The Canadian oil and gas stocks on our list have market capitalization/NAV values trending under their current stock price
SmallCapPower | August 21, 2018: Today we have identified four Canadian oil and gas stocks with significantly high NAV that may currently be undervalued. For investors, comparing Market Capitalization to NAV is a useful way to identify undervalued/overvalued stocks. For reference, Net Asset Value (NAV) is a company’s assets minus liabilities and is generally close to, or equal to, the book value of a business. In the Oil & Gas industry, NAV can be used to analyze a company’s future cash flows, individual business segments, and working cost of capital.
Baytex Energy Corp. (TSX:BTE) – $3.64
Oil & Gas Exploration and Production
Baytex Energy is a Canada-based oil producer operating in Alberta and Texas, producing 51% of its oil from its Eagle Ford asset in Texas and the remainder from its Peace River and Lloydminister heavy oil fields. On August 09, 2018, the Company announced that two external advisors (ISS and Glenn Lewis) advised shareholders to vote in favour of a merger between Baytex Energy and Raging River Exploration (TSX:RRX). The combined company will have an enterprise value of approximately $5B and will continue to operate under the Baytex name. Following the merger, average annual production is expected to range between 100,000 – 105,000 boe/d.
- Market Cap: $867.4 Million
- Net Asset Value – (CAD): 1,917,688,000
- Market Cap/NAV: $0.45
- 1 Month Total Return: -15.0%
- YTD Total Return: -3.4%
Obsidian Energy Ltd. (TSX:OBE) – $1.30
Oil & Gas Exploration and Production
Obsidian Energy is a Canada-based oil producer operating in Alberta. The Company operates ~1600 sections over four areas and is producing 30,000 boe/d. On August 2, 2018 the Company announced approval for a $50M investment in the Cardium Waterflood Platform, an investment that is expected to add meaningful light oil volumes of 18,400 boe/day and netbacks of $27/boe leading to an uptick in cash flows.
- Market Cap: $654.6 Million
- Net Asset Value – (CAD): 2,009,000,000
- Market Cap/NAV: $0.33
- 1 Month Total Return: -6.5%
- YTD Total Return: -16.7%
Pengrowth Energy Corp. (TSX:PGF) – $0.90
Oil & Gas Exploration and Production
Pengrowth Energy is an Alberta-based oil producer focused on growing its Lindbergh thermal oil property. The Company’s 2018 guidance indicates average daily production of 23k-24k boe per day. The Company’s properties host proven and probable reserves of 249M bbl. Its FCF growth in 2019 is expected to be 7.3%.
- Market Cap: $500.5 Million
- Net Asset Value – (CAD): 753,000,000
- Market Cap/NAV: $0.66
- 1 Month Total Return: -13.5%
- YTD Total Return: -10.0%
Athabasca Oil Corp. (TSX:ATH) – $1.50
Oil & Gas Exploration and Production
Athabasca Oil is a Canada-based light and thermal oil producer operating in Alberta. The Company aims to maintain its Montney light oil asset and expand its Duvernay light oil asset through a joint-venture with Murphy Oil (NYSE:MUR). The Company also plans to maintain its Leismer thermal oil production platform, as well as ramp up production at its Hangingstone asset. In total, the Company produces ~40,000 boe/d at 90% oil and liquids, with ~1,250 mmboe in reserves.
- Market Cap: $773.7 Million
- Net Asset Value – (CAD): 1,418,587,000
- Price/NAV – $0.55
- 1 Month Total Return: -13.8%
- YTD Total Return: 40.2%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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