ATB Capital Markets 2022 Fall Energy Conference

Conference Highlights

Patrick J. O'Rourke, CFA 

Canada's Advantage in Global Energy Security

On September 20, ATB Capital Markets held its annual Fall Canadian Energy Conference, returning to New York City for in-person presentations for the first time since 2019. The conference included panels and discussions on our headline conference theme of ‘Canada’s Advantage in Global Energy Security’ and included 12 corporate presenters, as well as Alberta’s Minister of Energy, Hon. Sonya Savage, MLA, and the President of the Explorers and Producers Association of Canada (EPAC), Tristan Goodman, who spoke to a large gathering of institutional capital providers. 

Thoughts from the Buy Side
Many of the questions and mind share we heard from the buy side revolved around the theme of “what’s next?”. With most business models on strong financial footing and well down the path to communicating near-term FCF allocation strategies, investors were generally trying to understand where companies go from here strategically, with the obvious choices being further returns of capital, the potential for incremental growth, and self-financed acquisitive activity. On the back of these questions and recent commodity volatility, questions with regards to forward looking hedging strategies were also prevalent. Ultimately, given the robust turnout (well exceeding our 2019 event), we continue to believe that investor interest in the sector remains high and that sentiment is generally still positive with respect to the outlook.  

Corporate Messaging
While most companies conveyed clear and consistent messaging with respect to the near-term outlook for limited growth (with some exceptions where near-term growth aspirations are well understood) and a focus on FCF generation and return of capital to shareholders, in our view, several business models also showcased their depth of inventory and asset quality and the optionality to accelerate growth should investor sentiment shift towards growth in the future. In other words, when key upcoming egress expansions in TMX and LNG Canada come calling, these companies are ready and willing to fill them in a manner that creates value for shareholders.  

Lunch Panel Learnings
Our lunch panel focused on the regulatory environment and competitive positioning of the Canadian upstream industry. It was noted during the panel discussion that investment in Canada rose in 2022, and Alberta should have a record 4.2 mmbbl/d of production this year. Future egress expansions remain an issue, but both TMX and LNG Canada remain on track (noted in the range of 60%-70% complete). TMX should be ready by 2H/23 and will raise Alberta’s export capacity by nearly 600 mbbl/d, and we anticipate that LNG Canada and the Coastal Gas Link pipeline supporting it will begin to take gas in late 2H/24, adding an incremental 2.1 bcf/d of capacity. Additionally, the panel highlighted a strong commitment to the current Alberta royalty regime and consistent regulatory framework. Finally, the panel highlighted the recent resumption of well permitting in BC (as we have been highlighting recently based on public filings), with one panelist suggesting that Treaty 8 signatories and the BC Government could be reaching an agreement shortly that further accelerates the permitting and land disturbance request process.

Patrick J. O'Rourke, CFA 403-539-8615

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