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Oil and gas industry executives seem much more bullish about the economic outlook than their counterparts in other sectors, according to an Ernst & Young survey.

The survey indicates that nearly half of respondents believe their businesses have been less severely impacted by the economic downturn than other sectors. A similar number actually reported improvements as a result of their focus on cost and risk management.

The report, Opportunities in Adversity, surveyed 569 C-suite executives globally and across all industry sectors.

When it comes to Canada, however, Barry Munro, leader of Ernst & Young’s Canadian oil and gas practice, said the Canadian exploration and production (E&P) companies are much more susceptible to the myriad challenges continuing to plague the natural gas business.

“Whether Canadian oil and gas companies share in this global optimism is dependent primarily on their size and bias toward oil,” he added.

Munro noted that over the past two to three years, the larger, well-capitalized firms have achieved an advantage over the smaller players in Canada — a difference that’s only been exacerbated by the downturn.

However, oil prices have rebounded strongly from their early 2009 lows, and the industry has moved very quickly to operate leaner and more efficiently. As a result, many Canadian E&P companies are well poised to take advantage of opportunities when the recovery comes.

Despite the turbulent energy market, Munro feels optimistic about Canada. “Cost structures have become more favourable, and there’s an inflow of money to new management teams, a reduction in staff turnover levels and greater access to top talent, as well as multiple acquisition prospects for cash-rich players.”

The report states that global oil and gas executives believe acquisitions, divestitures and strategic alliances will help them emerge stronger from the economic downturn. Munro expects Canada will be no exception to these trends.

Other key findings:

• In preparation for the upturn, global oil and gas companies are moving swiftly to position themselves ahead of the competition. Eighty-eight percent of executives said they had been “responsive” or “very responsive” to cost-management issues over the past 12 months, compared with 76% of executives from other industries; • A majority of respondents reported that their companies had been “effective” or “very effective” at achieving overall cost savings; and • Global oil and gas respondents were more likely to report that they had scrutinized their relationships with customers and suppliers more closely over the past 12 months and negotiated contracts with suppliers over the last six months (60% of oil and gas respondents versus 43% of overall respondents).

BetaPro rejigs commodity ETFs

BetaPro Management Inc. plan to change the underlying indexes of their Agricultural Grains Bear Plus ETF and Agricultural Grains Bull Plus ETF so that each can track the daily performance of Standard & Poor’s (S&P) Agribusiness North America Index, starting Aug. 25.

Similarly, their Global Mining Bear Plus ETF and Global Mining Bull Plus ETF (the Metals ETFs) will change their underlying indexes and track the daily performance of the S&P/TSX Global Base Metals Index.

“BetaPro’s decision to move to Standard & Poor’s indices validates the relevance and importance of our investable benchmarks in this space,” said Jasmit Bhandal, director, business development, with Standard & Poor’s.

Changes to underlying indexes, investment objectives, principal investment strategies and names of these ETFs follow previously granted unitholder approval.

According to Howard Atkinson, president of BetaPro, these equity-based indexes will provide investors with more direct and precise access to the agribusiness and base metals markets.

By moving to new indexes, BetaPro expects that the agricultural and metals ETFs will provide investors with a pure play on their respective equity sectors. They may also benefit from improved market liquidity as public trading of the equity issuers in the indexes — and the stock exchanges where they are listed — will close each day at the same time. Atkinson expects this will help enhance liquidity and improve ETF efficiencies.

Tickers for the four ETFs will remain the same.

(08/24/09)