EOG Looks North - 3 Notable Beneficiaries
Leading oil company comments signal a broader Canadian M&A opportunity
EOG Resources is one of the largest U.S. oil and gas producers, with a $77 billion market capitalization and a large portfolio of assets across major U.S. shale basins and abroad. On its Q2 earnings call, EOG management suggested that Canadian oil & gas assets are becoming increasingly attractive acquisition opportunities.
EOG’s CEO highlighted Alberta’s Deep Basin and Duvernay and said that “there are a lot of Canadian juniors up there that have done a lot of work,” suggesting that both areas have become more attractive following years of additional development and delineation.
He added that EOG could potentially apply technologies they’ve developed in the U.S. to Canadian resources, and that the same type of resource “renaissance” EOG has seen elsewhere could extend into Alberta.
These comments highlight the increasing attractiveness of Canadian oil & gas, especially as U.S. shale inventory continues to deplete, and suggests that EOG is evaluating opportunities in Canada.
Dan Tsubouchi of Energy Tidbits, a widely followed Calgary-based industry analyst, publicly asked whether EOG might pursue a Canadian oil and gas acquisition and wrote that Yacob’s response “certainly makes that seem possible.”
One of North America’s best operators and biggest oil independents sees potential in Canadian resources - where junior producers have already spent years proving up the acreage. A large buyer could apply additional technology, capital, and operating scale to develop those assets more efficiently.
Meanwhile, many Canadian juniors still trade at steep discounts to their cash flows and reserve values. This presents a setup where an acquirer could pay shareholders a meaningful premium and still complete an accretive transaction.
In this article, I highlight three Canadian producers that I see as beneficiaries from increased acquisition activity by EOG or other companies looking to acquire Canadian assets.
Disclaimer: This is for informational and educational purposes only. This is not an offer, solicitation, or investment recommendation. Please consult an advisor and conduct your own diligence. Past performance may not repeat itself.
