Insight
Upstream Canada valuations: will they ever recover?
Report summary
Canadian oil and gas companies have traded lower and lower. US companies see similar trends but the rationale is quite different. US companies are facing operational issues while Canadian firms have faced continued market pricing and pipeline issues. We compare share price performance for companies active in Canadian plays versus commodity prices and US peers. Our valuations are higher than market values. Eight companies are trading below our value for proved developed producing assets. We discuss why this is and dig into some other metrics to highlight how low market valuations have dropped to. We tackle the contributing factors like pipelines and the lack of regional deals.
Table of contents
- Executive summary
- Contrasting our valuation outputs to market
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Four key valuation criteria
- 1. Pipeline, pipeline, rail - regional market access issues still waiting for relief
- 2. Deal flow needs a jump start
- 3. Pitching to new types of investors
- 4. Global investor oil and gas sentiment
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Comparing share price performance – misery seeks company
- Big versus small
- Diversified versus pure play
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Reasons for optimism
- Avoiding the operating hiccups of the Permian
- Environment Social and Governance – making the case for Canadian exceptionalism
- Economic assumptions
Tables and charts
This report includes 5 images and tables including:
- Enterprise values are at a steep discount to Woodmac valuations
- Commodity and share price changes over two periods
- Appendix table
- Deal flow and consideration amounts highlight the drop in foreign acquisitions
- A higher liquids production weighting is not rewarded with a premium
What's included
This report contains:
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