Robert Cooper: Oil And Gas Volatility Creates Winners And Losers

Price movements, distribution problems, drilling rig availability and regulatory factors have all come into play this year, providing both challenges and opportunities for junior companies, according to Robert Cooper, senior oil and gas analyst at Haywood Securities. But change has been good for some of the companies he follows, and in this interview with The Energy Report, he shares some names that are still sitting pretty.

The Energy Report: It's been about one year since we last spoke, Robert. What do you think have been the most significant developments in the North American oil and gas industry since then?

Robert Cooper: It's a dynamic business, and a number of changes have occurred. First, the macroeconomic backdrop remains murky, resulting in persistent volatility in equity and commodity markets. Investors remain wary of putting on riskier trades because the visibility simply isn't there. The fear that some Monday morning we'll wake up with a negative surprise is inhibiting risk taking and impacting small-cap growth equities, particularly.

Second, the rapid increase in U.S. oil production has negatively impacted Canadian producer net-backs. The spread between Canadian light oil prices and the U.S. equivalent has been much more volatile than historical rates. The lack of pipeline capacity has exacerbated this trend and given rise to alternative methods of transportation, such as oil-by-rail. But overall, the "differential risk" has been added to the list of risk factors investors assume when investing in the oil and gas sector.

Finally, the natural gas market, after a period of massive oversupply, has, in our view, self-corrected and appears to have returned to balance.

TER: In terms of pipeline capacity and building potentially new pipelines and better distribution, do you have any further thoughts on where you think that might be headed at this point—or is it all regulatory?

RC: There is a juicy arbitrage between waterborne markets and domestic markets. There are a lot of smart companies and individuals looking at ways to solve that, but in the end, these things sometimes have political masters who need to be appeased. The current president has indicated he's not amenable to it. We'll see what happens.

TER: In your last Robert Cooper , CFA, is Senior Oil & Gas Analyst at Haywood Securities in Calgary. He has a diverse background including commodity trading and merchant banking. Cooper has spent the past six years in equity research focused on high-growth energy equities both in Canada and across the world and is regularly called upon for insight on the oil and gas industry by various local and national media. He is a CFA charter holder and is a past president of the Calgary CFA Society.

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DISCLOSURE:
1) Zig Lambo of The Energy Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Energy Report: Royal Dutch Shell Plc.

3) Robert Cooper: I personally and/or my family own shares of the following companies mentioned in this interview: Crocotta Energy Inc. I personally and/or my family am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview.

4) Haywood Securities Inc. or one of its subsidiaries has managed or co-managed or participated as selling group in a public offering of securities for Poseidon Concepts Corp., Crocotta Energy Ltd., Yoho Resources Inc. and Tamarack Valley Energy Ltd. in the past 12 months.
5) As of the end of the month immediately preceding this publication either Haywood Securities, Inc., one of its subsidiaries, its officers or directors beneficially owned 1% or more of Yoho Resources Inc.

Written By: The Energy Report