This year, we are putting the 14 largest publicly listed Canadian oil and gas producers* and their auditors on notice: the AGM votes for Chair of the Audit Committee and reappointment of the external auditor are in play. Investors have identified potentially material gaps in these companies’ 2024 financial statements and related auditor reports concerning decommissioning liabilities that could affect billions in shareholder capital.
The accounting and auditing gaps relate to the potential size of reported decommissioning liabilities, when they will come due, and the amount of revenue available to pay for them. Moreover, the independent auditors, whose job is to provide investors with confidence in the financials’ accuracy and compliance with standards, are generally failing to highlight these issues.
If these issues are not adequately addressed in the companies’ upcoming 2025 financial statements, we intend to withhold support for the re-election of their responsible director – the Chair of the Audit Committee – and for the reappointment of their external auditor. We will make the rationale for this decision available to the investor community ahead of the AGM.
Today, a tailored version of the attached letter was delivered to each company (see list below). The letters outline our key concerns against a series of factors summarized in the table on p.10 and 11 of this report.
*Companies contacted: Suncor Energy, Cenovus Energy, Canadian Natural Resources, Imperial Oil, Tourmaline Oil, ARC Resources, Whitecap Resources, Strathcona Resources, Peyto Exploration & Development, Paramount Resources, Athabasca Oil, NuVista Energy, Tamarack Valley Energy, and Baytex Energy.
