The TSX oil and gas stocks we’ve identified have fallen following the Trans Mountain Pipeline court ruling
SmallCapPower | September 4, 2018: The Federal Court of Appeal, the second-highest court in Canada, has overturned federal approval of the Trans Mountain pipeline expansion. The court ruled the National Energy Board did not properly consult Indigenous people in its review of the pipeline expansion and unjustifiably removed project-related tanker traffic from project review. The Trudeau administration must either successfully appeal the ruling to the Supreme Court or redo its review if it chooses to proceed with construction. While we previously reviewed Canadian companies operating outside of Canada here, today we highlight five TSX oil and gas stocks that have seen declines following the ruling. They could drop further should the ruling be upheld.
Step Energy Services Ltd. (TSX:STEP) – $7.00
Oil Related Services and Equipment
Step Energy Services is an oilfield services company operating in Alberta and Texas. The Company’s coiled tubing segment operates 23 deep-capacity coil spreads, with integrated monitoring services. Its fracturing solutions segment currently deploys 490,000 HP, responsible for ~70% of the Company’s revenue.
- Market Cap: $468.9M
- 1 Week Total Return: -11.5%
- 3 Month Total Return: -40.7%
Yangarra Resources Ltd. (TSX:YGR) – $4.40
Oil & Gas Exploration and Production
Yangarra is a Canadian oil and gas company with operations in Western Canada. Its primary landholdings are in central Alberta, where it focuses on the resource-rich Cardium formation. As of FY 2017, Yangarra properties were measured to host 87.9M boe of Proven & Probable reserves. The breakeven price for current operations is $22.75/boe, including reserve replacement.
- Market Cap: $377.7M
- 1 Week Total Return: -7.8%
- 3 Month Total Return: -23.7%
PHX Energy Services Corp. (TSX:PHX) – $2.69
Oil & Gas Drilling
PHX Energy Services is a Canada-based oil and gas services company operating in Canada, the U.S., Albania, and Russia. The Company provides directional drilling and motor rentals, survey management, and stream services. PHX’s Canadian and U.S. divisions operated at a loss in 2017, and the Company aims to further expand its operations in East Siberia.
- Market Cap: $156.8M
- 1 Week Total Return: -6.9%
- 3 Month Total Return: 26.9%
Delphi Energy Corp. (TSX:DEE) – $0.70
Oil & Gas Exploration and Production
Delphi operates primarily in the southern edge of the Montney area in Alberta. The Company produced an average of 8,400 boe/d in 2017, with 10% of that production coming from non-Montney legacy assets. Delphi owns 169.5 gross sections, 147 of which are undeveloped. Its operating area hosts ~1.1 mmboe in reserves. The Company drilled 17 in-fill wells in 2017 and seven more in H1 2018. The Company aims to continue exploration and drilling, with 52 wells drilled at a 100% success rate. DEE is guided to have a 2018 exit production rate of 10,600 – 10,900 boe/d.
- Market Cap: $130.7M
- 1 Week Total Return: -6.7%
- 3 Month Total Return: -20.5%
Bonavista Energy Corp. (TSX:BNP) – $1.43
Oil & Gas Exploration and Production
Bonavista Energy 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. BNP’s assets produce 72,000 boe/d at 26% oil and liquids, and host reserves of 437.7 mmboe.
- Market Cap: $380.9M
- 1 Week Total Return: -6.5%
- 3 Month Total Return: -8.3%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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