Resource World Magazine

A U G U S T / S E P T E M B E R 2 0 1 7 www.resourceworld.com 73 year's end. With OPEC likely to repeat their strategy of production cuts of the late 90s and early 2000s followed by another round of cuts, it will be "a few quarters" before prices come back, he said. OPEC has its own problems with Libya and Nigeria dropping production and the likelihood that, if prices stay low, world demand will be met by non-OPEC nations. In Schachter's opinion, this is a good time for investors to rid themselves of their margins and "sit on the sidelines" for a while as major operators like Suncor Energy [SU-TSX] and Canadian Natural Resources [CNQ-TSX] downsize, by mea- sures topping 20%. He said the next two quarters likely will see companies have lower cash flows and miss production tar- gets and "Q2 and Q3 will disappoint the street." "When we get to the fourth quarter, we will see some bargains," he said, add- ing that savvy investors will look at the service sector at least as favorably as energy production, as the former currently offers the best return on investment. He cited Schlumbrger, Haliburton and Baker Hughes GE as good bets, along with the low-cost action in the hot, liquids-rich Montney play. "There are lots of [company] names peo- ple can invest in," he said. "It just depends on how much liquidity you want." And there is considerable opportu- nity for investors in both Canada and the United States, he noted. "These days, investors are being nimble on both sides of the border," Schachter said. The industry faces other obstacles. In British Columbia, the failure of the Liberal government to retain power means eco- nomic uncertainty as the NDP-Green coalition takes control. Schachter likens it to "shooting oneself in the foot" and pre- dicts massive budget deficits and a "day of reckoning" will come soon if resource development stalls. "I give them 18 months at most," he said. Government has failed the industry in many ways, he said, fighting over a pie that doesn't exist with politicians shoot- ing themselves in the foot repetitively when faced with problems involving ship- ping, pipelines, LNG and First Nations. Organizations like CAPP (Canadian Association of Petroleum Producers) and EPAC (Explorers and Producers Association of Canada) are getting the mes- sage out regarding the reality of pipelines and the positive impact they can have on job opportunities and revenues. The debate needs a "platform of rationality" instead of a discourse which has until now been largely directed by the "emotional left". "Do we have the strength at the federal level to use their powers as they did with the Trans-Canada Highway, the railway, etc., when the federal government used its muscle to drive [those projects] through? The Kinder Morgan pipeline will be the test," he said. n

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