BMO comments on expectations for 2023BMO sees continued dividends and FCF for 2023 from cdn. Producers
Fourth-Quarter Results from Canadian Oil and Gas Producers Better than Expected, BMO Capital Markets Says
02:49 PM EDT, 03/13/2023 (MT Newswires) -- Fourth-quarter results from Canada's oil and gas producers came in better than expected, BMO Capital Markets noted in a report, though costs are rising sharply. The good results have cleaned up balance sheets for the producers, auguring even better returns for shareholders in 2023.
"The fourth quarter delivered better-than-expected financial results for Canadian producers, with the large-cap names generally posting stronger results relative to the SMIDs," the investment bank noted. Reserve growth for the group was fairly mild in 2022, but inflationary pressures resulted in FD&A costs rising significantly year over year. Relative to January 2022 estimates, capital expenditures came in 20% higher than our and the Street's expectations, while our and consensus 2023 capex forecasts rose by 30% and 32%,respectively, over the same time frame. Despite the increases in costs, we still believe free cash flow profiles will remain robust going into 2023. Since balance sheets have been largely repaired across the board, we expect Canadian producers will prioritize shareholder returns even more this year, with several companies committed to allocating the vast majority of free cash flow to dividends and buybacks."