Oil industry analysts expect lots of investor interest in prospects for crude-by-rail shipments, as tighter differences between Canadian and U.S. oil prices make that shipping option less financially attractive. (Photo by THE CANADIAN PRESS)

Oilpatch financial results expected to reflect extreme Q4 oil price volatility

CALGARY — Financial analysts say fourth-quarter results from Canada’s biggest oil and gas companies will likely feature some surprises, as well as revisions to forward plans, given extreme volatility in commodity prices in the last three months of 2018.

The parade of results and conference calls begins Friday with Imperial Oil Ltd. and continues next Tuesday with Suncor Energy Inc.

During the quarter, U.S. benchmark oil prices fell 16 per cent from the previous period to average US$58.79 per barrel but Canadian prices were much more severely impacted thanks to discounts blamed on full export pipelines, according to RBC Capital Markets.

Those discounts, which resulted in a 59 per cent average drop in bitumen-blend Western Canadian Select oil and 45 per cent for lighter Edmonton Par crude, subsided to normal levels or lower in December after the Alberta government announced production curtailments beginning Jan. 1.

Analysts say they expect plenty of questions for executives at the 25 large operators affected by the cuts on how they are dealing with them and what the impact will be on future production and profits.

They also expect lots of investor interest in prospects for crude-by-rail shipments, as tighter differences between Canadian and U.S. oil prices make that shipping option less financially attractive.

“Without readily available data on Alberta crude inventories, timing of pulling back on mandated production cuts remains a big question mark,” said Tudor Pickering Holt & Co. analysts in a report.

“We expect the question to be highly topical on conference calls.”

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