Latest news with #CanadaEnergy
Yahoo
5 days ago
- Business
- Yahoo
1 Magnificent Canadian Energy Stock Down 38% to Buy and Hold for Decades
Written by Amy Legate-Wolfe at The Motley Fool Canada Energy stocks have always had a bit of a wild streak. Prices rise and fall with every geopolitical event, Organization of Petroleum Exporting Countries (OPEC+) decision, or shift in consumer demand. But amidst that volatility, smart investors often find real gems, companies with strong fundamentals trading at bargain prices. Right now, Baytex Energy (TSX:BTE) fits that description. It's down 38% year-to-date at writing, but with a solid long-term outlook, this may be the perfect time to buy and hold for the decades ahead. Baytex is a Canadian oil and gas company based in Calgary. It produces crude oil and natural gas across key regions including the Western Canadian Sedimentary Basin and Eagle Ford in Texas. This dual exposure gives it a nice mix of conventional and shale oil production. It's not one of the biggest names on the TSX, but it has spent the last few years cutting costs, boosting production, and returning capital to shareholders. Baytex reported its first quarter 2025 results on April 25, and the numbers were solid. Revenue came in at $791.2 million, up from $775 million a year earlier. Net income was $70 million or $0.09 per share. While that's down from the $113.7 million reported in Q1 2024, the dip was largely due to foreign exchange and hedging losses, not operational issues. What really stood out was the energy stock's free cash flow, which came in at $53 million. That's real money which can be used to pay down debt, buy back shares, or reward shareholders with dividends. Production during the quarter averaged 144,194 barrels of oil equivalent per day, a 2% increase year over year. About 84% of that was oil and natural gas liquids, which fetch higher prices than dry gas. Baytex's break-even price is below US$50 per barrel, giving it a wide margin of safety with oil currently trading closer to US$80. That makes its production profitable even in a downturn, which is something long-term investors should love. Baytex has also been aggressively reducing debt, which is key in a cyclical industry. As of March 31, its net debt was approximately $1.3 billion. That's down sharply from over $2 billion just a few years ago. The energy stock wants to reduce that even further and has committed to returning 50% of its excess free cash flow to shareholders through buybacks and dividends. That means investors can count on both stability and growing income as long as oil prices remain supportive. In Q1, Baytex repurchased 3.7 million shares for $13 million and paid a dividend of $0.0225 per share. That's not a huge yield, but it's a sign of a shareholder-friendly strategy. And with free cash flow projected to climb later this year, there's room for increases ahead. In fact, here's what a $7,000 investment would look like today. COMPANY RECENT PRICE NUMBER OF SHARES DIVIDEND TOTAL PAYOUT FREQUENCY INVESTMENT TOTAL $2.97 2,356 $0.09 $212.04 Quarterly $6,999.32 What makes Baytex particularly interesting is its long-term potential. Energy demand isn't going away. Even as the world transitions toward renewables, oil will still be needed for petrochemicals, aviation, heavy transport, and heating. Baytex doesn't have to grow explosively to be a winner, it just has to keep operating efficiently, reducing debt, and returning cash to investors. If it does that, today's share price could look like a serious bargain in hindsight. There are always risks with energy stocks. Oil prices can fall fast, regulatory changes can impact operations, and Baytex has some U.S. exposure that adds currency risk. But the flip side is that this is a well-run, well-positioned company that's trading at a valuation that makes little sense given the financials. A price-to-earnings ratio under 6 and price-to-cash flow ratio of about 2.8 are both lower than the industry average. If you're looking for a long-term energy stock to tuck away, Baytex Energy looks like a smart bet. It's producing strong cash flow, paying a dividend, and buying back shares. And with its stock down 38%, you're getting it at a steep discount. The post 1 Magnificent Canadian Energy Stock Down 38% to Buy and Hold for Decades appeared first on The Motley Fool Canada. Before you buy stock in Baytex Energy, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Baytex Energy wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $21,345.77!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*. See the Top Stocks * Returns as of 4/21/25 More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2025 Sign in to access your portfolio
CTV News
6 days ago
- Business
- CTV News
Smith says she sees a ‘breakthrough' in talks with Americans on energy
Alberta Premier Danielle Smith poses for a photo at the Canadian Embassy in Washington, D.C., on Wednesday, June 4, 2025. THE CANADIAN PRESS/Kelly Geraldine Malone WASHINGTON — Alberta Premier Danielle Smith said on Wednesday there's been a 'breakthrough' in conversations with Americans on Canada's role in the United States' quest for energy dominance as President Donald Trump's tariffs continue to cause uncertainty for the bilateral relationship. 'We've managed to make a breakthrough on the discussion about energy dominance and how Canada can lend itself to that, whether its our oil, our gas, critical minerals, uranium from Saskatchewan, electricity from many of our provinces,' Smith said in an interview with The Canadian Press at the embassy in Washington, D.C. 'I feel like there's a real understanding of that.' Trump returned to the White House set on boosting America's energy production. Smith said that while the energy argument has seen success, conversations around other industries are ongoing. The Alberta premier was in the United States capital for meetings and a forum on energy this week as Trump doubled his tariffs on steel and aluminum imports. Canada is a major supplier to the U.S. and Canadian industry says 50 per cent levies will be devastating. Smith said she had conversations with American counterparts and explained that, particularly for aluminum tariffs, they are 'the very definition of a tariff being its own punishment.' The United States imports about 60 per cent of its aluminum from Canada. The Canadian industry largely uses hydroelectricity to make the high energy costs connected to smelting more affordable. Smith said the U.S. doesn't have the ability to develop a homegrown industry to fill the gaps. 'We just have to make sure we are able to make that same (energy) argument on everything else, on the integrated food market, the integrated manufacturing market,' Smith said, also pointing to timber. '(We) haven't had a full breakthrough on all of that but I think the conversations I have are always very positive.' Despite conversations at home about Western alienation and Alberta separatism, Smith said that issue has not come up in Washington. The premier, however, said it's important to take the issue seriously. Trump set his sights on Canada early in his return to the White House and his tariffs on steel, aluminum and automobiles have upended Canadian industries. The president has repeatedly said he doesn't need anything from Canada but his actions have shown signs that he still values trade with America's northern neighbour. Trump slapped Canada with economywide duties in March, only to walk back the tariffs on imports complaint with the Canada-U.S.-Mexico Agreement on trade, called CUSMA, a few days later. Commerce Secretary Howard Lutnick was asked during a U.S. Senate hearing Wednesday about tariffs on Canada. Lutnick pointed to the trilateral agreement and said imports that are compliant with CUSMA remain tariff-free. CUSMA was negotiated during the first Trump administration and was up for a mandatory review next year. Smith said it remains unclear when CUSMA negotiations might start but there is 'encouragement or expectation that we might get some kind of detente or interim agreement by the time we have the G7.' It's unclear whether that will be commitments on CUSMA or a separate agreement on the current tariffs. Carney has said Canada will negotiate a new economic and security agreement with the United States. Canada-U.S. Trade Minister Dominic LeBlanc, who met with Lutnick in Washington Tuesday, said he's 'hopeful that we can get to the best outcome for Canadians.' Carney and Trump will join leaders from France, Germany, Japan, the United Kingdom, Italy and the European Union from June 15 to 17 for the G7 leaders summit in Kananaskis. Mexican President Claudia Sheinbaum has also been invited to attend. Smith said it 'just makes so much sense for Canada and the U.S. to get to an agreement fast.' She said Americans have 'bigger fish to fry' on other major policy priorities. Smith was optimistic about Carney's relationship with Trump. While the president recently brought back comments on making Canada a U.S. state, Trump has also spoken about a good relationship with Carney and calls him prime minister and not the 'governor' title he used to taunt former prime minister Justin Trudeau. It also marks a change in tone for the Alberta premier, who had an icy relationship with Ottawa under Trudeau. Smith has long been critical of the governing Liberal's policies around energy which she says micromanaged Alberta's priorities and hindered industry. She said federal policies stopped Alberta from developing foreign markets that would be critical for many Canadian industries as Trump tries to realign global trade through tariffs. Following the First Ministers' meeting in Saskatoon earlier this week, Smith said she is 'hoping that we are having a breakthrough with the Liberals way of seeing things.' Smith had proposed a bitumen pipeline to B.C.'s northern coast coupled with support for a project on decarbonization. She said 'if we can work together on developing new markets then I think it will be good for everyone.' B.C. deputy premier Niki Sharma has pushed back on Smith's proposal, saying the province is focusing on 'shovel-ready projects, not theoretical projects with no proponents.' This report by The Canadian Press was first published June 4, 2025. Kelly Geraldine Malone, The Canadian Press
CTV News
7 days ago
- Business
- CTV News
Quebec, Newfoundland energy touts Canadian independence to Trump: Hydro‑Québec CEO
Chief executive of Hydro‑Québec Michael Sabia and Jennifer Williams, head of Newfoundland and Labrador Hydro are seen at an energy conference in St. John's, N.L. on Tuesday, June 3, 2025. THE CANADIAN PRESS/Sarah Smellie ST. JOHN'S — The chief executive of Hydro‑Québec says a sweeping new energy deal with Newfoundland and Labrador Hydro is a signal to the United States that Canada can get 'big things done.' Michael Sabia was in St. John's, N.L., Tuesday, where he pitched the draft deal as a turning point in Quebec's relationship with Newfoundland and Labrador, and a step toward Canada becoming an 'energy superpower.' 'Let's be clear: Canada is under threat,' Sabia told a room full of representatives from Newfoundland and Labrador's energy industry. 'This is a time of real economic and political uncertainty. It's a time when Canadians need to work together to build the future,' he said. 'Ultimately, that's what this deal is about. It's about building now to secure Canada's energy future.' Sabia was speaking to the crowd at a conference held by Energy N.L., Newfoundland and Labrador's energy industry association. He was joined on stage by Jennifer Williams, president and chief executive of Newfoundland and Labrador Hydro. The two discussed an agreement in principle announced last year that would end a contract signed in 1969 that allows Hydro‑Québec to buy the lion's share of the energy from the Churchill Falls hydroelectric plant at prices far below market value. The contract has long been a source of bitterness in Canada's easternmost province. The new arrangement would end the contentious deal 16 years early and see Hydro‑Québec pay for more power while developing new projects with Newfoundland and Labrador Hydro along the Churchill River. Newfoundland and Labrador would also get more power from Churchill Falls. The memorandum of understanding has its critics. The Opposition Progressive Conservatives have been uneasy with the draft deal, demanding the Liberal government have it independently reviewed. The party also called for a halt to ongoing negotiations of final contracts, saying a proposed national energy corridor could bring better opportunities. Some in Newfoundland and Labrador have also wondered if Hydro‑Québec can be trusted and whether the province will truly get enough value for its resources. 'Show me a deal where there hasn't ever been skeptics,' Williams challenged when asked about those who have criticisms. Sabia addressed the tangled history of the provinces several times, and said repeatedly that the new arrangement was 'balanced' and served the needs of both Newfoundland and Labrador and Quebec. Both sides made concessions, he said, adding that the deal contained items neither side wanted. He refused to elaborate on what those were. Sabia said the agreement is the 'single most important signal we can send to the United States right now,' as long as it goes ahead as planned. Williams agreed the proposed projects need to proceed smoothly and quickly, repeating 'rigour and speed are not incompatible.' Both said they were heartened by signs from Prime Minister Mark Carney that he would speed up project approvals. Williams touted the deal's promised economic benefits, which includes $17 billion in revenue to the provincial treasury by 2041. Newfoundland and Labrador expects to be carrying a net debt of $19.4 billion by the end of the current fiscal year. 'We have to take this opportunity now,' Williams told reporters after the event. 'If we don't, something this momentous may not come again for a very long time, and who will we have to blame? We have got to take this moment on.' Officials hope to have final agreements hammered out next year. In the meantime, preliminary topographic and soil studies are expected to begin in Labrador this summer, Sabia said. This report by The Canadian Press was first published June 3, 2025. The Canadian Press
Globe and Mail
23-05-2025
- Business
- Globe and Mail
Why Canadian energy is a secret bargain, spurring a hostile takeover bid in the oil sands
Panic over U.S. President Donald Trump's global trade war and unexpected production bumps from countries outside North America have sent oil prices plummeting, making investors fear a 2014-style crash all over again. Adjusting for inflation, the current price of West Texas Intermediate crude, the North American benchmark, is hovering around US$45. The last time it fell to this level, a decade ago, it spelled disaster for Canadian producers – and for the Canadian economy. But this is not 2014. After years of painful restructuring, the Canadian oil industry is much stronger today, and some producers are now so resilient that they've earned the right to brag. 'The discipline today is night-and-day different,' Jeremy McCrea, an energy analyst at BMO Nesbitt Burns, said in an interview. The new era is defined by cost constraint, an aversion to debt and a promise to return excess cash to shareholders instead of spending it on endless expansion. There is also a growing global appetite for natural gas, which is seen as a logical fuel source for AI data centres, and an increasing likelihood that Canada will build more export plants sourced by low-cost gas from the Montney formation in northeast British Columbia. In short, Canada's energy sector is sitting pretty. Yet with more than half of the S&P/TSX Capped Energy subindex trading below their September, 2014, prices, investors aren't ready to admit it yet. Producers, however, see opportunity, which explains why Strathcona Resources Ltd. SCR-T launched a hostile takeover bid for MEG Energy Corp. MEG-T, one of the few pure-play companies focused on the Canadian oil sands. MEG runs a low-cost oil sands operation at Christina Lake, earned $507-million in profit last year and recently paid down a good chunk of its debt early, yet its shares have been trading roughly 45 per cent below their September, 2014, level. It's an odd scenario because the industry looked quite different before the 2014 crash. Costs were bloated, everyone was taking on debt to expand and oil and gas companies were treated as growth stocks. Then Saudi Arabia shocked the market with plans to boost production and the growth bubble burst. 'No one wants to go back to that ever again,' said Mr. McCrea, the BMO analyst. It wasn't just negligence from the producers. As investment in the oil sands exploded, the U.S. energy industry went through a revolution and new technology – fracking – unlocked oil and gas reserves that previously weren't accessible. The U.S. quickly went from being Canada's largest export market to its top competitor. Around the same time, the ESG era that promoted environmental, societal and governance concerns took hold, putting a spotlight on oil sands emissions. Canada also struggled to get a pipeline or LNG plant built to export its energy beyond the U.S. What snapped Canadian energy out of its seven-year rut was Russia's attack on Ukraine in February, 2022, which put an international focus on energy security. For the next few years, Canadian producers were akin to malfunctioning ATMs, spitting out cash as oil and gas prices soared. Things have since settled down, but many companies are still quite profitable even as oil prices fall. Suncor SU-T, for instance, has pledged to cut production costs and in 2024 the company beat its US$4 target per barrel, lowering expenses by US$7 per barrel. The sector's debt load also continues to improve. Cenovus Energy Inc. CVE-T has been hampered by leverage concerns for years, but in March Moody's Investors Service upgraded its debt rating to 'Baa1′ – the same level as industry darling Canadian Natural Resources Ltd. CNQ-T – citing the company's 'commitment to a conservative financial policy,' among other things. Summarizing this new-look Canadian industry, Mark Oberstoetter, head of research for upstream companies at energy consultancy Wood Mackenzie, offered this comparison: Since 2014, 'everyone's been working out, but Canada has been training with a weighted vest.' Adding to the bull case: Canada has long-life oil reserves, meanwhile U.S. shale oil wells are starting to run dry, and the Trans Mountain pipeline expansion is now up and running. Because more oil can be moved to the West Coast for export, the price differential between Canadian heavy crude, known as Western Canadian Select and West Texas Intermediate oil, is now around only US$12, because more Canadian oil can be exported abroad from the West Coast. Previously, it would get trapped in Canada and the supply glut would hurt domestic prices. WTI oil could drop US$20 per barrel, and the Canadian differential could drop another US$20. Despite all that, investors aren't convinced. Cenovus got a debt rating upgrade, and its shares are down 31.7 per cent over the past year. Part of what's still missing, explained Benoit Gervais, head of the resource team at Mackenzie Investments, is policy certainty. Investors can't get too excited about Canadian energy if new export projects never get built. 'Mark Carney really needs to be careful with his first move,' he said. If the new Prime Minister isn't clear about his energy agenda, and the permanency of it, 'we won't attract a meaningful amount of capital. It's pretty simple.' To that end, the new federal Minister of Energy and Natural Resources, Tim Hodgson, who used to sit on MEG's board of directors, delivered a speech in Calgary on Friday and had a clear message: Canada will remain a reliable global supplier of oil and gas for decades to come. 'No more asking, 'Why build?'' he said. 'The real question is, 'How do we get it done?''
