HOUSTON, March 11 — Kimmeridge Energy Management aims to increase activism among Canadian oil and gas producers, targeting underperforming companies and exploring potential benefits arising from the trade tension with the United States.
Despite the trade disputes initiated by President Donald Trump against Canada, which have impacted various sectors, Canadian oil and gas exports to the U.S. have faced relatively fewer penalties.
Mark Viviano, Managing Partner at Kimmeridge, believes that the current tensions should prompt a reevaluation to enhance Canadian energy exports, especially of liquefied natural gas, to other regions. This shift, according to Viviano, could enhance the value of operators in the long run.
"We believe (tariffs and the trade war) will ultimately benefit the Canadian industry in the long term because it will compel them to explore markets beyond the U.S. and diversify their market reach into Asia," Viviano shared during an interview at the CERAWeek conference.
Recently, Kimmeridge reached an agreement with Advantage Energy, a Calgary-based oil and gas producer, wherein two new independent directors were appointed, and a special committee was tasked with evaluating a potential sale of the company.
Viviano expressed intentions for further investments, noting the fragmented nature of Canada's upstream industry and the presence of underperforming management teams and boards prioritizing production growth over shareholder value.
Kimmeridge, known for its activism in the U.S. oil and gas sector, has identified similar challenges present in Canada’s industry today.
While the firm has been less active in the U.S. over the past year and currently holds stakes in only one U.S. producer, Expand Energy, it maintains the capacity and readiness to invest, particularly given the recent downturn in U.S. equity markets and crude oil prices.
"We are observing significant volatility and substantial underperformance in numerous smaller and mid-sized exploration and production companies," Viviano noted. "We are well-positioned to deploy capital, as market conditions align with our objectives."