Canadian petroleum producers are increasingly confident that elevated oil prices will persist through the rest of the year, leading several companies to accelerate their spending plans. In recent weeks, a growing number of firms have raised their capital expenditures to bolster production as crude prices stay high.
Companies Raise Spending
Yangarra Resources, based in Calgary, increased its capital expenditures by a third to $80 million. Surge Energy announced a 17% spending hike to $175 million. Obsidian Energy boosted its capital program by nearly 50%, or $100 million, to about $313 million, targeting a 15% production increase next year.
"There are periods in which you have to make hay, and periods in which you have to batten down the hatches," said Jay McGilvary, Obsidian Energy's vice-president of development. "There is a structural component to oil and gas that we think is going to stay in short supply for a longer period of time."
Market Signals
McGilvary noted that new wells for Obsidian are paying out in less than a year due to strong commodity prices. For Yangarra, the extra capital will allow it to add a second rig and drill 25 wells in Alberta this year. CEO Jim Evaskevich said, "Our view is that it's quite likely that we'll see oil north of $75 for the rest of '26. And that could be the case for a good bit of '27. The market is instructive. Our job is to listen."
West Texas Intermediate crude closed at US$90.54 on Friday, down 2.7%, amid speculation the Middle East conflict could end. However, the Strait of Hormuz remains largely blocked, affecting global supply. Bank of America forecasts WTI will average $86 a barrel in 2026 and $73 in 2027, estimating that over one billion barrels of liquids production have been lost since the war began, drawing down inventories.
"While the hostilities may get settled... our view is it's going to take an extended period of time for that deficit to be made up," Evaskevich added.
