CEO who called Canada’s stock bottom sees $90 oil by 2020

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By KRISTINE OWRAM on 6/16/2017

TORONTO (Bloomberg) — Early last year, Jean-Guy Desjardins correctly predicted that Canadian equities were due for a rebound. He’s now saying oil prices will double, taking energy stocks along for the ride.

“The fundamentals of the global supply-demand relationship are favoring higher oil prices,” Desjardins, CEO of Fiera Capital Corp., said in an interview in Toronto on Thursday. “When it goes up it’s going to go up for an extended period of time. I think it can go back to $90, not in six months but over a couple of years.”

That’s way more bullish than most analysts, with the median forecast in a Bloomberg survey calling for $65 crude in 2020 from $45 now. Still, Desjardins believes global central banks will keep some amount of stimulus as their economies recover, boosting demand for crude.

His method to prepare for this outcome is to buy up relatively cheaper Canadian shares. Desjardins last February had called the bottom of the S&P/TSX Composite Index, which met his forecast by rising 18% in 2016. This year, however, it’s dropped about 1% as oil prices languish while the S&P 500 has gained more than 8%.

“You’re better off being overweighted in Canadian equities today than being overweighted U.S. equities,” he said.

Eyeing acquisitions

Montreal-based Fiera — which had C$122.1 billion ($92 billion) in assets under management as of March 31 making it Canada’s third-largest independent asset manager — is hoping to increase it to C$200 billion by 2020. To get there, Desjardins said the company will need to add about C$25 billion through strategic acquisitions, in addition to organic and market-value growth.

Some 16 potential acquisitions are being considered — 10 in the U.S., four in Canada and two in Europe — targeted at fixed-income managers focusing on emerging markets, U.S. taxable assets and Canadian alternative assets.

Desjardins said his preference is to stick to North America, but he’s open to doing a deal in Europe or Asia if it’s an “exceptional opportunity.” Fiera made its first foray into Europe with last year’s acquisition of London-based Charlemagne Capital Ltd., which specializes in emerging and frontier markets.

Emerging markets are being watched because they’re seen as beneficiaries of the current global economic cycle.

“I think emerging markets are at the beginning of an upward cycle under the impact of a growing global economy,” he said. “I feel pretty good saying two years but I could almost say four years before we possibly go into recession.”

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Diversified Gas & Oil

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June 15, 2017

Update on proposed acquisition

15 June 2017

Diversified Gas & Oil PLC
(“DGO” or the “Company”)

Update on proposed acquisition of certain gas and oil assets of Titan Energy, LLC
Share placing to raise $35.0m (the “Placing”)
Restoration of trading on AIM

Diversified Gas & Oil PLC (AIM: DGOC), a US based gas and oil producer, is pleased to confirm that it has finalised the agreement to acquire certain gas and oil assets of Titan Energy, LLC (“Titan Assets”) which was announced on 5 May 2017 (the “Acquisition”). Details of the Acquisition will be set out in a new Admission Document and Circular to Shareholders which is expected to be published by not later than 7.00am on 16 June 2017 (the “Admission Document”).

As announced previously, the Titan Assets comprise certain producing gas and oil wells, close to DGO’s existing operations in the Appalachian Basin in the eastern United States, principally in the states of Ohio, Pennsylvania, southern New York and northeast Tennessee.

Daily gas production from the Titan Assets is approximately 12,500 gross boepd (6,550 net boepd) and oil production is 380 gross bopd (266 net bopd). The Acquisition will more than triple DGO’s gross gas production to approximately 17,367 boepd, and will increase gross oil production by 69% to approximately 930 bopd. Overall gross production will increase from approximately 5,400 boe to 18,300 boe. The Titan Assets will be immediately accretive to cash and earnings.

The cash consideration for the Acquisition is $84.2 million (approximately £66.1 million) (subject to adjustment in accordance with the terms of the agreement for the Acquisition). This will be funded by a new $110 million Senior Secured Loan Facility (the “Loan Facility”) and the Placing. Mirabaud Securities LLP has placed 39.3 million new ordinary shares (the “Placing Shares”) at 70p per share with certain existing and new institutional investors to raise $35.0 million (£27.5 million). The Placing will take place in two tranches. 11.4 million firm Placing Shares have been placed to raise $10.1 million. The remaining 27.9 million conditional Placing Shares are placed conditional on approval by Shareholders.

Notice of a Shareholder meeting to seek approval for the Acquisition and authority for the conditional Placing Shares will be sent to Shareholders later today. The Shareholder meeting will be held at 11.00am on 30 June 2017.

Full details of the Loan Facility and the Placing will be set out in the Admission Document.

Following publication of the Admission Document the Company anticipates that the suspension of trading in the Company’s shares will be lifted and that trading in the Company’s existing ordinary shares will recommence at 8.00am on 16 June 2017.

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