Are you looking for a stock?
Try one of these
While Ottawa mulls over whether it should approve the Chinese state-backed CNOOC's $15.1-billion takeover of Calgary-based Nexen, analysts at CIBC say oil patch joint ventures and foreign takeovers will accelerate in the coming years.
"We believe Canada will be in critical need of foreign capital for at least the next four to five years," the analysts write in a report to clients. "As such, we believe the net economic benefit to Canada from foreign investment will be clear to industry and regulators, and we expect foreign interests will continue to be made very welcome in Canada (by necessity)."
The analysts add that the "magnitude, economics and security of supply" of Canada's energy resource will be "sufficiently" compelling to attract interest from foreign investors.
Those international investors will include national oil companies, sovereign wealth funds, international giants, private equity firms and pension funds.
But they say outright takeovers will be put on hold in favour of joint ventures until Ottawa makes its decision on the CNOOC-Nexen takeover, which is expected by the end of the year.
As for who will get taken out, CIBC expects companies operating in or near the Montney and the Duvernay shale gas plays in British Columbia and Alberta to be the busiest deal-makers in the next year.
"Companies most likely to execute on JVs in the near future include Athabasca on its Hangingstone and Birch oil sands properties or on its Duvernay lands, Encana on its Duvernay lands, and Talisman on its Duvernay or Montney exposure," the analysts write. "Note that while we do not think joint ventures involving large players will necessarily trigger re-ratings, we believe that the Athabasca and Talisman potential deals are material enough to be positive catalysts for their share prices."
They say other companies such as Bonavista, Penn West and Enerplus could also sign joint venture deals.
The analysts say that when the political uncertainty surrounding takeovers in the oil sands clears and activity picks up, premiums paid to Canadian producers will be "rare" and reserved for companies with quality assets, strong management teams and resource magnitude.
"We believe Painted Pony and Celtic deserve to be highlighted as operators that fit these criteria," the analysts write.
The analysts conclude that the days of premiums being offered for junior energy companies are likely over.
"In our opinion, the majority of junior producers can no longer rely upon a corporate acquisition as a viable exit strategy, and must be prepared to grow either organically or via acquisition to the size of an intermediate producer (at which point a dividend can be considered)," the analysts write.