JPMorgan took aim at companies with strong exposure to the Canadian oil sands in Alberta, with analyst Katherine Minyard initiating coverage on Cenovus Energy (NYSE:CVE), Nexen (NYSE:NXY), Talisman Energy NYSE:TLM), Canadian Natural Resources (NYSE:CNQ), Suncor Energy (NYSE:SU) and Husky Energy (TSE:HSE).
She started off Cenovus Energy, Nexen, and Talisman Energy with "Overweight" ratings. Canadian Natural Resources and Suncor Energy with "Neutral" ratings, and Husky Energy with an "Underweight" rating.
“We believe depth of resource base, production growth visibility and exposure to an increasingly important source of global oil supply make for an attractive value proposition in oil sands-rich Canadian oils,” Minyard said in a note to clients.
Minyard concedes her outlook on the sector is based on the ongoing support underlying oil prices. If they were to drop, the scenario for the above-mentioned companies in the short term could change significantly.
She concluded, “Although our near- and long-term oil price modeling assumptions do not call for prices to differ significantly from the current $81/barrel, significant or sustained weakness in the oil price would likely pressure share prices.”
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