01/31/2015 05:00 EST | Updated 04/01/2015 05:59 EDT

Energy earnings: How bad will they get?

Canadian Oil Sands surprised no one on Thursday when it reported sharply lower earnings and a massive cut to its dividend.

But as energy earnings season gets fully underway next week, the hope is that company's report won’t be representative of the entire sector.

Canadian Oil Sands reported net income of $25 million, down 87 per cent from the same quarter a year ago. It cut its capital spending plans for 2015 and slashed its dividend by 86 per cent, to five cents a share, to conserve cash.

"Canadian Oil Sands is what you call a pure play," says Judith Dwarkin, director of energy research with ITG Investment Research in Calgary. The company's only asset is a nearly 37 per cent stake in Syncrude, which has been mining the oilsands since the 1970s. It’s neither a diversified nor an integrated company, so there’s no protection against volatility in the price of crude.

That’s not the case for every oilsands player reporting in the coming weeks, but that doesn’t mean we should expect good news.

"The general tenor is not going to vary a lot," says Dwarkin. "Capital cuts, trying to maintain the cash flow."

Suncor and Imperial

Imperial Oil and Suncor Energy report Feb. 2 and Feb 5, respectively. Both companies are fully integrated, meaning they extract the oil, refine it and sell gasoline, diesel, propane and petrochemicals. Refining margins have been under pressure in the U.S., but holding together in Canada, according to Nick Lupick, an energy analyst with AltaCorp Capital.

Lupick does not expect capital spending cuts from the two giants. There will naturally be less spending from Imperial because Kearl (oilsands mine) is in operation now." Lupick says that Suncor is not easily able cut back on its spending because development of its Fort Hill project is far enough along that it’s difficult to turn back.

Cenovus and Husky

Cenovus and Husky report the following week on Feb 12. Both companies have oilsands operations that are steam-assisted instead of mined. Steam-assisted drilling operations tend to have break-even costs around the $50 US a barrel mark. The average price for West Texas Intermediate in the fourth quarter was $73.20 US.

That means the earnings pain is mostly deferred until the first-quarter numbers come out in the spring.

"That will dominate all the analyst calls next week," says Lupick. "How do you strategically position yourself to weather the storm."