With oil prices seemingly stuck a multi-year lows, Alberta's oilpatch is trying to figure out how it will survive 2016, yet another year of struggle for an industry that lost a collective $1.5 billion in just the first half of 2015.
With so much financial pain, one expert insists it's likely the large players that have the best odds of enduring the oil price collapse.
He's crunched the numbers during this downturn and found it's the big-name companies, such as Suncor and Cenovus, that are faring the best.
That's why he suggests the downturn could lead to the creation of fewer, but larger companies.
Already in Alberta, the industry is highly concentrated among giant firms. Approximately half of all conventional oil and natural gas production comes from about a dozen operators.
The big firms generally have economies of scale. They are able to raise more capital, large projects with lower costs, and tend to be more diversified. Often, they operate in different locations around the world and not only produce oil and gas, but likely also refine products such as gasoline.
The oil downturn is putting pressure on all companies, big and small. Firms are laying off workers, slashing spending, pulling back salaries and focusing operations where margins are best. Now is not the time to venture into unexplored areas.
Executives can't bank on price recovery as part of their financial plans as that is not likely to happen anytime soon. Companies with the most uncertainty are likely those in the oilfield service sector. They're calling the oil and gas producers to see what kind of work they can expect to see next year.
That's why just about weekly some of the large service companies are asking to renegotiate loan agreements.
Selling assets isn't necessarily the answer, since there is little value in oilfield equipment when there is little demand for the machinery.
A mitigating factor for much of the sector has been the Canadian dollar. Companies operating north of the border pay Canadian dollars for most of their expenses, but sell their oil in U.S. dollars. With the loonie around 75 cents compared to the American greenback, it's working in favour of Canadian companies.
