The May opening of the Trans Mountain Pipeline, a government-owned project that runs for 715 miles from oil-rich Alberta to Vancouver, is expected to boost the capacity of oil that Canadian producers can ship to customers, adding 590,000 barrels per day and notably improving the financial outlook for Canadian oil companies, according to Fidelity’s Peter Belisle.
“This is a game changer for Canadian oil producers,” says Belisle, Portfolio Manager of Fidelity® Global Commodity Stock Fund (FFGCX). “Oil prices in Canada are set on the basis of pipeline access, and I expect the Trans Mountain Pipeline to boost the price of Canada’s heavy crude oil for years to come, with less earnings volatility for producers.”
In managing the narrowly focused equity strategy since 2022, Belisle seeks to take advantage of inefficiency within global commodity markets through active investments among energy, agriculture, and metals and mining producers.
He explains that Canada has the third-greatest oil reserve in the world, after Venezuela and Saudi Arabia, but the nation hasn’t been able to fully capitalize on all those underground riches because there haven’t been enough pipelines to get it to market. This has forced Canadian producers to sell at a substantial discount relative to U.S.-based producers, according to Belisle.
“This new pipeline gives Canada significantly greater access to world markets,” says Belisle. “And I believe the broader market is underestimating the impact here.”
He adds that the Canadian energy sector has the potential to “meaningfully improve its environmental profile” via Pathways, a carbon capture and sequestration program, or CCS, that is being developed by an industry group.
Oil sands, the type of crude deposits found in many of Canada’s oilfields, are well-suited to CCS applications, given their large, concentrated sources of carbon dioxide. The CCS program recently appointed Derek Evans, the former CEO of oil-sands producer MEG Energy, as executive chair. Belisle says he has high confidence in Evans’s ability to direct this program.
Belisle believes one of the biggest beneficiaries of the pipeline’s opening could be Cenovus Energy (CVE), the fund’s fifth-largest position and top overweight at the end of June.
“Looking ahead, I expect Cenovus to achieve a better realized price and profit,” he notes, adding that this year the company should turn from debt reduction to a focus on returning 100% of cash flow to shareholders, a major positive for investors.
Another plus: Belisle expects Cenovus to have best-in-class production growth the next three years, mainly through the expansion of low-risk projects.
MEG Energy (MEGEF) and Canadian Natural Resources (CNQ) are among other companies Belisle sees as likely beneficiaries of the improved flow of oil. Both were notable holdings as of June 30.
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Peter Belisle is a research analyst and portfolio manager in the Equity division at Fidelity Investments.
In this role, Mr. Belisle evaluates companies in the oil and gas sectors. Additionally, he manages the Fidelity and Fidelity Advisor Global Commodity Stock Fund and commodity-related equity sub-portfolio of the Fidelity and Fidelity Advisor Strategic Real Return Funds.
Prior to joining Fidelity in 2016, Mr. Belisle was an investment banking analyst at Evercore Partners and an associate at Triplepoint Capital. He has been in the financial industry since 2009.
Mr. Belisle earned his bachelor of science in mechanical engineering at Stanford University and his master of business administration in accounting and health care management from the Wharton School of the University of Pennsylvania.