Industrials Due Diligence Canadian Oil and Gas

Stax carried out an in-depth assessment of the Canadian oil and gas industry to support the diligence efforts of a PE Client

The Situation
  • Stax was hired by a PE Client to assess its investment consideration in a firm specializing in chemicals, lubricants and packaging solutions for the Oil & Gas industry.

  • As part of a broader diligence, we sought to inform our Client on the positioning and growth opportunity of the Target within the Canadian Oil & Gas (O&G) industry and evaluate market dynamics and growth outlook.

The Assignment
  • Leveraged primary research across the Target’s key end-markets and regions along with an in-depth analysis of secondary research and company data to compile a comprehensive fact base.

  • Analyzed macro trends and demand drivers, prices, Target revenue, and production particulars and provided insight into the Target’s positioning and growth opportunity within Oil & Gas.

The Benefits
  • Stax concluded a positive outlook for the Target in the Canadian O&G sector and presented the client with several insights to validate their investment consideration.

The Finding
  • We found that while the Canadian O&G industry was historically more stable than the US, recent price drops and macro economic instability had restricted O&G production to primarily large scale producers within Western Canada.

  • While market outlook uncertainty may have caused a slight dip in the Target’s performance, the Company’s stable sales growth, and relatively low correlation to O&G turbulence over time, indicated a muted effect to industry trends and price volatility.

  • Furthermore, the Target had a defendable market position in regions where Canadian O&G activity was strongest, indicating favorable investment outcomes.