{"id":54966,"date":"2020-09-10T07:59:32","date_gmt":"2020-09-10T12:59:32","guid":{"rendered":"https:\/\/olduvai.ca\/?p=54966"},"modified":"2020-09-10T07:59:32","modified_gmt":"2020-09-10T12:59:32","slug":"private-equity-is-bargain-hunting-in-canadas-oil-patch","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=54966","title":{"rendered":"Private Equity Is Bargain Hunting In Canada\u2019s Oil Patch"},"content":{"rendered":"

Private Equity Is Bargain Hunting In Canada\u2019s Oil Patch<\/a><\/h3>\n
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After two months of an encouraging\u2014if not half-hearted–rebound, oil prices have gone into reverse gear once again. Futures tied to WTI crude were down a whopping 8% on Monday morning to trade at $36.35\/barrel, a level they last touched two months ago as the markets come under a fresh wave of pressure from a stalling recovery in demand as well as a\u00a0mistimed expansion of production by OPEC<\/a>\u00a0that threatens to reverse the gains by the cartel\u2019s latest production cuts.\u00a0\u00a0The latest rout has elicited another round of\u00a0price cuts by Saudi Arabia<\/a>\u00a0in a situation eerily reminiscent of the oil price war that sent the markets crashing into negative territory for the first time ever.<\/p>\n

But as the debt-riddled U.S. shale patch braces for a new reality of \u2018Lower Forever\u2019 with\u00a0massive asset writeoffs<\/a>\u00a0amid a growing wave of bankruptcies, its equally distressed neighbor further north has resorted to a different trick: Mergers and Acquisitions.<\/p>\n

Starved of vital capital by weary banks and shareholders, small- and mid-sized oil and gas companies in Canada are scrambling to find partners in a bid to become bigger and– hopefully–more solvent.<\/p>\n

Meanwhile, bargain-hunting private equity firms have pounced on the opportunity, hoping to buy distressed assets for pennies on the dollar.<\/p>\n

WTI Oil Price 30-Days Change<\/strong><\/p>\n

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Source: Business Insider<\/p>\n<\/picture>\"\"<\/a><\/p>\n

Source: Visual Capitalist<\/em><\/p>\n

Orphaned Businesses<\/strong><\/p>\n

After years of continuous underperformance and paltry returns following a six-year downturn by the sector, cheap credit for Canada\u2019s oil and gas companies has dried up, forcing them to look for less conventional means to survive.<\/p>\n

The Covid-19 crisis has only served to worsen the situation, with the\u00a0S&P\/TSX Capped Energy<\/strong>–Canada\u2019s equivalent of the U.S.\u2019\u00a0Energy Select Sector SPDR Fund\u00a0<\/strong>(XLE)–down 46.8% in the year-to-date vs. -41.9% return by XLE.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Private Equity Is Bargain Hunting In Canada\u2019s Oil Patch After two months of an encouraging\u2014if not half-hearted–rebound, oil prices have gone into reverse gear once again. Futures tied to WTI crude were down a whopping 8% on Monday morning to trade at $36.35\/barrel, a level they last touched two months ago as the markets come […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[23185,103,6755,592,595,5332,6041],"class_list":["post-54966","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-alex-kimani","tag-canada","tag-canadian-oil-patch","tag-oil-price","tag-oil-production","tag-oilprice-com","tag-private-equity"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54966","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=54966"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54966\/revisions"}],"predecessor-version":[{"id":54967,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54966\/revisions\/54967"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=54966"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=54966"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=54966"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}