Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
As Hamas announced that its leader Ismail Haniyeh was killed in an airstrike on his residence in Iran in the early hours of the 31st, triggering market concerns about the outbreak of a larger conflict in the Middle East, the risk premium in the oil market rose significantly, and the price of Brent crude oil soared to more than $80 per barrel at one point.
Meanwhile, the U.S. Energy Information Administration reported on Wednesday that U.S. oil demand reached a record seasonal level in May (20.8 million barrels per day), higher than the EIA’s previous estimate of 20 million barrels per day in May. Together with the upcoming meeting of the Organisation of the Petroleum Exporting Countries (OPEC+) Technical Committee to review member countries’ compliance with production quotas, a number of factors appear to support further increases in oil prices.
As the world’s fourth-largest exporter of crude oil, higher oil prices could benefit the Canadian economy, especially in oil-producing provinces such as Alberta. Increased revenues from oil exports could boost the provinces’ economies and increase federal revenues. However, it could also lead to higher domestic fuel prices, affecting consumers and businesses.
In addition, as global oil prices rise, investment in Canadian oil sands and other oil production projects may increase as they become more economically viable. This will lead to growth and increased production capacity in the Canadian oil industry. Companies like Canadian Natural Resources Limited (CNRL) (TSX:CNQ), for example, are most likely to benefit from higher oil prices.
The company is one of Canada’s largest independent producers of natural gas and heavy crude oil. The company has a diversified portfolio of products, including oil sands, conventional heavy oil, light oil, synthetic oil and natural gas. Higher oil prices have improved the profitability of these assets, particularly oil sands and heavy crude. These assets typically have higher production costs, but can generate significant revenues when oil prices rise.
In addition to oil price volatility, the company has an excellent track record of operational efficiency and cost management. It is constantly optimising its production processes to reduce costs and improve margins. With a strong balance sheet and liquidity, this energy stock is well-positioned to capitalise on market opportunities arising from rising oil prices.
The stock jumped 2.3% intraday immediately after the escalation of geopolitical conflict in the Middle East, but the price-to-earnings ratio remains in a reasonable range of 14.3x. Coupled with a 4.2 per cent dividend yield, presenting a good opportunity to buy.
