‘Why would we invest in North america right now, when there isn’t a steady policy on energy and the economy?’
CALGARY — Prospects are looking brighter in the Canadian oilpatch seeing that commodity price increases force higher profits and afford to pay for companies room to offer results hikes and share buybacks — but slumping stock prices show that the oil and gas sector remains during the penalty box with investors.
It’ohydrates getting so bad that does not even Canadian institutional investors can be convinced to buy Canadian vigor company shares, says Grant Fagerheim, CEO of Calgary-based Whitecap Resources Corporation.
“We want to get Canada again, to be proud Canadians, to be happy producers of our own products and not just be penalized for it,” mentioned Fagerheim in an interview after coming from disappointing meetings together with investors in New York a while back.
“The question we are continually enquired, whenever I’m on the road, is, ‘Why would we spend money on Canada right now, when there isn’t a consistent policy regarding energy or the economy?’ … Perhaps the Canadian institutional investors are hesitant about investing in Canada.”
Investors were turned off by the lack of export pipeline space for coal and oil, Canada’s failure to match Anyone.S. reductions in corporate taxes, higher personal income taxes north of the border and numerous ongoing reviews and variations to provincial and federal regulatory systems that create uncertainty, he said.
The pipeline capacity issue will continue to expand worse since the Energy Distance pipeline to Eastern Nova scotia was cancelled last year after the National Energy Board said it would use a tougher evaluate process that would include looking at roundabout emissions related to the direction, from production to end-use of your oil.
Prime Minister Justin Trudeau accredited Kinder Morgan’s Trans Mountain pipeline expansion to the West Sea-coast in 2016, but rejected Enbridge’ohydrates Northern Gateway pipeline that will Kitimat, B.C. Since then, your NDP government in B.T. and protesters have been aiming to disrupt Trans Mountain construction.
Whitecap’utes story is typical of a industry that just can’t seem to a single thing right these days.
In November, them announced it would buy a share in the Weyburn, Sask., CO2 enhanced retrieval light oil project via Cenovus Energy Inc. for $940 million and, based on the predicted improvement in revenue, would raise it has the dividend by five percent.
Its shares, which closed for $9.11 that day, fell as far as $7.48 in early March as well as closed at $7.99 in Friday — although the majority of monetary analysts currently rate being a “strong buy.”
So significantly this year, the S&P/TSX Capped Energy Index has fallen by way of almost 10 per cent, despite results increases and share buybacks by a number of of its 38 constituents, exactly who represent the cream of your Canadian energy sector.
The prize for dividend increases has been hit and miss. Shares in significant oil giant Husky Energy Inc. and liquids-rich gas producer Tourmaline Oil Corp. have risen since they declared higher payouts to investors in early March.
But shares within oilsands and refining company Suncor Energy Inc. have been little transformed since it raised its results by 12.5 percent on Feb. 7.
The corporations announcing share buybacks, which come back cash to shareholders each directly by providing a buyer with regard to their shares and indirectly by giving each remaining share an even bigger equity stake in the corporation, have included Suncor, Canadian Pure Resources Ltd., Encana Corp., Birchcliff Energy Ltd. and Paramount Resources Limited., among others.
They say their stock shares are so inexpensive it’s less expensive to buy back their stock options to improve performance per talk about than it is to grow the business by using finding and developing brand-new sources of oil and gas.
Analysts are left shrugging their particular shoulders.
“It feels like an entire sense of apathy among investors — especially in Canada — and I probably have that a large portion of that could be due to the pipeline issues,” claimed analyst Nick Lupick of AltaCorp Cash.
“So some are taking setup of, ‘Forget it, why worry? I’ll go elsewhere till they figure it out.”‘
He said the cheap stock prices will likely result in much more mergers and acquisitions in the next 12-18 weeks.
A report by analysts from CIBC concluded that “Canadian energy appears to be like cheap, both from a famous and relative perspective,” introducing Canadian producers are buying and selling at cash flow multiples way below American rivals in spite of generally better debt jobs.
“I think it is a report greeting card on Canada,” said Claire McMillan, CEO of the Canadian Connections of Petroleum Producers, which has launched a campaign calling for more affordable taxes and fewer regulatory road blocks to restore competitiveness with the U . s . and other global producers.
“We certainly hear back anecdotally at a very wide range of companies that are generally out trying to raise capital along with the Canadian brand today is where investors don’t look at certainty, where they find layered-on costs, where they don’l see a clear path to marketplace access and they’re voting using their dollars.
“That’s why we view Canadian investments continually simply being downgraded.”