In the past few years, energy price fluctuations were the most significant factor affecting North American oil and gas corporate revenues, according to a report published today by Standard & Poor’s Ratings Services.

Rising hydrocarbon prices have propelled the oil and gas industry’s revenues to record levels and generated robust cash flows; however, the financial performance of some North American oil and gas companies has also been somewhat affected by fluctuating foreign exchange rates.

“Although tertiary in significance when compared with fluctuations in both hydrocarbon prices and production levels, foreign exchange fluctuations did have some effect on reported revenues; however, there was also an offsetting effect on foreign currency-denominated operating expenses,” said Standard & Poor’s credit analyst Michelle Dathorne.

“As a result, foreign exchange movements were less significant to the industry’s financial performance than prices and production levels,” Dathorne added.

“Although positive underpinnings likely will keep the Canadian dollar on an appreciating trend to the end of 2005 and in 2006, the same forces that recently propelled the currency to multiyear highs are no longer in place,” said Standard & Poor’s economist and fixed income analyst Robert Palombi.

“A more likely scenario for the remainder of 2005 and 2006 is that the Canadian dollar will remain range-bound between 80 and 85 U.S. cents, which would not represent much of an appreciation from current levels,” Palombi added.