Oil prices have risen steadily all yr, but spending discipline continues to be the main focus at Canada’s largest oil and gas conference. Industry leaders emphasized their predictability and give attention to returning money to shareholders fairly than talk of growth on the Canadian Association of Petroleum Producers conference in Toronto this yr.
Is boring good?
Suncor Energy Inc. (SU/TSX) CEO Rich Kruger, who was named head of Canada’s largest oil and gas producer last yr because it struggled with safety and operational problems, said his goal is to supply clarity and Bringing simplicity into the corporate.
“I want to become consistently and boringly excellent,” Kruger said. “I’m not a big fan of surprise parties.” Kruger has worked to standardize operations and create a more stable production schedule, in contrast to a few of the more hasty decisions when growth was the reply to all of the industry’s questions.
For example, within the early development of the Fort Hills oil sands site, there have been mine plans with slope angles that were too steep, and never enough research was done to confirm this Water problems, which were fairly short-sighted decisions to produce the processing plant more quickly, he said. “If you look back greater than ten years ago, we lived in a world where we thought there have been resource constraints, oil prices were $100 or more, where growth in production volumes was synonymous with appreciation, a unique world than the one we live in today.”
Oil prices have risen
Even though oil prices have risen about $15 to this point this yr to $85 a barrel, industry leaders emphasized on the conference that they not see production growth as tied to value and that every additional barrel trades against returns should be weighed money to the shareholders.
The shift comes as investors worry in regards to the long-term demand outlook for fossil fuels as pushes to scale back carbon emissions intensify.
However, forecasts show oil demand continues to be growing, said BMO analyst Randy Ollenberger. “We often hear the narrative that oil demand has peaked, that it is not growing and that this is negative for the space. That’s not true, oil demand actually continues to grow at a pace that is higher than the average over the last 13 years.”
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Investors on the lookout for growth
But as investors look to the industry as much, if no more, to pump out reliable money than they do to hunt growth, company leaders wish to make certain they do not wander away in exuberance as prices rise.
Jon McKenzie, CEO of Cenovus Energy Inc. (CVE/TSX), said his company plans for cautious and strategic growth focused on reducing shortages and completing projects which were placed on hold. “The growth that we have initiated in 2023 is very different than the growth that you would have seen 10, 15 years ago. We’re not talking about greenfield expansion, we’re not talking about incremental expansion.”
Smaller producers were also keen to emphasise that they are not any longer growing for growth’s sake, including Grant Fagerheim, CEO of Whitecap Resources Inc. (WCP/TSX). “Managing growth in a very disciplined manner is, I think, a mantra that has been introduced into the energy sector and I am proud to be a part of it.”
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