ATB Capital Markets’ Fall 2024 Energy Sector Survey, released on September 19, 2024, provides a comprehensive look at the current state of the Canadian energy industry. The survey, conducted between August 28 and September 9, 2024, gathered insights from executives representing 33 energy services companies, 38 exploration and production (E&P) companies, and 39 institutional investors.
The survey reveals a moderate shift in sentiment among investors, with lower crude price expectations driving a decrease in overall optimism. While 75% of respondents expect WTI crude prices to average above $75/bbl over the next three to five years, this figure represents a decline from the 91% recorded in previous surveys. This weakened commodity price outlook is reflected in a moderation of E&P sentiment, with 58% characterizing their outlook as “improving” over the next six months, down from 88% in the spring 2024 survey. Institutional investors have experienced the most significant reduction in sentiment, with only 38% expecting energy to outperform the TSX/S&P 500 over the next 12 months, a decrease from 67% in the spring survey.
Despite these moderations, the survey indicates that 2025 is poised for low-to-mid-single digit growth in Canada. Respondents anticipate 3% to 5% field activity growth in 2025 compared to 2024, mid-single digit production growth for Canadian E&Ps on average, and flat year-over-year per-well development costs with low-single digit service price inflation.
The survey also shed light on the impact of Bill C-59, Canada’s environmental reporting legislation, on E&P companies. A significant majority (53%) of E&P respondents view the legislation as “very impactful,” leading to a reduction in the willingness of energy companies to invest in environmental technologies and improve ESG disclosures. Only 17% of E&Ps and energy services respondents expressed intentions to invest in environmental technologies, down from 34% in the spring 2024 survey.
The upcoming U.S. and Canadian federal elections are seen as potential catalysts for the energy sector. The survey suggests that a Republican victory in the 2024 U.S. federal election would be viewed more favorably by the energy industry than a Democratic victory. However, with respect to the Canadian federal election scheduled for October 20, 2025, the survey indicates that the energy industry would likely welcome a change in government, as “federal energy and environmental policies and regulations” were ranked as the top risk to the industry over the next three to five years.
Institutional investors have shown a clear preference for E&P companies as the top energy investment sector, both in terms of likelihood to invest and expected equity performance over the next 12 months. Midstream companies ranked second in terms of likelihood to invest, followed by energy services, which ranked second in terms of expected equity performance.
Overall, ATB Capital Markets’ Fall 2024 Energy Sector Survey provides a valuable snapshot of the current state of the Canadian energy industry. The survey highlights both the challenges and opportunities facing the sector, offering insights that can guide businesses and investors as they navigate the complex landscape ahead.
