Canada's oil and gas sector outlook 'down, but not out', NBC says

Enerplus

11/01/2023 08:58

** National Bank of Canada is optimistic on the country's
oil and gas industry outlook despite "a weak finish" to 2022,
and expects macro tailwinds to mitigate potential concerns
    ** "2022 was unequivocally another solid year for the energy
sector as it earned the top-performing sector within the S&P/TSX
Composite index for the second consecutive year," NBC says
    ** The brokerage says equities have shown resiliency and
sees further upside in the energy sector, considering current
valuations and potential higher cash returns
    ** NBC forecasts cumulative 2023 capex of around $33 billion
across its coverage to support total average production of about
6.3 million barrels of oil equivalent per day
    ** "2023 outlook: down, but not out," the brokerage says,
with "cash returns poised to rise" as many companies are quickly
approaching their net debt/leverage targets
    ** "We expect inventory-driven M&A to gain momentum, driven
by the need for operators to pad drilling inventory after
multiple years of underinvestment and a lack of transacting"
-NBC
    ** For gas, NBC's top picks are Advantage Energy  AAV.TO ,
ARC Resources  ARX.TO , Birchcliff Energy  BIR.TO  and
Tourmaline Oil  TOU.TO 
    ** For oil, it prefers Cenovus Energy  CVE.TO , Enerplus
 ERF.TO , Headwater Exploration  HWX.TO , Tamarack Valey Energy
 TVE.TO  and Whitecap Resources  WCP.TO 
 (Reporting by Juliette Portala)
 ((juliette.portala@tr.com))