CEOs of Canadian oil and gas producers said on Tuesday they are seeking to avoid making abrupt decisions, as global oil prices hover around four-year lows and recession fears grow.
Doug Bartole, CEO of Calgary-based InPlay Oil, said his company does not foresee reducing production or capital spending in the short term, despite the recent tariff-related fall in oil prices.
“Don’t make any rash decisions. Let’s take a longer view of things and see where it all settles out,” Bartole said in an interview in Toronto.
But he said that could change if oil continues its slide.
“I think $50 oil would change things a bit more, obviously,” Bartole said. “We can easily pull back capital. We’re a small company, we’re nimble. We make decisions quick.”
InPlay on Monday closed a previously announced C$321-million acquisition of Alberta oil assets from Obsidian Energy. On Tuesday, ATB Capital Markets lowered its price target for InPlay shares, citing “the current WTI pricing environment.”
Brent futures and West Texas Intermediate crude futures have slumped since U.S. President Donald Trump’s April 2 announcement of broad tariffs.
Oil prices dipped on Tuesday, trading over $60 per barrel and remaining near four-year lows as recession fears exacerbated by trade conflict between the United States and China offset a recovery in equity markets.
ATB said in a research note it still expects Canadian production to grow this year, but warned sustained lower oil prices would pressure companies to limit spending and constrain output growth.
Peter Tertzakian, economist and founder of think tank Studio.Energy, said it was too early to know where oil prices are headed. Canada’s biggest oil sands companies can be profitable at lower prices, he said, but smaller, higher-cost operators could find themselves revising their capital budgets if commodity prices do not rebound.
“It’s a question of whether there’s enough (money) to grow, and if $61-$62 is sustained for the balance of the year, we’re not likely to grow very much,” Tertzakian said.
Chris Carlsen, CEO of Canadian natural gas producer Birchcliff Energy, said the sector is concerned about the potential for a global recession.
But he said the slide in oil prices could benefit natural gas producers in the long term if it leads to an overall reduction in North American drilling.
“When they’re drilling less oil, there’s less associated gas with that, which means we could be short on the natural gas production side,” Carlsen said.
(Reporting by Amanda Stephenson; Editing by Rod Nickel)