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CPP investment CEO bullish on oil despite price crash, emissions debate

He cites demand for fossil fuels, which is expected to remain strong for many years.

March 10, 2020   by CP STAFF

CALGARY — The CEO of the Canada Pension Plan Investment Board says today’s oil price crash and stock market selloff will hurt Canadian energy companies that have weak balance sheets and high debt.

But Mark Machin says those with strong books will survive – and companies with money should be following his organization’s example and looking at buying opportunities.

Saudi Arabia slashed its official crude selling price March 8 after OPEC talks with Russia broke down without producing an agreement on production cuts. Benchmark global oil prices fell by more than 20%.

Following a speech in downtown Calgary, Machin, the head of the organization that manages about $420 billion for Canada’s national pension fund, said damage to the Canadian economy and the energy sector will depend on how long low oil prices continue.

He says the CPPIB is protected from the fallout by its diversified portfolio of investments in assets around the world, some of which will likely benefit from the current situation.

He says he believes investments in the oil and gas sector are still attractive despite increasing attention being paid to climate change because demand for fossil fuels is expected to remain strong for many years.

“Companies that may have … stretched balance sheets and projects that they can’t stop spending on, they may have some stress,” said Machin.

“But I think companies with strong balance sheets and cash can weather this out, and are going to see really interesting opportunities over time.”

 


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