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Is there a price mismatch in the Canadian Energy Patch?


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WTI bottomed out at $48 in Feb 2009 & $30 in Jan 2016.


While WTI has "stabilized" at 20% above 2009 lows, the Canadian oil patch has many companies trading well below Feb 2009 lows : CPG (60% below Feb 2009), ECA (40% below), BTE (70% below), TDG (30% below), OBE (85% below), CVE (60% below).


Why are these companies not tracking WTI price? Does the market believe these companies are not sustainable at $59 WTI?

The "large caps" in the Canadian energy patch - SU and CNQ have doubled from their 2009 lows as one would expect. Why have the smaller companies not only lagged in appreciation but have actually lost market cap since 2009?


Factors such as WTI price, environmental regulation, negative press associated with carbon producers and fossil fuel should be affecting all oil and gas companies somewhat equally. However, there appears to be a disconnect.


Are these companies a value trap or unjustified market mismatch suggesting buying opportunities?

Thanks for your thoughts,



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The gas price (AECO) is obviously awful too which impacts some but not all companies. The differentials between WTI/WCS usually ebb back and forth so eventually they will come in again.


I think the interest is well timed as 12/27 was the last day for tax loss selling for Canadians.


I own PPR, ATU, IPO, CPG, and GXE. All oil weighted and trading well below peers on valuation. PPR is the most interesting if you like event driven optionality as they have some Quebec assets that may become suddenly very valuable (regulation changes) and a lawsuit with the Canadian government (arbitration hearings completed in Nov) that should be resolved in 2018. All of that upside is for free as the current producing assets  and reserves exceed the value of the current EV. Goldman Sachs owns over 50% of it as well so I think once the Quebec catalysts play out, they will sell the company.

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If you look at 5 year crude price, the Jan '16 low was not as bad as $30, and the bounce off that is not quite as dramatic either. 


Besides that, the big thing that happened on the fundamental side of the business is the cancellation of a couple of big gas takeaway expansion projects vs. the completion of some of the Marcellus takeaway projects.

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Its taking time to work out. 


I have a huge position in WCP.  I kept buying right through tax loss selling season, amd it was tax loss selling.  The stock in early 2017 was above $11.00 and will be way above that soon.  Should oil remain at this price, or rise, eventually these stocks will be like rocket fuel. 


The companies will raise their dividends or pay special dividends, if they have concerns about price sustainability. 



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