The companies will be expected to elaborate on the effect of TMX, which officially opened on May 1
In the second quarter, the differential narrowed to $13.55 per barrel, down 18 per cent compared to the average during the period between 2021 and 2023, Bank of Nova Scotia analyst Jason Bouvier said in a note on July 15.
Despite that, Meg Energy expects the differential to be within the $10-to-$15 range in the long term.
“The nice thing with the TMX online, the volatility that you have seen in the past, (we are) now protected from that, from an unconstrained egress perspective,” senior vice-president of marketing Erik Alson said on a conference call.
He said the TMX is defying initial doubts and has been performing “extremely well.” Half of Meg Energy’s barrels being transported to the pipeline are moving to the West Coast in the United States and the other half is going to eastern Asia, largely China.
“Between the assets that we have with TMX, the access to the Gulf Coast and the assets that we have there, the international reach has been great,” Alson said. “We continue to access new international customers and continue to grow the sales portfolio.”
MEG is one of the companies that Bouvier has picked to have the “most torque” or benefit from heavy oil prices. The others are Strathcona Resources Ltd., International Petroleum Corp. and Imperial. Overall, though, the analyst’s top picks among the large companies are Cenovus and Imperial.
“We continue to favour heavy oil producers given the positive egress outlook, coupled with heavy oil refining capacity additions outpacing supply growth,” he said. “Further, oilsands players benefit from currently weak natural gas prices.”
Bouvier said several companies have either reached their debt targets or are expected to do so in the next few months. That, coupled with higher oil prices, is expected to lead to robust share buybacks.
“We believe special dividends will also be on the table,” he said.
Similarly, CIBC has picked Arc Resources Ltd., Suncor and Cenovus as its “top ideas” among large companies.
Going into the quarter, a number of companies either reduced their workforce or temporarily curtailed production due to the wildfires in Alberta. After a record number of wildfires last year, there were talks about how oil companies have strengthened their capability to tackle these disasters, so investors will be curious to see if this has been put into practice.
MEGs chief executive Darlene Gates on Friday said the company’s mitigation strategy was working.
“To be frank, the fire was all around one of our disposal wells,” she said. “The fire breaks were extremely effective. The team managed it very well.”
But she said no one was “out of the woods” yet, and she expects the wildfires to remain a problem for a while.
“We are seeing the progress that the Alberta Forestry and Parks is making and I expect that we will continue to monitor these throughout the summer because of lightning strikes and those kinds of things that are just present in the world that we are in today,” Gates said.
The act of greenwashing occurs when companies provide false information regarding how environmentally sound their products are or when they deceive the public by making unsubstantiated claims about the steps they are taking to protect the environment or reduce their carbon emissions.
Pathways had said its decision to remove the content was not because it didn’t believe in what it was promoting, but because of the “significant uncertainty and risk” that the bill creates for all Canadian companies, regardless of the sector. The legislation will also “silence” Canadian businesses, it added.
Bank of Nova Scotia’s Bouvier expects additional policies to be introduced by the government in this area before year-end.