Q: As a source of dividends, many Canadian “hydrocarbon energy” companies have a long and positive track record. Today, non-hydrocarbon energy sources have become more economically attractive, are growing quickly through significant investment, are becoming easier to support politically, and continue to improve through ongoing R&D. Against this backdrop of an accelerating shift to lower carbon energy sources…
Which Canadian “hydrocarbon energy” companies do you think are best suited to adjust to this change?
Which Canadian “hydrocarbon energy” companies do you think are best suited to adjust to this change?
5i Research Answer:
We think that the theme of shifting to non-hydrocarbon energy is tailored towards the largest producers who have the money to spend on R&D. Smaller companies who are already in the hydrocarbon space will struggle to shift production to a non-hydrocarbon approach due to sunk capital costs. In Canada, large energy producers such as Suncor Energy (SU), Canadian Natural Resources (CNQ), and Cenovus Energy (CVE) have all put focus on investing in reduced environmental impact. It is important to note that we may rely on new renewables companies to lead this change as there have been a few articles that came out this year stating that top oil and gas firms have made almost no progress in shifting away from hydrocarbons.