It's a difficult time for juniors in the oil and gas industry. The downturn in oil prices has forced companies of all sizes to slash budgets and cut costs. Smaller firms are particularly constrained since they typically lack the cash reserves and operational flexibility of the majors to help them weather the storm.
Moreover, juniors were already under pressure prior to the price slump. The appetite for high-risk, high-payoff investments has waned over the last few years, limiting the available capital. This has been particularly true on the Toronto and London stock markets, where many junior resources-oriented companies list.
These trends have played out in Latin America as well, but not all is doom and gloom. In general, juniors in the region are less financially stretched compared to North American companies. Market peculiarities in some countries have also created strong demand for locally produced hydrocarbons, often at an attractive price relative to international benchmarks. In Mexico, the energy reform is opening up exciting new areas to private investment for the first time in decades.
This report will examine these and other opportunities for juniors in Latin America. It will cover small-cap E&P companies, former juniors that have made it big in the region, and local independent firms.