Production cuts mount as crude prices fall
Athabasca Oil Corp and Obsidian Energy joined CNRL, Cenovus and MEG Energy in their plans to shut-in production due to low oil prices.
Athabasca says it plans to slow production out of Hangingstone and Leismer by 5,000 to 8,000 bbl/day for the remainder of this year. Obsidian Energy has delayed the start of four newly constructed wells in Peace River. Perpetual Energy and Gear Energy also announced plans to defer Q4 drilling programs to sometime next year.
RBC pegs total production losses somewhere between 52,000 and 98,000 bbl/day, while investment firm Eight Capital says at least 110,000 bbl/day is offline due to lack of storage capacity in Alberta.
According to Statistics Canada, the country produced 4.4 million bbl/day in August (the latest available data), but RBC estimates production is currently tracking closer to 4.6 million. Canada's heavy oil benchmark, Western Canadian Select (WCS), ended the week at US$17 a barrel, a full US$44 below WTI. Canadian Light isn't fairing much better, trading at a US$35 discount, or roughly US$25/bbl. Although differentials have actually narrowed in recent weeks, WTI has now declined for 10 days in a row, ending Friday at US$60/bbl, down US$16 from the highs of early October.