ATB Capital Markets Energy report this morning is a 10/10. Other firms could take note on disseminating insights from institutional conference efforts. Congrats Hugh Sanderson, Patrick J. O’Rourke and Waqar Syed:

The ATB Take: ATB Capital Markets hosted its 13th Annual Institutional Investor Conference on January 8, 2025, in Toronto. The day focused on the energy sector, and included discussions with nearly 30 energy companies in the energy infrastructure, energy services and energy production areas. Our keynote lunch speaker was Paul Epstein, a former NFL and NBA executive and author of the bestseller, Better Decisions Faster, who spoke about leadership and team building. In this report, we highlight key takeaways from the various panel sessions and fireside chats.
Highlights:
▪ E&P: Key topics discussed on the E&P panels included current and long-term views on WCSB egress and the impact on near and medium term Canadian crude oil differentials, production growth project progressions, multilateral and secondary recovery trends, the potential impacts of US tariffs, industry M&A outlooks, ROC expectations, and modifications/learnings being factored into 2025 drilling/completion programs. In-basin natural gas dynamics are expected to materially improve in H2/25 following LNG Canada, with longer-term data center power generation tailwinds for natural gas demand introducing incremental industry confidence in potential future gas market demand. The current political climate represents a mixed bag for producers, with very clear optimism towards a potential change in the Canadian federal government and regulatory environment, and political uncertainty and risks stemming from the US's potential sweeping tariffs. M&A consolidation is expected to continue to be a theme through 2025 as companies continue to seek M&A-fueled growth and portfolio inventory optimization.
▪ Energy Infrastructure: The EI panel featured ALA, CPX, NPI and TA. Discussions focused on rising demand for power and firm natural gas generation to support broader electrification and data center development. CPX and TA have robust power generation asset positioning in Canada and the US, and are seeing significant opportunity for data center development co-located with power generation assets in Alberta. NPI is focused on its widespread renewable portfolio and offshore wind developments, but has flagged greenfield development opportunities to expand its natural gas generation portfolio in Canada. ALA is exposed on the Utility gas delivery side and further boasts a midstream asset portfolio that deals in processing natural gas, fractionation, and LPG exports.
▪ Energy Services: The bullish electric power and natural gas view outlined by Energy Infrastructure and natural gas leveraged E&Ps is a long-term positive for energy services, but it has not manifested in actual activity increase yet. The ES panel participated by CEU, ESI, PD and TCW highlighted modestly growing activity increases in Canada and a flattish US and International outlook for 2025. However, TCW expects 4-6 frac crew and PD 15 to 20 rig increase in Canadian demand in the coming years from natural gas-related activity. PD is focused on raising cash return to shareholders, ESI is targeting $200mm in debt reduction in 2025, while TCW is actively considering organic and inorganic growth opportunities. CEU is positively exposed to rising drilling productivity and expecting market share gains in 2025, it is likely to increasingly prioritize high return growth opportunities. Heavy Hitters: Canadian Oil Growth Opportunities
Presenters:
Highlights:
Rob Broen, President & CEO, Athabasca Oil Corp.
Robert Wollmann, SVP Exploration, Cardinal Energy Ltd. Christophe Nerguararian, CFO, International Petroleum Corp. Connor Waterous, SVP & CFO, Strathcona Resources Ltd.
▪  LackofNear/Medium-TermConcernRegardingWCSBEgress:Eachcompanyonthepanelhad a similar sentiment towards WCSB crude egress, largely predicated on the commissioning of TMX in 2024, which materially improved Canadian egress capacity and WCS differentials. Going forward in the longer-term, SCR anticipates a US$8-$10/bbl transportation-related WCS differential alongside a US$3-$5/bbl quality-related WCS differential (totalling ~US$11-$15/bbl), noting that downside on the WCS differential for any sustained period of time will likely be less impactful over the next few years relative to the past. IPCO highlighted the importance of being able to move barrels to markets outside of the US, noting that its upcoming Blackrod project is connected into Edmonton and can potentially take advantage of arbitrage opportunities between the US West Coast and Asian markets that Canada has not had access to in the past. CJ thinks that TMX will remain a game changer and sees the pipeline industry as relatively underestimated in its ability to add incremental capacity. ATH sells all of its oil in-basin and thinks that Canada will need continued increases in takeaway in the long-term, but has never been more optimistic on Canada getting egress sorted out given the current domestic political climate.
▪  NotableGrowthProjects:Ourpanelistsallhavemeaningfulgrowthprojectscomingonlineinthe near to medium term. ATH’s Leismer facility expansion to 40 mbbl/d (from ~28 mbbl/d mid-2024) is underway, currently drilling and prepping growth wells (finished four well pairs on a new pad and six re-drills), with production coming online in phases as ATH builds it out; the Company won’t see a clean annual production number until 2026, following 2025’s planned major turnaround. IPCO has now spent US$600mm of the required US$850mm capex for its Blackrod project, guiding to first steam in 2026 and first oil later in the year for the 30 mboe/d phase 1 of the project. CJ is now drilling well pairs at its 6 mbbl/d Reford SAGD project (relative to CJ’s current ~22 mboe/d production base) with the facility footprint already in-place, noting that the project remains both on time and budget, with little remaining execution risk and July set for first steam. SCR is ready to sanction Lindbergh phase 2 at the start of 2026, expecting first steam in 2028 as the asset grows to ~45 mbbl/d (from 20 mbbl/d currently), with 105 mboe/d anticipated as the asset’s plateau rate.
▪  Return of Capital Philosophy - Share Repurchase/Dividend Priorities: CJ is currently paying a $0.72/share annual base dividend (10.6% current dividend yield) which is supported by its conventional asset base. As CJ builds out its two thermal projects over the next three years, it will begin to look at either incremental growth or returns to shareholders (likely through incremental dividends) as a destination for its improving FCF profile. ATH and IPCO are active users of their NCIB authorizations; both companies completed their previous 10% NCIB programs and are on-track to complete them again this year, with ATH stressing its continued emphasis on share repurchases as its preferred ROC vehicle going forward and IPCO pointing to the potential for a shift to a dividend-paying ROC model following the commissioning of its Blackrod project.
▪  LimitedConcernOverPotentialUSTariffs:Therewasanoverarchingviewonthepanelthatthe very long reserve life assets operated by the companies would reduce the impact on value of the potential tariffs floated by Donald Trump back in November, with the life of the tariffs expected to generally be short. If the tariffs do apply, IPCO expects the impact burden will be split by both producers in Canada and refiners/end-users in the US, and will likely have a negative impact on the Canadian currency, with some insulation for the Company being a US denominated business.

Long weekend energy thoughts from world famous energy analyst Dan Payne at NBC: 2024e STRIP; US$78.02/bbl WTI (+3% W/W), C$101.12/bbl EDM (+3% W/W), C$84.16/bbl WCS (+6% W/W), C$3.26/mcf AECO (FLAT W/W) >>> XEG +6% W/W Inflections to Return of Capital – Given the strength in the commodity, we are increasingly looking towards accelerating inflections to return of capital, particularly as WCP jacked its dividend by 26% (to a 6% yield under an inflection to 75% return of FCF from 50%)

Energy thoughts from Dan Payne’s weekend note: This week with a focus of OFS. 2024e STRIP; US$75.31/bbl WTI (+4% W/W), C$95.84/bbl EDM (+5% W/W), C$79.47/bbl WCS (+5% W/W), C$3.27/mcf AECO (+3% W/W) >>> XEG +4% W/W. Thread: OFS Majors Review. OFS Majors second quarter results largely echoed the sentiment reflected by recently published Dallas Fed Energy Survey, although offered more distinction, granular detail and visibility in the outlook to support our thesis for our domestic OFS coverage.

Credit to Peters & Co., some interesting charts to better understand an evolving Cdn energy sector…
a) lagging cost of capital (valuation) rarely last forever.
b) historically M&A market had been a solution.
c) buyers need a multiple gap to consolidate in size/frequency. Compressing P/NAV valuations