Nearly half of the global oil and gas industry executives surveyed by Ernst & Young believe that their businesses have been less severely impacted by the economic downturn than other sectors. A similar number even reported business improvements while highlighting a focus on cost and risk management.

Ernst & Young surveyed 569 senior corporate executives globally and across all industry sectors. Oil and gas industry executives proved to be more optimistic than other respondents about the economic outlook.

“Whether Canadian oil and gas companies share in this global optimism is dependent primarily on their size and bias towards oil,” says Barry Munro, leader of Ernst & Young’s Canadian oil and gas practice. “Over the past two to three years, the larger, well-capitalized firms really have achieved an advantage over the smaller players in Canada — a difference that’s only been exacerbated by the downturn.”

Munro also noted that many Canadian exploration and production (E&P) companies are much more susceptible to the myriad challenges continuing to plague the natural gas business.

Meanwhile, oil prices have rebounded strongly from their early 2009 lows, and the industry has moved very quickly to operate leaner and more efficiently. As a result, many Canadian E&P companies are well poised to take advantage of opportunities when the recovery comes.

“Despite the turbulent energy market, there’s a strong case for optimism right now in Canada,” says Munro. “Cost structures have become more favourable, there’s an inflow of money to new management teams, a reduction in staff turnover levels and greater access to top talent, as well as multiple acquisition prospects for cash-rich players.”

The report states that global oil and gas executives believe acquisitions, divestitures and strategic alliances will help them emerge stronger from the economic downturn. Munro expects that Canada will be no exception to these trends.

IE