How has Oil & Gas investment risk changed? Substantially. KYC suitability and 'high-risk' ratings are based on historical volatility bands. With debt metrics holding well below past levels still (esp. under lower WTI / NYMEX prices), we finally may see institutions allow for…

How popular are Oil & Gas stocks? We track how often a CDN Oil & Gas ticker gets typed in Bloomberg, relative to other TSX names. For contrarian investors, the sentiment (and search interest) is the lowest we’ve had on record (Oct '20). This explains the low valuations today and…

Overall, Oil & Gas loans make up only 1.7% of all wholesale lending now (and down 5% just a few years ago). Lower leverage is clearly a trend, which should ultimately give better flexibility with bank line redeterminations and business decisions #investing.

Less willingness to lend; or less need to borrow - Either way, there’s been a remarkable drop in debt used by Oil & Gas operators – down 53% since 1Q20. $xfn $xeg

Give credit where credit is due: Q2 CDN bank results show Oil & Gas loan impairments falling to the lowest level we have on record - from $2.5 bln to $180 mln or a drop of 93%. As a proxy for risk, the sector looks to be much healthier in eyes of lenders - a thread #energy #oott

Impaired Oil & Gas loans make up only 0.8% of total Oil & Gas loans (which is similar to all other types of business loans at 0.5%). Overall, this lower ‘risk’ should ultimately give comfort to equity investors (and also reduce higher interest rates & fees paid by energy names)

Energy has slipped to 4.3% of the S&P500 (from 5.4% in Oct). The move is not necessarily energy specific as nearly all sectors lost market share to Tech. Nevertheless, we find more inst. investors are putting Oil & Gas on the radar and the recent retreat might allow some catch-up

Although bond fund buying in Canada continues to be positive YTD, traction has started to slip with April net purchasing at $1.7 bln. Hopefully this is a signal that risk is coming back to the market (and interest rates have peaked) – and rotation back to equities is near-term

Mutual Fund redemption concerns are still likely influencing PMs’ decision-making choices and this is likely keeping their focus/interest on larger, more liquid names. Ultimately, smaller Oil & Gas companies may not be seeing the attention they otherwise should see #investing

What's leading to Oil & Gas volatility? A considerable part could be Portfolio Managers being forced to liquidate their energy investments as they continue to face unprecedented net mutual fund redemptions (at -$6.3 bln for Apr 2023) - a thread $XEG #montney

Part of the LT labour force challenge is a younger generation that is seemingly avoiding Oil & Gas while an older generation makes up a higher portion. With in-the-money stock options finally vesting after 3-yrs (standard length), we would expect more retirements to come in 2023

We saw a slight uptick in the E&P labour force however the trend is clearly lower and now down 7% from 2021 highs (at 103k today vs. 111k in March 2021). Finding qualified geologists / engineers is becoming increasingly challenging and why capex spending is likely still capped

Help Wanted! A sector’s labor market can serve as an indication of profitability and CDN Oil & Gas continues to see low unemployment at 3.1%. Although a slight uptick from 1.6% (in '22), this better balance should alleviate some G&A cost pressure - a thread #oott #yyc #yeg

Much of the Oil & Gas buying over the last few quarters has actually come from U.S. and international based funds (and not from Canada). With the TSX Composite weighted ~20% to energy, there seems to be a catch-up trade coming/needed for CDN based investors as the year progresses

Large AUM funds (Assets Under Mgmt) continue to chip away at buying CDN Oil & Gas. We suspect the volatility in share prices has come from smaller AUM funds (hedge funds) but if WTI / NYMEX prices show strength again, watch for these funds to come back, along w/ large AUM funds

High Turnover Funds have dominated buying of CDN Oil & Gas since 2019. But since 2Q22, Low Turnover Funds have been responsible for nearly all net buying now (and even more so in 1Q23). This should help provide stability w/ share prices if commodity prices remain volatile #oott

Generalist style funds (i.e., CDN energy is fewer than 5% of AUM), continue to show interest in the sector, especially since 2Q22. Although volatile commodity prices have likely forced some Oil & Gas focused funds to trim positions, generalists seem unfazed, and continue buying

With the latest 13F/AMR institutional ownership filings, we looked at every fund that has owned at least one CDN Oil & Gas company - to see what they were buying In Q1, we saw net selling of $0.2 bln but there is a new style of fund suddenly buying – a thread #oott #investing

Value style funds were the big buyers of Oil & Gas in Q1. This group has generally missed the last few years but has finally come back. The number of meetings we've had with 'Value' style inst. investors also suggests they are still buying today w/ share prices still attractive

For context and the potential for oil production outages, this is the Alberta forest fire risk today (vs. May 2016 when the Fort McMurray wildfires had occurred). Back then, upwards of 1 mln bbls/d of oil supply was shut-in) #ableg #ABWildfires

Although no major infrastructure was impacted with the Fort McMurray forest fires in May 2016, crude exports from Alberta declined by a peak of 1 mln b/d with June average volumes down 14% or 0.5 mln b/d (vs Q1) for precautionary measures. Production had mostly rebounded by Aug

CDN Heavy Oil Differentials (WCS) continue to narrow – now at $12.80/bbl (vs $15/bbl avg). Alberta forest fires (and production outage concerns) are contributing to higher pricing. 2nd chart shows oil outage from the 2016 F. McMurray fires, with a peak cut at 1 mln bbls/d #OOTT

The EIA came out with their Short Term Energy Outlook. These are the largest revisions in key data points impacting oil markets today. Although many of the adjustments are small, it shows the directional bias the EIA sees with its forecast models - a thread #oott #oilandgas #WTI

Some pretty drastic videos of facilities depressurizing with all the Alberta forest fires on social media. Although some share prices are lagging from temporary production shut-ins, the impact should be immaterial in the context of an asset base that will produce for the next 20+…

A pretty astonishing Sask Crown Land sale w/ a ‘Frobisher’ section selling for ~$2.6 mln! This is one of the highest prices paid in recent memory with likely someone coming across a new highly productive pool. With other recent industry Frobisher wells reaching 400+ bbls/d…