Oilpatch market reaction muted after election of minority Liberal government

Investors in the oil and gas sector were shrugging off the federal election results despite predictions that a Liberal minority propped up by the NDP and Greens would result in policies that hurt the industry.

Shares in several Canadian oil and gas companies rose Tuesday morning, pushing the S&P/TSX Capped Energy Index higher, although it remains more than 25 per cent below levels set a year ago.

Analyst Patrick O’Rourke of AltaCorp Capital says the market reaction is a “sigh of relief” that the Liberals won enough seats to avoid the worst-case scenario, which would have been a very weak minority government.

However, he doesn’t think the results will change producer plans to maintain low- or no-growth capital budgets with low activity levels through this winter drilling season.

Hal Kvisle, chairman of producer ARC Resources Ltd. and a former CEO of pipeline builder TC Energy Corp., says he doesn’t think the Liberals will cancel or delay the Trans Mountain pipeline expansion or the LNG Canada project on B.C.’s coast, despite opposition to both.

He says he expects investment in the oil and gas industry in Western Canada will remain on hold for years until the oil pipeline comes on stream and LNG Canada project construction is finished.

“Most of us in the oilpatch are being quite restrained because there’s just no access to market and there’s no point in investing in big projects in either oil or gas production until we see some things going ahead,” he said.

In a statement, Canadian Association of Oilwell Drilling Contractors president and CEO Mark Scholz said infrastructure projects like the Trans Mountain pipeline expansion are a priority.

“Now that the election is over, we look forward to progress on market access issues, and to working with the federal government on the vision for our people and our products,” Scholz said.