CTV News Calgary has reported:

Canadian oil and gas companies sharply increased operating profits in the second quarter of 2026, while capital spending rose more modestly as producers favoured drilling projects with quicker returns. Deloitte’s energy forecast, released Oct. 8, says operating profits climbed 68 per cent from the first quarter, amid volatile crude prices and uncertainty about whether higher prices will last.

Brent crude, the international benchmark, moved between US$68 and US$105 a barrel in July and August. Deloitte attributed the swings to disruptions tied to the Middle East war, including constraints on shipments through the Strait of Hormuz. High prices made oil producers the largest contributor to non-financial industry profits in the second quarter, according to Statistics Canada.

Separate Statistics Canada capital expenditure data showed spending rose about seven per cent to $11 billion in the second quarter compared with the first. Deloitte also cited Baker Hughes rig count figures showing Canadian drilling was up 17 per cent from the same quarter a year earlier. The figures point to increased activity, though companies have not matched the pace of their profit gains with a comparable rise in capital spending.

“Producers view the current price environment as temporary, or uncertain, rather than rooted in a fundamental supply-demand shift,” Deloitte said. The firm said companies are concentrating on drilling programmes with efficient, short-cycle economics, including plays in the Montney, Duvernay and Clearwater, instead of pursuing long-cycle projects requiring large capital commitments.

Deloitte expects that focus on projects with faster payback to continue, while major spending decisions will be shaped by companies’ long-term strategic priorities. Its forecast puts West Texas Intermediate (WTI), the North American benchmark for light oil produced from U.S. fields, at an average of US$90 a barrel in the final three months of 2026. The firm projects an average of US$76.50 a barrel for 2027, reflecting expectations that global production and inventories will recover next year; its separate forecast also describes US$90 as the projected 2026 average.

Andrew Botterill, who leads Deloitte Canada’s oil, gas and chemicals practice, said investors have pressed companies to control spending and debt over the past five to eight years. The COVID-19 pandemic and the price collapse that followed damaged oilpatch finances soon after companies had barely recovered from the 2014-2015 bust. Botterill said the sector now has a sense that “we could be much more.”

A proposed export pipeline with capacity of one million barrels a day to British Columbia’s coast and steps by Prime Minister Mark Carney’s government to simplify the regulatory process, roll back Trudeau-era environmental policies and expand investment tax perks could support growth, Botterill said. “We could see significant growth coming from Canada,” he said. “And I think what we are going to see play out over the coming year is companies are going start to look at, ‘Where are we going to make our bets? Where are we going to start to make bigger capital spends for ... the medium and long term?’”

Recent corporate deals offer examples of companies adjusting their portfolios. Earlier this week, oilsands producer Cenovus Energy Inc. agreed to buy smaller peer Athabasca Oil Corp. for $5.7 billion. Suncor Energy Inc. said it had reached a $1.2-billion deal to sell some Atlantic Canada offshore holdings as it concentrates on its core oilsands business. Botterill called the transactions “preparatory steps” for companies considering growth over a longer horizon, adding: “Where would we be more likely to play that capital and let’s make sure we get our portfolio in that direction.”

Natural gas faces a supply challenge. Canadian production averaged 20 billion cubic feet a day in the second quarter, or more than 20 billion according to the report’s rounded figure, about five per cent above the same period in 2025. Companies continued to increase output while seeking more valuable natural gas liquids, including propane, produced alongside dry gas.

Alberta’s AECO trading hub recorded average prices below C$2 per thousand cubic feet in the first eight months of 2026, despite rising Canadian liquefied natural gas exports. Those exports include shipments from the LNG Canada terminal in Kitimat, B.C., which began operating in mid-2025. Deloitte forecasts Alberta gas prices will average C$1.75 per thousand cubic feet this year, rise to $2.15 next year and exceed $3 after 2029.

Botterill said Alberta prices in August and September, usually the weakest months for the province’s gas market, stayed relatively steady instead of falling sharply. “What that shows you is that there is natural gas demand building in Canada. The ability to export off our West Coast is making a difference,” he said. “We’re much more structurally sound on the natural gas market than we were say, a year ago.”

The report also discussed artificial intelligence adoption, following a Deloitte study published in February. It said 72 per cent of energy, resource and industrial companies use “physical” AI through machines and control systems to some extent, but many have difficulty expanding beyond pilot projects. Only 16 per cent reported using AI extensively.

“Oil and gas companies are used to capital intensive investments, with the oilsands as a prime example of making big bets. Simply put: it’s a business that isn’t afraid of risk,” the report said. “But to compete with capital that is designated to core operations for development, expansion and optimization projects, the value proposition for AI use cases needs to be well developed.”

Calgary drivers have also faced sharp price changes at the pump. By Wednesday, many stations were charging in the $1.70-per-litre range, after some had sold gasoline for around $1.40 or less following Alberta’s suspension of its 13-cent-per-litre fuel tax. Patrick De Haan, GasBuddy’s head of petroleum analysis, said a local price war drove some stations below cost before wholesale prices rose.

“A price war pushed prices down 20 to 30 cents a litre below cost, coupled with then another increase in the wholesale market of roughly eight cents a litre on Monday, precipitated a pretty hefty increase for some of the retailers across Calgary,” De Haan told CTV News. Analysts forecast pump prices could rise another 10 to 15 cents over Thanksgiving weekend, with a possible further increase in the third week of October.

The Canadian Press report was first published Oct. 8, 2026. The companies identified in the report include Suncor Energy Inc. (TSX:SU) and Cenovus Energy Inc. (TSX:CVE).