Canadian Oil Companies Rewarding Shareholders

Oil companies are encountering faltering prices, and Canadian companies are also soaking an unusually disciplining discount for their heavy-grade crude.

BMO Capital Markets analysts calculate that the leading 35 companies will generate C$54B ($39.7B) in free cash flow in 2023. It is 16% inferior to this year. But the amount of the cash that flows to shareholders may be increased because companies will disburse less on debt repayment, BMO’s managing director of oil and gas equity research Randy Ollenberger displayed.

Most large- and mid-size producers hope to be net-debt-free in the second half of 2023, as stated by BMO. Net debt describes a company’s gross debt minus money and cash-like assets.

Companies might consider rev buybacks next year ahead of Canada’s planned 2% buyback tax. It’ll take impact in 2024, as stated by CIBC.

One company with cash to expend is Bonterra Energy Corp. BEC is a conventional oil producer pulling 13,500 barrels of oil equivalent per day.

Paying Off Debt

It encountered an existential threat in 2020 when the coronavirus epidemic whipped oil prices. A government-backed loan assisted in sustaining it. As prices recovered, Bonterra refunded the loan and C$150M in debt throughout the past year as of the third quarter.

Bonterra anticipates paying off its remaining C$38M bank debt by the third quarter of 2023. Moreover, Chief Executive Officer Pat Oliver informed Reuters that it still has options like creating a dividend, raising production, or repaying debt further.

Canadian Natural (NYSE: CNQ) Resources, the country’s largest oil producer, stated on Nov. 30 that it would raise shareholder returns to 80% to 100% of free cash flow from 50% once it decreases net debt to C$8B. An analyst expressed this would likely occur late next year.