For years the Canadian oilsands have been in competition with the shale boom in the United States and now in early 2021 there is a positive outlook from financial experts and Wall Street analysts on higher investment in the Canadian oilsands.
Canadian producers are emerging from the downturn stronger, with greater ability to generate free cash flow
Benny Wong and Adam J Gray – Morgan Stanley
Analysts from Morgan Stanley to Goldman Sachs Group Inc. have seen more interest in the free cash flow and low investment structure of Canadian oilsands verus the shorter life span of shale wells.
Since the historic market crash in 2020 we’ve been seeing much more interest in the Canadian oilsands projects. Morgan Stanley analysts Benny Wong and Adam j Gray said in a note that “With improved cost structures and increased propensity to be capital disciplined, Canadian producers are emerging from the downturn stronger, with greater ability to generate free cash flow,” which is positive news for the Canadian market in general.
The new pipelines currently under construction gives Canadian producers the added capacity they have so desperately needed in order to take their product to the worldwide markets and leads as another market positive for the industry heading into 2021.
We saw more free cash flow coming out of oilsands producers then we did for U.S. exploration and production companies in the third quarter of 2020. According to data compiled by Bloomberg, from the 8 largest oilsands producers we saw a combined free cash flow of US$1.4 billion compared to US$163.7 million from the 8 largest U.S. shale-based producers.
It is forecasted that we will see a “well supported” industry in regards to Canadian oil and oilsands producers going forward in 2021 according to Adam Waterous; who is the Chief Executive Officer of Calgary-based private equity firm WEF GP.
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