Wilson Wang on the Canadian E&P Industry

This article is authored by Wilson Wang, Managing Partner of Twin Peaks Capital.

E&P is where generalists go to die. Similar to banking, specialty finance, and insurance, E&P is a space where understanding a special set of numbers will save you a lot of money. All too often, investors ask the wrong questions to management, sell side analysts focus on growth as opposed to profitability, and management has incentives to treat growth as the number one priority. It’s a space where reading ten years of 10Ks could be replaced simply by having a chat with a geologist, and industry executives. It’s a risky space where people in the Middle East determine companies’ fates and banks lend on hopeful reserves. If you are willing to still venture in this space, then I got just the thing to get you excited.

E&P is currently heavily neglected due to the uncertainties surrounding oil prices. What’s more neglected than U.S. E&P names are the Canadian E&P names. My goal is to find the companies with just enough hair on them that markets shred them to pieces, but have extremely high quality acreages as to be able to survive in this commodity price downturn.

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