The delay to Enbridge Inc.’s Line 3 crude oil pipeline expansion hammered shares of Canadian oil-sands producers — including Cenovus Energy Inc., MEG Energy Corp. and Canadian Natural Resources Ltd. — as investors grappled with the prospect of another year of shipping bottlenecks.
Cenovus fell as much as 7.5 percent in Toronto, and Canadian Natural slipped as much as 6.5 percent, the biggest intraday drops in almost three months for both stocks. MEG declined as much as 7.2 percent.
Those three companies are among the producers most exposed to Canadian oil prices, which may take a hit as drillers struggle to get their crude to market, Michael Loewen, an analyst at Bank of Nova Scotia, said in a note to investors. Still, the postponement will likely affect all Canadian oil products, he said.
“Ultimately, the delay of this project is an additional 12-month headwind for the Canadian energy sector,” Loewen said.
The 43-company S&P/TSX Energy Index fell 3 percent, compared with a 0.6 percent drop for the S&P/TSX Composite Index.
By contrast, Suncor Energy Inc. may be a “relative winner” if discounts on Western Canadian Select heavy crude widen again, Goldman Sachs Group Inc. analyst Neil Mehta said in a note. Suncor was down 2 percent to C$44.54 at 1 p.m. in Toronto. The shares earlier climbed as much as 0.6 percent.
While the Line 3 delay is “unfortunate,” the Canadian energy industry has faced similar setbacks many times in the past few years, John Rogers, a spokesman for Calgary-based MEG said in an emailed statement, while declining to comment about the company’s plans to deal with the postponement.
“Canadian heavy has never been in higher demand,” Rogers said. “The resilience and ingenuity of the Canadian oil industry has been evident in the past and it will continue in the future as it strives to meet the demands for its products.”