reaction to Alberta’s proposed royalty over done

QWE321

Look for buying opportunity in Suncor and Canadian Natural, Citigroup says
* ?7 m1 b% C  Z* s2 y* ]) tThe negative after-market reaction to Alberta’s proposed royalty changes for the energy sector appears overdone and may present an opportunity to buy some names in the sector, says Citigroup analyst Doug Leggate.
% M# s* R5 r0 c: t: _, y- u7 R
  R! e  L# a  Y8 Y3 d) JHe recommends keeping an eye on preferred names in the sector like Suncor Energy Inc. (SU/TSX) and Canadian Natural Resources Ltd. (CNQ/TSX), but admits there will likely be a strong response to any change from the industry.

This view is partly a result of oil prices. Citigroup has a long-term oil price assumption of US$60 per barrel, which means the changes are not considered material enough to warrant any alterations to its earnings or target prices.
( s- ^- O, q3 ]+ {) R/ _
# ~1 g6 S1 O% f0 F/ TAt first glance, the proposed regime looks significantly less onerous than feared, Mr. Leggate said in a research note, adding that with US$55 oil, there would be no changes to his assumptions.

% O  ~( z! B# S  x$ zThere would be an impact with prices at US$100 and the royalty rate increases on a sliding scale with a cap at US$120 for WTI crude, he said, adding that the sector is discounting prices below US$60.
. Q1 {2 Y" V0 y: u" \* S8 N( q
“...Versus the level of oil prices we estimate are currently being discounted in the major Canadian oil sands players, the impact on valuations looks benign,” Mr. Leggate wrote.

7 u* I" K; R  p" _& R% h6 V1 |So while he acknowledged that the new regime gives away some upside, the analyst thinks plenty of core value remains with investors.