Energy sector survey highlights optimism and growth in Canadian energy industry
October 18, 2023
By Canadian Manufacturing
CALGARY —The Fall 2023 Energy Sector Survey conducted by ATB Capital Markets Inc., reveals renewed optimism within the Canadian energy industry since earlier this year. 60 per cent of energy services executives polled are anticipating an upswing in activity levels over the next six months, while a 88 per cent of Exploration and Production (E&P) executives are reporting an increasingly positive outlook for the sector over the same period.
“Given our extensive coverage of the energy space, ATB Capital Markets is able to offer a distinctive vantage point on insights into the energy sector,” said Darren Eurich, CEO of ATB Capital Markets. “This allows us to regularly gauge industry sentiment and leverage the in-depth market knowledge of our analysts to provide clients with a comprehensive industry overview in addition to the latest market analysis.”
Conducted between September 18 and October 2, the semi-annual survey collected insights from executives representing 30 energy services companies, 26 exploration and production (E&P) companies, and 29 institutional investors. Included in the responses were their perspectives on the sector, outlook for the upcoming year, significant challenges faced, opportunities, and emerging industry trends.
“The energy industry in Canada is showing a promising trajectory as optimism within the sector is complemented by a growing confidence in crude oil prices and increased investment in exploration and development,” said Tim Monachello, Managing Director, Institutional Research, Energy and Industrial Services and Technology.”The findings of the Fall 2023 Energy Survey are a testament to the sector’s resilience and adaptability, positioning it for sustainable growth as it continues to adapt to evolving stakeholder interests.”
Looking ahead to 2024, despite lingering uncertainties stemming from macroeconomic factors, respondents collectively anticipate a year of moderate growth for the Canadian energy industry.
According to the survey, an overwhelming 88 per cent of E&P executives expect production growth in the next 12 months. More than half (65 per cent) foresee an increase in exploration and development spending in 2024 compared to 2023, including 35 per cent of E&P respondents expecting to spend over 10 per cent more in 2024.
Energy services respondents share a similar sentiment, with a large majority of 90 per cent anticipating higher activity levels in 2024 compared to 2023, assuming a WTI price range of $85-$95 per barrel. Of these respondents, 47 per cent expect activity to increase by 5 per cent-10 per cent year-on-year.
Survey participants highlighted federal energy and environmental policies and regulations as the primary concern for the medium-to-long-term outlook of the Canadian energy industry, with 68 per cent expressing concern. The second most prominent risk identified was “access to capital/cost of capital” with over a third (35 per cent) ranking it among the top two risks facing the industry.
On the other hand, the “West Coast LNG expansion” emerged as the leading medium-to-long-term opportunity for the energy sector, perceived as such by more than half (61 per cent) of energy executives and institutional investors. This was followed by the “revival of a major oil pipeline project” and “carbon capture and sequestration” as the second and third most prominent opportunities, respectively.
The survey results also underscore a positive hiring trend within the energy industry, with 46 per cent of energy companies surveyed expecting to increase their headcount over the next six months, while only 5 per cent anticipate a reduction in their workforce. Expressing concern over access to services and labour, over half (57 per cent) of service companies support this view, with 70 per cent expecting wages to rise in the next six months.
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