Roughnecks wrestle pipe on a True Company oil drilling rig outside Watford, North Dakota, in this file photo.Reuters
Globe editors have posted this research report with permission of Mackie Research Capital Corp. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:
After peaking at US$107/bbl in June 2014, the price of crude oil has collapsed, nearing a 12 year low. Not surprisingly, the TSX Oil & Gas index has lost ~56-per-cent of its value over the same time period. It's been a terrible start to 2016 with the price of oil falling ~15 per cent, driven down by jittery markets in China and elsewhere, while the oil market remains over supplied with resilient U.S. shale production, record OPEC production and the lifting of sanctions on Iran. With shifting supply and demand forecasts, it's difficult to predict when the oil market will balance, but eventually it will, as massive cuts to capital spending takes a toll on non-OPEC supply.
With an uncertain oil price outlook, we have decided to highlight three companies with limited exposure to weak oil prices. Madalena Energy Inc. ("MVN"), Canacol Energy Ltd. ("CNE") and Valeura Energy Inc. ("VLE") are all set for substantial production and cash flow growth in 2016, primarily funded with internally generated cash flow. Despite our positive outlook, these companies have not been immune to the market turmoil. We believe these companies will perform well in 2016 as they achieve production milestones and are exposed to a second lift once the E&P sector is back into favor again.
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