According to Bryan Mills Iradesso’s iQ Report, energy companies in Western Canada are making the switch from exploring for natural gas to producing oil after months of deliberation.
The report, a survey of the public junior and intermediate oil and gas companies that operate in Western Canada, shows that the median junior explorer had a natural gas weighting of only 53 percent of overall production in the first quarter of 2011. This is a significant development given that the median natural gas weighting for the juniors has been fluctuating between 65 and 76 percent for the past four years. The natural gas weighting for the juniors in the first quarter of 2010 was 71 percent.
Intermediate oil and gas companies are moving in the same direction, with a median natural gas weighting of 63 percent of overall production in the first quarter of 2011. This compares with a natural gas weighting of 66 percent for this group in the first quarter of 2010.
“Oil and gas companies have finally stopped targeting natural gas in their drilling, production enhancement and acquisition programs,” says iQ Report co-editor Geoffrey Vanderburg. “Oil is where it’s at.”
The latest iQ Report compares financial and operating results for the period from January to March. It defines junior oil and gas companies as those with production between 500 and 10,000 barrels of oil equivalent per day (boe/d) and intermediates as companies with production between 10,000 and 100,000.
During the first quarter, 79 percent of intermediates and 60 percent of juniors saw their share prices rise. The median return over this period was 8.1 percent for the intermediates and 5.4 percent for the juniors.
In the following three months of April through June, 75 percent of intermediates and 79 percent of juniors saw their share prices decline. The median loss over this period was 11.7 percent for the intermediates and 13.1 percent for juniors. These returns are calculated using opening and closing share prices combined with dividends paid during the period.
The number of intermediates with first quarter production of more than 10,000 boe/d and less than 100,000 boe/d has increased to 28 companies, a 22 percent increase over the 23 intermediates operating in the first quarter of 2010.
Of the 28 intermediates this quarter, 82 percent have production of less than 50,000 boe/d and no companies reported production of between 80,000 boe/d and 100,000 boe/d. Overall, the population of juniors has remained steady over the past year.
12 of the 28 intermediates and three of 57 juniors paid a monthly dividend to their shareholders in the first quarter of 2011. All but one of these companies are former income trusts.
The release date for Bryan Mills Iradesso’s iQ Report for the first quarter was delayed due to the 30-day extension granted to public companies to report their first quarter results in accordance with new International Financial Reporting Standards. The iQ Report for the second quarter is expected to be released on schedule within two months.
Category: Oil & Gas
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