Last year’s high energy prices left many companies flush with cash. With energy prices down these companies are taking advantage of the market and looking to merge and acquire companies and assets for the long term.
Energy companies look at 40 years in their planning. And I think it is safe to say that there will certainly be a few bull markets in that time. According to a recent report from Canaccord Adams;
We believe that major oil companies look beyond the short-term environment, particularly for assets, such as oil sands that have a 40+ year reserve life. There will most likely be several bull market cycles for energy over that time period.
The experience to date with shale gas is that they come into production high see some immediate decline and produce at a fairly steady pace for 25-35 years. With the recent changes in Alberta’s royalty scheme, couple with the long term outlook for energy it gives good reason for exploration and development companies to focus on shale gas plays in northern British Columbia.
Activity in the Horn River is strong. Apache Corp, and Encana Corp. are drilling 20 wells each currently, and most other players in the region are active despite softer natural gas prices. Most players have a tight hole status on their operations waiting till April/May before results are announced. Given the results posted by Apache, Encana, and EOG of world class targets last year, expect to see headline grabbing announcements this year again. In terms of junior players some will post results, and may be good acquition targets.
This “quiet time” may be the right time to add some of these companies to your portfolio in anticipation of some potential announcements in the spring.
