Survey forecasts low-to-mid growth and highlights election impacts on energy sector
ATB Capital Markets' Fall 2024 Energy Sector Survey reveals softened investor sentiment and upcoming catalysts, while also projecting low-to-mid single-digit growth in Canada next year.
Darren Eurich, CEO of ATB Capital Markets, noted that the bi-annual survey reflects industry sentiment shifts due to the economic and regulatory environment.
“Energy is a critical sector of our business,” Eurich said.
“We remain dedicated to providing critical insights to help our clients succeed.” Waqar Syed, managing director of Energy Services at ATB Capital Markets, added that institutional investors remain generally positive about moderate sector growth for 2025, despite a weakened sentiment in 2024.
The survey found that sentiment indicators have moderated alongside a 17 percent slide in WTI crude prices since the spring 2024 survey. Only 75 percent of respondents expect WTI crude prices to average above US$75 per barrel over the next three to five years, down from 91 percent in previous surveys.
E&P sentiment also weakened, with 58 percent of respondents characterizing their outlooks as ‘improving,’ down from 88 percent in spring 2024, while 29 percent noted worsened outlooks in the past three months.
Institutional investors showed the most notable drop in sentiment, with only 38 percent expecting energy to outperform the TSX/S&P 500 over the next 12 months, down from 67 percent in the spring.
However, energy services companies reported improved sentiment over the past three months and anticipated increased activity in the next six months.
Looking ahead to 2025, respondents expect 3 percent to 5 percent field activity growth and mid-single-digit production growth for Canadian E&Ps. Development costs are expected to remain flat year-over-year, with low-single-digit service price inflation.
The survey also examined the impact of Bill C-59 on environmental reporting, with 53 percent of respondents viewing it as ‘very impactful.’ Additionally, only 17 percent of respondents plan to invest in environmental technologies over the next year, down from 34 percent in spring 2024.
Meanwhile, 70 percent of respondents are not planning to invest, up from 50 percent in the previous survey. Only 11 percent plan to increase ESG-related disclosures, down from 30 percent in spring 2024.
Upcoming US and Canadian federal elections are seen as potential catalysts for the energy sector. The survey found that 44 percent of respondents view a Republican victory in the US federal election as a positive outcome for energy companies, while 29 percent consider a Democratic win negative.
In Canada, respondents expressed that a change in government could benefit the energy sector, particularly regarding federal energy and environmental policies.
Institutional investors ranked E&Ps as the top energy investment sector for the next 12 months, with midstream companies and energy services also viewed favourably for investment and equity performance.
The survey involved executives from 33 energy services companies, 38 exploration and production (E&P) companies, and 39 institutional investors.
