Higher oil prices are expected to boost cash flow for Canadian crude producers as they roll out second-quarter results beginning next week, but analysts say the extra money is unlikely to be added to growth budgets.
Canadian oil prices steadied in comparison with U.S. benchmarks in the three months ended June 30 following six months of volatility blamed on the failure of pipeline capacity to match growing oilsands output and Alberta’s decision to impose production limits starting in January.
Analyst Nick Lupick of AltaCorp Capital says despite current higher prices and expectations of strong prices going forward, producers remain cautious and are more likely to buy back their own shares or raise dividends than increase spending to grow output.
Greg Pardy of RBC Dominion Securities says oilsands bitumen producers such as MEG Energy Corp. and Cenovus Energy Inc. are likely to post “standout” results given a 16 per cent increase in average Western Canadian Select bitumen-blend prices from the first to the second quarter.
Natural gas producers, however, are expected to see more dismal results as Alberta spot gas prices averaged 60 per cent less than in the previous quarter.
The earnings parade starts July 24 with Suncor Energy Inc., followed by Cenovus and Husky Energy Inc. the next day.