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Brian See, Portfolio Manager at CIBC Asset Management.

With extreme volatility in all of the markets comes opportunity, and one such opportunity we like is Concho Resources. The reason we like this name is it’s a low cost operator in the Permian Basin. Why we like it is the Permian Basin is actually going to have pipeline-takeaway capacity coming into focus in the second half of 2019, so there’s a line of sight in getting the barrels out from the Permian Basin into the Gulf Coast. Concho Resource is a big beneficiary of this, because they’re one of the largest operators.

They also produce oil at very low break-even prices, and in addition to which they have a strong management team, and a good balance sheet. Pending their acquisition of RSP [Permian], we think it sets up the company for multiple years of growth at an attractive rate, and good rates of return, and for those reasons we like the stock.

A second name that we find attractive is BP Petroleum. This is a super, major global-integrated company. The reason we like it is because of the impending challenges in Canada. We’ve all heard about the pipeline takeaway issues in Canada, and political and regulatory risk. This obviously causes wide differentials for Canadian producers, and more specifically, that the upstream Canadian producers are realizing low prices. On the flip side of that, the one who benefits from that is actually refiners, and BP Petroleum has an extensive refining network in the United States. What they’ve done is bought discounted Canadian crude at attractive prices, and then processed that crude to sell gasoline and diesel. So, they’re actually a beneficiary of the impending challenges in Canada, and that’s one of the reasons we like it.

We also like BP because their acquisition of BHP’s shale assets in the US. We think BP can realize synergies from these assets, and then turn them around into growth vehicles, and then finally the free cash flow profile that BP is spinning off from the company from its assets is actually quite attractive, and among the best amongst its global integrated peers. So for all these reasons, we like a BP Petroleum.

The third final stock that we like is Enbridge Pipeline. Enbridge is one of the largest pipeline operators in Canada. We think the company has taken extensive steps to fix its balance sheets, roll up its MLP structure, and then get back on a trajectory of growth as well, and so we think Enbridge is attractive in terms of its dividend yields, its valuation, and its future growth prospects, and for all those reasons, we like that stock as well.

CIBC Energy Fund
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