week fell to a record low, but this may not be the lowest price yet.

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As of Thursday, the price of WCS was $ 6.45 per barrel, or $ 9.08. According to data from the Alberta government, the price was $ 36.82 and $ 27.28 in January compared to the average WCS price in January and $ 27.28 in February, respectively.

Asphalt prices may already be negative.

“From the perspective of asphalt prices, it is zero to negative. As a result, the situation is getting worse and worse.” Martin Pelletier, portfolio manager at the TriVest Wealth Council in Calgary, told CBC News this week.

Faced with a plummeting oil price, Canadian companies are eager to cut expenses, cut operations, delay investment and start-up funding, cut executive salaries and fire workers.

Husky Energy has cut budgets and production, Chenovs Energy has cut capital expenditures by about 32% in 2020, Suncor has cut capital guidance, and Natural Resources Canada has also cut. Athabasca Oil Corporation also cut capital expenditures and aggressively cut heavy oil production at Hangingstone.

Rob Broen, CEO of Athabasca Oil, told the Calgary Herald columnist Chris Varcoe two weeks ago: “I want to be everywhere See opportunities for layoffs.

Tim McMillan, President and CEO of the Canadian Petroleum Producers Association (CAPP), said: “Rising prices have made us particularly vulnerable to sharp changes in oil prices, and what we are seeing today will directly affect The Canadian economy has had a negative effect, “said the day the international oil price plummeted by 25%.

In a report this week, Royal Bank of Canada said that by 2020, the COVID-19 pandemic and the economic recession it will cause will affect every province in Canada, with Alberta being the hardest hit.

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“The slump in oil prices will again take a heavy blow to the country’s oil-producing regions, most of which have not fully recovered from the slump in 2014-2016. It will significantly reduce cash flow in the energy sector and reduce government concessions Fee income. “Robert Hogue and Econom, senior economists at RBC.

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REF: oilprice.com

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