Global oil market prices started climbing after Hamas launched a surprise attack on Israel. The price rose to US$94 per barrel last week, and industry experts say it could breach US$100 if the conflict escalates. There are no supply disruptions yet, although many expect oil and gas prices to rise if exports stall due to the war.
On the investment side, buy signals for Canadian energy stocks are flashing. However, is it the right time to buy them now? Oil traders are worried about the negative impact of high interest rates and energy prices on economic growth and energy demand.
Still, Suncor Energy (TSX: SU), Cenovus Energy (TSX: CVE), and Tourmaline Oil (TSX: TOU) remain solid investment options if you want exposure to the resurging energy sector.
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Game changer
Suncor announced early this month that it had purchased TotalEnergies EP Canada Ltd. The $1.47 billion transaction also means full ownership of the Fort Hills project. The $60.47 billion oil bellwether considers the deal a game changer, because its bitumen production capacity increases substantially to 61,000 barrels per day.
Likewise, the proven and probable reserves in the oil sands portfolio would rise to 675 million barrels. Suncor’s president and chief executive officer (CEO), Rich Kruger, said, “With 100% ownership of Fort Hills, we will pursue opportunities to create additional value. Suncor will realize regional synergies and manage an unparalleled, integrated oil sands asset base.”
At $46.50 per share, Suncor is up 12.24% year to date and pays an attractive 4.47% dividend.
Pitch for CCS technology
Cenovus Energy, a $53.7 billion oilsands producer, is a member of the Pathways Alliance like Suncor. The group announced a plan in 2022 to collect carbon dioxide from up to 20 oil sands facilities into a pipeline to Cold Lake, Alta. Its executive chairman Alex Pourbaix considers the carbon capture and storage (CCS) technology “relatively proven,” despite criticisms from the International Energy Agency (IEA).
Pourbaix said the Pathways Alliance will file government applications for a $16.5 billion carbon-capture network in northern Alberta soon. He added, “If we desire to make a meaningful dent in our CO2 emission in the next 15 years, CCS absolutely has to be part of that. It’s a technology that we have right in front of us right now.”
At its current share price of $28.32, Cenovus outperforms the broader market year to date at +9.52% versus -1.39%. The energy stock pays a decent 1.98% dividend.
Aggressive program
Tourmaline Oil is Canada’s largest natural gas producer. The $24.75 billion company operates in the Western Canadian Sedimentary Basin. It has interests in the Alberta Deep Basin, northeast British Columbia Montney, and the Peace River High Triassic oil complex.
The latest feather on its cap is the $1.45 billion deal to buy Bonavista Energy. Management said the acquisition represents an essential component of the company’s consolidation strategy, and the assets are a natural extension of existing operations.
Tourmaline investors enjoy a 15.78% year-to-date gain ($72.86 per share) on top of the modest 1.43% dividend yield.
Massive profits ahead
No one can predict how high oil prices can go with the ongoing war in the Middle East. If you recall, energy companies delivered massive profits when commodity prices rose sky-high in 2021 and 2022.
