March 10th, 2020 | 11:40 CET
Baytex Energy, Husky Energy, Saturn Oil & Gas - why Canadian oil now?
The oil industry around the globe had an unexpected start to the week, marked by a collapse in the price of oil. Last Friday, WTI was still trading at over USD 41.00 per barrel and at the start of the week the price fell briefly to below USD 28.00 per barrel. This was preceded by the announcement that Saudi Arabia will increase its production volume because Russia will not participate in a joint cutback. The defiant reaction of Saudi Arabia sent the oil price and the stock markets around the globe into a downward spiral.
time to read: 2 minutes
|
Author:
Mario Hose
ISIN:
CA80412L1076 , CA07317Q1054 , CA4480551031
Table of contents:
"[...] The Oxbow Asset now delivers a substantial free cash flow stream to internally fund our impactful drilling and workover programs. [...]" John Jeffrey, CEO, Saturn Oil + Gas Inc.
Author
Mario Hose
Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.
Tag cloud
Shares cloud
World economy as a plaything
There is much room for speculation about the motives and reasons why Russia and Saudi Arabia have not come up with a common ground to curb the amount of oil. The reason for the talks was the decline in demand for oil in connection with the Corona crisis. One possible common reason was that they wanted to slow down the USA, now the largest oil producer. A large part of US production is obtained through cost-intensive fracking, and a low oil price makes the development of new fields uneconomic.
OPEC and Russia miss profits
However, this type of predatory pricing is not cheap. After all, the OPEC countries hold around 80% of global reserves. Since 1960, the population of these countries has risen from less than 100 million people to over 500 million. In countries with a diversified economy, the price of oil plays a more subordinate role than in the producing countries, which are still dependent on the price of 'black gold'.
In 2018, the USA produced around 11.0 million barrels of oil per day. Russia produced around 10.5 million barrels per day in the same period and Saudi Arabia around 10.3 million barrels per day. Of these three countries the economy of the USA is the most broadly based and therefore Russia and Saudi Arabia are currently hurting themselves and the OPEC countries substantially with the lost profit.
Hedging protects the oil market
On the Canadian stock markets, oil producers came under enormous pressure. The market value of Baytex Energy collapsed by 40% to CAD 353 million and Husky Energy fell by over 30% to CAD 3.5 billion. The value of Saturn Oil & Gas declined by 21.7% to CAD 21 million - an amount that is probably not far from the total revenue in 2019. Given that oil producers usually hedge their future production volumes in connection with credit financing at an already agreed price, the price collapse on Monday will hardly be felt in the short term. For investors who assume that the low oil price will only be temporary, the price declines are an excellent entry opportunity.
Importance of the producing countries will increase
In view of the fact that Canada is in a much better position than most OPEC countries when it comes to protecting human rights and the environment, it will only be a matter of time before one or the other oil-producing country is frowned upon by society. Then also the import of OPEC oil to Canada for the mentioned reasons should find an end. Anyone who wants to position themselves in the oil sector with shares will find attractive opportunities in Canada under ethical and moral aspects in the current environment.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.
Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.
Risk notice
Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and etc. on news.financial. These contents serve information for readers and does not constitute a call to action or recommendations, neither explicitly nor implicitly. implicitly, they are to be understood as an assurance of possible price be understood. The contents do not replace individual professional investment advice and do not constitute an offer to sell the share(s) offer to sell the share(s) or other financial instrument(s) in question, nor is it an nor an invitation to buy or sell such.
The content is expressly not a financial analysis, but rather financial analysis, but rather journalistic or advertising texts. Readers or users who make investment decisions or carry out transactions on the basis decisions or transactions on the basis of the information provided here act completely at their own risk. There is no contractual relationship between between Apaton Finance GmbH and its readers or the users of its offers. users of its offers, as our information only refers to the company and not to the company, but not to the investment decision of the reader or user. or user.
The acquisition of financial instruments entails high risks that can lead to the total loss of the capital invested. The information published by Apaton Finance GmbH and its authors are based on careful research on careful research, nevertheless no liability for financial losses financial losses or a content guarantee for topicality, correctness, adequacy and completeness of the contents offered here. contents offered here. Please also note our Terms of use.
