Canadian oil and gas stocks on the Toronto Stock Exchange are drawing fresh attention as investors weigh how tariffs, geopolitical conflict and shifting oil prices are reshaping the sector, according to an analysis using StockCalc’s valuation screener.
The analysis, conducted by Brian Donovan, president of the Miramichi, N.B.-based fintech StockCalc, examined the top 10 TSX-listed oil and gas companies by market capitalization. Using valuation tools including discounted cash flow, price comparables and adjusted book value, the screen compared each stock’s recent closing price against its calculated intrinsic value to assess whether shares appear undervalued or overvalued.
Tariffs and Pipeline Access Shape the Picture
Despite ongoing strain in U.S.-Canada trade relations, the analysis found that Canadian crude currently appears shielded from U.S. tariffs. That is largely because many U.S. Midwest refineries are built specifically to process Canadian heavy crude, meaning a tariff would push up costs for American refiners and consumers. Canadian goods compliant with the USMCA also retain key exemptions.
The Trans Mountain Expansion pipeline was also flagged as a significant factor, having improved Canada’s access to Pacific markets, reduced reliance on U.S. refineries and narrowed the Western Canadian Select price discount that has historically weighed on Canadian crude. The analysis noted that Canadian barrels gain added strategic value when Middle Eastern crude becomes harder or more costly to transport, since much of that production is medium or heavy sour crude similar to Canadian oil-sands output. If those Middle Eastern barrels become less available, refiners may turn to Canadian heavy crude shipped via the expanded pipeline to Asian ports — a shift that could narrow the WCS discount at the same time as a rise in WTI prices.
Strait of Hormuz and Price Sensitivity
The report also examined the importance of the Strait of Hormuz, through which 20 million to 21 million barrels of petroleum moved daily before the current conflict, representing about one-quarter of global seaborne oil trade. The analysis suggested that if an agreement were reached to ease tensions, oil prices could see a significant decline from current levels — potentially dropping from roughly $100 WTI toward $80, which would materially cut into the windfall currently benefiting producers.
To illustrate how sensitive individual companies are to oil price swings, the analysis cited figures disclosed by producers themselves. Suncor Energy Inc. has said each US$1 per barrel increase in WTI adds approximately $215-million to its annual Adjusted Funds from Operations. Cenovus Energy Inc. has said a similar $1 per barrel increase adds $220-million to its Adjusted Funds Flow, while Whitecap Resources Inc. has said the same $1 increase adds $50-million to its funds flow.
Three Categories of Companies
The screened companies were grouped into three categories based on how they are affected by oil and gas prices. The first group — Canadian Natural Resources Ltd., Suncor Energy Inc., Imperial Oil Ltd., Cenovus Energy Inc., Whitecap Resources Inc. and Ovintiv Inc. — has direct oil exposure, meaning their funds flow moves directly with oil prices and production volumes.
Tourmaline Oil Corp. was noted separately because more than 75 per cent of its production is natural gas, meaning its results are more closely tied to natural gas prices and volumes rather than oil.
The third group consists of midstream companies — Enbridge Inc., TC Energy Corp. and Pembina Pipeline Corp. — whose revenues depend more on the volume of oil or natural gas moved through their systems under contracted pricing, rather than directly on commodity price swings. The analysis noted that all of the companies screened pay dividends, with the midstream companies offering the highest yields among the group.
The report emphasized that investing involves risk and that StockCalc accepts no liability for losses or damages arising from use of the analysis.
This article is for informational purposes only and does not constitute financial, investment, or legal advice. Consult a licensed financial advisor before making investment decisions.
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