The Globe and Mail reports in its Friday edition the oil sell-off is unduly dragging natural-gas equities with it, creating some value opportunities among some gas-heavy producers.
The Globe's Ahmad Hathout writes that while oil prices are down 18 per cent since June 10 in Canadian dollar terms, natural-gas prices are up 12 per cent over that same time period.
This, according to TD Securities, has brought with it indiscriminate selling pressure on the energy sector in general.
"The disproportionately large sell-off of gas companies relative to ... forward AECO [natural-gas] prices creates an interesting buying opportunity," TD said in a recent note. One example of a natural-gas stock affected by oil's misery is Advantage Oil and Gas Ltd., TD said, noting about 97 per cent of its production is natural gas. The stock has declined about 18 per cent since June.
National Bank's Kyle Preston believes that not all natural-gas equities have unduly been punished. Some of the better-positioned gas-weighted names have been trading at "fair-to-rich" valuations for the year, Mr. Preston said.
TD recommends ARC Resources, Advantage Oil & Gas, Painted Pony, Peyto Exploration, Pine Cliff and Tourmaline Oil.
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