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Energy Stocks

International Politics Don’t Slow These Companies

By Roger S. Conrad, on Dec. 21, 2017

Whereas mergers and acquisitions in the US shale patch have focused on asset deals in the Permian Basin and Oklahoma’s STACK play, Suncor Energy (TSX: SU, NYSE: SU), Canadian Natural Resources (TSX: CNQ, NYSE: CNQ) and other major players have driven consolidation in Canada’s oil sands—a long-lived resource that exhibits a shallow decline rate and generates significant cash flow after a capital-intensive start-up phase.

However, Canadian energy prices tend to trade at a discount relative to their counterparts south of the border because of competition from increasing US oil and gas production and insufficient takeaway capacity.

These lower price realizations have forced Canada’s energy complex to operate relatively conservatively and focus on reducing costs.

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