Canadian oil companies, lighter in debt, have cash to spare despite falling prices

FILE PHOTO: A TORC Oil & Gas pump jack near Granum By Rod Nickel WINNIPEG, Manitoba (Reuters) – After a bumper year of share buybacks and dividends, investors in debt-light Canadian oil and gas producers are set to reward shareholders even more in 2023 as they generate ample cash and show little appetite for acquisitions. Oil companies are facing faltering prices and Canadian firms are also absorbing an unusually punishing discount for their heavy-grade crude. BMO Capital Markets analysts estimate the top 35 companies will generate C$54 billion ($39.7 billion) in free cash flow in 2023, 16% lower than this year. But the portion of cash that flows to shareholders may be higher because companies will spend less on debt repayment, BMO’s managing director of oil and gas equity research Randy Ollenberger said. "We don’t see 2023 as being challenging for the sector given the improvement to balance sheets," he said. Most large- and mid-size producers expect to be net-debt-free in the second half of 2023, according to BMO. Net debt represents a company’s gross debt minus cash and cash-like assets. Companies might accelerate buybacks next year ahead of Canada’s planned 2% buyback tax, which takes effect in 2024, […]

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