Alberta announced on Sunday that it will cut oil production by 8.7% in 2019, which could pump up the Canadian oil stocks on our list
SmallCapPower | December 4, 2018: On Sunday, the Alberta government announced plans to restrict crude oil production by 8.7% next year in order to reduce the current oversupply of crude oil. The move should narrow the gap between the Western Canada Select and WTI Crude oil prices that were trading at a US$50/bbl discount earlier this year. Should market conditions change, the restriction on production can be removed once crude oil supply return to normal, which should be an effective short-term solution to the excess crude oil supply in Canada. Today, we have identified four Canadian oil stocks that are set to benefit most from a potential rebound in Canadian crude oil prices as a result of the new regulations. Note: All metrics reflect closing prices as at November 30, 2018.
Canadian Natural Resources Limited (TSX:CNQ) – $33.39
Oil & Gas
Canadian Natural Resources is an oil & gas producer with assets in North America, the U.K. North Sea, and offshore West Africa. The Company is the largest producer of natural gas in Western Canada, with five core drilling sites in British Columbia, Alberta, and Saskatchewan, producing 1,485 Mcf/d. Canadian Natural’s heavy oil production comes primarily from assets along the Alberta-Saskatchewan border, while assets in the North Sea and Offshore Africa yield light-crude oil. Currently, the Company has production guidance for 2018 forecasted at 1,073 – 1,152 Mboe/d.
- Market Cap: $40,260 million
- 1-Month Total Return: -13.1%
- YTD Total Return: -27.0%
- Average Daily Volume (3 month): 3.92 million
Cenovus Energy produces and markets crude oil and natural gas resources in Canada and the United States. The Company’s operations include oil sand projects in northern Alberta and natural gas and oil production in Alberta and British Columbia. Through a joint venture with Phillips 66, Cenovus has 50% ownership of two U.S. refineries: Wood River and Borger located in Roxana, Illinois and Borger, Texas, respectively. The Company has an expected production guidance of 481-509 Mboe/d for 2018.
- Market Cap: $12,065 million
- 1-Month Total Return: -16.8%
- YTD Total Return: -19.4%
- Average Daily Volume (3 month): 4.63 million
Paramount Resources Ltd. (TSX:POU) – $7.26
Oil & Gas
Paramount Resources is an energy company that operates in the exploration, production and marketing of crude oil, natural gas and natural gas liquids in Canada. The Company’s primary assets are in Alberta, British Columbia, Saskatchewan and the Northwest Territories. Paramount has an estimated production guidance of 88,000 – 92,000 Boe/d for 2018. In August 2018, the Company acquired a 13.1% interest in Claims Post Resources Inc (TSXV:CPS), “CPRI,” by purchasing ~41.4M common shares at a price of $0.10 per share. CPRI is a Canadian silica resource development and production company that is currently developing a Tier 1 frac sand deposit in Manitoba.
- Market Cap: $951.1 million
- 1-Month Total Return: -30.7%
- YTD Total Return: -63.6%
- Average Daily Volume (3 month): 0.37 million
Baytex Energy Corp. (TSX:BTE) – $2.46
Oil & Gas
Baytex Energy operates in Alberta and Texas, producing 51% of its oil from its Eagle Ford asset in Texas and the remainder from its Peace River and Lloydminster heavy oil fields. In August, the Company closed its agreement to merge with Raging River Exploration (TSX:RRX). The combined Company will have an enterprise value of approximately $5B and expected average annual production of between 100,000 – 105,000 boe/d. On November 2, 2018, the Company announced the competition of two light oil discovery wells in the Pembina area, with each well yielding an initial average 30-day production rate of ~750 boe/d.
- Market Cap: $1,362.9 million
- 1-Month Total Return: -15.2%
- YTD Total Return: -36.6%
- Average Daily Volume (3 month): 6.25 million
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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