5 Canadian Oil Stocks Trading at a Discount to Their Peers

The Canadian oil stocks on our list have industry-low EV/EBITDA multiples

SmallCapPower | March 21, 2018: Oil prices have rallied somewhat over the past week, with WTI crude increasing 5% to US$64, but the price remains 4% lower than its high of US$66 on January 24. OPEC, Russia, and other oil producers remain committed to their prior agreement to cut oil supply through 2018. The Canadian oil stocks on our list trade at industry-low forward EV/EBITDA multiples, trading at an average of 3.2x while their peers trade at 6.2x.

TransGlobe Energy Corp. (TSX:TGL) – $1.74
Oil & Gas Exploration and Production

TransGlobe Energy Corporation is an oil & gas exploration and production company, concentrated in Canada and Egypt. TGL’s Canadian assets are located in the Harmattan area in central Alberta, 80 kilometers north of Calgary. In Egypt, Transglobe has 100% working interests in six concessions, which comprise 1.07 million acres of land.

  • Market Cap: $125.4 Million
  • YTD Total Return: -8.4%
  • Enterprise Value To EBITDA LTM: 1.5x
  • Forward Enterprise Value to EBITDA FY2018: 1.7x

Journey Energy Inc. (TSX:JOY) – $1.68
Oil & Gas Exploration and Production

Journey Energy is a Canada-based oil & gas exploration and production company operating in Western Canada. The Company has drilled 40 horizontal wells and holds interests in 300 oil pools on its Central and South regions and is also conducting development drilling in its Resource Fairway.

  • Market Cap: $61.9 Million
  • YTD Total Return: -5.1%
  • Enterprise Value To EBITDA LTM: 6.1x
  • Forward Enterprise Value to EBITDA FY2018: 3.4x

Gear Energy Ltd. (TSX:GXE) – $0.69
Oil & Gas Exploration and Production

Gear Energy is an oil and natural gas producer with assets in Canada. The Company’s focus lies on exploration and production at properties in Alberta and Western Saskatchewan. Combined, Gears operations contribute an average production of ~7,300 boe/d (86% liquids).

  • Market Cap: $134.5 Million
  • YTD Total Return: -18.8%
  • Enterprise Value To EBITDA LTM: 4.1x
  • Forward Enterprise Value to EBITDA FY2018: 3.7x

Bonavista Energy Corp. (TSX:BNP) – $1.24
Oil & Gas Exploration and Production

Bonavista Energy Corporation is a Calgary-based oil & gas company. The Company’s West Central Core Area is characterized by natural gas and light oil resources. West Central Core Area is located within the Western Canadian Sedimentary Basin (WCSB) between Calgary and Drayton Valley, Alberta. Infrastructure in West Central Core Area includes over 2,800 kilometers of pipelines and approximately 40 facilities. The Deep Basin Core Area contains multiple vertically stacked oil and natural gas reservoirs.

  • Market Cap: $328.7 Million
  • YTD Total Return: -44.9%
  • Enterprise Value To EBITDA LTM: 3.8x
  • Forward Enterprise Value to EBITDA FY2018: 3.7x

Tamarack Valley Energy Ltd. (TSX:TVE) – $2.69
Oil & Gas Exploration and Production

Tamarack Valley Energy is a Canada-based oil and gas producer operating in Alberta. The Company’s flagship operation, the Viking project, is a heavy-oil field located east of Edmonton. In January 2018, TVE completed its acquisition of Spur Resources for $400M. Viking produces 9,990 boe/d, at a liquid weighting of 69%, with reserves of 900 Mboe. The Company drilled 85 wells at the site 2017, with an additional 90 planned for 2018.

  • Market Cap: $613.7 Million
  • YTD Total Return: -5.9%
  • Enterprise Value To EBITDA LTM: 5.2x
  • Forward Enterprise Value to EBITDA FY2018: 3.6x

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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