Three of Canada's largest energy companies will hand in their fourth-quarter results this week, and to keep investors happy, the trio need to do more than chat about their strategies to keep costs under control.
Cenovus Energy Inc. , a power player when it comes to drilling for bitumen, reports Wednesday and the market wants to know how the company's hunt for joint venture partners is unfolding. Cenovus has more bitumen-soaked land than it can develop itself, so getting others to help carry the financial burden will allow the company to cash in on its resource riches sooner.
Companies are loath to detail negotiations before the deals are rock solid, but investors still want an assurance the process is chugging along.
Nexen Inc. 's Thursday conference call will be much more tangled. Kevin Reinhart will make his debut as the company's chief executive, a role he inherited (for the interim) when Nexen and Marvin Romanow parted ways in January. (Mr. Reinhart was previously Nexen's chief financial officer.) The market applauded Mr. Romanow's departure, hoping a new leader can turn the company around.
The Calgary-based company has operations around the world, and two of those international assets could play roles as Mr. Reinhart updates investors this week. First, Yemen. Nexen has worked in this Middle Eastern country for decades, but in December, the government of Yemen ended one of their two partnership agreements. Without rights to operate in the Masila oil field, which churned out about 9.5 per cent of Nexen's production after royalties in the third quarter, the company needs to prove it can fill the void.
Enter Nigeria. Nexen is counting on its new Usan oil field, off Africa's west coast, to make up for the oil lost out of Yemen. Usan is scheduled to start production in the first half of 2012, and investors want comfort that the plan is still on track. Nexen's credibility suffered as its Long Lake oil sands project was plagued by production delays, and a repeat of that episode would not be welcome.
While Nexen is out of the Masila field, it is not entirely out of Yemen. It still has a partnership agreement with the government on another play, albeit one producing much less oil. The company previously said it was "evaluating alternatives" with respect to this property, and its "future activities" in Yemen. In short: it could sell this asset.
Encana Corp. wraps up the reporting parade Friday and will remind investors – it has been doing this a lot lately – that it is searching for oil and pouring money in to natural gas liquids projects. Being a pure-play natural gas company, which Encana became when it spun out its oil assets as Cenovus in 2009, is a tough gig these days with the price of gas trading around 10-year lows. To buffer its balance sheet and attract investors, North America's second-largest natural gas company is focusing on other commodities and Encana has promised more announcements tied to this hunt.