‘Troubled children’ failures add stability: experts

Mergers and acquisitions experts are predicting fewer Canadian oil and gas companies will go bust over the next year.

CALGARY — Mergers and acquisitions experts are predicting fewer Canadian oil and gas companies will go bust over the next year as most of the “troubled children” of the industry have already failed or been sold.

Tom Pavic, vice-president of Calgary-based Sayer Energy Advisors, said 26 Canadian energy companies have entered into a court-monitored receivership or restructuring process so far this year.

That’s up from 20 in 2015, when the total matched the number of failures recorded in 2009 during the last oil price-related economic downturn. He said there are typically eight oil and gas company failures each year.

“I think a lot of the troubled children have been dealt with, for lack of a better word,” Pavic said in an interview.

“There will still be more receiverships but I don’t believe it will be as much as this year.”

Higher oil and natural gas prices have brought a measure of stability to the sector.

However, confidence continues to be buffeted by changing provincial and national carbon emission policies and uncertainty over international supply and demand.

In a report, Sayer predicted more energy deals over the next year because buyers and sellers are becoming more closely aligned on how much assets are worth after two years of slumping commodity prices.

The report noted that $17.8 billion in oil and gas deals took place in Canada through the first nine months of 2016, up from $15 billion in all of 2015, but lagging the $49 billion in 2014.

Bruce Edgelow, vice-president of strategic initiatives with ATB Financial, said the Alberta lender is seeing signs of stability as it completes the fall reviews of its energy company loans.

“People have kind of settled into the cash flow they’re getting,” he said.

“They’ve gotten their costs as low as they can and the market has clearly stabilized … There’s not as much frantic-ness to it.”

He said he agrees that the mergers and acquisitions market has improved and predicted that several deals will be announced in December and January as companies make year-end moves to try to impress their shareholders.

Edgelow said rising buyer interest is illustrated by the case of Mosaic Energy, a private Calgary company thrown into receivership in April.

Receiver Ernst &Young reported to Court of Queen’s Bench last week that it had received 40 proposals from 32 bidders for three packages of assets in Alberta and B.C.

It recommended that the court accept Calgary-based ARC Resources’ (TSX:ARX) bid for certain B.C. properties, without revealing the price.

However, Pavic and Edgelow pointed out that access to investment capital remains tight in the oilpatch with only large, well-managed companies able to borrow money to fund drilling programs.

“A 1,000-barrel-a-day producer is in tough shape these day to find somebody as a new lender,” said Edgelow.

Just Posted

Red Deer area businesses recognized at Business of the Year Awards night

“It’s an honour just to be nominated.” The popular words echoed throughout… Continue reading

Child sex offender should get 12 years: Crown prosecutor

Stuart Peter Hunt has pleaded guilty to 10 child sexual exploitation and pornography charges

Legalizing cannabis cost estimate for Red Deer just under $400k

Although the province of Alberta has announced $11.2 million for cannabis legalization,… Continue reading

WATCH: Every square tells a story: Edmonton expert is exploring Red Deer’s quilting history

Community members can bring in family heirloom quilts for documentation

Red Deer-area dads going through divorce are invited to Man Up

Support group formed to focus on positive activities, networking

WATCH: Two weeks away from Canadian Finals Rodeo in Red Deer

In just two weeks, Ponoka’s Shayna Weir will compete with the best… Continue reading

PHOTO: Say goodbye to City Hall Park flowers

A sure sign that winter is on its way is when City… Continue reading

PHOTO: Chew On This! campaign draws attention to national poverty

Lunch bags were being handed out in front of The Hub downtown… Continue reading

Wickenheiser, Pegula reflect NHL’s trend toward diversity

BUFFALO, N.Y. — With a laugh, Kim Pegula’s competitive nature kicked in… Continue reading

Harry and Meghan bring rain to drought-stricken Outback town

DUBBO, Australia — The Duke and Duchess of Sussex were jokingly thanked… Continue reading

TV Review: A Roseanne Barr-less ‘The Conners’ is a triumph

NEW YORK — Can there be a “Roseanne” without Roseanne? The answer… Continue reading

Canadian manufacturing sales fell 0.4 per cent in August: Statistics Canada

OTTAWA — Statistics Canada says manufacturing sales fell 0.4 per cent to… Continue reading

Brian Mulroney joins board of directors of New York-based pot company

NEW YORK — Former prime minister Brian Mulroney is joining the board… Continue reading

Canadians waking up to legalized cannabis: ‘My new dealer is the prime minister’

ST. JOHN’S, N.L. — Canadians across the country woke up to legalized… Continue reading

Most Read