Oil sands pain points to long-term gain: Moody's

CALGARY, Alberta (Reuters) – Canada’s oil sands developers will emerge from the economic downturn smaller in number and ready to advance projects at a more measured pace than during the boom, a debt rating agency said on Wednesday.

Moody’s Investor’s Service said today’s slowdown should be a boon for the sector overall as high-cost plans get scrapped and development costs drop. Since last autumn, companies have deferred or canceled more than C$90 billion ($81 billion) worth of Alberta oil sands projects.

In addition, financing difficulties that have plagued the smaller, pure-play oil sands companies may lead to more merger and acquisition activity, the agency said in a report.

“For the industry as a whole, on a longer-term basis, it’s a positive development because it’s a pullback from the breakneck pace of development that was going on out there,” Terry Marshall, vice-president and senior credit officer for Moody’s and lead author of the report, said in an interview.

Reuters