CNRL tops in market value
Natural gas helps it surpass Suncor
Canadian Natural Resources Ltd. has dethroned Suncor Energy Inc. as Canada's most valuable energy company amid a sell-off in domestic oil and gas stocks that has continued to erode the size of the industry on major North American stock indices.
Canadian Natural, which is already the largest oil and gas producer in Canada by production, is now also the most valuable energy company in the country with market capitalization of more than $25 billion, surpassing Suncor's $24.4 billion.
Analysts say the two companies trading places at the top of the Canadian energy industry is indicative of broader trends in investor attitudes to the oil and gas sector, where refining businesses have been hurting
in the pandemic and those with strong natural gas assets have outperformed.
Suncor's new second-place status is also partly a result of generalist investors putting less of their money into the oil and gas industry.
“Sector exposure is at 30-year lows,” said BMO Capital Markets analyst Randy Ollenberger, adding that “exposure to oil and gas is what it was in 1998 and 1999 during the first internet boom.”
Ollenberger said the fact “investors have only five cents of every dollar invested in oil and gas,” it has contributed to Suncor and Canadian Natural switching places because most generalists have room in their portfolio for just one or very few oil and gas stocks.
In Canada, a six-year downturn in the sector has been exacerbated by the COVID-19 pandemic this year and the country's largest energy companies — including Canadian Natural, Suncor, Imperial Oil Ltd., Husky Energy Inc. and Cenovus Energy Inc. — are trading at less than half of their value from a year ago, and a quarter of their value from just two years ago.
The sell-off has not been limited to the producers.
On Monday, pipeline giant TC Energy Corp. announced a US$1.4-billion all-share offer to buy up the stake it didn't already own in TC PipeLines, LP at a 7.5-per-cent premium to TCP's 20-day trading average.
TC PipeLines shares are still down 32 per cent on the year.