BMO analyst Randy Ollenberger assesses the winners and losers as the TMX pipeline opening nears,
“Long-suffering western Canadian oil producers are finally about to get some relief as the TMX pipeline comes into service over the next several months. The pipeline is reported to be 98 per cent complete and expected to begin linefill in March, clearing the way for deliveries by the end of April … While the impending start-up of TMX has been frequently reported on, we think it is not adequately reflected in Western Canada Select futures prices or Canadian equity valuations … . Winners and losers. MEG and Strathcona demonstrate the largest cash flow improvement to a tighter WTI-WCS differential. Both Cenovus and Imperial Oil are net beneficiaries from tighter spreads, with the gains in their upstream business’ more than offsetting the loses in their downstream business. Suncor is relatively neutral to the change in differential. Overall, we expect refiners of western Canadian heavy oil to see relatively higher feedstock costs, which could weaken their margins”