Oil and gas extraction, 2021
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Released: 2022-09-27
In 2021, Canada's oil and gas extraction industry saw growth in revenue after experiencing a turbulent 2020. A rebound in economic activity and demand for energy products led to rising prices and increased production.
In 2021, oil prices reached their highest level since 2015. As a result, the industry looked to recover the losses that were incurred during the COVID-19 pandemic. Total gross revenue in the oil and gas extraction industry increased 85.7% to $174.0 billion in 2021 from $93.7 billion in 2020. According to the Raw materials price index, the price of crude oil and bitumen increased by 70.8% from 2020, while the price of natural gas increased by 15.8%. Total production for crude oil rose by 6.2%, while total natural gas production increased by 3.9%.
As a result, the combination of rising oil and natural gas prices along with increased production volumes, greatly contributed to the overall increase in revenue for the industry.
Chart 1
Revenue, oil and gas extraction industry
Meanwhile, total expenses and deductions for the oil and gas extraction industry increased 1.0% in 2021 compared with a 3.8% increase in 2020. Operating expenses rose 45.7% in 2021 from 2020, which coincided with higher production levels across Canada.
With the pandemic having adverse effects on the demand of energy products in 2020, a significant driver for total expenses was write-offs and amortization of deferred charges. The industry consequently wrote off large amounts of value from their assets due to the difference in the book value and market value of industry assets. Conversely, as 2021 recovered from the effects of the pandemic, write-offs also had a significant impact as the industry sought to reverse the write-offs of 2020, due to increased commodity prices. Those reversals contributed to higher values of assets in 2021. Write-off reversals amounted to -$7.8 billion for 2021, a 128.5% decrease from 2020 which offset the increase in total expenses and deductions in 2021.
Year-over-year decreases in non-cash deductions, specifically amortization and depreciation (-40.4%), depletion (-11.0%), and impairments (-128.5%), suggest that the oil and gas extraction industry continued to recover from the impacts of the pandemic. In 2021, net income was $33.7 billion, up from a loss of $45.2 billion in 2020.
Capital expenditures increase
The rise in demand and prices in 2021 fostered confidence in the oil and gas extraction industry, and consequently, encouraged investment opportunities. Total capital expenditures increased 20.4%, from $21.4 billion in 2020 to $25.8 billion in 2021. Investment in the oil sands sector rose to $9.0 billion in 2021, an increase of 23.5% from 2020. Similarly, investment in the oil and gas extraction sector saw an increase of 18.9% in 2021 when compared with the previous year.
However, total capital spending in 2021 had not yet returned to pre-COVID levels. Total capital expenditures in 2021 were 26.7% below levels of 2019.
Chart 2
Capital expenditures
Balance Sheet
In 2021, Canada's oil and gas extraction companies reported total assets of $452.9 billion, up 2.6% from 2020. Total capital assets increased 1.2% in 2021 to $380.0 billion as the industry reversed the write-offs incurred in 2020.
Following a 12.1% decrease in 2020, total liabilities (the sum of current liabilities, long term debt, and other liabilities) increased by 1.6% to $276.5 billion for 2021.
Total shareholder's equity rose 4.4% in 2021 due to the overall increase in net income and subsequent retained earnings for Canadian oil and gas producers.
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Note to readers
The Annual Oil and Gas Extraction Survey program disseminates its data in tables 25-10-0064-01 (oil and gas extraction capital expenditures and operating costs) and 25-10-0065-01 (oil and gas extraction revenues, expenses and balance sheet), starting with the 2015 reference year.
The oil and gas extraction industry includes establishments engaged primarily in operating oil and gas field properties. This includes the production and extraction of oil from oil shale and oil sands.
Oil and gas extraction (formerly known as conventional oil and gas extraction) includes establishments engaged primarily in the production of petroleum or natural gas from wells in which the hydrocarbons will initially flow or can be produced using normal pumping techniques.
Oil sands extraction (formerly known as non-conventional oil and gas extraction) includes establishments engaged primarily in producing crude oil from surface shales, oil sands, or reservoirs in which the hydrocarbons are semisolids and conventional production methods are not possible.
Crude oil and equivalent products include crude oil, crude bitumen, synthetic crude oil and condensate.
Natural gas by-products include ethane, propane, butane and pentanes plus. Elemental sulphur is not included.
Other assets include all assets not reported as either current or capital assets.
Other liabilities include all liabilities not reported as either a current liability or long-term debt.
Equity includes common shares, preferred shares, retained earnings and all other equity.
Data are subject to revisions. Oil and gas extraction data are revised on an annual basis to reflect new information provided by respondents and updates to administrative data.
Contact information
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