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What are we looking for?

Opportunistic natural gas majors with momentum in reducing emissions.

The screen

The ultimate plan for the Coastal GasLink pipeline was to transport Canadian natural gas to an export terminal on the West Coast, from where it could be shipped to the fast-growing markets of Asia and beyond. The economic growth in that region, as well as a shifting preference to natural gas (a relatively cleaner fossil fuel) and away from coal, which currently powers much of the region’s power plants, was forecast to provide significant export demand for Canadian producers.

But in the wake of nationwide protests and blockades opposing the project, the future timeline of Coastal GasLink, currently owned by TC Energy Corp., is far from certain, so we will examine which other natural gas producers could meet the demand that Canada’s gas producers may miss out on.

  • First, we look for natural gas producers with the scale to capture this demand and filter for only those (outside of Canada) forecast to produce at least 500 million cubic feet a day over the next 12 months.
  • Next, we screen for companies that already have links to the region. We use the Refinitiv StarMine Revenue Fraction by Country model and screen for those with at least 2 per cent of their total revenue in one of the region’s four largest economies: China, Japan, India and South Korea.
  • Finally, since other gas producers aren’t immune to the environmental concerns that have hampered Coastal GasLink, we will include only those that have reduced their total emissions over the past three years.

More about Refinitiv

Refinitiv, formerly the financial and risk business of Thomson Reuters, is one of the world’s largest providers of financial markets data and infrastructure, serving more than 40,000 institutions worldwide. Refinitiv’s environmental, social and governance (ESG) data cover more than 70 per cent of the world’s public companies by market capitalization, using more than 400 metrics.

What we found

U.S.-based gas producers dominate the list and the one with the strongest links to China also has strong links to Canada. Formerly Encana Corp., Ovintiv Inc. moved its domicile and headquarters to the United States in response to pipeline bottlenecks and to access deeper pools of capital. It has roughly twice as many assets in the U.S. as in Canada.

London-based BP PLC, the largest company in terms of both production and market cap, has the biggest relative exposure to China of the group. It has lowered emissions the least over the past three years among companies on the list, but in February pledged to reach net zero by 2050.

Investors are advised to do their own research before trading in any of the securities shown.

Select natural gas producers outside Canada

CompanyTickerCountryMkt. Cap. (US$ Mil.)Gas Prod. NTM (Mil. CF/D)Rev./China (% of Ttl. Rev.)Rev./India (% of Ttl. Rev.)Rev./Japan (% of Ttl. Rev.)Rev./South Korea (% of Ttl. Rev.)CO2e Emissions 3Y Chg. (%)1Y Price Chg. (%)Div. Yld. NTM (%)Recent Price *
CNX ResourcesCNX-NUSA9991,4112010-88-51.4n/a5.35
Hess Corp.HES-NUSA17,4555854110-31-2.01.957.19
Ovintiv Inc.OVV-TUSA2,9411,5807121-19-68.23.415.08
OMV AGOMVV-VIAustria13,6351,727201n/a-12-15.35.837.79
BP PLCBP-LUK106,7959,46710241-7-18.28.0411.25

Source: Refinitiv 

*Recent price shown in native currency. 

Hugh Smith, CFA, MBA, is director of Refinitiv’s ESG and investment management business for the Americas, and a director on the board of the Responsible Investment Association.

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