Precision Drilling among 7 Calgary-based companies dropped from S&P/TSX composite index

Pumpjacks are shown pumping crude oil near Halkirk, Alta., on June 20, 2007. Drilling companies are continuing to move rigs from Western Canada into the more active oilfields of the southern United States. THE CANADIAN PRESS/Larry MacDougal. Canadiani Press

On Monday, eight Canadian energy companies were removed from the S&P/TSX composite index — seven of them are based in Calgary.

Precision Drilling Corp. is Canada’s most active drilling contractor, with 7,000 employees and a stock price that’s under $2 now.

READ MORE: 8 energy companies dropped from Canada’s main market index

“It’s been a very, very tough year. Likely one of our worst years in our history,” Precision president Kevin Neveu told Global News from Houston on Wednesday.

He said the move is disappointing and reflects the lack of investor confidence in the Canadian energy sector.

READ MORE: ‘We’ve got open doors’: Texas lures Western Canadian businesses south

Neveu said the move won’t change day-to-day business but it could make raising capital harder.

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“It generally means a depressed stock price for a little longer and if we decided we needed more capital, we would be facing a higher cost to raise the capital. But we are in a healthy position with a strong capital structure.”

READ MORE: Acquisitions, insolvencies cited as drilling company count tumbles by 40%

He predicts Canada’s energy sector is going to be challenged for a while but adds valuations right now very attractive, so it might be a time for bold investors to get on board.

“In the best-case scenario, this is a fantastic buying opportunity, and I certainly hope that’s the case,” said Mike Holden, chief economist with the Business Council of Alberta.

He said the delisting isn’t surprising given how brutal it’s been for the energy sector.

“We are facing a challenging investment climate. Investment in Alberta’s energy sector has fallen by 55 per cent since 2014 and that’s a loss of $32 billion in annual investment over that time. Investors are uncertain,” Holden said.

The companies’ exclusion from the index is a result of their market valuation falling below the minimum level for inclusion.

Companies removed from the index must wait a year to get back on, if their value meets requirements.

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Watch below (June 14): Grande Prairie-Mackenzie MP Chris Warkentin raised concerns regarding Alberta’s energy sector growth during Question Period in the House of Commons on June 14.

Click to play video: 'Future growth of Alberta’s energy sector questioned in the House of Commons' Future growth of Alberta’s energy sector questioned in the House of Commons
Future growth of Alberta’s energy sector questioned in the House of Commons – Jun 14, 2019

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