Canadian Natural Resource Ltd (USA) (CNQ), Imperial Oil Limited (USA) (IMO): A Deeper Look at Oil and Gas Production in Canada

With massive growth and industrialization of emerging economies, particularly China and India, the global demand for oil and gas have tremendously increased. Major developments in oil drilling technologies created opportunities to exploit shale gas and oil. Massive reserves have been identified in various parts of the world, including North America, which created  massive growth opportunities in the oil and gas sector.

During 2012, the oil and gas sector in Canada witnessed some of the largest mergers and acquisitions in the history of the country. The two key acquisitions were Nexen by Chinese state-controlled CNOOC for a mammoth $15 billion and Progress Energy by Malaysian state-controlled Petronas for $5 billion.

Canadian Natural Resource Ltd (USA) (NYSE:CNQ) is at the forefront of gaining heavily through this technological shift and expects to bolster its position not just in Canada, instead turning into a dominant player across the globe.

The company is actively involved in reconnaissance for asset resources across the globe in order to increase its global share in the oil and gas sector.

It has robust operating experience, therefore, it now plans to increase its production in order to meet the global demand. It aims to elevate its production in a horizon oil sands project to 250,000 barrels/day from a 110,000 barrels/day. In addition, it plans to commission 40,000 barrels/day from the Kirby South Steam Assisted Gravity Drainage project and steadily advance its deepwater exploration projects in South Africa.

The company has a focused objective on increasing its production of oil and gas consistently in order to generate and maintain high cash flow. It is also focused on  increasing its reserves and net asset value by both organic and inorganic means.

Industry outlook

With robust production of oil in the U.S. and Canada coupled with the overall declining demand in the developed regions, the global oil market is set to undergo a major change.

On the back of sluggish economic progress and improved technological framework, North America is expected to be self-sustained and meet its oil demand, resulting in significant reductions in oil imports.

In contrast, the Middle East and Asia regions are estimated to drive the demand of oil in the near to medium term, owing to rapid growth in economies, virtually inverting the whole supply-demand equation. Interestingly, for the very first time, the developing markets are expected to consume more oil than the developed world.

As per the estimates made available on oil consumption by the International Energy Agency (IEA) covering the next five years, the supply of oil in the global markets will far outdo the demand, leading to a sharp fall in the price of oil and gasoline.