Analyst Corner – Analyst Corner: Energy | CIBC Asset Management


My name is Jeremy Mosher, I am an energy analyst at CIBC Asset Management. Hi, my name is Brian See and I’m a senior analyst covering energy for CIBC Asset Management. One of the things that I like to do is think about energy in a very broad sense. So that means paying attention to GDP data, that means paying attention to consumers of energy, producers of energy, anyone in between, and looking for any signals that might indicate a change in that chain. Why energy is important to Canada is it’s effectively a large part of the Toronto Stock Exchange, making about 20 to 25 percent of the TSX and the second largest sector behind financials. Broadly speaking, the energy sector, you can think about it as two broad commodities: crude oil and natural gas. Within that energy sector there is smaller subsectors, if you will. Since the beginning of this past decade, basically since 2010, the industry has gone through a revolution if you will through basically two main issues. One is the discovery of shale oil as well as horizontal drilling. So, all of us bring a unique expertise.

My expertise is grounded in oil field services, that’s kind of where I did most of my training when I lived out in Calgary. And so the exploration and production companies, I cover some of the U.S. companies and some of the Canadian companies, and so you can see that connection there, but Brian See would also cover a big group of those. And so he and I will collaborate as we try and understand what the E&Ps are likely to do and how that will affect the services, and what the services are likely to do and how that will affect the E&Ps. We still see a lot of opportunities for growth and improvement, and that’s really driven by the fact that manufacturing processes around the globe have benefitted from the application of robotics and automation. And energy, specifically oil and gas drilling and fracking, is an industry that that could be applied to, but it’s tended to be a laggard in terms of deploying new technology.

With new legislation and regulation around carbon emissions, greenhouse gas emissions, and so forth, that’s going to cause companies basically to rethink about how they actually exploit these resources in a more environmentally friendly way. Ultimately, it could lead to a lot more cost for the industry. So, that’s one threat. The second other threat is just basically the emergence of alternative sources of energy, such as solar. I really like my job, and the reason is with these trends and the interconnectedness of the energy chain, you uncover new data points, new themes, new trends every single day. In a way I almost feel like a detective as I dig through conference calls and dig through industry commentary, identify these trends, and then ask how is this going to affect Company A, how is this going to affect Company B? So, it’s just really exciting.