Oil and Gas Dec 2010

Industry Report - Oil & Gas - December 2010
Adding Value to Information Since 1900
North America
Oil & Gas Sectors
A Company and Industry Analysis December 2010
CONTENTS
Current Environment — Key Points
• Helped by a rebound in global consumption and higher oil prices in the range of US$70 to US$80/
Current Environment – US bbl, North American oil and gas producers were on track to make bigger profits this year.
• Sector Overview • All leading oil companies continued to climb back from the recession, reporting a jump in net
• Sector Performance
• Leading Companies income for the second quarter of 2010. The hike in profits came as oil companies waited on a ban
• Mergers and Acquisitions on deepwater drilling in the Gulf of Mexico that is scheduled to last until late November.
• The market value of North America’s top five oil and gas companies improved modestly in the
Current Environment – Canada six months to September 10, up 2.52% in the US and 9.09% in Canada, amid rising oil demand,
• Sector Overview production and prices.
• Sector Performance • The level of M&A activity in the US oil and gas sector was at its highest level since 2008. The main
• Leading Companies drivers included the stabilization of crude oil and gas prices following a period of extreme volatility
• Mergers and Acquisitions
in 2008 and 2009, and independent producers’ mad rush to drill for natural gas from shale.
Industry Profile – US • Canadian oil sands operators were busy developing new customers, with considerable interest and
• Industry Size and Value investment from growing Asian markets such as China, Japan and South Korea.
• Oil Sector
• Natural Gas Sector Industry Profile — Key Points
• Policy and Regulatory • Increased crude oil production in the Gulf of Mexico and North Dakota’s Bakken shale has resulted
Environment in the first annual increase in US oil production since 1991.
• Conventional production in Canada has been declining steadily for many years, but the big upturn
Industry Profile – Canada
• Industry Size and Value in oil sands production has more than compensated, and it now appears that Canada’s shale
• Oil Sector production may play the same role on the natural gas side.
• Natural Gas Sector • The Gulf of Mexico oil spill will not only tighten regulations in the oil industry, but will also force
• Policy and Regulatory US oil rig operators to take their business to other countries, as it is too expensive to let equipment
Environment stand idle, making the US more reliant on oil imports.
• The July 2010 Michigan oil spill from a pipeline operated by Enbridge led US regulators to further
Market Trends and Outlook – US intensify their scrutiny of TransCanada’s plan to build a US$12 billion pipeline network, Keystone
• Shale Gas Boom Attracts More
Investors to the US XL, that would roughly double the capacity connecting Canada’s vast tar sands oil reserves to US
• US Oil Bonanza from Shale Gas refiners.
• Drilling Moratorium May Hurt
Oil Production Market Trends and Outlook — Key Points
• Market Outlook • The US shale gas phenomenon is transforming global energy markets, generating interest among
international investors. Oil super majors and sovereign investment funds are clamoring to get a
Market Trends and Outlook – piece of the shale gas action.
Canada
• Canada’s Oil Sands Benefit from
• The EIA estimates that if shutdowns in the Gulf continue, whether because of a moratorium or
BP Oil Spill because of economic conditions that make drilling in the Gulf a sub-par investment, it will reduce
• Asian Investment in Canada’s Oil US oil production by more than 27% by 2035, and oil imports will be 19% higher.
Sands Rises • New technology is enabling companies to extract gas from previously uneconomic shale deposits,
• Emerging Interest in Shale Gas triggering a boom in production that is driving down prices in the giant US energy market, and
• Market Outlook triggering a spate of takeovers by oil majors eager to get in on the action.
• Chinese interests are taking an increasingly larger stake in oil sands, while Canada, faced with
Currency Conversion Table growing political pressure over the extraction of oil from its highly polluting tar sands, has begun
The Scope of this Report
Key References courting China and other Asian countries to exploit the resource.
Comparative Data • With future demand for oil set to rise in the coming years, North America’s unconventional
Reports Coverage hydrocarbons are looking likely to play a very significant role in meeting the shortfalls of future
global energy demand.
1 http://webreports.mergent.com
Publisher
Jonathan Worrall
Director
John Pedernales
Managing Editor
Peter O’Shea
Research Analyst
Grace Kon
Website:
http://webreports.mergent.com
Customer Service:
1800 342 5647 or 704 559 7601
email: customerservice@mergent.com
Sales Enquiries:
Fred Jenkins - Executive Vice President, Sales
704 559 6897
email: fred.jenkins@mergent.com
Copyright Statement
The North America Industry Reports are
Copyright 2010 by Mergent, Inc. All Information contained herein is
published by Mergent, Inc., headquartered in copyrighted in the name of Mergent, Inc. and none of such information may be
copied or otherwise reproduced, repackaged, further transmitted, transferred,
disseminated, redistributed or resold, or stored for subsequent use for any
Fort Mill, South Carolina, USA. Each such purpose, in whole or in part, in any form or matter or by any means
whatsoever, by any person without prior written consent from Mergent.
industry sector report is updated every six
http://www.mergent.com
months. Mergent, Inc., a leading provider of

Disclaimer
global business and financial information on
All information contained herein is obtained by Mergent, from sources believed
by it to be accurate and reliable. Because of the possibility of human and
publicly traded companies, operates sales mechanical error as well as other factors, however, such information is
provided “as is” without warranty of any kind. NO WARRANTY, EXPRESS
offices in key North American cities as well as OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF
ANY INFORMATION IS GIVEN OR MADE BY MERGENT IN ANY FORM OR
London, Tokyo and Melbourne. MANNER WHATSOEVER. Under no circumstances shall MERGENT have
any liability to any person or entity for (a) any loss or damage in whole or
in part caused by, resulting from, or relating to, any error (negligent or otherwise)
or other circumstance involved in procuring, collecting, compiling, interpreting,
analyzing, editing, transcribing, transmitting, communicating or delivering any
such information, or (b) any direct, indirect, special, consequential or incidental
damages whatsoever, even if Mergent is advised in advance of the possibility
of such damages, resulting from the use of, or inability to use, any such
information.
Current Environment
United States
Sector Overview
After a very difficult 2009, the US oil and gas industry fracturing − sometimes called “fracing” or “fracking” −
expanded at a moderate pace in the first half of 2010, that involves injecting fluid into tight formations at very
but the recovery was marred by the worst oil spill in US high pressures to create man-made fractures. Generally,
history, the oil spill in the Gulf of Mexico in April. The the more fractures created, the more gas production, due
US Administration subsequently declared a moratorium on to potential environmental damage, particularly to water
deepwater drilling after the oil spill, and the moratorium supplies.
was expected to end on November 30.
Meanwhile, refining margins improved after a remarkably
The disaster not only harmed the environment on the Gulf difficult second half of 2009, and were back to where they
Coast, but also revealed that deepwater drilling for oil and were before the 2005-2008 boom. For the first half of 2010,
gas was even more difficult and high-risk than previously refinery inputs of 14.84 million bbl/d were 1.3% higher
thought. The moratorium also intensified US dependence than they were the year earlier. Nevertheless, additional
on foreign oil, as tighter regulations following the accident US refinery closures may be necessary as capacity comes
were set to hinder domestic production. It is likely that the online in Asia and the Middle East. Pressures remained
sector will face not only more regulation but also the threat on refiners to maintain their liquidity and cash flow.
of reduced or delayed investment.
After posting a 22% first quarter decline relative to 2009,
The International Energy Agency (IEA) estimates the six US oil and natural gas drilling activity staged a turnaround
month moratorium on drilling in the US Gulf of Mexico, in the second quarter of 2010, with completions rising
which may yet be extended, combined with the time 38% from second quarter 2009. The roller coaster year of
required for new deepwater regulations to be drawn up and 2009 created better prospects for US drilling activity in
adopted, means that the US Gulf of Mexico region could 2010, as expectations for crude and natural gas demand
lose one to two years of progress relative to where it would became more bullish. Drilling activity started to reverse
have been had the spill not happened. The IEA estimates last year’s steep decline. In the second quarter of 2010,
that, as a result, by 2015 US Gulf of Mexico oil production the estimated number of exploratory oil and natural gas
could be 100,000 to 300,000 barrels of oil per day (bbl/d) wells drilled jumped 35% from the second quarter of 2009,
lower than previously forecast. Mergent expects that oil demonstrating the oil and natural gas industry’s continued
prices could reach US$100 per barrel (/bbl) by then, so the drive to finding new sources to increase US production.
lost production could have a significant economic impact.
Sector Performance
In 2010, more modest consumption habits and weaker
developed economies somewhat eased demand pressures, The top five leading US oil and natural gas companies saw
creating consistent prices in the US$70 to US$80/bbl range their market value rise by an average 2.52% over the six
for nearly a full year. Pending any swings in the economy, months to September 10, when crude closed at US$76.25/
the US Energy Information Administration (EIA) expects bbl on the New York Mercantile Exchange (NYMEX). The
prices to remain relatively stable in the short to medium EIA projects the West Texas Intermediate (WTI) spot price,
term. US crude oil production averaged 5.47 million which ended in June near US$76/bbl, will average US$79/
bbl/d in the first half of 2010 — 3.5% higher than 2009’s bbl over the second half of 2010, and US$83/bbl in 2011.
5.29 million bbl/d. US gas fundamentals remained weak, The Henry Hub natural gas spot price is expected to average
hampered by poor demand and strong production growth. US$4.70 per million Btu (MMBtu) in 2010, a US$0.75-per-
However, producers continued to invest substantially in MMBtu increase over the 2009 average. The EIA expects
unconventional gas plays, particularly shale, suggesting a the Henry Hub spot price to average US$5.17 per MMBtu
positive long-term outlook. in 2011. Worldwide natural gas markets have experienced
an unprecedented reduction in demand over the past two
During the year concerns remained high over future years, due to the economic recession. This, combined with
possible regulatory action that would limit hydraulic a faster-than-expected expansion in unconventional gas
Current Environment - United States
Table 1: Top Five US Oil Majors’ Stock Price Movements
Share Prices
Company NYSE Ticker March 10, September Rise / Fall (%) Market Cap
2010 10, 2010
ExxonMobil Corp XOM US$67.22 US$61.20 (8.95) 311.62B
Chevron Corp CVX US$73.96 US$78.83 6.58 158.47B
ConocoPhillips COP US$51.47 US$54.75 6.37 83.60B
Marathon Oil MRO US$31.49 US$32.32 2.64 22.94B
Hess Corp HES US$51.27 US$54.52 5.96 17.87B
Average Rise / Fall % 2.52
Source: Mergent analysis
in the US, resulted in global oversupply, sending spot gas on an appraisal well and suspended operations at one of its
prices sharply lower. The EIA says markets could remain Gulf platforms. The impact is likely to be minimal as their
in oversupply until at least the middle of this decade. operations are so vast.
Although ExxonMobil (NYSE: XOM) posted strong Chevron (NYSE: CVX)

results in the second quarter, its stock performance was
not so impressive. The company’s share price dropped The US listed international giant Chevron generated second
8.95% in the six months to September 10, as ExxonMobil quarter earnings of US$5.41 billion, or US$2.70 per share,
returned more than US$3 billion to shareholders through compared with US$1.75 billion, or 87¢ per share, in the
dividends and share buybacks from its takeover of natural second quarter of 2009. Revenues in the second quarter
gas producer XTO Energy, and after saying it would pay totaled US$51 billion, up US$11 billion, after the company
off or refinance the deal’s assumed debt. However, the benefited from higher prices for crude oil, natural gas and
globally diversified company is among the industry’s best refined products. For the second quarter, Chevron continued
managed, particularly since its acquisition of XTO Energy, to make significant progress in building a natural gas
one of the largest natural gas companies. business to supply Australia and the Asia-Pacific. Chevron
also undertook several key exploration and development
While Exxon shares dipped, the decline did not spread projects, including exploration of 200,000 acres of shale
to the rest of the energy sector, as shares of Chevron gas leases in Western Canada, likely to start at the end of
(NYSE: CVX), ConocoPhillips (NYSE: COP), Marathon 2011. The company also confirmed it would invest in the
Oil (NYSE: MRO) and Hess (NYSE: HES) collectively Duri Field in Indonesia, that could boost production by
rose by an average of 5.38%, after recovering demand for 20,000 bpd. During the second quarter, Chevron produced
petroleum-based fuels lifted energy prices. 2.75 million bbl/d (net oil-equivalent), up 3% on the
second quarter of 2009, thanks largely to developments in
Leading Companies Kazakhstan, Brazil and the US.
All leading major oil companies continued to climb back Conoco Philips (NYSE: COP)
up from the recession, and reported a huge increase in net
income for the second quarter of 2010. They benefited as a ConocoPhillips, the third largest US oil producer, reported
recovering global economy spurred gains in crude prices, that second quarter net income rose after gains in crude
and higher global crude oil production more than offset the prices made up for a drop in the value of an idled German
effects of lower worldwide refinery output and domestic refinery that the company may sell. Its profit rose to
refining margins, leading to higher revenues and net US$4.16 billion, or US$2.77 a share, from US$859
income. The jump in profits came as oil companies waited million, or US$0.57 the year earlier. The company, which
out a ban on deepwater drilling in the Gulf of Mexico was in the middle of a US$10 billion divestiture program,
that is due to last until November 30. Shell took a US$56 canceled plans to upgrade its German Wilhelmshaven plant
million charge for idling its rigs, while Exxon halted work and pulled out of a refining project in Saudi Arabia and
Current Environment - United States
from an Abu Dhabi natural gas venture. The company also conglomerate Reliance Industries (LON: RIGD), which
planned to sell its entire 20% stake in Russia’s OAO Lukoil bought into two shale plays, Atlas Energy’s Marcellus shale
(LSE: LKOH), valued at about US$9 billion, although this project in Pennsylvania and Pioneer Natural Resources’
was not included in the US$10 billion divestiture target. In Eagle Ford shale project in Texas. Reliance has committed
June, the company completed the sale of its 9% stake in oil to spend US$2.8 billion in cash payments to and cost carry
sands producer Syncrude Canada for US$4.65 billion. for their partners, and is teaming up with two companies
with significant experience in shale gas extraction.
ExxonMobil (NYSE: XOM)
Unlike the round of mergers that created today’s behemoths
ExxonMobil posted its biggest profit increase since 2003, in the late 1990s, the current round is not likely to form new
as rising production helped the largest US oil company giant companies like Exxon Mobil or ConocoPhillips. This
take advantage of gains in energy prices. Its second quarter time, companies are focusing on buying fast-growing small
net income jumped 91% to US$7.56 billion, or US$1.60 companies, or on acquisitions that expand their reserves in
a share, from US$3.95 billion, or 81¢, the year earlier. an era when it is hard for them to find new places to drill.
The world’s largest public energy company capitalized With the proliferation of horizontal drilling and various
on jumps in oil and fuel prices by boosting production. other enhanced oil recovery methods, companies may find
Exxon’s output climbed 8.4% to the equivalent of million it cheaper to acquire oil and gas fields from competitors
bbl/d. Exxon announced plans to buy back US$3 billion than to undertake expensive and often-risky exploration
of its shares, following its acquisition of leading US activities.
unconventional natural gas and oil producer XTO Energy.
It completed the XTO Energy deal on June 25, making The consistent deal activity in the first half of 2010
ExxonMobil the largest US natural gas producer. Through highlights a robust market, and is likely to remain dynamic
this transaction, ExxonMobil acquired a resource base in through the rest of 2010, as long as capital markets remain
excess of 45 trillion cubic feet (Tcf) equivalent at a cost of open and oil prices hold near recent levels of US$75/
under US$1 per thousand cubic feet (Kcf) equivalent. bbl. Large international and national oil companies from
other countries will continue to pursue unconventional US
Mergers and Acquisitions opportunities to gain expertise to use overseas. In addition,
buyers looking to reduce natural gas exposure are finding
Merger and acquisition (M&A) activity in the US oil and opportunistic sellers of conventional oil assets, sparking
gas sector was this year at its highest level since 2008. The additional deal making both offshore and onshore in the US.
main drivers included the stabilization in crude oil and gas Another factor that might increase the momentum could be
prices following a period of extreme volatility in 2008 and any new government regulations resulting from the spill
2009, and from independent producers’ mad rush to drill in the Gulf of Mexico. If the cost and liabilities associated
for natural gas from shale. These independent producers with drilling deep-water wells rises, some companies could
struck partnerships because they needed capital to drill to be forced to leave deep-water, leading to asset sales.
keep their leases from expiring. Many international energy
companies were interested in what these independents
hold, especially when shale assets are up for sale.
Transactions in unconventional resources dominated US

deal making in 2010. Total SA (PAR: TOT), Europe’s
third largest oil company, accelerated its expansion in
unconventional energy by agreeing to buy a stake in
independent producer Chesapeake Energy’s (NYSE: CHK)
assets in the biggest US natural gas field for US$2.25
billion. In another mega deal, Royal Dutch Shell (LON:
RDSA) made a foray into the sector with its giant US$4.7
billion acquisition of Marcellus shale gas specialists East
Resources. The transaction gives Shell more than a million
acres of prospective shale gas lands. Another company
making a bold entrance into the US shale scene was Indian
Current Environment
Canada
Sector Overview
Canadian producers this year continued slowly to emerge per-gigajoule costs for conventional gas production
from the two-year slump they had experienced since the remained high in Canada, making unconventional
midpoint of 2008. For the past two years, the oil industry prospects even more appealing.
in Canada struggled to cope with the global recessionary
situation, as weaker consumption and demand resulted in Canadian oil sands producers were also busy developing
a significant drop in oil prices. However, there were some new customers, attracting considerable interest and
positive signs in the first six months of 2010. Helped by investment from growing Asian markets such as China,
a rebound in global consumption, which reached almost Japan and Korea. Canada felt the effects of the disastrous
pre-recession levels, and rising oil prices, Canadian oil Gulf of Mexico deepwater blowout, with members of
and gas producers were poised to make bigger profits in Parliament voting to review federal laws that govern the
2010. development of unconventional oil and gas, as well as
deepwater drilling off Canada’s east coast. In May, federal
The Conference Board of Canada (CBC) saw production and provincial regulators mandated extra precautions for
in the oil extraction industry expanding by 4.1% in 2010, an offshore well being drilled northeast of Newfoundland
and the conventional extraction industry increasing in 8,500 ft of water.
drilling, but future growth is likely to come from higher
oil sands production. The relative stabilization of global Conventional production in Canada has been declining
oil prices, holding steady in the US$70-US$80/bbl range steadily for many years, but the big upturn in oil sands
in the first half of 2010, allowed oil producers to develop production has more than compensated, and it appeared
projects in their inventories and move ahead with larger- this year that Canada’s shale deposits may play the same
scale developments, including tight oil plays and oil sands. role on the natural gas side. Estimates of the size of shale
The decline in gas prices also reduced costs at oil sands gas resources in Western Canada vary widely, with some
operations, many of which use gas as a primary feedstock. suggesting they could be as much as 1,000 tcf. There are
Unconventional gas plays, predominantly shale, took on signs of potential shale gas deposits in areas of Canada that
greater prominence in Canada, suggesting that lower gas have not previously experienced significant oil and gas
prices may remain for a long time. Adding further pressure, development, including Quebec, where Talisman (TSX:
Table 2: Canada’s Top Five Oil Majors’ Stock Price Movements
Share Prices
Company TSX Ticker March 10, September 10, Rise / Fall (%) Market Cap
2010 2010
Suncor Energy SU C$31.55 C$34.10 8.08 54.91B
Canadian Natural
CNQ C$37.81 C$34.18 (9.60) 41.32B
Resources
Imperial Oil IMO C$39.34 C$39.45 0.27 33.67B
TransCanada Corp TRP C$36.14 C$38.34 6.08 26.38B
Encana Corp ECA C$35.12 C$30.18 (14.07) 22.62B
Average Rise / Fall % 9.09

Source: Mergent analysis
Current Environment - Canada
TLM) is pursuing the Utica development close to the St. Canadian Natural Resources (TSE: CNQ)
Lawrence River. The biggest challenge there will be the
lack of infrastructure. Canadian Natural Resources, the country’s second
largest oil producer by market value, posted a rise in
Sector Performance profit on record crude and natural gas output. Net income
for the second quarter rose to C$667 million (US$659
The share prices of Canada’s top five oil and gas companies million), from C$162 million (US$160.2 million) the
improved 9.09% on average over the six months to year earlier. The company said the gain was the result of
September 10. Profits from Canada’s oil industry were higher realized crude oil prices, higher sales volumes of
expected to increase by nearly 400% this year due to rising crude oil and natural gas liquids, and realized foreign
oil demand, production, and prices, according to CBC’s exchange gains. Second quarter production before
industrial outlook. The oil industry’s pre-tax profits are royalties rose 9.8% from the year earlier to the equivalent
forecast to be US$$8.4 billion for 2010, as growth outpaces of 649,195 bpd. Crude production for the quarter exceeded
cost rises. It is forecast that more intense activity will spark the company’s previously issued forecast of 80,000 to
competition for materials and labor, but companies will 95,000 bpd.
need to keep costs under control. Global oil consumption
this year was at levels before the financial meltdown that Imperial Oil (NYSE: IMO)
led in 2009 to a 90% drop in industry profits to US$1.7
billion. Imperial Oil’s second quarter profit jumped 147%
on higher oil prices and a rise in oil sands production,
Prices almost doubled this year from the lows they hit in compared with the year earlier. Imperial, owned largely
2009, with crude for October delivery settling just above by US oil major Exxon Mobil Corp, earned C$517 million
US$75 per barrel on the NYMEX. CBC expected a 2010 (US$497 million), up from a year-earlier C$209 million
average crude price of US$79.50 — still well below the (US$206.7 million). Imperial, known for its dominant
2008 peak of US$147. It forecast that uncertainty over the position in oil sands and heavy crude, and its national
recovery and high inventories would limit price increases, chain of Esso gas stations, said that results were aided
but expected crude prices to strengthen longer-term, hitting by higher prices for crude oil, increased production at its
US$117/bbl in 2014. Cold Lake, Alberta, and Syncrude oil sands projects, and
stronger refining margins. Oil production in the quarter
Suncor Energy (TSX: SU) recorded the highest growth in averaged 209,000 bpd, up 10% from the year earlier.
stock valuation over the six-month period, up 8.08% from Natural gas output rose 7% to 253 million cubic feet a day
C$31.55 (US$31.20) on March 10, to C$34.10 (US$33.72) (cfd). The company continued to develop the C$8 billion
on September 10, followed by TransCanada Corp (TSX: (US$7.9 billion) Kearl oil sands project in Alberta, and
TRP) and Imperial Oil (TSX: IMO) at 6.08% and 0.27% waited for Canada’s energy regulator to give permission
respectively. Much of the increases in Suncor’s share price to proceed on the C$16.2 billion (US$16.02 billion)
were led by additional upstream production following the Mackenzie Valley gas pipeline.
August 2009 merger with Petro-Canada, as well as higher
benchmark prices in the second quarter of 2010, compared Suncor Energy (TSE: SU)
with the second quarter of 2009. Conversely, Encana Corp
(TSX: ECA) recorded the largest decline in the six months, Canada’s largest oil company, Suncor Energy, reported
down 14.07% from March 10 to C$30.18 (US$29.84) per second quarter 2010 net earnings of C$480 million
share. This followed a hedging loss and a non-operating (US$474.7 million) compared with a net loss of C$51
foreign exchange loss on long-term debt. million (US$50.4 million) for the second quarter of 2009,
amid higher crude prices and production from last year’s
Leading Companies takeover of Petro-Canada. The company sold C$2.4
billion (US$2.3 billion) worth of non-core assets after its
Stronger crude oil and product prices in the second quarter Petro-Canada purchase. The oil giant agreed in June to sell
of 2010 lifted the combined earnings of Canadian oil and fields in the North Sea to Dana Petroleum (LSE: DNX)
gas producing companies and refiners from the rather for US$400 million (US$395.6 million). It also agreed to
dismal results in second quarter 2009. sell some natural gas properties in Alberta to a subsidiary
Current Environment - Canada
of the Abu Dhabi National Energy Co for about C$285 Monterey Exploration for C$366 million (US$361.9
million (US$281.8 million). Suncor’s production jumped million) to expand its business in British Columbia.
89% to the equivalent of 633,900 bpd from the same
quarter of 2009, thanks to the Petro-Canada takeover.
Mergers and Acquisitions
The Canadian oil sands sector saw US$5.5 billion worth

of deals during the first half of 2010, with the biggest deals
being Sinopec (SSE: 600028) acquiring ConocoPhillips’
9% interest in Syncrude for US$4.65 billion and China
Investment Corp acquiring a 45% interest in Penn West
Energy Trust’s (TSX: PUT.UN) Peace River assets for
US$780 million. French energy giant Total SA announced
in July 2010 it would acquire a 20% share of a massive
oil sands project in Alberta under a proposed takeover of
UTS Energy Corp for C$1.5 billion (US$1.48 billion).
Since CNOOC (HKSE: 883) failed to acquire Unocal in

2005 following strong public and political opposition,
government-backed Chinese companies have been
developing a portfolio of global assets through low-key
acquisitions of a variety of non-controlling and partial
interests. Within Canada, the focus of deals by Chinese
companies has been on oil sands projects, with four
significant acquisitions taking place since 2009. While
the Sinopec acquisition was not the first investment by
a Chinese company in Canada’s oil sands, it was the
largest. It underlines the resurgence in interest in the vast
but difficult-to-extract energy resource located in the
province of Alberta. Investment in oil sands has jumped
since crude prices shot past US$80/bbl with the global
economic recovery gaining traction.
The Gulf of Mexico oil spill also had an effect on M&A

activity, as onshore assets became more attractive. British
Petroleum (BP) (LSE: BP) announced it would sell US$7
billion in assets to Apache (NYSE: APA), including its
Western Canadian upstream natural gas business, for
US$3.25 billion, to cover costs accruing from the spill.
Other notable deals included Crescent Point Energy’s
(TSX: CPG) purchase of Shelter Bay Energy for C$1.1
billion (US$1.0 billion), ARC Energy Trust’s (TSX: AET.
UN) acquisition of Storm Exploration (and its substantial
shale gas holdings in British Columbia) for C$680
million (US$672.5 million). Suncor Energy sold assets
in Alberta to Abu Dhabi National Energy Co for C$285
million (US$281.8 million), and its Dutch subsidiary for
C$400 million (US$395.6 million) to Dana Petroleum.
Pengrowth Energy Trust (TSX: PGF. UN) acquired
Industry Profile
United States
Industry Size and Value
The US is the world’s third largest petroleum producer the largest producer of natural gas in 2009, recording the
with more than 500,000 producing wells, the vast majority largest global increase in natural gas production for the third
of which are marginal wells, generally producing only a consecutive year, owing to increases in unconventional
few barrels of oil per day. It is also the largest natural gas supplies such as shale gas.
producer, ranking 11th worldwide in reserves of oil, and
first in terms of coal. The country also has approximately The Bakken shale in North Dakota is emerging as one
4,000 oil and natural gas platforms operating in US waters. of the most promising oil and gas producing areas in the
The top oil producing areas include the Gulf of Mexico, US. Production from Bakken shale increased from 9.3
North Dakota, Texas onshore, Alaska’s North Slope, MMboe (million barrels of oil equivalent) in 2004 to 70.9
California, Louisiana onshore, New Mexico, Oklahoma MMboe in 2009, at an average annual growth rate (AAGR)
and Wyoming. Together, oil and gas supply 65% of US of 40.6%. Production is expected to continue to increase
energy. The nation’s 144 refineries process more than 17 to 211.4 million barrels by 2020, at an AAGR of 9.9%.
million bbl every day. Oil and gas production facilities Technological advancements such as hydraulic fracturing
include 16,000 establishments shipping products worth and horizontal drilling have led to higher production. North
US$134 billion. Dakota is now the fifth largest oil-producing state in the
nation behind Louisiana, Texas, Alaska and California.
The BP Statistical Review 2010 estimates the US increased With rising crude oil prices, the oil assets have attracted
its oil and natural gas production more than any other greater interest from oil and gas companies, with the
country in 2009. Increased crude oil production in the Gulf Bakken shale likely to continue to draw greater levels of
of Mexico and North Dakota’s Bakken shale resulted in activity over the next few years. The oil majors plan to drill
the first annual increase in US oil production since 1991, approximately 841 gross (391.8 net) wells, investing more
according to the EIA. The US also surpassed Russia as than US$2.6 billion in the play in 2010.
Table 3: Countries with the Largest Increases in Oil Production in 2009 (thousand barrels per day)
462
144
130 128
118
69 59 65
US Brazil Columbia Azerbaijan Kazakhstan Russian Iraq Oman

Frederation
Source: BP Statistical Review of World Energy, June 2010
Industry Profile - United States
Oil Sector
The US had 21.4 billion barrels of proven oil reserves as 66% of US crude oil imports in May 2010, while the top
of January 1, 2009, the 11th highest in the world, according ten sources accounted for approximately 86% of all US
to EIA data. These are concentrated overwhelmingly crude oil imports. Canada remained the largest exporter of
in four states — Texas with 22% of the total, Louisiana crude oil in May, selling 1.997 million bbl/d to the US. The
20%, Alaska 20% and California 18%. Despite shutdowns second largest exporter of crude oil to the US was Mexico,
caused by hurricanes in June and July, crude oil production followed by Saudi Arabia, Venezuela and Nigeria. Total
averaged 70,000 bbl/d, slightly higher than the EIA’s crude oil imports averaged 9.622 million bbl/d in May, a
original forecast of 50,000 bbl/d for these two months. Total drop of 0.119 million bbl/d from April 2010.
domestic crude oil production is expected to rise by 30,000
bbl/d to 5.46 million bbl/d in 2011, including a projected In addition to crude oil, the US also imports refined
120,000 bbl/d decline in Gulf of Mexico output in 2011. petroleum products. While the US produced the majority
This reflects the EIA’s estimates of an average reduction (90%) of the petroleum products it used, the US also
in crude oil output of about 82,000 bbl/d in 2011, because imported two million bbl/d of refined products. Motor
of the six month moratorium on deepwater drilling, which gasoline blending components, fuel ethanol, and finished
was due to end in November 2010. motor gasoline topped the list of the imports at 52%.
There is likely to be growth in consumption of all major Natural Gas Sector

petroleum products in 2010 and 2011, with an estimated
140,000 bbl/d (0.7%) rise in total liquid fuels consumption The US has vast resources of natural gas available for
in 2010 and 170,000 bbl/d (0.9%) in 2011. This is in contrast extraction. The EIA estimates there was 237.74 tcf of
to falling consumption over the past four years. A year- proved natural gas reserves as of January 1, 2009. Because
over-year decline in total liquid fuel consumption averaging of its abundant resources, the US is much less reliant on
40,000 bbl/d in the first quarter of 2010 was followed by a other countries for its natural gas supply than it is for its
380,000 bbl/d year-over-year rise in the second quarter of supplies of crude oil. Domestic natural gas production
2010, led by increases in motor gasoline and distillate fuel comes from 32 states, with the top ten producing states in
oil consumption. Throughout 2010, the consumption of 2009 being Alaska, Arkansas, Louisiana, Colorado, Kansas,
gasoline and distillate fuel is projected to increase by 0.3% New Mexico, Oklahoma, Texas, Utah and Wyoming. The
and 1.4%, respectively. Jet fuel consumption is likely to EIA estimates these ten states were responsible for about
grow more slowly, at an AAGR of about 0.5% throughout 80% of total marketed natural gas production in 2009.
2011, because of the drop in air carrier capacity over the
past two years, with airlines likely to remain reluctant to In 2009, marketed production of natural gas totaled 21.9 Tcf
expand their capacity in the immediate future. — the highest recorded annual total since 1973. Production
of natural gas from shale and tight sand formations
The US imports crude oil from more than in 60 countries continued to improve, to the extent that the US overtook
and in 2009 the top two suppliers were Canada and Russia as the world’s largest natural gas producer. The
Mexico. The top five exporting countries accounted for increases in production were the result of more efficient,
Table 4: Top Five Crude Oil Exporters to the US (million barrels per day)
Country May 2010 April 2010 May 2009

Canada 1,997 1,883 1,746
Mexico 1,290 1,134 1,088
Saudi Arabia 1,093 1,245 996
Venezuela 1,011 851 1,228
Nigeria 1,004 1,092 552
Source: Energy Information Administration
Table 5: Percentage of Domestic Production by State
Oklahoma, 7%
New Mexico, 6%
Lousiana, 5% Texas, 30%
Alaska, 12%
Wyoming, 10%
Offshore, 12%
Colorado, 5%
Other States, 13%
Source: Energy Information Administration
Table 6: Five Largest Producers of Natural Gas, 2009 (billion cubic meters)
Norway 103.5
Iran 131.2
Canada 161.4
Russia 527.6
US 593.4
Source: BP Statistical Review of World Energy, June 2010
cost-effective drilling techniques, notably in the production and rising gas prices, gas production from shale formations
of natural gas from shale formations. is expected to grow to six tcf in 2035, more than offsetting
declines in other production and being the largest contributor
Natural gas production is forecast to grow from 20.6 tcf in to production growth. Shale gas is likely to provide 24% of
2008 to 23.3 tcf in 2035. With technology improvements total US gas production in 2035, according to the EIA.
Natural gas production shutdowns because of hurricanes an abrupt reversal. In the face of the disaster, the US
during June and July were less than the EIA had originally Administration announced a six-month moratorium on
projected. The original forecast called for outages totaling deep-water oil and gas drilling and ordered the shutdown
20 billion cubic feet (Bcf), compared with actual outages of offshore exploratory wells already operating until they
from Hurricanes Alex and Bonnie in June and July of eight meet new safety requirements. The moratorium also halted
Bcf. Based on the National Oceanic and Atmospheric drilling at 33 deepwater sites in the Gulf of Mexico. The
Administration’s (NOAA) hurricane forecast in May 2010, Government said it would issue no new deepwater drilling
shutdown production from August to October is likely to permits for six months, and canceled plans for new offshore
total 146 Bcf. The offshore drilling moratorium is likely to exploratory leases in Alaska and Virginia.
reduce Gulf of Mexico production by 10 Bcf over the last
six months of 2010, and by 92 Bcf during 2011. Minerals Management Service (MMS), in charge of
regulating oil and gas leasing, was criticized for grossly
The US is a large consumer of natural gas, accounting under-estimating the dangers of spills from deepwater
for around 25% of total worldwide consumption and, in drilling in its own environmental reviews, and for failing
2009, used 22.8 Tcf, making it one of the leading global to ensure that safety equipment worked properly. As a
consumers. Total natural gas consumption should increase result, the Government restructured MMS into three new
by 3.8% from 2009 levels to 64.9 billion cubic feet per day agencies, including one that will focus only on enforcing
(Bcf/d) in 2010 but is likely to remain flat in 2011, according safety rules. US lawmakers also considered changes to
to the EIA’s estimates. Growth in the use of natural gas the liability for oil spills — currently capped at US$75
in both the power generation and industrial sectors will million under the 1990 Oil Pollution Act, as a response to
account for the bulk of the jump in consumption in 2010 Alaska’s 1989 Exxon Valdez tanker spill — to a cap of
over 2009. US$10 billion.
The use of natural gas for power generation is expected to These stringent environmental reviews were part of a
grow by more than one Bcf/d to 20 Bcf/d in 2010, despite wave of new regulations and legislation that will tighten
a year-over-year increase in prices. Although the use of regulatory standards for offshore drilling. The industry faces
natural gas for electric power generation has been on a other higher costs, including a proposed increase in the per
generally upward trend over the past several years, it is barrel tax that would boost reserves of a federal oil spill
expected to decline slightly in 2011. To meet the demand clean-up fund. Insurance premiums for rig operators also
for natural gas, the US relies on domestic production, are likely to rise, and higher costs and tighter regulations
imports of dry gas, and imports of liquefied natural gas may deter some smaller players from the high stakes game
(LNG). Most of the natural gas used in the US is produced of deepwater drilling.
domestically, with the balance of dry natural gas imported
mainly from Canada. In essence, the Gulf catastrophe was set to bring tighter
regulation of the oil industry and new operational
Policy and Regulatory Environment procedures, including more detailed plans to cope with
blowouts and other disasters. Rig inspections will be more
The Gulf of Mexico oil spill not only devastated the frequent, and there will be more significant environmental
south coast of the US, but it became clear this year that reviews before approving new offshore drilling permits.
the offshore drilling industry would be operating under Some claim the moratorium will also force US oil rig
a stricter regulatory environment than that of the past operators to take their business to other countries, as it is
decade. In March 2010, the Government said it would end too expensive to let equipment stand idle, making the US
a decades-long moratorium by opening more waters to more reliant on oil imports. Tougher safety rules could
offshore drilling along the Atlantic coast, the eastern Gulf eventually push up crude prices, and most likely will slow
of Mexico and the north coast of Alaska. the development of new wells while raising costs.
However, just as the US Administration was on the verge The moratorium will have far-reaching effects on the
of loosening the nation’s policy on offshore oil drilling, economies of the Gulf Coast, as well as an impact on the
the oil spill in the Gulf of Mexico in April 2010 caused mainland businesses that support the drilling industry. The
Gulf of Mexico holds the most promising untapped crude

oil reserves in the US, and a string of major discoveries
over the past decade by companies, including BP, have
rejuvenated investment in deeper and more difficult
waters. The EIA estimates that a vast majority of projected
increases in US production in the near term will come from
Gulf deepwater fields similar to the site of the Deepwater
Horizon spill, which currently represent about 70% of all
Gulf oil production. This share is expected to grow in the
next few years.
Industry Profile
Canada
Industry Size and Value
Canada, the third largest producer of natural gas and the Northwest Territories. The WCSB is a mature basin where
seventh largest producer of crude oil in the world, has conventional crude oil production has been declining for
considerable natural resources and is the world’s fifth years. However, this decline rate should slow with renewed
largest energy producer. In 2009, Canada produced 19.3 interest in the Cardium oil formation in Alberta, which is
quadrillion British Thermal Units (Btu) of total energy, the causing optimism in the industry similar to that generated
fifth largest amount in the world. Since 1980, Canada’s by the Bakken formation in Saskatchewan over the past
total energy production has increased by 87%, while its several years. The National Energy Board (NEB) expects
total energy consumption has increased by only 44%. Canadian crude output to total 2.81 million bbl/d this year,
Almost all of Canada’s energy exports go to the US, up from 2009 production of 2.73 million bbl/d.
making it the largest source of US energy imports. Canada
is consistently among the top sources for US oil imports, In first quarter 2010, Canada exported 1.76 million bbl/d
and it is the largest source of US natural gas and electricity of crude oil and refined products to the US. Because
imports. growth of oil sands production has exceeded declines in
conventional crude oil production, Canada has become
Statistics Canada estimates the value of crude oil and the largest supplier of oil and refined products to the US,
equivalent hydrocarbons produced in 2009 totaled ahead of Saudi Arabia and Mexico. The largest share of
C$61.6 billion (US$60.9 billion), down 32.9% US bound Canadian oil exports go to the Midwest (PAD
from C$91.8 billion (US$90.7 billion) in 2008. The value District II), followed by the Rocky Mountains (PAD
of natural gas marketable production stood at C$20.9 District IV). The bulk of Canadian exports to the US have
billion (US$20.6 billion) in 2009, down 53.1% from C$9.6 traditionally gone to PAD Districts II and IV, because
billion (US$9.49%) in 2008. Both these declines were due these areas are well connected to Alberta by oil pipelines
to the decrease in wellhead prices in 2009. Conventional and are not well served by coastal import terminals.
production in Canada has been declining steadily for many
years, but the big upturn in oil sands production has more The Canadian Association of Petroleum Producers
than compensated, and it now appears that Canada’s shale (CAPP) estimates 2009 Canadian oil production totaled
deposits may play the same role on the natural gas side. 2.7 million bbl/d, with 2.5 million bbl/d sourced from
western Canada. Canada’s oil reserves are estimated at
Oil Sector more than 175 billion bbl — second only to Saudi Arabia.
The bulk of these reserves, more than 95%, are oil sands
Crude oil is produced primarily in the western provinces deposits in Alberta. The EIA expects oil sands production
of Canada, in the Western Canada Sedimentary Basin will increase even further in the coming years and will
(WCSB), which underlies most of Alberta and parts of more than offset the decline in Canada’s conventional
Saskatchewan, British Columbia (BC), Manitoba and the crude oil production.
Table 7: Oil and Gas Extraction Industry Marketable Production Volumes and Value
2008 2009 2008 to 2009 % change

Crude oil and equivalent
Volume (thousand cubic meters) 158,881.2 158,054.4 -0.5
Value ($ million) 91,757.0 61,558.7 -32.9
Natural Gas
Volume (million cubic meters) 158,208.8 147,484.0 -6.8
Value ($ million) 44,656.3 20,933.4 -53.1
Source: Statistics Canada
Industry Profile - Canada
Table 8: Estimated Canadian Crude Oil Exports to the US for Q1, 2010 believed to hold huge amounts of unconventional natural
(bbl/d)
gas.
Market Total
PADD I 190,344 As development of these resources grows, and conventional
resources decline, there will be a shift of natural gas
PADD II 1,092,251
production from Alberta to BC. Alberta’s gas production
PADD III 105,465 is likely to decline from 12.7 to 8.5 Bcf in 2010, according
PADD IV 200,155 to NEB data, while BC’s production should increase
PADD V 165, 221 from 2.7 to 3.7 Bcf/d. Although Canadian drilling activity
will increase over the next few years, overall natural gas
Total US 1,753,436 production is likely to decline throughout 2012. This is
Other 5,914 due to lower drilling activity in recent years compared
Total 1,759,350 with that in the past decade, as exploration and production
Source: Statistics Canada
companies have responded to persistently low natural gas
prices by reducing the number of wells drilled.
Oil sands production surpassed that of conventional oil in Policy and Regulatory Environment
2006 and, since then, the deposits in Alberta continue to
be the focus of future oil production growth from western The July 2010 Michigan oil spill from a pipeline operated
Canada. The CAPP estimates current oil sands production by Enbridge (TSX: ENB) caused US lawmakers, regulators
at about one million bbl/d, while the EIA says that it could and environmental groups to intensify their scrutiny of
make up more than a third of the nation’s oil and refined TransCanada’s plan to build a US$12 billion network of
product imports by 2030. By 2020, production is likely to pipelines. Known as Keystone XL, the network would
grow to almost four million bbl/d. There are three oil sands roughly double the capacity connecting Canada’s vast
deposits in Alberta, at Fort McMurray, Peace River and and highly controversial tar sands oil reserves to US
Cold Lake, with more than 20 active mining and in-situ oil refiners. Production of synthetic crude oil from oil sands
sands projects in these three areas. is deemed environmentally damaging because it requires
the excavation of millions of tons of earth in a forested
Natural Gas Sector wilderness, the contamination of millions of gallons of fresh
water that forms toxic ponds, and the emission of millions
Canada is the world’s third largest producer of natural gas, of pounds of greenhouse gases into the atmosphere.
with an average annual production of 6.4 Tcf. Canadians
use 3.2 Tcf of natural gas a year, and the demand is growing The 30-inch diameter Enbridge pipeline, which carries
at a rate of more than 2% a year. As with oil, Canada’s about eight million bbl/d from Griffith, Indiana, to Sarnia,
natural gas production is concentrated in the WCSB, Ontario, as part of a 7,500km network, suffered a major
particularly in Alberta. Of the gas produced in Canada, malfunction underground, spilling more than one million
90% is conventional and, while there have been some new bbl into the Kalamazoo River and adjacent tributaries in
conventional natural gas finds in the WCSB, this type of gas one of the biggest pipelines spills in US history. While the
is getting more difficult to find and production is declining oil leak was stopped, the spill raised new concerns over
as more unconventional gas sources are developed. pipeline safety and over plans by Enbridge and other oil
companies to build more pipelines.
Production of unconventional gas and tight gas in Canada,
including coal bed methane and shale gas, is growing, Over the past few years, pipelines to bring oil sands output
particularly in two key geological areas, Montney and to the US have been approved in the US without much
Horn River in northeast BC. In 2010, more than 210 wells public discussion. However, with the recent oil spills and
were on track to be drilled in Montney and 70 in Horn the US Administration’s pledge to reduce the nation’s
River, boosting deliverability in those areas significantly. dependence on fossil fuels, such decisions have taken
Canadian firms EnCana, Nexen (TSX: NXY), Talisman on new significance. Even given these concerns, most
Energy and Canadian Natural Resources, plus US forecasts of world oil markets estimate that Canadian oil
companies EOG Resources (NYSE: EOG) and Apache, sands will become an increasingly important component of
all have big land positions in north-eastern BC, which is world oil supply and especially to the US. Alberta supplies
Industry Profile - Canada
about 1.4 million bbl/d to the US, both from oil sands and
conventional wells. The EIA estimates Canadian oil sands
operators could produce 4.2 million bbl/d by 2030.
Keystone XL has become one of the most important bilateral

issues between Canada and the US. Facing a decision on
the network, the US Administration is meeting strong
resistance from the public and from regulatory departments
that oppose the project and are urging further study before
approval. Keystone XL is part of TransCanada’s US$12
billion Keystone project to bring up to 1.5 million bbl/d
of crude from the oil sands to refineries in the US Midwest
and Gulf coast. The first part of the project, which includes
a pipeline to Illinois, began commercial deliveries of crude
in June 2010. TransCanada is now fighting for approval of
Keystone XL, a massive second stage of the project that
would deliver oil to refineries in Texas.
The massive pipeline would allow Canada to export

an additional 1.1 million bbl/d of oil to the US. For the
moment, the US is the primary customer for oil from
oil sands, and without Keystone XL, the growth of that
industry could be limited. Canada is ultimately planning to
build a domestic pipeline to move the oil to its west coast
so that it can export it to Asian countries, primarily China.
Market Trends & Outlook

United States
Shale Gas Boom Attracts More Investors to the US
The discovery of abundant, low-cost natural gas formations BP plans to acquire a 50% stake in 80,000 acres of the
in shale rock has had a robust effect on the US oil and gas Eagle Ford Shale deposit in southeastern Texas held by
industry. While the presence of hydrocarbons in shale Lewis Energy. With an uptrend in the economy, many large
has long been known, the application in recent years of integrated energy companies have also been keen to acquire
hydraulic fracturing has made the extraction of shale smaller independent US producers or their properties.
hydrocarbons economical. In the US alone, shale gas French oil major Total SA struck a US$2.25 billion deal
production has expanded from virtually nothing in 2005 with Chesapeake Energy, paying US$800 million for a 25%
to about 10 Bcf/d in 2009, constituting nearly one fifth stake its Barnett Shale assets and up to US$1.45 billion
of total natural gas production in the lower 48 states. The over six years by funding 60% of Chesapeake’s costs in
US overtook Russia as the world’s largest natural gas the Barnett shale formation of north Texas, which produces
producer in 2009, while demand in Russia plunged amid about half of all shale gas in the US.
the country’s worst economic decline on record. With an
assumed 347 Tcf of technically recoverable shale gas, US Investments in US shale gas plays and players are likely
onshore shale gas could potentially provide a large portion to become more frequent in the next few years, especially
of future US production if significant growth occurs in among smaller companies with leases in producing fields.
future US demand, according to the EIA. Prices for natural gas are also likely to remain under long-
term pressure due to the huge volumes of gas produced
With technology improvements, US natural gas production from the shale deposits.
from shale formations is expected to grow from 20.6 Tcf
in 2008 to 23.3 Tcf in 2035, more than offsetting declines US Oil Bonanza from Shale Gas
in other production and being the largest contributor to
production growth. Shale gas is likely to provide 24% of As conventional petroleum reserves dwindle in the US,
total US gas production in 2035, according to the EIA. energy companies are setting their sights on unconventional
The US has also offered its full expertise and technical domestic sources such as oil sands, coal beds and shale to
know-how to help major economies such as China and reduce the country’s dependence on foreign energy. New
India develop the full potential of shale gas and to reduce technology has enabled companies to extract gas from
dependence on foreign oil and to move towards its goal of previously uneconomic shale fields, triggering a boom
energy dependence. The US also believes that developing in production that has driven down prices in the giant
shale gas would provide fast-growing China and India US energy market and starting a spate of takeovers by
with a cleaner alternative to coal, a key culprit in carbon oil majors eager to get in on the action. As the US shale
emissions blamed by scientists for a dangerous warming gas revolution enters its third year, companies are trying
of the planet. to recreate that success with the billions of barrels of oil
locked in the sedimentary rock.
The US shale gas phenomenon has so greatly transformed
global energy markets that it has garnered tremendous Some of the major shale gas plays that have previously
interest from international investors, ranging from oil super been thought of as only about natural gas are turning out
majors to sovereign investment funds, all clamoring to get to be significant oil producers. The largest US oil shale
a piece of the North American shale gas action. India’s deposit is the Bakken formation, in North Dakota, Montana
Reliance Industries has been eager to pursue shale gas, and Canada. The amount of oil in the Bakken formation
investing nearly US$3.5 billion since April 2010 in joint may exceed four billion recoverable barrels, according to
ventures in fields in the US. BP intends to make a deal with a study by the US Geological Survey. The Bakken deposit
privately held Lewis Energy Group for the expansion of its has fast emerged as one of most promising oil and gas
US shale gas operations, and this transaction is expected to producing areas in the US, with production from the US
be in the range of US$150 million to US$200 million. increasing from 9.3 MMboe in 2004 to 70.9 MMboe in
Market Trends & Outlook - United States
2009, at an AAGR of 40.6%. Production in the play is By then, Gulf deepwater output would have accounted for
likely to continue to increase to 211.4 million barrels in almost 29% of all oil produced in the US. That increase
2020, at an AAGR of 9.9%. includes drilling off the Atlantic and Pacific coasts, owing
to the expiration of the moratorium in 2008.
The increasing production from the Bakken shale has
significantly increased overall production in North Dakota, However, that was before BP’s oil spill on April 20,
which is now the fourth largest oil producer in the US. 2010, and the six-month drilling moratorium by the US
North Dakota’s oil production, three quarters of which Administration. The EIA estimates that if shutdowns in
comes from the Bakken play, shot up from 85,000 bbl/d the Gulf continue, whether because of the moratorium
in 2004 to 218,000 bbl/d in 2009, according to the EIA. or because of economic conditions that made drilling in
In addition to the Bakken shale formation there is oil in the Gulf a sub-par investment, it would reduce US oil
the Barnett shale formation near Fort Worth, Texas, and in production by more than 27% by 2035, and oil imports
Eagle Ford shale south of San Antonio, Texas. The major would be 19% higher. Further, employment would be
oil companies are finding that focusing on crude oil in reduced by 175,000 jobs each year between now and 2035,
shales such as Eagle Ford and Barnett is more profitable and GDP would be reduced by US$500 billion (US$20
than drilling for natural gas. billion annually). Because the Energy Independence and
Security Act of 2007 mandates biofuel production, output
With crude oil prices rising, the assets have attracted of ethanol is expected to increase by 150,000 bbl/d in 2010.
intense interest from oil and gas companies, with Bakken Together, domestic oil production and ethanol production
continuing to draw further activity over the next few years. should thus be able to meet the higher demand levels for
The true yield from these deposits will become clearer by 2010.
the end of the year, with a number of companies, including
EOG Resources and Noble Energy, poised to begin drilling With the oil spill from BP’s Macondo well is essentially
wells in new areas. Oil from shale may be the most contained, the question is still open as to whether the
significant new development in the US energy picture US Administration will restore drilling in the Gulf and
and, according to the EIA, shales such as Eagle Ford in the Pacific and lift the moratoria or at least not extend
South Texas may supply billions of barrels of domestically them past November. This would enable the nation to
produced oil in the near future. benefit from its domestic resources, instead of competing
with China and other countries for additional foreign oil
Drilling Moratorium May Hurt Oil Production supplies. Also at issue is whether oil companies will be
subjected to unreasonable rules that will make offshore
In 2009, deepwater oil production in the Gulf of Mexico oil production unprofitable. Congress is currently working
accounted for 23% of all oil produced in the US, according on legislation to improve safety and to help prevent future
to the EIA. Offshore production has risen by 770,000 oil spills, but that legislation may prove too onerous for
barrels per day since 1990, helping offset declining output the industry, subjecting the US even more to the whims of
of almost 2.9 million barrels elsewhere. Deepwater has foreign countries.
been the fastest growing segment in the Gulf in recent
years, accounting for more than three quarters of all Market Outlook
production in 2009.
With future demand for oil set to rise in the coming
The BP Statistical Review estimates the US had the largest years, unconventional hydrocarbons are likely to play
increase in domestic oil production of any country in the a very significant role in meeting future global energy
world in 2009. Of total US oil production in 2009, 30% demand. There remain many growth opportunities in the
came from the offshore area of the Gulf of Mexico, and US, despite the slowdown driven by the market turmoil
more than 80% of Gulf production was from deep water. over the past two years. Strong global demand, robust
Before the blow-out of BP’s Macondo well, and the commodity prices, improved technologies, and readily
subsequent drilling moratorium, the EIA forecast that available capital, led some companies to expand production
deepwater output would rose by another 35% to 1.67 from US unconventional resources significantly − in both
million bbl/d in 2015, up from 1.23 million bbl/d in 2009. oil and gas. Oil sands, shale gas, oil shale, and coal bed
Market Trends & Outlook - United States
methane (CBM) are the primary unconventional oil and

gas resources in the world today, called unconventional
because they are extracted, processed, and refined in ways
other than traditional.
Typically, unconventional resources are difficult-to-

extract, expensive to refine, and have more impact on
the environment. Improved exploration and production
technology, along with additional investments, have
led to significant levels of commercial production from
unconventional oil and gas resources that previously were
too costly to exploit. Unconventional oil and gas could
potentially make up a large portion of future US oil and
gas production, if significant growth occurs in future US
gas demand, according to the EIA. The dramatic rise in
shale gas production in the US, along with tight-gas and
CBM production growth, has demonstrated the scale of the
effect unconventional gas can have on even the very largest
gas market. The US now has the potential to be essentially
self-sufficient in gas over the next decade or more, which
not only has significant implications for US LNG-import
requirements, but will also have a knock-on affect on other
gas markets.
Despite some uncertainty over the strength of the economic

recovery and the shape and impact of forthcoming policy
decisions on drilling moratoria, Mergent is confident that
the US oil and gas industry will sustain its recovery in
the second half of 2010 and early 2011. Oil prices have
strengthened, equity capital is starting to flow back into the
sector, development projects are coming back on stream
with increasing frequency, and stronger exploration budgets
are being set. All this suggests more intense activity in an
industry that has more experience than most of managing
volatility, and which tends to run on a considerably longer
investment time-scale.
Market Trends & Outlook

Canada
Canada’s Oil Sands Benefit from BP Oil Spill
Prospects for the development of Canada’s oil sands could the MSCI World/Energy Index’s second biggest company
potentially benefit from the massive US Gulf oil spill. The by weighting, declined by 10%.
major accident that engulfed much of the US Gulf Coast
has triggered debate over the safety of offshore drilling, Mergent sees oil sands companies cashing in on higher
which could now become more expensive due to rising oil prices because of supply concerns amid regulatory
insurance and environmental costs, in relation to oil sands tightening, and stronger demand from the US. If the
production. This could make the development of Canada’s moratorium on drilling in the Gulf of Mexico continues,
oil sands an even more attractive alternative. it will also increase US dependence on imported crude oil.
Increased regulation of the industry in the US will also
Because of the US moratorium on offshore oil drilling, mean that the cost of production and the time to bring on
US oil imports are expected to increase, with Canada’s new output will both rise, both of which will benefit oil
oil sands offering the only secure and reliable source to sands players. While Canada is also reviewing its own
supply the volumes needed to meet US requirements in rules for offshore drilling, Mergent does not expect to see
the coming years. Suncor Energy and Canadian Natural any dramatic new regulations introduced for an already
Resources, two of Canada’s largest oil sands producers, well-regulated oil sands industry.
rank among the biggest winners, as the halt on new Gulf
of Mexico drilling leads investors to alternative crude Asian Investment in Canada’s Oil Sands Rises
sources. As of July 2010, Canadian energy stocks were
drawing the highest premium since 2005. In September One major trend in 2010 was the significant investment from
2010, Standard & Poor’s/TSX Energy Index of Canadian Asia in Canada’s oil sands, particularly by China. Canada’s
stocks traded for 32.1 times reported profit from the past oil sands producers have attracted growing attention
year — more than twice as much as fuel producers on from foreign oil companies, especially Asian companies,
the MSCI World Index, the benchmark for equities in 24 seeking to satisfy growing demand for oil. China, the
developed markets. world’s second largest consumer of oil after the US, uses
about eight million bbl/d, according to the US Department
The IEA has forecast that oil output from the Gulf region of Energy’s statistics agency. Chinese interests have taken
may fall by as much as 300,000 bbl/d in the next five an increasingly large stake in the oil sands, while Canada,
years. As a hedge against tighter oil supplies, investors faced with growing political pressure over the extraction of
are pumping more money into companies that extract oil from its highly polluting tar sands, has begun courting
crude from Alberta’s sands. In July, Total SA, Europe’s China and other Asian countries to exploit the resource.
third biggest oil producer, announced it would buy UTS The massive Chinese investment also comes as US firms
Energy Corp for C$1.5 billion (US$1.4 billion) to boost Conoco, Chevron and Shell face growing pressure from
its output from Canadian oil sands. This price is 81% more shareholders and green groups concerned about the impact
than Total declared as its final offer for the company in an of oil sands mining on the environment. Earlier this year,
April 2009 bid. Investors are also raising valuations for Shell announced it was scaling back its expansion plans for
oil sands companies, while those for the largest US oil the tar sands after a revolt by shareholders.
companies decline.
In the most significant deal to date, the Canadian
Suncor Energy realized a 7.7% increase in its forward price Government approved a C$1.9 billion (US$1.87 billion)
earnings ratio, even as the price of oil slid 3.7% this year. investment giving the Chinese state-owned oil company
The ratio for TransCanada, which is building a pipeline PetroChina a majority share in two projects. PetroChina
to deliver oil sands production to southern US refineries, has taken a 60% stake in two new tar sands projects due
climbed 3.2%. In contrast, the price-to-earnings ratio of to get underway in the MacKay River and Dover areas in
Exxon Mobil Corp, the world’s largest energy company Alberta in 2011, with plans to produce up to 35,000 bbl/d
by market value, dropped by 4.8%, and that of Chevron, by 2014, and eventually up to 500,000 bbl/d.
Market Trends & Outlook - Canada
China made its first investment in tar sands in 2005, with (US$399.5 million) to secure new land on which to hunt
state-owned China National Offshore Oil Corp (CNOOC) for shale gas in northeastern BC. The major investment,
spending C$150 million (US$148.3 million) for a 17% which created the largest single sale of exploration land in
stake in startup MEG Energy Corp. Another Chinese Canadian history, shows that the industry has fully shaken
state-owned firm, Sinopec, in 2009 raised its interest in off the malaise of the past two years and is ready to invest
the Northern Lights oil project to 50%. China’s National in natural gas, even though the current price is low because
Petroleum Corp also bought oil sands leases that it has not of ample supplies. The shale gas revolution has also spread
yet developed. The projects, which will begin coming on to Alberta, where the first stampede occurred in December
line over the next decade, are seen as crucial to a long- 2009, when C$384 million (US$379.7 million) went on a
term strategy of finding new sources of energy as China’s single sale. Up to the end of September 2010, companies
economy continues to expand. looking to stake out emerging shale plays had spent C$838
million (US$828.7 million).
Japanese and South Korean companies have also begun
moving in, opening up potential new markets for Canada. The rise of shale gas in Canada further blurs an already
India’s Reliance Industries is also reportedly bidding uncertain outlook for the natural gas supply-and-demand
on a project. Korea National Oil recently submitted an balance in North America, leading some companies to
environmental impact assessment report regarding the seek a way out of a market that historically has been self-
expansion of its Blackgold Project in Alberta, which would contained. It also represents a stark reversal of previous
add 20,000 bbl/d of capacity to its initial 10,000 bbl/d in-situ forecasts, some of which had predicted that the decline
project. Japan Canada Oil Sands Ltd (JACOS) is currently in Canada’s conventional gas supplies would force it to
operating a 10,000 bbl/d steam assisted gravity drainage become a net importer of gas by 2030. Over the course of
(SAGD) pilot project at its Hangingstone lease in Alberta, the last six months of 2009, Canada’s NEB shifted from
and a 35,000 bbl/d expansion of this project is proposed for a prediction that the decline in conventional gas output
development through a joint venture with Nexen Inc (TSX: would far outstrip new shale supplies to saying that shale
NXY), which holds a 25% interest. JACOS is a subsidiary gas could satisfy domestic demand far into the 21st century
of Japan Petroleum Exploration Co Ltd (JAPEX), which and spur exports of LNG. However, the shale gas revolution
owns 86% of the company. in the US means that Canada will have to find global
buyers for any natural gas exports, via LNG. Therefore,
Emerging Interest in Shale Gas while the current price of gas leaves many potential wells
unprofitable, the industry is betting that the situation will
While large-scale commercial production of shale gas in eventually change.
Canada has not happened so far, interest has increased since
2007. As in the US, the emergence of horizontal drilling and Market Outlook
high-pressure liquid injections has enabled gas producers
to access gas previously thought to be out of reach, fueling The Canadian Association of Petroleum Producers
a boom in gas supplies and causing a subsequent drop in (CAPP) forecasts significant growth in Canadian crude
prices. British Columbia has some of the best potential oil production over the next 15 years, driven largely by
resources on the continent, with EnCana Corp, Nexen oil sands. CAPP’s 2010 Crude Oil Forecast reaffirms the
and Talisman Energy among several companies gaining trend of continued long-term production growth in Canada.
traction in the Horn River and Montney shale formations, While the economic downturn in 2009 saw many projects
both situated in BC. deferred, a stabilizing investment climate, more robust
commodity prices, and market demand for Canadian crude,
Shale gas is attracting a growing level of attention from should provide the foundation for several projects to return
Canadian exploration companies, with the trend expected to active development.
to pick up pace. The hydrocarbon volume stored within
shale gas in Canada is huge and experience in the US has The economic climate recovered somewhat in 2010 and
showed the economic viability of the resource. In July some companies are now actively developing phases of
2010, energy companies made their biggest bet on the their projects previously placed on hold. The pull back of
long-term future of Canadian natural gas exploration since capital spending in 2009 had a limited effect on production
the credit crisis began in 2008, by allocating C$404 million growth, as companies that had already invested in the
Market Trends & Outlook - Canada
Table 9: Canada’s Crude Oil and Oil Sands Production from 2010 to 2025
2010 2015 2020 2025

Total Canadian Crude Oil Production, Including Oil Sands
2.8 3.3 3.9 4.3
(million barrels/day)
Canadian Oil Sands Production
1.5 2.2 2.9 3.5
(million barrels/day)
Source: Canadian Association of Petroleum Producers
process continued to move forward. There is an emerging

expectation that new technologies being implemented in
challenging conventional oil reservoirs, such as horizontal
multi-stage fracturing, will enable more of these reserves
to be exploited, although they have not yet had a material
impact on CAPP’s production outlook.
The Canadian Energy Research Institute (CERI) estimates

that over the next 25 years, oil sands will generate C$1.7
trillion (US$1.68 trillion) in GDP for Canada. That
translates into new government revenues of C$19.6 billion
(US$19.38 billion) a year from oil sands activity. This
could pay for the schools, hospitals, roads and services that
sustain Canada’s living standard. The oil sands obviously
have a significant environmental effect, including land
degradation, carbon dioxide emissions, water consumption
and tailings ponds. However, the industry is developing
promising, more sustainable technologies in an effort to
solve these problems.
Long-term growth in shale gas production is likely to

change the overall supply and demand balance in Canada,
Europe and Asia. However, there are still some underlying
uncertainties over growing environmental concerns,
technology challenges, water availability and land issues.
On the demand side, uncertainties exist about the state of
economic recovery and expanded long-term uses for new
natural gas production. Natural gas production in Canada
has fallen significantly in the past five years, with the
industry under-investing in conventional gas because of
challenging economics.
Currency Conversion Table
Currency exchange rates as of October 10, 2010
Currency Unit Units per US$ US$ per Unit
US Dollar (US$) 1 1
Canadian Dollar (C$) 1.011 0.989

Source: Federal Reserve Bank of New York
The Scope Of This Report

This report discusses the oil and gas sector in North America. The report examines the current environment as well as
global and regional affairs that influence the development of the various industry segments using available data. Key
financial results of leading public companies and other major players in the industry are also provided.
Research analysts draw on a range of credible industry and company data sources as well as news and information
services to research and analyze the current trading environment, industry landscape and market trends and outlook for
a particular sector. Primary sources are used, unless otherwise indicated, and include company data, e.g. annual reports
and company financial results; macroeconomic and trade data; data and information from global and country regulatory,
industry and trade bodies; government data; and reports from industry organizations and private research organizations.
Industries covered by the industry reports are defined by standard industry classification systems and leading companies
are identified on this basis. SICs relevant to the industry include: 1311 (Crude Petroleum and Natural Gas); 1321 (Natural
Gas Liquids); 1381 (Drilling Oil and Gas Wells); 1382 (Oil and Gas Exploration Services, Geophysical Mapping and
Surveying, Other Oil and Gas Field Exploration Services); 1389 (Oil and Gas Field Service, NEC); 2911 (Petroleum
Refining); 3533 (Oil and Gas Field Machinery and Equipment); 4612 (Crude Petroleum Pipelines); 4613 (Refined
Petroleum Pipelines); and 4619 (Pipelines, NEC).
Key References
Global
International Energy Agency (IEA)

An intergovernmental body committed to advancing security of energy supply, economic growth and environmental
sustainability through energy policy cooperation.
http://www.iea.org
International Monetary Fund (IMF)

An organization of 184 countries, working to foster global monetary cooperation, secure financial stability, facilitate
international trade, promote high employment and sustainable economic growth, and reduce poverty.
http://www.imf.org
United States
American Gas Association (NGSA)

Established in 1918, the AGA represents suppliers that produce and market natural gas.
http://www.ngsa.org
America’s Natural Gas Alliance (ANGA)

Formed in March 2009, the ANGA represents North America’s independent natural gas exploration and production
companies.
http://www.anga.us
America Petroleum Institute (API)

The API is the trade association of the US oil and gas industry.
http://www.api.org
Energy Information Administration (EIA)

A statistical agency of the US Department of Energy created by Congress in 1977.
http://www.eia.doe.gov
Minerals Management Services (MMS)

A federal agency that manages the nation’s oil, natural gas and other resources on the continental shelf.
http://www.mms.gov
US Department of Commerce (DOC)

A government department that aims to foster, promote and develop the foreign and domestic commerce of the US.
http://www.commerce.gov
US Department of Energy (DOE)

A government department that aims to advance the national, economic and energy security of the US.
http://www.energy.gov
US Geological Survey (USGS)

An independent fact-finding US government agency that collects, monitors, analyzes, and provides scientific understanding
about natural resource conditions, issues, and problems across the US and around the world.
http://www.usgs.gov
Canada
Canadian Association of Petroleum Producers (CAPP)

The CAPP is the trade association of Canada’s oil and gas upstream industry.
http://capp.ca
Conference Board of Canada (CBC)

CBC is a not-for-profit Canadian organization dedicated to researching and analyzing economic trends, as well as
organizational performance and public policy issues.
http://www.conferenceboard.ca
Canadian Energy Research Institute (CERI)

CERI is an independent, non-profit research institute that analyzes energy economics in Canada.
http://www.ceri.ca
National Energy Board (NEB)

An independent federal regulatory agency established in 1959 to regulate the Canadian energy industry.
http://www.neb.gc.ca
Natural Resources Canada (NRCan)

NRCan plays a pivotal role in helping shape the important contributions of the natural resources sector to the Canadian
economy, society and environment.
http://www.nrcan.gc.ca
Statistics Canada
A Canadian government agency that collects and collates industry statistics.
http://www.statcan.ca
Comparative Company Data | UNITED STATES Industry Report - Oil & Gas - December 2010
Company Country Ticker Exchange Primary SIC Other SICs
Exxon Mobil Corp United States XOM NYSE 2911 1311 4612 2821 1222
Chevron Corporation United States CVX NYSE 2911 2999 2899 1381 3295 6531
ConocoPhillips United States COP NYSE 2911 2999 1382 1381 4612 4922
Valero Energy Corp United States VLO NYSE 2911 5172 4613 5541
Marathon Oil Corp United States MRO NYSE 2911 1382 1311 4613
Sunoco Inc United States SUN NYSE 2911 5052 5541 2899
Hess Corp United States AHC NYSE 2911 5172 5541 1311 1381 4923
Plains All American Pipeline United States PAA NYSE 4619 4789 4612 4922
Occidental Petroleum Corp United States OXY NYSE 1311 1321 2812 2819 2869
Williams Cos Inc United States WMB NYSE 4922 5172 4613 4612
Company Total Revenue - FYE - 1 Total Revenue - FYE - 2 Total Revenue - FYE - 3 EBITDA - FYE - 1 EBITDA - FYE - 2 EBITDA - FYE - 3
Exxon Mobil Corp $303,443,000,000 $466,278,000,000 $395,651,000,000 $47,242,000,000 $96,449,000,000 $84,129,000,000
Chevron Corporation $168,320,000,000 $267,639,000,000 $216,760,000,000 $30,638,000,000 $52,585,000,000 $40,982,000,000
ConocoPhillips $149,859,000,000 $241,932,000,000 $189,408,000,000 $19,327,000,000 $5,489,000,000 $31,657,000,000
Valero Energy Corp $68,144,000,000 $113,136,000,000 $89,987,000,000 $1,486,000,000 $2,350,000,000 $8,173,000,000
Marathon Oil Corp $53,841,000,000 $77,365,000,000 $64,206,000,000 $6,124,000,000 $8,949,000,000 $8,084,000,000
Sunoco Inc $31,289,000,000 $51,054,000,000 $42,538,000,000 -$80,000,000 $1,848,000,000 $1,792,000,000
Hess Corp $29,798,000,000 $41,019,000,000 $31,828,000,000 $3,776,000,000 $6,726,000,000 $5,401,000,000
Plains All American Pipeline $18,520,000,000 $30,061,000,000 $20,394,000,000 $1,030,000,000 $819,000,000 $713,000,000
Occidental Petroleum Corp $15,531,000,000 $24,480,000,000 $20,013,000,000 $7,786,000,000 $14,081,000,000 $10,957,000,000
Williams Cos Inc $8,255,000,000 $11,890,000,000 $10,239,000,000 $3,033,000,000 $4,007,000,000 $3,068,000,000
Company Net Income - FYE - 1 Net Income - FYE - 2 Net Income - FYE - 3 EPS - FYE - 1 EPS - FYE - 2 EPS - FYE - 3
Exxon Mobil Corp $19,658,000,000 $46,867,000,000 $41,615,000,000 $3.99 $8.70 $7.31
Chevron Corporation $10,563,000,000 $24,031,000,000 $18,795,000,000 $5.26 $11.74 $8.83
ConocoPhillips $4,936,000,000 -$16,928,000,000 $11,978,000,000 $3.26 -$11.16 $7.32
Valero Energy Corp -$1,982,000,000 -$1,131,000,000 $5,234,000,000 -$3.67 -$2.16 $9.24
Marathon Oil Corp $1,463,000,000 $3,528,000,000 $3,956,000,000 $2.06 $4.97 $5.73
Sunoco Inc -$200,000,000 $889,000,000 $961,000,000 -$2.81 $6.63 $7.44
Hess Corp $807,000,000 $2,357,000,000 $1,953,000,000 $2.28 $7.35 $5.86
Plains All American Pipeline $580,000,000 $437,000,000 $365,000,000 $3.34 $2.66 $2.47
Occidental Petroleum Corp $2,966,000,000 $6,973,000,000 $5,475,000,000 $3.59 $8.37 $6.45
Williams Cos Inc $361,000,000 $1,592,000,000 $1,080,000,000 $0.49 $2.44 $1.66
Total Current Assets - Total Current Assets - Total Current Assets - Long-Term Debt - Long-Term Debt - Long-Term Debt -
Company
FYE - 1 FYE - 2 FYE - 3 FYE - 1 FYE - 2 FYE - 3
Exxon Mobil Corp $55,235,000,000 $72,266,000,000 $85,963,000,000 $7,129,000,000 $7,025,000,000 $7,183,000,000
Chevron Corporation $37,216,000,000 $36,470,000,000 $39,377,000,000 $10,130,000,000 $6,083,000,000 $6,070,000,000
ConocoPhillips $21,167,000,000 $20,843,000,000 $24,735,000,000 $26,925,000,000 $27,085,000,000 $20,289,000,000
Valero Energy Corp $10,923,000,000 $9,450,000,000 $14,792,000,000 $7,195,000,000 $6,302,000,000 $6,470,000,000
Marathon Oil Corp $10,637,000,000 $8,403,000,000 $10,587,000,000 $8,436,000,000 $7,087,000,000 $6,084,000,000
Sunoco Inc $3,764,000,000 $2,835,000,000 $648,000,000 $2,061,000,000 $1,705,000,000 $1,724,000,000
Hess Corp $7,987,000,000 $7,332,000,000 $6,926,000,000 $4,319,000,000 $3,812,000,000 $3,980,000,000
Plains All American Pipeline $3,658,000,000 $2,596,000,000 $3,673,000,000 $4,142,000,000 $3,259,000,000 $2,624,000,000
Occidental Petroleum Corp $8,086,000,000 $7,172,000,000 $8,595,000,000 $2,557,000,000 $2,049,000,000 $1,741,000,000
Williams Cos Inc $3,793,000,000 $4,411,000,000 $5,538,000,000 $8,259,000,000 $7,683,000,000 $7,580,000,000
Company Return on Equity (Most Recent Yr) Profit Margin (Most Recent Yr) Date FYE - 1 Date FYE - 2 Date FYE - 3
Exxon Mobil Corp 17.78 6.48 31-Dec-2009 31-Dec-2008 31-Dec-2007
Chevron Corporation 11.49 6.28 31-Dec-2009 31-Dec-2008 31-Dec-2007
ConocoPhillips 7.90 3.29 31-Dec-2009 31-Dec-2008 31-Dec-2007
Valero Energy Corp -13.46 -2.91 31-Dec-2009 31-Dec-2008 31-Dec-2007
Marathon Oil Corp 6.68 2.72 31-Dec-2009 31-Dec-2008 31-Dec-2007
Sunoco Inc -7.82 -0.64 31-Dec-2009 31-Dec-2008 31-Dec-2007
Hess Corp 6.03 2.71 31-Dec-2009 31-Dec-2008 31-Dec-2007
Plains All American Pipeline N/A 3.13 31-Dec-2009 31-Dec-2008 31-Dec-2007
Occidental Petroleum Corp 10.20 19.10 31-Dec-2009 31-Dec-2008 31-Dec-2007
Williams Cos Inc 4.27 4.37 31-Dec-2009 31-Dec-2008 31-Dec-2007
Notes to Comparative Data

- All figures are in United States dollars. - N/A = Data Not Available.
- All figures are as reported by the company. - N/L = Not Listed.
- Companies ranked by total revenue for the full year most recently reported.
Definitions
- Total Revenue = All revenues, including net sales, operating revenues, interest income, royalties, excise taxes etc. - Long Term Debt = Debt due to be paid at a date more than one year in the future.
- EBITDA = Earnings before interest, taxes, depreciation and amortization. - Return on Equity = The company’s earnings divided by its equity (book value).
- EPS Cont Operations = Earnings Per Share as reported by company excluding extraordinary items. - Profit Margin = The company’s net income as a percent of revenues.
- Total Current Assets = All assets expected to be realized within the next year, includes cash, accounts receivable and inventories.
Comparative Company Data | CANADA Industry Report - Oil & Gas - December 2010
Company Country Ticker Exchange Primary SIC Other SICs
Suncor Energy Inc Canada SU NYSE 2911 1311 4923
Imperial Oil Ltd Canada IMO AMEX 2911 1311 5171 2865 2821
Husky Energy Inc Canada HSE TSX 1311 5172 1321 4612 4619
Enbridge Inc Canada ENB NYSE 4619 4612 4911 4923
EnCana Corp Canada ECA NYSE 1311 2911 1321 5172
Canadian Natural Resources Ltd Canada CNQ NYSE 1311 1321 1381 1382 4923
TransCanada Corp Canada TRP TSX 4922 4612 4924 4619 4911
Talisman Energy Inc Canada TLM NYSE 1311 1382
Nexen Inc Canada NXY TSX 1311 2911 2812 2899
Canadian Oil Sands Trust Canada COS UN TSX 6722
Company Total Revenue - FYE - 1 Total Revenue - FYE - 2 Total Revenue - FYE - 3 EBITDA - FYE - 1 EBITDA - FYE - 2 EBITDA - FYE - 3
Suncor Energy Inc $24,303,712,508 $23,333,394,181 $16,983,313,948 $3,429,036,360 $3,406,673,921 $4,328,714,592
Imperial Oil Ltd $20,410,158,565 $25,730,532,348 $24,957,055,375 $2,843,381,750 $4,892,052,193 $5,060,466,481
Husky Energy Inc $14,378,106,842 $20,126,345,974 $15,221,616,370 $3,773,370,749 $5,804,626,886 $5,929,544,462
Enbridge Inc $11,890,505,499 $13,143,519,975 $11,691,354,912 $3,079,932,798 $2,481,877,245 $2,023,598,052
EnCana Corp $11,114,000,000 $21,053,000,000 $14,385,000,000 $6,048,000,000 $13,656,000,000 $8,020,000,000
Canadian Natural Resources Ltd $9,673,793,260 $11,534,292,280 $10,939,004,109 $4,963,756,668 $8,214,801,834 $5,724,536,225
TransCanada Corp $8,552,083,452 $7,022,751,142 $8,659,390,986 $4,061,428,880 $3,612,818,026 $3,987,361,164
Talisman Energy Inc $6,188,480,642 $7,624,887,479 $7,097,797,142 $2,193,820,203 $6,424,688,798 $3,984,418,462
Nexen Inc $5,536,057,590 $6,711,497,988 $6,477,867,928 $1,075,925,734 $2,657,873,793 $2,024,578,953
Canadian Oil Sands Trust $2,650,707,106 $3,701,631,098 $3,563,612,081 $948,111,862 $1,582,339,334 $1,723,442,452
Company Net Income - FYE - 1 Net Income - FYE - 2 Net Income - FYE - 3 EPS - FYE - 1 EPS - FYE - 2 EPS - FYE - 3
Suncor Energy Inc $1,093,094,762 $1,741,225,106 $2,926,026,655 $0.92 $1.87 $3.17
Imperial Oil Ltd $1,506,105,261 $3,159,789,874 $3,127,111,289 $1.77 $3.58 $3.36
Husky Energy Inc $1,350,630,177 $3,056,310,423 $3,139,862,998 $1.59 $3.60 $3.72
Enbridge Inc $1,489,890,068 $1,082,052,850 $693,496,763 $4.07 $2.99 $1.93
EnCana Corp $1,862,000,000 $5,944,000,000 $3,959,000,000 $2.48 $7.92 $5.23
Canadian Natural Resources Ltd $1,507,059,096 $4,061,772,183 $2,558,188,909 $1.39 $3.76 $2.37
TransCanada Corp $1,316,292,122 $1,173,310,320 $1,199,641,502 $2.01 $2.06 $2.27
Talisman Energy Inc $416,825,839 $2,867,277,093 $2,038,311,562 $0.41 $2.82 $1.97
Nexen Inc $530,332,188 $1,394,120,803 $1,082,914,324 $0.98 $2.66 $2.02
Canadian Oil Sands Trust $412,056,664 $1,240,938,623 $728,809,187 $0.85 $2.58 $1.52
Total Current Assets - Total Current Assets - Total Current Assets - Long-Term Debt - Long-Term Debt - Long-Term Debt -
Company
FYE - 1 FYE - 2 FYE - 3 FYE - 1 FYE - 2 FYE - 3
Suncor Energy Inc $7,946,398,309 $2,637,503,822 $2,872,869,933 $13,258,304,704 $6,447,503,166 $3,924,964,245
Imperial Oil Ltd $3,343,191,222 $3,783,110,982 $4,604,347,676 $29,568,881 $27,703,160 $37,274,225
Husky Energy Inc $2,776,613,309 $2,688,836,149 $2,976,052,588 $3,079,932,798 $1,594,561,316 $2,033,407,059
Enbridge Inc $3,429,036,360 $3,022,088,872 $3,202,444,460 $12,375,053,614 $9,475,295,629 $9,060,971,714
EnCana Corp $5,795,000,000 $5,602,000,000 $4,444,000,000 $7,568,000,000 $8,755,000,000 $8,840,000,000
Canadian Natural Resources Ltd $1,803,701,741 $2,763,797,642 $2,139,344,329 $9,212,137,182 $10,263,206,101 $10,731,053,170
TransCanada Corp $3,028,425,715 $2,933,275,799 $2,260,976,011 $17,145,181,802 $14,218,239,636 $13,953,311,823
Talisman Energy Inc $3,008,395,182 $2,385,730,983 $1,911,508,561 $3,595,957,463 $3,227,418,178 $4,956,669,132
Nexen Inc $5,294,737,368 $4,825,238,689 $4,749,716,472 $6,916,256,648 $5,359,746,724 $4,699,762,381
Canadian Oil Sands Trust $587,562,280 $457,102,145 $740,579,995 $1,109,309,955 $1,025,016,932 $1,194,736,998
Company Return on Equity (Most Recent Yr) Profit Margin (Most Recent Yr) Date FYE - 1 Date FYE - 2 Date FYE - 3
Suncor Energy Inc 3.36 4.50 31-Dec-2009 31-Dec-2008 31-Dec-2007
Imperial Oil Ltd 16.73 7.38 31-Dec-2009 31-Dec-2008 31-Dec-2007
Husky Energy Inc 9.82 9.39 31-Dec-2009 31-Dec-2008 31-Dec-2007
Enbridge Inc 21.51 12.53 31-Dec-2009 31-Dec-2008 31-Dec-2007
EnCana Corp 11.21 16.75 31-Dec-2009 31-Dec-2008 31-Dec-2007
Canadian Natural Resources Ltd 8.13 15.58 31-Dec-2009 31-Dec-2008 31-Dec-2007
TransCanada Corp 8.76 15.39 31-Dec-2009 31-Dec-2008 31-Dec-2007
Talisman Energy Inc 3.93 6.74 31-Dec-2009 31-Dec-2008 31-Dec-2007
Nexen Inc 7.33 9.58 31-Dec-2009 31-Dec-2008 31-Dec-2007
Canadian Oil Sands Trust 10.88 15.55 31-Dec-2009 31-Dec-2008 31-Dec-2007
Notes to Comparative Data

- All figures are in United States dollars. - N/A = Data Not Available.
- All figures are as reported by the company. - N/L = Not Listed.
- Companies ranked by total revenue for the full year most recently reported.
Definitions
- Total Revenue = All revenues, including net sales, operating revenues, interest income, royalties, excise taxes etc. - Long Term Debt = Debt due to be paid at a date more than one year in the future.
- EBITDA = Earnings before interest, taxes, depreciation and amortization. - Return on Equity = The company’s earnings divided by its equity (book value).
- EPS Cont Operations = Earnings Per Share as reported by company excluding extraordinary items. - Profit Margin = The company’s net income as a percent of revenues.
- Total Current Assets = All assets expected to be realized within the next year, includes cash, accounts receivable and inventories.
Notes Industry Report - Oil & Gas - December 2010
Industry Reports Coverage 2010

Regional Reports
North America
• Automotive • Heavy Construction • Mining
• Aviation • Hospitality & Tourism • Oil & Gas
• Banking • Insurance • Pharmaceuticals
• Biotechnology • IT & Technology • Precious Metals
• Chemicals • Media • Property & Development
• Electricity • Medical Instruments & • Retailing
• Food & Beverage Equipment • Telecommunications
• Healthcare • Metal Works
Europe
• Automotive • Food & Beverage • Oil & Gas
• Aviation • Insurance • Pharmaceuticals
• Banking • IT & Technology • Property & Development
• Biotechnology • Media • Telecommunications
• Chemicals
Asia-Pacific
• Automotive • Food & Beverage • Oil & Gas
• Aviation • Heavy Construction • Pharmaceuticals
• Banking • Insurance • Property & Development
• Biotechnology • IT & Technology • Telecommunications
• Chemicals • Media
Latin America
• Automotive • Insurance • Oil & Gas
• Banking • Metal Works - Iron and Steel • Property
• Chemicals • Mining • Telecommunications
• Food and Beverage
www.mergent.com
34
The Preferred Source for

Global Business and Financial Information
FOR ADDITIONAL INFORMATION REGARDING ANY OF THE FOLLOWING MERGENT PRODUCTS, PLEASE PHONE OUR CUSTOMER
SERVICE DEPARTMENT AT (800) 342-5647 OR (704) 559-7601, E-MAIL : CUSTOMERSERVICE@MERGENT.COM OR VISIT US
ONLINE AT WWW.MERGENT.COM
Mergent’s Products & Services

Online Products Print Products
TM
MERGENT ONLINE MERGENT MANUALS & NEWS REPORTS
• U.S. COMPANY DATA • INDUSTRIAL MANUAL AND NEWS REPORTS
• U.S. COMPANY ARCHIVES DATA • OTC INDUSTRIAL MANUAL AND NEWS REPORTS
• U.S. ANNUAL REPORTS • OTC UNLISTED MANUAL AND NEWS REPORTS
• INTERNATIONAL COMPANY DATA • TRANSPORTATION AND PUBLIC UTILITY MANUAL
• INTERNATIONAL COMPANY ARCHIVES DATA AND NEWS REPORTS
• INTERNATIONAL ANNUAL REPORTS • BANK & FINANCE MANUAL AND NEWS REPORTS
• INSTITUTIONAL HOLDINGS DATA • NTERNATIONAL MANUAL AND NEWS REPORTS
• INSIDER TRADING DATA • MUNICIPAL AND GOVERNMENT MANUAL
• FACTSHEETS • COMPANY ARCHIVES MANUAL
• INTERNATIONAL FACTSHEETS • INTERNATIONAL COMPANY ARCHIVES MANUAL
• FACTSHEETS EXPRESS
• EXPANDED LONG-TERM DEBT MERGENT INVESTMENT GUIDES
• GLOBAL EARNINGS ESTIMATES • DIVIDEND RECORD AND ANNUAL DIVIDEND RECORD
• INDUSTRY REPORTS • UNIT INVESTMENT TRUSTS SERVICE
• D&B MILLION DOLLAR DATABASE PLUS • BOND RECORD & ANNUAL BOND RECORD
• INDUSTRY REVIEW
TM
MERGENT ACTIVE
MERGENT HANDBOOKS & GUIDES
TM
MERGENT EVENTSDATA • MERGENT’S HANDBOOK OF COMMONS STOCKS
• CORPORATE ACTION DATA • MERGENT’S HANDBOOK OF NASDAQ STOCKS
• CORPORATE DIVIDEND DATA • MERGENT’S DIVIDEND ACHIEVERS INDEX GUIDE
• INDICATED ANNUAL DIVIDEND DATA
• EX-DATE SERVICE
• UNIT INVESTMENT TRUST DATA
• CORPORATE NEWS
• FIXED INCOME
• CALLED BOND DATA
TM
MERGENT WEBREPORTS
TM
MERGENT EQUITY PORTRAITS
TM
MERGENT CORPORATE BOND PORTRAITS
TM
MERGENT HORIZON
Mergent’s Administrative Offices

• NEW YORK, NY 10010, 60 MADISON AVE, 6TH FLOOR - TEL: (800) 342-5647 OR (704) 559-7601
• FORT MILL, SC 29715, 580 KINGSLEY PARK DRIVE - TEL: (800) 342-5647 OR (704) 559-7601
www.mergent.com
Adding Value to Information Since 1900
Mergent, Inc., a leading provider of global business and
financial information on publicly traded companies,
operates sales offices in key North American cities
as well as London, Tokyo and Melbourne. Mergent’s
products date back to 1900 and contain information on
more than 15,000 US public companies, 20,000 non-
US public companies in 100 countries, and 20,000
US municipal entities, as well as extensive corporate
and municipal bond, UIT and dividend information.
More than 200,000 professional and individual
clients worldwide turn to Mergent’s products, which
include Mergent Manuals, Mergent Handbooks and
Investment Guides and its flagship Internet service,
Mergent Online.

Oil and Gas Dec 2010

Încărcat de

Informații document

Descriere originală:

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Oil and Gas Dec 2010

Încărcat de

Drepturi de autor:

Formate disponibile

Industry Report - Oil & Gas - December 2010

Adding Value to Information Since 1900

months. Mergent, Inc., a leading provider of

Current Environment - United States

Table 1: Top Five US Oil Majors’ Stock Price Movements

Although ExxonMobil (NYSE: XOM) posted strong Chevron (NYSE: CVX)

Current Environment - United States

Transactions in unconventional resources dominated US

Table 2: Canada’s Top Five Oil Majors’ Stock Price Movements

Suncor Energy SU C$31.55 C$34.10 8.08 54.91B

Imperial Oil IMO C$39.34 C$39.45 0.27 33.67B

TransCanada Corp TRP C$36.14 C$38.34 6.08 26.38B

Encana Corp ECA C$35.12 C$30.18 (14.07) 22.62B

Average Rise / Fall % 9.09

Current Environment - Canada

Current Environment - Canada

Mergers and Acquisitions

The Canadian oil sands sector saw US$5.5 billion worth

Since CNOOC (HKSE: 883) failed to acquire Unocal in

The Gulf of Mexico oil spill also had an effect on M&A

US Brazil Columbia Azerbaijan Kazakhstan Russian Iraq Oman

Source: BP Statistical Review of World Energy, June 2010

Industry Profile - United States

There is likely to be growth in consumption of all major Natural Gas Sector

Country May 2010 April 2010 May 2009

Industry Profile - United States

Table 5: Percentage of Domestic Production by State

Lousiana, 5% Texas, 30%

Source: Energy Information Administration

Source: BP Statistical Review of World Energy, June 2010

Industry Profile - United States

Industry Profile - United States

Gulf of Mexico holds the most promising untapped crude

2008 2009 2008 to 2009 % change

Industry Profile - Canada

Industry Profile - Canada

Keystone XL has become one of the most important bilateral

The massive pipeline would allow Canada to export

Market Trends & Outlook

Market Trends & Outlook - United States

Market Trends & Outlook - United States

methane (CBM) are the primary unconventional oil and

Typically, unconventional resources are difficult-to-

Despite some uncertainty over the strength of the economic

Market Trends & Outlook

Market Trends & Outlook - Canada

Market Trends & Outlook - Canada

2010 2015 2020 2025

process continued to move forward. There is an emerging

The Canadian Energy Research Institute (CERI) estimates

Long-term growth in shale gas production is likely to

Currency Conversion Table

Currency exchange rates as of October 10, 2010

Currency Unit Units per US$ US$ per Unit

Canadian Dollar (C$) 1.011 0.989

The Scope Of This Report

International Energy Agency (IEA)

International Monetary Fund (IMF)

American Gas Association (NGSA)

America’s Natural Gas Alliance (ANGA)

America Petroleum Institute (API)

Energy Information Administration (EIA)