Oil sands at high oil prices Report

Insight 17 March 2022

Get this report*

$1,350

You can pay by card or invoice

Share link

First name
Last name
Job Title
Company
Email
Telephone
Country

Message

Consent

Please keep me informed about Wood Mackenzie products, services and events.
Submit Category

For details on how your data is used and stored, see our Privacy Notice.

- FAQs about online orders
- Find out more about subscriptions

*Please note that this report only includes an Excel data file if this is indicated in "What's included" below

Report summary

With the Russia/Ukraine conflict putting extreme pressure on global commodities, Canada’s oil sands sector is reaching peak production levels at a unique time. Production is now past the three million barrel per day mark. Using Lens Valuations, we can quickly run price scenarios across an entire sector or region. A 2022 price of WTI US$110/bbl means annual oil sands cash flows to companies after maintenance costs, operating costs, royalties and taxes would total US$56 billion. That is a 2.4x higher than if prices averaged the US$70/bbl WTI we expected at the start of the year. Government share in royalties and taxes also benefit, making a 3x jump to US$41 billion. It is unlikely the higher cash generation is re-invested into growth. Instead, funds will be earmarked for future carbon reduction projects, further consolidating deals and continued shareholder payments.

Executive summary
- Cash flow outcomes from higher prices in 2022
- Corporate share
- Government share
- What does development look like in an upside scenario?
- Where will the cash flow go to?
- 1. Investors hold the reins and are rewarding cash return strategies
- 2. Cdn$70 billion needed for emissions reductions
- 3. A final use for cash will be consolidation