reaction to Alberta’s proposed royalty over done

QWE321

Look for buying opportunity in Suncor and Canadian Natural, Citigroup says
The 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.
% }, f1 I5 c; j* M5 a5 J+ `
9 X' w+ K; M8 q7 e, W, S/ bHe 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.
0 h6 a! G7 a& W6 l0 W
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.
( Y4 P3 s* t7 P7 j
At 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.
! H+ m' g& S% c/ X: L
3 c& b3 \: c; `1 |There 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.

* j7 u. B/ c9 {5 }' |" N' H  ^“...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.
! s9 W4 }7 F1 O6 G& x/ ?
So while he acknowledged that the new regime gives away some upside, the analyst thinks plenty of core value remains with investors.