Canadian Oil Companies on the Verge of Bankruptcy, But Experts Foresee Recovery

by San Antonio Attorney

Following a two-year price, the Canadian oil and gas industry is slowly emerging from its financial crisis.

Rick Grafton, an energy financier and CEO of Grafton and Asset Management, said that the worst is over for the oil and energy industry.

Grafton added that the past two years were the ‘most challenging’ in the industry of oil business.

Oil prices dropped from a steep price of more than $100 per barrel to $30 in 2016. Companies tried to reduce cost and a total of 40,000 employees lost their jobs in Alberta.

Grafton made his speech at the Chartered Financial Analyst Society event conducted in Calgary, explaining the company’s ordeal for the past year. Grafton said that the industry may be resilient but they were on ‘the cusp’.

When the revenues dropped and the banks did a major pullout on its loans, the Canadian oilpatch was on the verge of its financial problems. Affected oil and gas companies thrived through cost-cutting and increasing efficiency in production.

Fortunately, oil prices have slowly increased to $50 per barrel thus providing the benefit of gaining profit for some oil companies.

Suncor, an oil company, is one solid example of how they gained $392 million net profit for the past four months. This result surprised financial analysts who have predicted the loss of these companies. Precision Drilling has also gained almost 70 percent of its revenue from its rig activities for the past quarter.

Despite good outcomes from various companies, Grafton warned that the oil companies will be adversely affected if prices begin to slip downward again.

Grafton emphasized the fact that the oil industry will not work if the oil is priced under $50. If oil is under-priced, then expenditure cuts and major outflow of money will occur.

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