The Canadian oil companies and gas to find a little love in the stock market is again buying their neglected shares, driving & # 39; an increase in buying back shares already reached a level record this year.
The use of & # 39; scarce dollars to buy your stock instead of investing to grow the business can & # 39; looks sweet for some, but observers say that makes sense if you have money in your wallet and find your shares in the bargain bin.
"As CEO, the way I look at it, is a cyclical business. Buying back your shares when you stream & # 39; good money and good balance sheet, when your shares fail to truly levels low, is actually good business "said Dale Dusterhoft, CEO of & # 39; Calgary also based on the completion of the company Trican well Service Ltd.
"But then when your multiple end and you are in & # 39; update cycle, using your capital to buy other things is good business as well."
Trican bought back 9.8 million shares at & # 39; October after renewing the program & # 39; buying its annual return. He bought the maximum allowable 10 percent of its stock for $ 119 million under its 2017-18 program.
Approximately 627 million shares were repurchased in 2018 the cancellation of 209 companies that issued loans by mid-October, according to data provided by TMX Group, the operator of Stock Exchange & # 39; Toronto, at the request & # 39; The Canadian Press.
That's about 135 million shares over all of & # 39; 2017 and well before the previous highest record & # 39; 557 million shares in 2007, according to statistics dating back to 1989.
Twenty-three companies based in & # 39; Calgary involved in the upstream sector of the oil and gas accounted for about 184 million purchase & # 39; shares this year, more than twice & # 39; 76 million in 2017.
The boom in compliments of energy company shares is linked to & # 39; conditions in Western Canada, where a lack of & # 39; capacity & # 39; pipeline to transport growing production led to unprecedented discounts in oil prices compared with points & # 39; Reference USA, said Eric Nuttall, manager & # 39; & # 39 in senior portfolio; Ninepoint based in & # 39; Toronto Partners.
"We had the greatest dislocation in history between the commodity and stocks," he said. "The energy stocks are trading at & # 39; half their historical multiples."
The recent decline in West Texas Intermediate was traded in New York at & # 39; half the US $ 50 per barrel from a peak & # 39; over US $ 75 early in & # 39; October increases the risk & # 39; lower returns going & # 39; ahead and make the purchase less attractive than simply comes back in "bunker mode" and ippreservaw capital, said Nuttall.
best buybacks of drilling risk: Nuttall
"But in & # 39; environment & # 39; commodity at a higher price, which means US $ 60 WTI, and more normalized differential, if the share price does not reflect the value, then it is better to buy back the your shares to take the risk of piercing your own wells, "he said.
The appeal & # 39; back not lost on the oil major Canadian Natural Resources Ltd. that on 1 & # 39; November issued a new strategy & # 39; & # 39 allocation; capital needs half the cash in the future after capital expenditures and dividends spent on buybacks, debt.
He re-purchased 20 million of its shares by 30 & # 39; in September at a cost of & # 39; $ 874 million under the plan approved last spring to buy back up to 61 million shares over the next year.
The executive vice president Steve Laut said on a call conference that "significant acquisition" in buybacks create "shareholder value in & # 39; current market conditions" – on 1 & # 39; November , the company's shares closed at $ 37.84, 16% from 12 months before.
Earlier this month, SUNCOR Energy Inc., the largest oil and gas company by market capitalization, said she had approval to increase the program & # 39; its actual purchase for five per cent of its shares by three percent.
She spent $ 1.98 billion to buy back 39 million shares under the program between May and November last year – added another program worth $ 1 billion if implemented with & # 39; fullest.
In theory, reduction in the number of & # 39; outstanding shares in & # 39; Company increases the value of the remaining shares – should reinforce investor measures such as net earnings per share and yield per share and thus lead to higher market prices per share.
But it did not work for Trican.
Although purchased and canceled 34 million shares in the 12 months ended on 30 & # 39; in September, the price of its shares lost half their value, which collapsed & # 39; from $ 4.56 to $ 2.31.
Dusterhoft admits to "mixed feelings" about the outcome but said he still believes that they are buying strategy that will lead to good returns for long-term shareholders.
He blamed the woes of the stock price & # 39; Trican a general selloff in the energy services company shares related to & # 39; poor drilling prospects in Canada because producers restrict spending on exploration.
"If the price of the shares remaining & # 39; the same, they get 10 percent during that time. I think the negative only seen was the decline of the market during the year passed. "