We are most of the way through oilpatch earnings season and despite continued uncertainty in the price of crude, earnings weren't a complete disaster, with some key oilsands companies, such as MEG Energy and Cenovus, beating expectations, while others, such as Imperial Oil and Suncor, disappointed.

Martin Pelletier, chief investment officer at Trivest Wealth Management characterized the quarter as "OK."

"They're swimming and the head is still above water," he said.

Costs under control

So much that affects the Canadian energy sector, such as the price of crude, or the value of the Canadian dollar, is out of its control, leaving companies to manage costs very carefully. You saw that reflected in the earnings conference calls with analysts. 

Suncor's chief executive Steve Williams said in a call on Thursday that his company's earnings were mixed because of operational problems at its Syncrude asset and that the company was focused on things that it could control, such as taking costs out of the business.

Williams said that the cash costs of producing barrel of oilsands oil were ranging between $22 and $26 per barrel, a substantial drop from 2014. Cash costs don't include a return on investment, or the capital costs of building the operation the first place.

Oilsands companies beating expectations

Cenovus, MEG Energy and Athabasca Oil all operate in the oilsands and posted positive numbers.

MEG Energy posted earnings of $104 million in the quarter, as compared to a loss a year ago, and management said that they had brought costs down as well. Athabasca Oil eked out a $24-million positive earnings quarter, also compared to a loss a year ago, and Cenovus also posted positive numbers that did little to offset the skepticism around its purchase of Conoco Phillips assets in the oilsands.

This is a modest recovery for companies that were struggling a year ago, before OPEC gave up the market share war and tried to push prices higher.

"The industry is living within its means," said Pelletier. "There have been improvements in costs, improved profitability, it should translate into OK production compared to last year."

Pricing still in question

The problem with using the second quarter of the year as a template for the future is that crude prices were higher through April and May than over the summer quarter, so far. However, oil is once again flirting with $50 US as inventory levels have begun to draw down in recent weeks, and OPEC tries assert some control over its members and their production and demand for gasoline has been strong.

"I'm pretty bullish on second half [of the year] demand," said Jackie Forrest, director of research with the ARC Energy Research Institute.

Forrest expects to see inventory levels drop through the rest of of 2017. "It's looking pretty good, if OPEC can hold the line."