IEA boosts oil demand outlook for 2022. Time to buy TSX oil stocks?

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IEA boosts oil demand outlook for 2022. Time to buy TSX oil stocks?

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 IEA boosts oil demand outlook for 2022. Time to buy TSX oil stocks?
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Highlights

  • The International Energy Agency now expects the global oil demand to reach 99.7 million barrels a day this year
  • Stocks of Athabasca swelled by over 184 per cent in 12 months
  • The TSX Capped Energy Index jumped by over 41 per cent year-to-date

Some TSX oil stocks like Pason (TSX: PSI), Vermilion (TSX: VET), Enerplus (TSX: EFR) etc., might be worth exploring as the TSX energy index climbed higher by nearly four per cent on Thursday, August 11, helping Canada’s main equity index to extend its triple-digit winning streak to close at 19,991.88.

Some Canadian oil and gas stocks like Athabasca (TSX: ATH), Headwater (TSX: HWX) etc., surged as oil prices rallied after the International Energy Agency (IEA) boosted its oil demand growth projections to 3,80,000 barrels per day for this year. According to its latest oil market report released on August 11, the global oil demand is expected to expand by 2.1 million barrels per day to reach 99.7 million barrels a day in 2022.

Brent prices were up by 0.20 at US$ 99.80, while Crude was hovering around US$ 94.22 at 5:16 AM EST on August 11. Keeping these new estimates in mind, Canadians can explore the following TSX oil stocks selected by Kalkine Media®.

Pason Systems Inc (TSX: PSI)

Pason Systems is a small-cap oilfield service firm offering fully integrated drilling solutions. Pason revealed that its revenue from North America increased 71 per cent year-over-year (YoY) to C$ 59.63 million in the second quarter of FY2022. International revenue also grew by 58 per cent to C$ 12.31 million in the latest quarter compared to C$ 7.8 million in the same quarter a year ago.

Pason Systems also stated that its solar and energy storage revenue was C$ 1.66 million in the second quarter this year, marking a notable YoY rise of 94 per cent. The oil service firm posted a net income of C$ 17.99 million in Q2 2022, up by 268 per cent from Q2 2021.

Stocks of Pason Systems climbed over 63 per cent in 52 weeks. According to Refinitiv findings, the PSI stock had a Relative Strength Index (RSI) value of 48.76 on August 11.

Vermilion Energy Inc (TSX: VET)

Vermilion Energy completed the acquisition of Leucrotta in May. Vermilion said it successfully integrated acquisition assets, including Mica property, into the company, which is expected to enhance free cash flow (FCF) to the oil business. High commodity prices and net hedging gains mainly led to a net profit surge of 28 per cent to C$ 363 million in the second quarter of 2022 relative to Q2 2021. Vermillion declared a 33 per cent growth in its quarterly dividend to C$ 0.08, payable on October 17.

Stocks of Vermilion Energy galloped by roughly 262 per cent in 12 months. Refinitiv data suggests VET stocks to be on an upward trajectory with an RSI value of 63.68, signalling a moderate-to-high momentum on August

Athabasca Oil Corporation (TSX: ATH)

Athabasca Oil increased its annual production expectations to 34,000 and 35,000 barrels of oil equivalent a day (boe/d) compared to the previous range of 33,000 and 34,000 boe/d, underpinned by ‘strong’ underlying asset performance. The small-cap oil producer said that its free cash flow amounted to C$ 33.6 million in Q2 2022, higher than C$ 27.6 million in the same period a year ago.

Stocks of Athabasca swelled by over 184 per cent in 12 months. According to information from Refinitiv, ATH stocks held an RSI value of 53.13 on August 11.

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Precision Drilling Corporation (TSX: PD)

Precision Drilling is a Calgary, Alberta-headquartered firm that provides drilling, production and related services to the oil and gas players across North America. Precision Drilling said that drilling activities in North America increased by 38 per cent, which helped its quarterly revenue to reach C$ 326 million in Q2 2022, up by 62 per cent YoY. Precision also disclosed that drilling day rates jumped by 25 per cent and 30 per cent in the United States and Canada, respectively.

Stocks of Precision Drilling spiked by over 105 per cent in a year. As per Refinitiv, Precision Drilling scrips recorded an RSI value of 55.53 (above the oversold level of 30) on August 11.

MEG Energy Corp (TSX: MEG)

MEG Energy posted revenues of C$ 1.57 billion in Q2 2022, an increase of C$ 1 billion recorded in the same quarter a year earlier. The C$ 5-billion market cap firm significantly improved its net income to C$ 225 million in the second quarter of this year. MEG reduced its net debt to C$ 1.78 billion in the latest quarter, relatively low from C$ 2.66 billion in the second quarter last year.

The MEG stock gained roughly 126 per cent in a year. According to Refinitiv data, MEG stocks had an RSI value of 52.79, with around 2.77 million shares switching hands on August 11.

Headwater Exploration Inc (TSX: HWX)

Headwater Exploration saw its sales jump by 226 per cent YoY to C$ 122.1 million in the second quarter ended on June 30 this year compared to C$ 37.42 million a year ago. Headwater substantially expanded its net profit by 955 per cent to C$ 48.41 million in the latest quarter compared to C$ 4.58 million in Q2 2021.

Stocks of Headwater Exploration swelled by over 50 per cent in one year. On August 11, HWX stocks saw an RSI value of 55.86, based on Refinitiv findings.

Enerplus Corporation (TSX: EFR)

Enerplus said its bottom line increased to US$ 244.4 million in Q2 2022, considerably higher than a loss of US$ 50.93 million incurred in the second quarter of 2021. The mid-cap company generated US$ 250.86 million cash from operating activities relative to US$ 110.46 million in Q2 2021. In addition, Enerplus narrowed down its net debt to US$ 545.98 million in the latest quarter compared to US$ 913.72 million in the same period last year.

The EFR stock expanded by nearly 146 per cent in 52 weeks. With a trading volume of 1.1 million on August 11, ERF stocks held an RSI value of 56.74, as per Refinitiv data.

Bottom line

The TSX Capped Energy Index jumped by over 41 per cent year-to-date (YTD). Hence, equity investors looking for oil exposure can explore TSX oil stocks.

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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