The rise in demand and prices in 2021 fostered confidence in the oil and gas extraction industry, and consequently, encouraged investment opportunities in 2021, according to a new report released Tuesday by Statistics Canada.
The federal agency said total capital expenditures increased 20.4 per cent, from $21.4 billion in 2020 to $25.8 billion in 2021. Investment in the oil sands sector rose to $9.0 billion in 2021, an increase of 23.5 per cent from 2020. Similarly, investment in the oil and gas extraction sector saw an increase of 18.9 per cent in 2021 when compared with the previous year, it said.
However, total capital spending in 2021 had not yet returned to pre-COVID levels. Total capital expenditures in 2021 were 26.7 per cent below levels of 2019, explained StatsCan.
“In 2021, Canada’s oil and gas extraction industry saw growth in revenue after experiencing a turbulent 2020. A rebound in economic activity and demand for energy products led to rising prices and increased production,” said the report.
“In 2021, oil prices reached their highest level since 2015. As a result, the industry looked to recover the losses that were incurred during the COVID-19 pandemic. Total gross revenue in the oil and gas extraction industry increased 85.7 per cent to $174.0 billion in 2021 from $93.7 billion in 2020. According to the Raw materials price index, the price of crude oil and bitumen increased by 70.8 per cent from 2020, while the price of natural gas increased by 15.8 per cent. Total production for crude oil rose by 6.2 per cent, while total natural gas production increased by 3.9 per cent.
“As a result, the combination of rising oil and natural gas prices along with increased production volumes, greatly contributed to the overall increase in revenue for the industry. Meanwhile, total expenses and deductions for the oil and gas extraction industry increased 1.0 per cent in 2021 compared with a 3.8 per cent increase in 2020. Operating expenses rose 45.7 per cent in 2021 from 2020, which coincided with higher production levels across Canada.”
The report said Canada’s oil and gas extraction companies reported total assets of $452.9 billion in 2021, up 2.6 per cent from 2020. Total capital assets increased 1.2 per cent in 2021 to $380.0 billion as the industry reversed the write-offs incurred in 2020. Following a 12.1% decrease in 2020, total liabilities (the sum of current liabilities, long term debt, and other liabilities) increased by 1.6 per cent to $276.5 billion for 2021.
(Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)
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