Recently I made a short trip to Calgary, the center of the Canadian oil & gas market, to visit some of senior executives of the oil & gas companies.
Since 2015, I have made a conscious effort to visit Calgary multiple times because I believe with the fall of oil price creates opportunities. We have seen the worst of the cycle last year and we believe the commodity cycle is on the rise again. However, this upward ride will not be a smooth one and may prove to be quite bumpy at times.
So the overall situations in the oil & gas town:
The low gas price has been affecting negatively the companies that have more gas-weighted production. However, not all of them as affected if investors do pay attention to the finer details. If the companies have done a good job in hedging, then their overall performance will not be as poor. Some companies has done hedging as much as over 50% of their production in higher gas price in the next few quarters to survive the short term gas price depression.
$50USD/barrel has provided a more stable and healthy environment for the oil & gas producers to grow and be flexible, but overall the retail investors are still on the sidelines watching only. So overall the energy sector is still underperforming comparing to financials and technology in TSX markets this year.
– The infrastructure (lack of) in Canada is hurting the industry long term, Canada has a lot of reserves but just selling to one customer south of the border is never good plan.
– With limited capital available in the market now, access to Asian capital can be the way to help some of the Canadian oil & gas juniors again.
We will be issuing a special oil & gas report by early December this year, to provide meaningful background info, explanation to how to invest in the Western Canadian Energy Market. Stay tuned for more info to follow.
President, NAI Interactive Ltd
Gilbert has over 17 years of experience in the investor relations industry with a focus on natural resources. In addition, Gilbert has established a broad network of business relationships within the financial and investment communities in both North America and China. Gilbert’s expertise and experience has led to a strong following in the Chinese speaking investor community in Canada. In recent years, Gilbert has become frequent speaker and interviewee on mining topics for numerous media outlets, including the Financial Post, Wall Street Journal, Vancouver Sun, OMNI TV, and other industry publications.