COMMENTARY: The Royalties and Taxes Being Paid by the Canadian Upstream Sector are Nothing Short of Spectacular – William Lacey

Money, Money, Everywhere

By William Lacey

With Q2 financial reporting now behind us for the Big 4 oil and gas producers in Canada, namely Canadian Natural Resources, Cenovus Energy, Imperial Oil and Suncor Energy, I thought it would be useful to post a few charts on what the companies have paid in terms of royalties and taxes, and how that compares not only to the same period in 2025, but also in comparison to the whole of 2025.

As we are all well aware, the Strait of Hormuz has become a place that we all have become acutely aware of as a result of the ongoing military actions that are taking place in the region, and the resultant shutdown of this passageway. Moreover, though many were aware of its importance in terms of the passage of oil and gas, many were not as aware of the passage of other critical items such as helium, fertilizers etc. As with most things, it is that last marginal sale which sets the price for all, and when you create a limit on that supply, prices rise, sometimes parabolically.

One beneficiary of this has been the energy sector, as the price of crude oil has seen upwards pressure, albeit perhaps not as high as one might expect considering the geopolitical realities that continue to unfold. LNG has also seen significant increases in pricing, both as a result of the impact of infrastructure being attacked as well as from the fact that many LNG contracts are priced off of oil based on S-curve contracting.

So, what has that meant in terms of Canadian oil and gas producers? We have seen a significant jump in terms of what is being paid out in terms of cash taxes and royalties. For the first 6 months of 2026 these top 4 producers have paid out $15.5 bn ($6.4 bn in taxes, $9.4 bn in royalties) versus $9.2 bn ($3.4 bn in taxes, $5.8 bn in royalties) over the same timeframe in 2025.

What is possibly more striking is when you compare H1 2026 to all of 2025. In 2025 these 4 companies paid out a total of $19 bn ($5.8 bn in taxes, $13.2 bn in royalties). Said another way, these four companies have already paid 10% more taxes in 2026 than they did in all of 2025, and have paid almost 70% of the royalties than they did all of last year.

All this to say, the Governments are sitting on a windfall in terms of revenue from the sector at a time when Canada is facing its share of economic challenges. It is good to see the Government of Canada adopt a more positive and constructive stance when it comes to the development of the oil and gas sector and the importance it represents, not only to the Canadian economy, but also to the global one as well. Now we just need to continue this momentum and get things done.

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