Jason Kenney to meet institutional investors in New York as Canadian energy stocks flounder

CALGARY – Alberta Premier Jason Kenney is heading to New York and Ohio next week to meet with private equity firms and investment banks at a time when interest in shorting Canadian energy stocks remains high.

Kenney will fly to New York on Monday for a series of meetings with banks and institutional investors to tout the province’s recently cut corporate tax rates and to ask the firms to consider investing more in Alberta, the Financial Post has learned.

The New York trip will include 14 meetings with institutional investors including large private equity firms that already have holdings in the province, before Kenney flies to Columbus, Ohio, for meetings at the North American Strategy for Competitiveness forum on Wednesday and comes after a bruising summer for Canadian oil and gas investments.

AltaCorp Capital released a report Friday showing that high levels of short selling continues in Canadian energy including large volumes of stocks like Athabasca Oil Corp., Obsidian Energy Ltd., Pengrowth Energy Corp. and Bonterra Energy Corp. sold short.

The AltaCorp note showed that more than 10 per cent of the daily trading volumes in each of those stocks had been shorted, driving down share prices at a time when Canadian energy equities are trading at or near historic lows.

Hedge funds and short sellers have increasingly been betting against Canadian oil and gas names given a lack of new pipeline space, depressed commodity prices and — more recently — the potential for bankruptcies and the potential for names to be dropped from major indices.

As many as seven Canadian energy names could drop off the S&P/TSX Composite Index after their market capitalizations fell below the threshold necessary for inclusion in the main index, which would preclude major passive funds and other institutional investors from buying their shares because most large funds have a mandate to follow major indices.

Against this backdrop, Kenney is pitching further investments in Alberta and also plans to raise the issue of how banks have scored oilsands companies environmental, social and governance (ESG) issues — a growing field of analysis that banks are applying on publicly traded companies lately. It’s also a field that Canadian oilsands producers believe scores their businesses harshly.

For months, oilsands companies including Canadian Natural Resources Ltd. have made the case at investor conferences, in meetings and on earnings calls that banks should score oilsands producers higher on their ESG ratings systems.

“When you look at the environment, the E in ESG, clearly Canada is doing very well if not better than any other jurisdiction, especially when you take into account Canada’s environmental performance on greenhouse gas intensity. When it comes to social and governance ….Canada clearly performs at the very top of the list,” CNRL executive vice-chairman Steve Laut said on a recent earnings call.

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