UBS Canada on royalty changesWho benefits from Alberta's royalty changes?
The Alberta government's decision yesterday to roll back on royalties, a bidto bring energy investment back to the province, is expected to benefit severalcompanies. UBS Securities Canada analyst Chad Friess said in a research reportthat the winners should include Cenovus Energy , EnCana Corp. and TalismanEnergy among the large-cap companies, PetroBakken Energy among the mid-caps, andTrican Well Service and Calfrac Well Services among the services firms.
"We expect players that have amassed significant positions in unconventionalplays to benefit the most from [yesterday's] announcement," Mr. Friess wrote."Given the type of curves (high declines, significant per cent of overallproduction occurring in the first year); most of the wells will have yielded alarge percentage of their value before royalties can ramp up. We look forplayers in emerging unconventional oil and gas plays, Pelican Lake, Weyburn,Montney and the Cardium to benefit from [yesterday's] news, i.e. [EnCana,Cenovus, Talisman and PetroBakken]. On the service side, we believe the pressurepumpers Trican and Calfrac come out as obvious winners since they provide muchof the necessary stimulus in today's unconventional plays."