A mass exodus of U.S. investors from the Canadian oil patch has often been blamed for some of the weakness in energy-company shares since the crude-price collapse began. It doesn't appear to have happened.
U.S. institutional ownership of large Canadian oil and gas companies has actually increased since oil prices began their downward spiral in the second half of 2014, according to a report by Toronto-Dominion Bank.
Share ownership data for 11 companies producing more than 100,000 barrels of oil equivalent a day show increases over the three years, with the largest gains at Encana Corp., Seven Generations Energy Ltd. and Suncor Energy Inc., according to the report, authored by TD Securities analyst Menno Hulshof.
The companies that have garnered higher percentages of American ownership are those that are considered the "go-to" players in the sector. Or they are known for operations in either hot U.S. shale plays or ones in Canada that have similar characteristics, such as the Montney formation, Mr. Hulshof said.
Suncor is seen as a proxy for the oil sands business, and has had U.S. ownership climb to 61 per cent from just over 40 per cent in the second half of 2014, according to the data. Encana's American shareholding has risen to 75 per cent from 40 per cent as it has concentrated much of its resources on drilling in its Permian and Eagle Ford holdings in Texas. Seven Generations, which has remained profitable in its Montney natural gas operations, has had U.S. ownership increase to 37 per cent from about 16 per cent.
Natural-gas-focused producers Peyto Exploration and Development Corp., Arc Resources Ltd. and Tourmaline Oil Corp. also won more U.S. investment.
Some of the change could be explained by a shift among Canadian funds out of domestic names and into U.S. companies, Mr. Hulshof said, though that move is likely minor.
The numbers are counter-intuitive. A common explanation for the drop in energy stocks has been that investors have abandoned the Western Canadian Sedimentary Basin, known for higher costs and increasing regulatory burdens, in favour of regions such as the Permian, site of some of the largest, low-cost oil finds and busiest drilling on the continent.
Meanwhile, U.S. oil producers such as Apache Corp. and ConocoPhillips Co. have jettisoned their Canadian oil and gas assets.
Indeed, the S&P/TSX capped energy index is worth about half of what it was three years ago, when U.S. crude began its descent from about $100 (U.S.) per barrel. It sold for $46.78 on Thursday.
Compared with U.S. rivals, Canadian share prices have the biggest trading discounts in a decade, according to TD.
The poor performance, and shrinking number of large-cap producers, have taken a toll on institutional investors in Canada. Specialist fund managers at such firms as Sentry Investments and Bank of Montreal have recently lost jobs.
Some of that may be a result of outflows of U.S. capital from Canadian mutual funds, but the TD numbers show the equities themselves have attracted investments from the United States.
The numbers are based on long positions in Canadian energy stocks, and do not include short interest. However, the shorts would not be expected to move the net ownership levels more than a percentage point or two.