Canadian oil producers' profits surge while capital spending lags, Deloitte reports

According to a Deloitte Canada report, Canadian oil producers saw operating profits climb 68% from the first to the second quarter, while capital spending edged up only about 7% to $11 billion. Brent crude prices fluctuated widely, ranging from US$68 to US$105 per barrel during July and August, creating a windfall for the sector, which led non-financial industry profits in Q2. Rig count data shows a 17% increase in drilling compared with the same quarter last year, with firms concentrating on efficient, short-cycle fields like Montney, Duvernay and Clearwater rather than capital-intensive projects.

Deloitte forecasts that producers view the present price surge as fleeting and anticipate larger medium- and long-term investments once the market stabilises. The report also notes recent M&A activity, including Cenovus Energy’s $5.7 billion purchase of Athabasca Oil and Suncor Energy’s $1.2 billion divestiture of Atlantic offshore assets, as preparatory steps for future growth.