“Investors can acquire great assets in Canada now,” said Dave Haugen, manager of Ryder Scott Canada
Quarterly deal activity in Canada during the first two months was “range-bound” by oil prices, and then in March, A&D took off. Deals included two large oil-sands-weighted transactions of more than $30 billion, six conventional deals valued at more than $20 million and a royalty transaction for $723 million, said BMO Capital Markets in its April A&D Market Monitor newsletter.
Several of the following factors are working together to create a buyer’s market:
- A weaker Canadian dollar and financial pressures are forcing Canadian companies to move quality assets now.
- Sellers are becoming more realistic and coming to the table more often because of pressure on leveraged balance sheets.
- Asking prices are dropping as financial pressure continues and hedges fall off.
- Supply, service, land and employee costs have fallen significantly.
- High-quality local personnel are available to support operations.
- Provincial oil and gas regulators have extensive data on Canadian oil and gas activities. In addition, Canada has one of the most advanced regulatory systems worldwide for oil and gas disclosures under National Instrument 51-101. Potential buyers can review drilling, geological, fracing and completions data, production histories and much more information to analyze.
- Regulators also are moving to play-based development approvals that shorten the cycle time for licensing. Dozens of licenses for wells, water, etc. can be issued under one approval.
Some market obstacles remain. See those in the full article in Reservoir Solutions newsletter article here.
Haugen can be reached on email at firstname.lastname@example.org or at his phone number, +1-403-262-2799, ext. 1025.