Repurchasing shares an oilpatch trend

He said oil and gas shares are undervalued and have not rallied alongside oil prices, creating a disconnect between the value of the producers and the product they pump out of the earth. The S&P/TSX Capped Energy Index has fallen 11.3 per cent year-to-date, trailing the broader TSX index, which is down 3.4 per cent.

“When I look at the average mid-cap in Canada using strip pricing today, the average free cash flow is 15 per cent,” Nuttall said, adding that “they could achieve 15-per-cent per-share growth on average without drilling a single well.”

Data from Baker Hughes, which tracks the number of active rigs in North America, shows there are 273 rigs working in Canada, a 13-percent drop from the 315 rigs drilling at this time last year.

Nuttall cautioned, however, companies that don’t generate free cash or that have distressed balance sheets don’t have the ability and should not announce share buybacks, likening any such announcements to “lipstick on the pig.”

A handful of mid-tier Canadian oil producers are also aggressively buying back their shares. confirmed in an earnings release Thursday that it plans to repurchase 5 per cent of its outstanding shares; the stock rose over 5 per cent to $5.66 on the Toronto Stock Exchange. Similarly,

announced this month it spent $10 million in 2017 repurchasing its own shares and Athabasca Oil Corp. raised the possibility of using funds from a midstream