Canada's new oil tycoon is shaking up the sector with a bold expansion plan

Canadian banker-turned-oil-tycoon Adam Waterous, an industry outsider who lives in a Rocky Mountain tourist town, not energy hub Calgary, has a plan to cement his company's status as one of ?North America's fastest-growing oil companies. Waterous wants to expand the company more aggressively and more efficiently than its competitors after Strathcona Resources' hostile bid for MEG Energy was unsuccessful. He wants Canada to be the fourth largest oil producer to increase oil and gas production to boost economic growth during a time of tensions between the U.S.

Do My Share

What am I doing if I say that a country as a whole should double its oil production? Waterous, 64 and Strathcona executive chairman, told an interviewer that he was trying to "do my part" since announcing his strategy. Waterous, former head of Scotiabank's global investment banking, is increasing his focus on oil, as Canadian public opinion shifts towards fossil fuel development. Mark Carney, the Prime Minister of Canada, is counting on oil to help Canada survive President Donald Trump’s tariffs against other Canadian products. He recently relaxed climate regulations to encourage growth in the industry.

Strathcona, which Waterous built to become Canada's 5th largest oil producer from scratch in 2026, will expand to as much as 300,000. bpd. by 2035.

The plan would cement Strathcona's position as one of North America’s fastest growing oil companies at a compounded annual rate of 10%.

The oil sands sector in Canada is recovering from a decade-long downturn, caused by low prices, political uncertainty and regulatory uncertainty. Strathcona has bought several small producers at discounted prices since 2017. While Canadian Natural Resources, Suncor Energy and other domestic producers have weathered tough times through cutting expenses and sending profits to shareholders.

Waterous, the founder and managing director of Calgary-based Waterous Energy Fund, controls a C$6.5billion ($4.69billion) stake in Strathcona. His most aggressive move was his bid for MEG. This turned into a 6-month battle with Cenovus Energy, who is a larger competitor. Cenovus was the winner in October, but Strathcona made a'side deal' that allowed it to buy some of Cenovus heavy oil assets for the price of voting its MEG share in favor of Cenovus. Strathcona’s production forecast is based on the newly acquired assets.

Waterous stated, "Sometimes, it appears that we had a plan. I don't wish to give the impression that I did, but I was aware that there were multiple ways to win this game."

"Fortune favours the bold."

A VIEW FROM OUTSIDE

Waterous, who was raised in Ontario and studied at Harvard University in Boston, considers himself an outsider to the friendly Canadian oilpatch. Waterous does not reside in Calgary, which is the heart of Canada's oil and natural gas industry. Instead, he lives in Banff in the Rocky Mountain resort of Banff with his wife, who owns a ski resort.

The plan is to build a 150 km (93 miles) rail line for C$2.6 billion that will connect Calgary and Banff, and provide hydrogen-powered passenger trains to tourists and commuters.

Waterous, who had moved to Calgary in 1991 from Toronto to co-found a bank specializing in energy investments, knew very little about the business that would bring him fortune.

"I knew oil was extracted from the ground, it went through a refinery to end up in your vehicle. "That was it," said he.

Waterous, however, said that his status as an outsider gives him an edge.

There's a lot of groupthink in the oil and gas industry. He said that it was natural to have a different perspective, but that this is a good thing.

Waterous' involvement in energy sector transactions as a banker for many years gives him a unique perspective on the oil and gas assets of the country, according to Brian Porter, former CEO of Scotiabank, who has worked closely with Waterous over the years.

Porter stated that Porter "knows the properties of the Western Canadian Sedimentary Basin and North America in general, probably better than anyone else." "That might make some people sneer, but I do believe it."

BRASH STYLE BRASH style is a way of speaking in a country that has a reputation for corporate executives being reserved. Waterous was known to be flamboyant during the MEG battle. Waterous accused Cenovus, of using "fear and deception" to keep MEG at bay as well as "preying" upon its "weak" board. Cenovus CEO Jon McKenzie said that the discussion had reached a point where it was a "circus."

Waterous claimed he is not a'spoiler' or a muckraker, but he will not hesitate to criticize "poor corporate management."

Waterous is proud of his independent thinking. That's why he feels confident laying out a plan for Strathcona expansion that is contrary to the popular wisdom.

He said: "People would say, 'no no, don't do that. You should really focus on just buying back shares, and shareholder returns.'"

This is my interpretation of the situation.

(source: Reuters)