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Energy investors haven’t made money in a decade — why are they still clinging to false hope?

Investors haven\'t made any money over the past decade with the S&P TSX Capped Energy Index gaining a paltry 0.3 per cent annually while the Canadian dollar-adjusted West Texas Intermediate oil price is up only 1.4 per cent per year.

It has been a very challenging time for investors in the energy space, but we discover their resiliency impressive, considering they have endured a decade of little to no returns.

Big oil warns world to brace for any different, but equally daunting, price shock to come

Oil companies say there will be a price to pay – a significantly higher price – for all the cost cutting being done today to cope with the collapse within the crude market. Read on

Investors haven\’t made anything over the past decade using the S&P TSX Capped Energy Index gaining a paltry 0.3 percent annually while the Canadian dollar-adjusted West Texas Intermediate oil prices are up only 0.7 percent per year. This compares to the S&P TSX Index that has gained approximately seven percent per year within the same period.

Even though it remained fairly flat over the past 10 years, the power index has experienced tremendous volatility with an average standard deviation of 30 percent, more than double the TSX\’s 14 per cent.

It is doubtful that many investors rode the entire period, instead we believe they pulled the ripcord during a few of the periods of excess volatility. It\’s a whole lot worse for those who purchased at its recent peak in mid-2014.

Which is why we find it rather amazing that investors plowed a whopping $5.5 billion into the Canadian exploration and production sector through bought-deal equity financings within the first quarter, as well as an additional $1.4 billion raised so far this quarter.

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