3 Takeaways From the Barclays CEO Energy Conference

Never miss an opportunity to listen to the biggest players in the business.

| More on:
The Motley Fool

Last week, industry executives from across the oil patch gathered in New York for the 2013 Barclays CEO Energy Power Conference. The event provided an opportunity for analysts to pick the brains of the top players in the industry. For those that missed it, here are the top three investment takeaways from the conference.

Keystone XL is no longer relevant
Canada’s energy executives played down the importance of TransCanada’s (TSX: TRP, NYSE: TRP) Keystone XL project. Analysts, who once called the pipeline essential to the industry’s growth, now believe a combination of rail and alternative pipeline proposals could accommodate the industry’s production growth.

“The belief in the industry is that the industry will get access to the market,” Suncor’s (TSX: SU, NYSE: SU) Chief Executive Steve Williams told analysts on Wednesday. “It has certainly not constrained our growth. And my best estimate would be that it’s not significantly constraining the rest of the market, either.”

Other executives echoed similar sentiment. On Tuesday, an executive at Canadian Natural Resources dismissed transportation issues as “overblown”. In addition, Continental Resources Chief Executive Harold Hamm told the National Journal earlier this month that “It’s [Keystone XL] not critical any longer.”

But given that the discount for Western Canadian Select versus West Texas Intermediate fell to a seven-month low last week, I can’t help but feel that these managers are just talking their books.

No slowdown in crude-by-rail transit
In spite of the tragedy in Lac Megantic this summer and a recent derailment in Calgary last week, there are no hints that the industry is retreating from the crude-by-rail option.

Cenovus (TSX: CVE, NYSE: CVE), one of the biggest adopters of crude-by-rail in the industry, reaffirmed its commitment to the rail transit. The company is targeting 30,000 brls/d ship by rail by the end of 2014, representing 10% of the company’s marketable volume. Imperial Oil Chairman and Chief Executive Rich Kruger is also considering to expand its rail shipments to “mitigate pipeline uncertainties”.

This is obviously encouraging news for rail investors. These stocks have sold off over public concerns regarding the industry’s safety.

Discipline is the new mantra in the oil patch
In an era of low commodity prices, investors are tired of the growth-for-growth’s-sake mentality that has dominated the industry’s thinking. Executives have gotten the message. The new mantra in the oil patch is restraint.

Encana (TSX: ECA, NYSE: ECA) Chief Executive Doug Suttles provided a preview of company’s future. On Thursday, Mr. Suttles promised that the new Encana is going to look smaller and oiler than its predecessor, with management looking to sell off the company’s dry-gas assets and increase liquids production. The changes signal a new era of discipline in a company whose past was focused on rapid growth and big spending.

Suncor executives also reiterated the company’s new operating philosophy by promising to only fund projects that deliver a sufficient return for shareholders. Much of the company’s capital spending will be focused not on bold projects, but on smaller initiatives such as improving reliability on the company’s upgrading facilities and de-bottlenecking upstream operations. The benefit of these types of activities is that they provide high return on investment with lower risk and capital-intensity than new mining projects.

Foolish bottom line
Never miss an opportunity to listen to the biggest players in the business, especially in the off-script question-and-answer sessions with analysts. Often, candid comments can reveal hidden trends in the industry — and that can spell big opportunities for the diligent investor.

Canada = fueling a global shift in energy
Looking for a specific stock idea from the energy sector? The Motley Fool Canada’s senior investment analyst has hand-picked two of his favorite in Canada. Download your copy of this Special FREE Report, “Fuel Your Portfolio With This Energetic Commodity,” by clicking here!

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Disclosure: Robert Baillieul has no positions in any of the stocks mentioned in this article. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

coins jump into piggy bank
Dividend Stocks

How to Use Your TFSA to Earn $1,057/Year in Tax-Free Income

Investing $5,000 in each of these high-yield dividend stocks can help you earn over $1,057 per year in tax-free income.

Read more »

data analyze research
Tech Stocks

Is BlackBerry (TSX:BB) a Buy in May 2025?

While its recent downturn might not look pretty, it might be the best opportunity to buy BlackBerry (TSX:BB) stock and…

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Investing

Where I’d Invest the New $7,000 TFSA Contribution Limit in 2025

If you have $7,000 for the new TFSA contribution increase, here are three stocks I would contemplate adding to the…

Read more »

open vault at bank
Bank Stocks

2 Banking Stocks I’d Buy With $7,000 Whenever They Dip in Price

Two banking stocks are worth buying on the dip and as reliable passive-income providers.

Read more »

Paper Canadian currency of various denominations
Investing

How I’d Invest $7,000 in Financial Sector Stocks for Stability

This Canadian financials ETF may stay insulated from Trump's tariffs.

Read more »

Man in fedora smiles into camera
Dividend Stocks

How I’d Build a $20,000 Retirement Portfolio With These 3 TSX Dividend All-Stars

If you're worried about returns and want to focus on dividends, these dividend stocks are the first to consider.

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

If I Could Only Buy and Hold a Single Canadian Stock, This Would Be It

Here's why this high-quality defensive growth stock is one of the best Canadian companies to buy now and hold for…

Read more »

dividends can compound over time
Dividend Stocks

3 Canadian Market Leaders Where I’d Invest $10,000 for Sustained Performance

Market leaders like Alimentation Couche-Tard Inc (TSX:ATD) are worth an investment.

Read more »