With just over a week remaining in Q3, there’s no better time to wrap up our Q2 2024 Earnings Season Report Card (see part 1 here). With respect to per-barrel metrics, the big story this quarter was realized pricing. Specifically, a divergence between oil (which appreciated notably) and gas (which declined notably). Canadian producers reported an overall improvement in realized pricing in the second quarter, however, likely a result of the large number of oil-weighted producers in the industry. Similarly, netbacks improved this quarter, albeit to a lower extent than realized pricing; this likely had something to do with changes in operating and transportation costs, which both increased quarter-over-quarter. G&A expenses, which aren’t included in netback calculations but remain a key barometer, declined. For more specific details on these outcomes in Q2, keep reading.
Realized Pricing
As mentioned above, the second quarter was a tale of two commodities. Taking a more granular look, the average realized natural gas price for companies in our dataset dropped from $2.82/mcf in Q1 to $1.63/mcf in Q2, while realized oil prices increased from $85.81/BBL to $97.90/BBL over the same period. Aggregated across commodities, the average barrel of oil equivalent realized price for companies in our dataset increased from $50.50/BOE in the first quarter to $54.10/BOE in the second quarter. Of all companies, oil sands producers Athabasca and MEG reported the most impressive quarters; both companies recorded absolute per barrel increases of more than $17.50/BOE. While MEG’s quarter is more or less self-explanatory, Athabasca’s story is slightly more nuanced given the just over 10% of corporate production attributed to its Duvernay Energy Corporation subsidiary. Even so, this production is only 20% natural gas and did not spoil Athabasca’s excellent realized pricing quarter. Lycos, another oil-weighted producer, saw its average realized pricing increase by $15.96/BOE in Q2. Lycos has consistently had a 99% liquids production portion since going public, virtually all of which is crude oil.
| Company | Q2 2024 | Q1 2024 | Absolute Change($/BOE) | % Change |
| Athabasca | 79.93 | 62.18 | 17.75 | 28.5 |
| MEG Energy | 91.11 | 73.58 | 17.53 | 23.8 |
| Lycos | 84.23 | 68.27 | 15.96 | 23.4 |
| Rubellite | 87.35 | 72.60 | 14.75 | 20.3 |
| Greenfire | 89.93 | 75.41 | 14.52 | 19.3 |
| Hemisphere | 87.65 | 73.53 | 14.12 | 19.2 |
| Cardinal Energy | 83.17 | 71.04 | 12.13 | 17.1 |
| Gear Energy | 79.68 | 68.60 | 11.08 | 16.2 |
| Strathcona | 70.06 | 60.35 | 9.71 | 16.1 |
| Surge Energy | 80.57 | 69.79 | 10.78 | 15.4 |
| Average | 54.10 | 50.50 | 3.60 | 7.1 |
Realized Pricing for Athabasca Oil, Lycos, MEG, and the Industry Average, Q2 2022 – Q2 2024
Netback
The average company in our dataset reported improved netbacks in the second quarter, with a Q2 figure that exceeded Q1 by $1.50/BOE. Looking company-by-company, 21 out of 41 companies in our dataset reported improved netbacks relative to the first quarter. Unsurprisingly, there is quite a bit of overlap between the realized pricing top 10 and the netback top 10. In fact, only Tamarack Valley, Baytex, and Paramount appear on the netback top 10 and not the realized pricing top 10. Tamarack Valley grew its average netback by $7.91/BOE relative to the first quarter, due largely to improved realized pricing but also reductions in its operating and transportation costs. Baytex, similarly, benefitted from improved transportation costs but also improved oil realizations, particularly for oil produced from its US assets. Paramount, the most interesting case of the three given its lower liquids percentage, benefitted from a strong quarter of hedging (which was $4.23/BOE better than Q1).
| Company | Q2 2024 | Q1 2024 | Absolute Change ($/BOE) | % Change |
| Lycos | 46.79 | 31.49 | 15.30 | 48.6 |
| Greenfire | 36.68 | 24.69 | 11.99 | 48.6 |
| Athabasca | 52.00 | 36.27 | 15.73 | 43.4 |
| Cardinal Energy | 42.03 | 30.67 | 11.36 | 37.0 |
| Surge Energy | 44.77 | 33.56 | 11.21 | 33.4 |
| Gear Energy | 45.02 | 35.99 | 9.03 | 25.1 |
| Tamarack Valley | 49.93 | 42.02 | 7.91 | 18.8 |
| Baytex | 44.31 | 37.43 | 6.88 | 18.4 |
| Paramount | 30.91 | 26.19 | 4.72 | 18.0 |
| MEG Energy | 47.14 | 39.99 | 7.15 | 17.9 |
| Average | 30.30 | 28.80 | 1.50 | 5.2 |
Netback for Baytex, Paramount, Tamarack Valley and the Industry Average, Q1 2018 – Q2 2024
Operating Expenses
Operating expenses per BOE were largely unchanged in the second quarter, with the average company recording a very modest $0.05/BOE bump. Interestingly, 22 out of 37 companies with data available actually reported decreased costs, indicating that the cost increases reported by the other 15 companies were quite significant. Among the companies who reported operating cost improvements, Petrus’ $1.80/BOE reduction was the largest proportionally. In its Q2 MDA, the company referenced savings from reduced production as well as lower power costs. Hemisphere reduced its operating costs by 13.6%. Hemisphere doesn’t reference an operational adjustment in its Q2 MDA, suggesting instead that per-barrel costs dropped on account of economies of scale from increased production. MEG, in contrast, reported Q2 operating costs that were $1.51/BOE lower than Q1 in spite of reduced production.
| Company | Q2 2024 | Q1 2024 | Absolute Change ($/BOE) | % Change |
| Petrus Resources | 4.96 | 6.76 | -1.80 | -26.6 |
| Hemisphere | 9.63 | 11.14 | -1.51 | -13.6 |
| MEG Energy | 7.76 | 8.92 | -1.16 | -13.0 |
| Kiwetinohk | 6.17 | 7.03 | -0.86 | -12.2 |
| Lycos | 22.64 | 25.51 | -2.86 | -11.2 |
| Birchcliff | 3.43 | 3.85 | -0.42 | -10.9 |
| Saturn | 19.25 | 21.19 | -1.94 | -9.1 |
| Cardinal Energy | 24.46 | 26.62 | -2.16 | -8.1 |
| Surge Energy | 21.30 | 22.86 | -1.56 | -6.8 |
| Baytex | 11.95 | 12.65 | -0.70 | -5.5 |
| Average | 12.55 | 12.50 | 0.05 | 0.4 |
Operating Costs for Hemisphere, MEG Energy, Petrus and the Industry Average, Q1 2018 – Q2 2024
Transportation Costs
Transportation costs per BOE also increased relative to Q1, although to a greater degree than operating costs. The average company in our dataset saw costs increase by 7.9%, representing a $0.30/BOE bump. Looking at the proportional split, only 13 out of 37 companies reported decreased transportation costs quarter-over-quarter. This group was highlighted by Petrus, which announced a 19.3% decline relative to the first quarter. As was the case for its operating costs, Petrus referenced savings from decreased production being a contributing factor. In addition, the company also highlighted an increase in its use of contracted firm service for transportation. Advantage Energy, which led all companies in per-barrel terms with a $0.50/BOE transportation cost reduction, expects a further decline toward a 2024 average of $3.50/BOE per its Q2 2024 MDA. Contextualizing its Q2 improvement, the company referenced lower fuel costs as a result of declines in natural gas pricing. While InPlay Oil’s Q2 MDA doesn’t provide an explanation for its improved transportation cost outcomes in the second quarter, it’s possible that economies of scale from a slight increase in average production contributed.
| Company | Q2 2024 | Q1 2024 | Absolute Change ($/BOE) | % Change |
| Petrus Resources | 1.46 | 1.81 | -0.35 | -19.3 |
| Advantage Energy | 3.73 | 4.23 | -0.50 | -11.8 |
| InPlay Oil | 0.98 | 1.09 | -0.11 | -10.1 |
| Lycos | 1.53 | 1.69 | -0.16 | -9.5 |
| Logan | 3.57 | 3.93 | -0.36 | -9.2 |
| Tamarack Valley | 3.93 | 4.18 | -0.25 | -6.0 |
| Gear Energy | 3.36 | 3.57 | -0.21 | -5.9 |
| Tourmaline | 4.96 | 5.23 | -0.27 | -5.2 |
| Spartan Delta | 1.50 | 1.58 | -0.08 | -5.1 |
| Rubellite | 7.67 | 7.88 | -0.21 | -2.7 |
| Average | 4.10 | 3.80 | 0.30 | 7.9 |
Transportation Costs for Advantage, InPlay Oil and the Industry Average, Q1 2018 – Q2 2024
G&A
G&A costs per BOE decreased in the second quarter, with the average company in our dataset reporting a 4.1% drop. Taking a more granular look, 28 out of 43 companies reported per-BOE G&A declines relative to Q1. Perpetual led all companies proportionally and on a per-barrel level with a $3.08/BOE reduction, representing a 39.8% drop. While the company references reduced professional fees in its MDA, we do wonder if preparations for the company’s recombination with Rubellite might have had something to do with movements in Perpetual’s G&A costs. Yangarra reported a $0.63/BOE reduction in G&A costs, referencing staffing changes. Cenovus’ quarter-over-quarter G&A cost reductions are not addressed in its Q2 MDA, although G&A cost leadership has repeatedly been referenced in the company’s corporate presentations throughout 2024 (see the August 2024 presentation here).
| Company | Q2 2024 | Q1 2024 | Absolute Change ($/BOE) | % Change |
| Perpetual | 4.66 | 7.74 | -3.08 | -39.8 |
| Yangarra | 1.22 | 1.85 | -0.63 | -34.1 |
| Cenovus | 2.39 | 3.37 | -0.97 | -28.9 |
| Ovintiv | 1.93 | 2.63 | -0.70 | -26.7 |
| Paramount | 1.20 | 1.56 | -0.36 | -23.0 |
| Bonterra Energy | 2.28 | 2.93 | -0.65 | -22.2 |
| Lycos | 2.95 | 3.79 | -0.84 | -22.2 |
| Gear Energy | 4.42 | 5.60 | -1.18 | -21.1 |
| Saturn | 1.18 | 1.47 | -0.29 | -19.7 |
| Advantage Energy | 1.26 | 1.56 | -0.30 | -19.2 |
| Average | 2.50 | 2.40 | -0.10 | -4.1 |
G&A Costs for Cenovus, Perpetual, Yangarra and the Industry Average, Q1 2018 – Q2 2024
That’s all for Q2, but with Q3 earnings season just around the corner, it won’t be long before there are more financial and operating announcements to review. Until then, check out BOE Intel for the latest developments in Canadian oil & gas.