Canadian oil and gas companies have experienced their fair share of hard times over the past half decade, starting with natural-gas prices dropping from depressed levels to ultra-depressed levels.
At one point in summer 2012, natural gas at the AECO hub in Alberta plunged below US$1 per million British thermal units—a price point where only handful of tiny producers could make money.
In this environment, high-cost developments quickly became uneconomic, forcing producers to take their medicine and shut in wells. Meanwhile, the battle-hardened survivors can hold their own in the lean times and thrive when the supply-demand balance turns in their favor.
Investors can buy these stocks with confidence when the market turns against them and collect a steady dividend while they wait for a potential upswing.
Canada’s liquids-focused producers have endured similar hardships, with the price of Western Canada Select (WCS) crude oil trading at discounts to West Texas Intermediate as wide as US$40 per barrel.
Temporary refinery outages contributed to these blowouts, but insufficient takeaway capacity is at the heart of this persistent weakness; production has overwhelmed existing pipelines to transport volumes to the US.
Whereas US producers generally have enjoyed elevated oil prices in recent years, their counterparts in Alberta have weathered severe downdrafts in WCS to as low as US$40 per barrel.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Dec. 21, 2017
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.