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Alberta oilsands more resilient to lower prices than U.S. rivals who are cutting budgets to cope with below US$60 crude
Originally published in the Financial Post – This Story and More by Meghan Potkins Here
Canada’s largest oilpatch spenders have begun unveiling their 2026 budgets, with early signs showing oilsands spending holding steady despite forecasts calling for an overall pullback of investment in oil and gas production next year.
Cenovus Energy Inc. said Thursday that capital spending will edge higher next year as it integrates MEG Energy Corp. following its successful $8.6-billion takeover.
But the oilsands major emphasized that underlying investment is largely unchanged from 2025 levels, because it aims to keep a lid on spending as it finishes a three-year growth cycle that saw big capital investments in offshore and oilsands projects.
Canada’s largest integrated producer, Suncor Energy Inc., said it’s planning to spend slightly less next year, announcing a capital budget of $5.7 billion for 2026, down less than two per cent from 2025.
You’d have to see a lot lower oil price than this to impact Canadian producers
-Tristan Goodman, president of the Explorers and Producers Association of Canada
The announcements come as oil and gas producers brace for a tough year ahead, with crude prices under pressure and a number of independent forecasts calling for lower capital spending and reinvestment across the industry in 2026.
Still, Canada’s oilsands heavyweights are largely expected to hold firm on capital spending — a sharp contrast to some of their U.S. shale rivals who are trimming budgets in response to sub-US$60 oil.
“Let’s be honest, at these oil prices, Canadian producers are still doing quite well. You’d have to see a lot lower oil price than this to impact Canadian producers,” Tristan Goodman, president of the Explorers and Producers Association of Canada, said.
“We’re just so efficient now, compared to where we were — much more so than the Americans, if you were to compare.”
Despite U.S. oil prices currently hovering below US$60 per barrel, down about 12 per cent year-over-year — and forecasts suggesting a rebound to 2024 pricing isn’t coming before 2029 — Canada’s largest producers are expected to hold spending flat while continuing to grow production.
“The big oilsands companies obviously account for the bulk of the capital spending, and it’s going to be roughly flat,” Randy Ollenberger, managing director at BMO Capital Markets, said.
“It’s not really because of weaker commodity prices — it’s because some projects are coming to an end, but it’s also just a focus on efficiency, getting better and reducing maintenance capital spending and those kinds of things.”
Analysts are calling for stable or slightly higher production next year from Canada’s oil majors and large exploration-and-production companies.
Cenovus said it expects a four per cent increase in production next year to between 945,000 and 985,000 barrels of oil equivalent per day, thanks to MEG’s added volumes and ramp-ups from its Foster Creek project in northern Alberta and White Rose offshore development in Newfoundland and Labrador.
And it isn’t the only oilsands major looking to boost production next year.
Canadian Natural Resources Ltd. — one of the largest oil producers in the world — has signalled it could actually hike capital spending by roughly seven per cent in 2026.
While the company has not yet released official budget figures, it told investors last month that it expects to invest about $6.4 billion next year, up from roughly $5.9 billion in 2025.
CNRL is likely to spend its cash on oilsands mining assets it gained full ownership of in a swap with Shell Canada earlier this year. The company said it’s aiming to grow its total production by 50,000 barrels of oil equivalent per day in 2026, up three per cent from an average of 1.57 million in 2025.
And it’s not the only heavy oil producer expected to increase spending next year, with analysts also predicting rising capex from oilsands major Imperial Oil Ltd. and mid-size producer Athabasca Oil Corp.
More than a decade of cost-cutting and balance-sheet repair have made Canadian oil and gas companies resilient to low prices, Ollenberger said, with deeper inventories and reduced sustaining capital needs that allow them to maintain output without constant drilling.
“It’s just a more durable business model,” Ollenberger said. “Canadian companies can maintain their businesses and their dividends in a $50 oil price environment or lower — some as low as $40. For U.S. shale companies, many of those companies need $65.”
But alongside the disciplined approach to spending, analysts and industry players warn that M&A activity and consolidation is also helping to push overall spending lower. Newly combined companies — such as Cenovus and MEG, or Whitecap Resources Inc. and Veren Inc., or Ovintiv Inc. and NuVista Energy Ltd. — are spending less.
The upshot is cooling, rather than expanding drilling and activity in Western Canada.
“If you took what would have previously been MEG’s budget and Cenovus’s budget together, I think the combined number will be lower than it would have otherwise been — so effectively a year-over-year decline in capital spending,” Ollenberger said.
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