Bargain prices for oil and gas companies as they strike a bonus bin

It was a severe week for a Canadian oilpatch, to contend a least, with a Keystone tube shutting down after a leak, Encana determining to turn American, and a new drilling foresee for 2020 that is woeful at best.

To top things off, Pengrowth Energy announced a tentative sale. 

The Calgary-based association was a homegrown success story and was once value billions of dollars. Its share cost was some-more than $13 in 2011.

On Friday, Cona Resources pronounced it would buy Pengrowth in a understanding that would value any share as value a nickel.

That’s even reduce than a 20 cents they were value progressing in a week.

Essentially, a square of leftover Halloween candy is value some-more than a share in Pengrowth.

Facing few options

The association spent most of this year perplexing to find a approach to survive. Still, a due sale cost is startling.

“It’s good to see them get something done, though a small astounded a offer is extremely reduction than what a shares were trade [the day before],” said Tom Pavic with Sayer Energy Advisors, a Calgary-based mergers and acquisitions consulting firm.

“You don’t routinely see open companies get sole during a bonus to a trade price, though it’s only a pointer of a times,” he said.

The times are utterly murky in a oilpatch. 

There are 50,000 fewer people operative in oil and gas than there were 5 years ago, before a cost crash, according to CIBC.

On Thursday, oil and gas writer Encana announced itself an American association in hopes of attracting some-more investment.

It’s not only Encana making an residence change to a U.S. Many companies are moving drilling rigs, equipment, and crews south of a border. Investment has dusty adult in Canada, while income is still being spent in Texas and other southern states.

Oil and gas producers in Western Canada are left perplexing to cut costs as most as possible. For those carrying complicated debt, a weight is mostly too most to bear.

Pengrowth due too most money. After oil prices crashed, a hole was too low to emerge from.

“Companies don’t have anywhere else to go though fundamentally say, ‘We’re adult for sale,’ or sell assets,” pronounced Pavic. “There’s only no collateral entrance into a industry. It’s a genuine buyer’s marketplace out there.”

Significantly symbolic

The Encana preference was symbolic. The association pronounced no jobs or spending skeleton would be impacted by a residence change.

The Pengrowth understanding is rather similar, nonetheless intensity staff changes are unknown. It’s also a pointy tumble for a association that once held the naming rights to a Saddledome in downtown Calgary.

Cona Resources became meddlesome as Pengrowth’s value dropped.

“I positively consider that’s a case,” pronounced Rob Morgan, a arch executive of Cona Resources, in an interview. 

“We consider Pengrowth has some unequivocally plain resources that fit within a portfolio.”

Morgan wouldn’t plead any intensity changes during Pengrowth.

The understanding would double a distance of Cona Resources, that is formed in Calgary and has operations in Saskatchewan.

While Encana pronounced a preference was not politically motivated, Pengrowth was different.

Management was in apocalyptic need for financing, though given of “lacklustre oil pricing and increasing domestic and regulatory uncertainty,” it was too difficult, according to a matter by Pengrowth chief executive Pete Sametz.

Looking for a buyer

Other oilpatch companies face a murky destiny and are weighing their options.

In September, Obsidian Energy began a possess “strategic alternatives process” that might outcome in a sale, merger, or other development. Its shares were offered for reduction than a loonie for most of October. Five years ago, they were value some-more than $20.

In October, Bellatrix Exploration entered creditor insurance and is still looking for a buyer.

In total, a volume of Canadian oil and healthy gas resources accessible now for sale is $3.7 billion, that is double a value of what was for sale during a same time final year, according to a new news by Pavic.

They can be bought for cheap, generally given there are few reasons to be confident in a oil patch, during slightest in a brief term.

Drilling activity is approaching to dump in all 4 Western Canadian provinces subsequent year. Job waste continue to occur, even during incomparable companies like Husky Energy. There won’t be any new oil trade tube projects in a subsequent 12 months and potentially longer.

The latter indicate seems to be a biggest plea for a sector, recoil once some-more pipelines are built, there is a faith some-more investment, spending and jobs will start to come back.

“It is going to be tough for a industry,” pronounced Alan Fogwill, boss of a Canadian Energy Research Institute.

“It unequivocally is all about marketplace access.”

Article source: https://www.cbc.ca/news/business/pengrowth-cona-oilpatch-calgary-1.5344643?cmp=rss