Following off of Part 1 of our Q2 2023 Earnings Season Report Card, which focused on production and financial metrics, we are looking at per-barrel indicators in Part 2. Shifts in commodity prices impacted Canadian producers in various ways this quarter, particularly for gas-weighted companies. While inflationary pressures remain a factor, price changes are not homogenous across cost categories and we see some interesting variety in how cost structures are being impacted.
This analysis was made possible with BOE Intel, our data and analytics platform that can keep you up to date on all of the latest developments in the Canadian oil patch.
Barrel of Oil Equivalent (BOE) Realized Pricing
The path of realized pricing was very different between oil-weighted and gas-weighted producers. While benchmark oil prices for many producers actually increased on account of improved WCS-WTI differentials, natural gas pricing was depressed through the quarter; the average quarterly WCS price increased from $51.36 in Q1 2023 to $58.74 in Q2, while AECO average pricing declined from $4.34 to $2.35 over the same period. These dynamics are illustrated in the starkly different $/BOE realized pricing results we observed among Canadian producers in the second quarter. Oil sands producers MEG Energy and Athabasca Oil saw the most significant increases in their realized pricing for this quarter, driven largely by each company’s high crude-weighting. Headwater Exploration also saw a significant boost in realized pricing, again an outcome that can be linked to oil production from the company’s Clearwater assets. The average $/BOE price for companies in our dataset declined by 4.70 $/BOE between Q1 and Q2.
| Companies | Q1 2023 ($/BOE) | Q2 2023 ($/BOE) | Absolute Change ($/BOE) |
| MEG Energy | 58.18 | 77.54 | 19.36 |
| Athabasca | 44.74 | 59.25 | 14.51 |
| Headwater | 61.40 | 71.98 | 10.58 |
| Rubellite | 63.56 | 72.88 | 9.32 |
| Gear Energy | 62.86 | 69.10 | 6.24 |
| Tamarack Valley | 61.61 | 65.66 | 4.05 |
| Baytex | 63.48 | 66.82 | 3.34 |
| Cardinal Energy | 69.03 | 71.56 | 2.53 |
| Surge Energy | 71.59 | 72.82 | 1.23 |
| Obsidian Energy | 60.89 | 58.97 | -1.92 |
| Journey | 50.03 | 47.28 | -2.75 |
| Whitecap | 63.30 | 59.58 | -3.72 |
| Bonterra Energy | 63.76 | 59.73 | -4.03 |
| InPlay Oil | 55.80 | 51.56 | -4.24 |
| Perpetual | 29.9 | 25.51 | -4.39 |
| Advantage Energy | 27.90 | 22.73 | -5.17 |
| Crescent Point | 72.88 | 67.31 | -5.57 |
| Pine Cliff | 29.30 | 23.00 | -6.30 |
| Birchcliff | 31.07 | 24.28 | -6.79 |
| Pipestone | 47.09 | 40.23 | -6.86 |
| Kelt Exploration | 47.15 | 39.81 | -7.34 |
| Saturn | 82.11 | 74.43 | -7.68 |
| Enerplus | 63.54 | 54.53 | -9.01 |
| Yangarra | 43.91 | 34.86 | -9.05 |
| Paramount | 55.94 | 46.63 | -9.31 |
| Crew Energy | 33.94 | 24.37 | -9.57 |
| Petrus Resources | 40.16 | 30.59 | -9.57 |
| Pieridae | 38.21 | 28.60 | -9.61 |
| Kiwetinohk | 55.30 | 45.14 | -10.16 |
| Tourmaline | 42.75 | 31.83 | -10.92 |
| Lucero | 72.76 | 61.75 | -11.01 |
| Spartan Delta | 43.81 | 32.01 | -11.80 |
| Hammerhead | 60.31 | 48.19 | -12.12 |
| Ovintiv | 55.09 | 42.39 | -12.71 |
| Vermilion | 75.36 | 61.74 | -13.62 |
| ARC Resources | 50.16 | 35.97 | -14.19 |
| NuVista | 60.88 | 43.64 | -17.24 |
| Peyto | 37.32 | 19.08 | -18.24 |
| AVERAGE | 54.50 | 49.80 | -4.70 |
Operating Expenses
The average per-barrel operating expense for companies in our dataset increased from 12.70 $/BOE in Q1 2023 to 12.90 $/BOE in Q2, although just under half of the companies in our dataset reported operating expense decreases. Pieridae Energy led all companies with a 2.94 $/BOE reduction in operating costs compared to the first quarter. The company’s operating cost improvement was due to a revision in its Alberta Technology Innovation and Emissions Reduction (TIER) compliance cost estimate, reduced power consumption on account of plant outages, and lower third party processing expenses for fees tied to benchmark natural gas prices (which, of course, declined during the period). Kelt Exploration realized a per-barrel operating cost decline of 1.55 $/BOE, and the company’s aggregate operating costs declined by 18.5%. Petrus Resources also saw its operating expenses decline by over 1.00 $/BOE, which is likely due to increased economies of scale through the use of enhanced capacity at the company’s Ferrier gas processing plant.
| Companies | Q1 2023 ($/BOE) | Q2 2023 ($/BOE) | Absolute Change ($/BOE) |
| Pieridae | 20.25 | 17.31 | -2.94 |
| Kelt Exploration | 11.34 | 9.79 | -1.55 |
| Ovintiv | 5.86 | 4.35 | -1.51 |
| Petrus Resources | 7.26 | 5.83 | -1.43 |
| Crescent Point | 15.35 | 14.40 | -0.95 |
| Gear Energy | 22.45 | 21.54 | -0.91 |
| MEG Energy | 10.34 | 9.58 | -0.76 |
| Vermilion | 18.66 | 17.91 | -0.75 |
| Surge Energy | 23.06 | 22.31 | -0.74 |
| Spartan Delta | 8.26 | 7.73 | -0.53 |
| Cardinal Energy | 25.64 | 25.14 | -0.51 |
| Pine Cliff | 13.18 | 12.68 | -0.50 |
| Athabasca | 16.31 | 15.82 | -0.49 |
| Yangarra | 7.00 | 6.54 | -0.46 |
| Enerplus | 14.27 | 13.85 | -0.42 |
| Tamarack Valley | 10.49 | 10.09 | -0.40 |
| Birchcliff | 3.95 | 3.64 | -0.31 |
| Cenovus | 13.15 | 12.95 | -0.20 |
| Peyto | 3.00 | 2.82 | -0.18 |
| Tourmaline | 4.63 | 4.63 | 0.00 |
| Pipestone | 13.49 | 13.57 | 0.08 |
| Lucero | 9.48 | 9.61 | 0.13 |
| NuVista | 11.71 | 11.91 | 0.20 |
| Baytex | 14.40 | 14.62 | 0.22 |
| ARC Resources | 4.50 | 4.81 | 0.31 |
| Crew Energy | 4.18 | 4.64 | 0.46 |
| InPlay Oil | 14.70 | 15.21 | 0.51 |
| Obsidian Energy | 16.20 | 16.73 | 0.54 |
| Paramount | 12.43 | 13.03 | 0.60 |
| Canadian Natural Resources | 13.51 | 14.24 | 0.73 |
| Headwater | 6.53 | 7.33 | 0.80 |
| Advantage Energy | 3.44 | 4.44 | 1.00 |
| Rubellite | 6.10 | 7.22 | 1.12 |
| Kiwetinohk | 7.66 | 8.82 | 1.16 |
| Whitecap | 13.97 | 15.16 | 1.19 |
| Hammerhead | 8.30 | 9.51 | 1.21 |
| Saturn | 21.99 | 23.38 | 1.40 |
| Journey | 20.85 | 24.57 | 3.72 |
| AVERAGE | 12.70 | 12.90 | 0.20 |
Petrus Resources Operating Costs and Total Corporate Production
Transportation Expenses
Transportation costs increased once again this quarter, although to a lesser extent than what we observed with operating expenses. Companies in our dataset saw an average increase of 0.10 $/BOE over Q1, the second consecutive quarter-over-quarter increase we’ve observed. 18 companies in our dataset bucked this trend, however, with Ovintiv leading the pack with a 1.46 $/BOE transportation cost reduction. In its Q2 MDA, the company referenced improved variable transportation contract rates for its Permian operations and lower downstream transport costs in the Montney. Gear Energy also realized a 0.50 $/BOE reduction in transportation expenses, largely as a result of a change in the sales point for the company’s heavy oil in Alberta.
| Companies | Q1 2023 | Q2 2023 | Absolute Change |
| Ovintiv | 12.18 | 10.72 | -1.46 |
| Athabasca | 7.95 | 7.04 | -0.91 |
| Petrus Resources | 2.05 | 1.40 | -0.65 |
| Gear Energy | 4.25 | 3.75 | -0.50 |
| Enerplus | 5.81 | 5.35 | -0.46 |
| Journey | 1.06 | 0.63 | -0.43 |
| Cenovus | 8.52 | 8.10 | -0.42 |
| Baytex | 2.18 | 1.78 | -0.40 |
| ARC Resources | 5.61 | 5.34 | -0.27 |
| Vermilion | 3.14 | 2.87 | -0.27 |
| Spartan Delta | 2.83 | 2.56 | -0.27 |
| Tourmaline | 5.37 | 5.15 | -0.22 |
| Surge Energy | 1.79 | 1.59 | -0.20 |
| Hammerhead | 5.84 | 5.77 | -0.07 |
| Lucero | 1.72 | 1.67 | -0.05 |
| Rubellite | 7.92 | 7.89 | -0.03 |
| Pine Cliff | 1.47 | 1.45 | -0.02 |
| Headwater | 5.50 | 5.48 | -0.02 |
| Advantage Energy | 4.33 | 4.34 | 0.01 |
| Obsidian Energy | 3.25 | 3.28 | 0.03 |
| Pieridae | 1.60 | 1.65 | 0.05 |
| InPlay Oil | 0.92 | 0.97 | 0.05 |
| Tamarack Valley | 3.90 | 3.98 | 0.08 |
| Canadian Natural Resources | 4.03 | 4.11 | 0.08 |
| Yangarra | 1.35 | 1.45 | 0.10 |
| Whitecap | 2.13 | 2.23 | 0.10 |
| Cardinal Energy | 0.91 | 1.07 | 0.16 |
| Perpetual | 1.82 | 2.01 | 0.19 |
| Crew Energy | 3.74 | 3.99 | 0.25 |
| Crescent Point | 2.83 | 3.10 | 0.27 |
| Peyto | 1.46 | 1.75 | 0.29 |
| Saturn | 1.01 | 1.42 | 0.41 |
| Birchcliff | 5.07 | 5.56 | 0.49 |
| Kelt Exploration | 3.01 | 3.54 | 0.53 |
| Pipestone | 3.26 | 3.87 | 0.61 |
| Kiwetinohk | 5.35 | 6.06 | 0.71 |
| NuVista | 4.13 | 5.52 | 1.39 |
| MEG Energy | 14.88 | 20.01 | 5.13 |
| AVERAGE | 3.90 | 4.00 | 0.10 |
Hedging Gains/Losses
Hedging outcomes improved for most companies in our dataset, with 24 companies reporting better hedging outcomes compared to Q1 2023. Peyto Exploration & Development saw the most marked improvement, increasing by 12.54 $/BOE in the second quarter. Peyto’s hedging gains were primarily a result of reduced natural gas prices; the company’s reporting indicates that its hedging program generally realizes gains during periods with price declines. Vermilion was impacted by a similar dynamic, with the company’s hedging program delivering positive results on account of reduced realized natural gas pricing. Spartan Delta specifically referenced the rebalancing of its AECO 7A swaps as a factor that contributed to its positive hedging outcomes in this quarter.
| Companies | Q1 2023 ($/BOE) | Q2 2023 ($/BOE) | Absolute Change ($/BOE) |
| Peyto | -7.20 | 5.34 | 12.54 |
| Vermilion | 1.95 | 8.86 | 6.91 |
| Spartan Delta | -1.36 | 5.36 | 6.72 |
| Hammerhead | -0.07 | 5.4 | 5.47 |
| Athabasca | -6.58 | -1.56 | 5.02 |
| Pieridae | 0.12 | 4.80 | 4.68 |
| ARC Resources | -4.87 | -0.29 | 4.58 |
| Kiwetinohk | 2.39 | 6.64 | 4.25 |
| Crew Energy | 4.72 | 8.87 | 4.15 |
| Saturn | -4.55 | -1.87 | 2.68 |
| NuVista | -1.42 | 1.15 | 2.57 |
| Crescent Point | -0.59 | 1.79 | 2.38 |
| Ovintiv | -2.22 | 0.13 | 2.35 |
| InPlay Oil | 0.00 | 2.07 | 2.07 |
| Rubellite | 0.77 | 2.77 | 2.00 |
| Baytex | 0.69 | 2.00 | 1.31 |
| Obsidian Energy | 0.88 | 1.94 | 1.06 |
| Bonterra Energy | -0.09 | 0.95 | 1.04 |
| Gear Energy | 0.87 | 1.37 | 0.50 |
| Yangarra | -0.04 | 0.46 | 0.50 |
| Birchcliff | -2.36 | -1.88 | 0.48 |
| Cenovus | -0.10 | 0.29 | 0.38 |
| Petrus Resources | 3.22 | 3.59 | 0.37 |
| Whitecap | 0.65 | 0.89 | 0.24 |
| Surge Energy | -0.88 | -0.93 | -0.05 |
| Canadian Natural Resources | -0.01 | -0.25 | -0.24 |
| Cardinal Energy | 0.76 | 0.00 | -0.76 |
| Tamarack Valley | -1.06 | -2.05 | -0.99 |
| Paramount | 0.70 | -0.33 | -1.03 |
| MEG Energy | 0.23 | -0.94 | -1.17 |
| Pipestone | 2.78 | 1.00 | -1.78 |
| Advantage Energy | 3.44 | 1.07 | -2.37 |
| Enerplus | 5.27 | 2.20 | -3.07 |
| Tourmaline | 10.59 | 6.14 | -4.45 |
| Headwater | 4.74 | 0.21 | -4.53 |
| Perpetual | 7.72 | 0.56 | -7.16 |
| Kelt Exploration | 6.85 | -1.17 | -8.02 |
| AVERAGE | 0.70 | 1.75 | 1.04 |
Peyto Exploration Hedging Gain/Loss and Corporate Production, Q1 2018 – Q2 2023
Netback
As was the case with realized pricing, netback changes from Q1 to Q2 depended largely on commodity price exposure. The companies with the most-improved netback outcomes this quarter were all oil-weighted; Athabasca Oil, Rubellite, and MEG Energy produced 85.4%, 100%, and 100% oil respectively and thus had heavy exposure to improved WCS pricing. In general, however, netbacks for companies in our dataset declined by an average of 1.91 $/BOE compared to Q1. This continues a steady downward trend in netbacks from 5-year peaks in Q2 2022. With oil and gas prices trending positively thus far in the third quarter, it’s possible that this trend is snapped in our next Earnings Season Report Card.
| Companies | Q1 2023 ($/BOE) | Q2 2023 ($/BOE) | Absolute Change ($/BOE) |
| Athabasca | 10.27 | 30.67 | 20.40 |
| Rubellite | 44.35 | 54.15 | 9.80 |
| MEG Energy | 34.32 | 42.38 | 8.06 |
| Gear Energy | 29.39 | 36.98 | 7.59 |
| Enerplus | 44.09 | 51.24 | 7.15 |
| Baytex | 35.65 | 39.21 | 3.56 |
| Surge Energy | 33.82 | 36.61 | 2.79 |
| Tamarack Valley | 34.17 | 36.68 | 2.51 |
| Headwater | 44.60 | 46.88 | 2.28 |
| Cardinal Energy | 29.92 | 31.85 | 1.93 |
| Bonterra Energy | 34.90 | 36.78 | 1.88 |
| Pieridae | 15.24 | 15.51 | 0.27 |
| Obsidian Energy | 35.55 | 35.27 | -0.28 |
| InPlay Oil | 30.34 | 29.16 | -1.18 |
| Crescent Point | 44.18 | 42.81 | -1.37 |
| Spartan Delta | 27.17 | 24.72 | -2.45 |
| Whitecap | 36.68 | 34.07 | -2.61 |
| Vermilion | 46.33 | 43.66 | -2.67 |
| Birchcliff | 15.09 | 12.14 | -2.95 |
| Crew Energy | 27.22 | 23.43 | -3.79 |
| Peyto | 22.92 | 18.90 | -4.02 |
| Saturn | 46.14 | 41.87 | -4.27 |
| Petrus Resources | 27.85 | 23.35 | -4.50 |
| Pine Cliff | 11.72 | 7.11 | -4.61 |
| Journey | 19.04 | 13.61 | -5.43 |
| Hammerhead | 39.18 | 33.64 | -5.54 |
| ARC Resources | 26.78 | 21.10 | -5.68 |
| Yangarra | 30.84 | 24.23 | -6.61 |
| Ovintiv | 32.36 | 25.56 | -6.81 |
| Advantage Energy | 20.73 | 13.86 | -6.87 |
| Kiwetinohk | 38.74 | 31.61 | -7.13 |
| Lucero | 42.81 | 35.34 | -7.47 |
| Paramount | 32.26 | 23.75 | -8.51 |
| Pipestone | 29.17 | 20.51 | -8.66 |
| Tourmaline | 28.08 | 19.23 | -8.85 |
| Perpetual | 22.79 | 13.72 | -9.07 |
| Kelt Exploration | 33.27 | 22.55 | -10.72 |
| NuVista | 35.58 | 24.07 | -11.51 |
| AVERAGE | 31.30 | 29.10 | -2.20 |
Contact us for more information on how BOE Intel can help you make sense of Canadian oil and gas.
NOTE: Our team has attempted to standardize metrics across companies, as many producers report $/BOE expense measures differently. This means that some of the figures above are slightly different from the $/BOE figures in the companies’ corporate reports.