Good times continued for Canadian energy companies in 2006 with an increase in gross revenues, cash flows from operations and total assets as compared to 2005.

According to the 2007 PricewaterhouseCoopers (PwC) Canadian Energy Survey average gross revenues for the top 100 exploration and production (E&P) companies in Canada in 2006 were $1.4 billion — an increase of 7% from 2005.

“2006 was once again a strong year for the industry,” says Angelo Toselli, PwC partner and energy and utilities practice leader. “All sectors are still enjoying solid results – a trend we don’t see changing anytime soon.”

According to PwC, average total assets for the top 100 companies increased by 21% from $1.93 billion in 2005 to $2.34 billion in 2006. Average cash flow from operations increased 9% to $436 million in 2006, up from $400 million in 2005.

Valuation parameters for Canadian oil and gas transactions continued their positive trend, reaching new record highs in 2006. The median acquisition price for 2006 was $20.13/boe compared to $15.83 in 2005 – an increase of 27%, fuelled primarily by oil prices.

This year’s survey included a total of 32 income trusts in 2006 compared to 36 in 2005 as a result of merger and acquisition activity in 2006. Total market capitalization of the trusts increased by 4% from $69.9 billion in 2005 to $73.0 billion in 2006. The S&P/TSX Energy index did not match the broader S&P/TSX index, posting a net gain of only 3% in the year, while the S&P/TSX Energy Trust index posted a loss of 4%.

Toselli notes, “The big story for 2006 was the surprise announcement on October 31 by the Canadian federal government to change legislation to impose a new tax on income trusts, effectively ending their perceived favourable tax treatment. This announcement resulted in a significant loss in market value of the energy trust sector.”

The PwC survey also notes that it is anticipated that the federal government will soon announce short-term targets for reductions in greenhouse gas emissions and air pollutants from key industrial sectors. It is expected that a significant portion of the burden will rest on the shoulders of the energy industry.