The top executives of Canadian oil and gas companies listed on the Toronto Stock Exchange expect to realize double-digit returns this year, according to a recent survey by Deloitte. This may not be mere wishful thinking on the part of Maple Leaf producers, integrated oils and income trusts. "Comparing the results of previous surveys to actual performance demonstrates that industry predictions of returns have generally been accurate," says Richard Cooper, Canadian energy and resources leader for the audit, tax, financial advisory and consulting firm. When asked to estimate the average 2004 wellhead price of West Texas Intermediate crude, survey respondents predicted $28 per barrel; for natural gas, they estimated an average 2004 price of $5 to $6 per thousand cubic feet. (All dollar values presented here are U.S.) Meanwhile, when asked about their target cost for replacing reserves in 2004, the respondents indicated an average target price of $9.49 per proven barrel of oil equivalent (BOE)-less than last year's price of $11.30 per BOE and slightly below the $9.83 average for the past three years. "The geographic areas anticipated to contain the greatest potential for significant new discoveries of natural gas were overwhelmingly identified as Alberta (47%) and British Columbia (21%)," says Cooper. Also, more than 70% of the survey respondents indicated they expect employment in the Canadian oil and gas industry to increase in 2004, he adds. Some 60% of those surveyed noted they experienced no difficulty last year in hiring and retaining geologists, engineers and other professionals. The majority of the Canadian oil companies and trusts surveyed believe that increased transparency in reserves reporting, including the newly adopted National Instrument 51-101, will lead to greater investor confidence. However, they don't want regulation demanding a regular annual independent reserves evaluation, according to the survey results. As for higher governance and control hurdles that are being imposed by regulators and exchanges, most of the respondents believe the new bar will be hard to meet, and some will need a qualification of the auditor's internal control report. Says Cooper, "We believe improvement in the transparency, accuracy, timeliness and reliability of reported information will cause investor confidence to rise."

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