As the loonie hovers around 75 cents U.S. and a new report suggests oil could drop as low as US$20 a barrel, Kevin O鈥橪eary sees investment opportunities.
鈥淚 believe the energy sector in the next five years is probably going to offer some of the best returns investors can find,鈥�
O鈥橪eary said a prediction by analysts at Goldman Sachs that oil prices 鈥� currently around US$45 a barrel 鈥� could go as low as US$20 a barrel reminds him of previous predictions 鈥渢hat oil would go to $250.鈥�
In fact, oil peaked at US$145 a barrel in 2008.
鈥淭hink about an analyst,鈥� O鈥橪eary said. 鈥淭hey can make a reputation for themselves making something bombastic or very wild in terms of a speculation.鈥�
In other words, oil prices are unlikely to go down that far and could in fact go up.
O鈥橪eary said that while he鈥檚 鈥渘ot recommending it to anyone,鈥� he will probably take money out of the U.S., convert it to Canadian dollars (despite the wide gap in the exchange rate), invest it in Canadian companies 鈥渁nd simply wait.鈥�
O鈥橪eary went on to say that, in addition to the potential for energy prices to climb, opportunities may be created in the Alberta oil sector by provincial government policy.
鈥淭he government there has decided not to make a call on what royalty rates are going to be, they鈥檙e going through a consulting process,鈥� he said.
鈥淚t鈥檚 scaring capital away from Canada and the Canadian energy sector because if you go to New York 鈥� the multi-billion-dollar pension plans 鈥� don鈥檛 know what to do with Canada.鈥�
鈥淭hey don鈥檛 know how to do a spreadsheet on what the cash flows are going to be, because the government is saying, 鈥榳e don鈥檛 know what we鈥檙e going to charge as a royalty rate.鈥欌��
As a result of the uncertainty, he said, Americans are selling off Canadian energy stocks, and that makes them affordable.
鈥淚t couldn鈥檛 get worse in Alberta,鈥� he said. 鈥淎t some point, when the government is finished with their chaos, it will be a good time to invest.鈥�
