Andrew Kim

Andrew Kim is Chartered Professional Accountant, with extensive experience working with a variety of private and publicly traded companies across North America.

Andrew has held various leadership positions of several Toronto Stock Exchange Issuers including President of Crescentwood Capital Corp., President of Pyxis Capital Inc., President of HAL Concepts Ltd., President of Graystone Corporation, President and Director of Stonington Capital Corporation, President and Director of CBOC Continental Corporation, and Vice-President, Finance of Unicorp Energy Corporation.

Mr. Kim was appointed to the Strath Resources Ltd. board of directors in January 2017 and was appointed as Audit Committee Chairman in May 2017.

Andrew holds an Honours Bachelor of Mathematics degree from the University of Waterloo.

Select Quotes

Select Quotes from Adam Waterous in the News Media in 2022

Financial Post – 4/26/2022

They point to the Oil Sands Pathways initiative, an alliance of six companies that have said they will co-operate to build a CO2 pipeline connecting various oilsands facilities to an underground storage hub near Cold Lake. Adam Waterous, founder of the eponymous private equity firm, Waterous Energy Fund, says the project could dramatically lower the carbon intensity of Canadian oil by the end of the decade.

“It’s our view that by the end of the decade there is a pretty good chance that there is going to be great political pressure to get Canadian barrels into the United States, not just for energy security but to help to decarbonize the fuel system in the United States,” Waterous said on a recent episode of the Veriten podcast, C.O.B. Tuesday.

“Now that’s a flip of the script,” Waterous said. “That is the opposite of what’s going on here and that’s how we see energy security and the Canadian industry lowering its emissions intersecting.”

Institutional Investor – 4/6/2022

“When you think about investors coming back into the market, you have to think about what drove them away in the first place,” said Adam Waterous, founder of the eponymous private equity firm, Waterous Energy Fund. “In our view, first and foremost, it was poor returns,” Waterous said. He added on Monday that ESG concerns played a minor role in investors’ departure from the space. 

In 2019, before the Covid-19 pandemic hit, oil was trading at around $57 per barrel on average, Waterous said. The U.S. oil and gas industry returned two to three percent on capital invested. “That was a broken industry for returns,” he said. “Having said that, $100 oil solves a lot of those problems.”  

During the oil rout, Waterous doubled down on its strategy, taking a value approach to identifying attractive investments. The firm tries to keep production costs at $44 per barrel, meaning that even in a lower price world, the firm would turn a profit. 

WEF on Peak Permian, Oil Industry M&A, and WEF Investment Strategy
Select Quotes from Adam Waterous in the News Media in 2020

Peak Permian

Bloomberg – 1/14/2020

“We think we are at or near peak Permian. The North American oil market has been grossly overcapitalized, which is not sustainable…Over the past five years,the industry and its investors mistook a massive structural change for a simple cyclical event. It’s impossible to continue to have uneconomic production and capex.” 

Financial Times – 8/17/2021

If they can be greened, supporters say a golden era awaits the oil sands, as stuttering US shale production and under-investment in supplies elsewhere increases the strategic value of deposits in western, open countries. “By the end of the decade, Canada is going to be a quarter of free-world oil,” said Adam Waterous, head of Waterous Energy Fund, a Calgary private equity firm.

Financial Post – 5/9/2020

“[We expect] total oil production in the U.S. to fall several million barrels per day this year. The coronavirus pandemic has only accelerated that trend. Essentially, it’s turned the slope of the decline from a green run into a double black diamond.” 

Globe and Mail – 6/19/2020

Even before the pandemic, the U.S. oil “tech-wreck” [as Mr. Waterous says] had showed itself over the past five years as producers and investors plowed piles of capital into drilling and hydraulic fracturing in regions such as the Bakken in North Dakota and the Permian in Texas. Returns have dwindled, Mr. Waterous says. U.S. oil output is on track to decline from 12.7 million barrels a day at the start of this year, to 9 million or 10 million a day by the end of 2021, and that will mean corporate casualties, he predicts.

The Financial Times – 10/12/2020

“They were making lousy returns at $65 a barrel,” said Adam Waterous, head of Waterous Energy Fund. “You need at least north of $70 before you start achieving a cost-of-capital return in the U.S. [shale] oil business.” Production from the Permian, the prolific shale field of west Texas and New Mexico, peaked even before the crash this year, Mr. Waterous said. At current prices, only 25% of US shale was economical, he added. 

Harold Hamm took issue with a claim by Adam Waterous, head of Waterous Energy Fund, that just 25% of the shale resources was now viable at $40 a barrel. “That just doesn’t hold water,” said Mr. Hamm, a renowned US oil bull. “If that was the case, oil wouldn’t be at $40 for very long – it would have to increase to have supply.”

S&P Global Platts - 12/29/2020

“More broadly, we think we're at peak investable oil; supply coming from investor-controlled companies in the world has peaked and is in decline," Waterous said.

At year-end 2019, the world consumed about 100 million b/d of oil, 27 million b/d of which came from investor-controlled oil businesses, Waterous noted.

“By 2030 we think that will decline to...20 million b/d," he said, with 3.5 million b/d of that decline coming out of the US.

The Globe and Mail - 2/23/2021

“More broadly, we think we're at peak investable oil; supply coming from investor-controlled companies in the world has peaked and is in decline," Waterous said.

At year-end 2019, the world consumed about 100 million b/d of oil, 27 million b/d of which came from investor-controlled oil businesses, Waterous noted.

“By 2030 we think that will decline to...20 million b/d," he said, with 3.5 million b/d of that decline coming out of the US.

Oil Industry M&A – Poor Asset Quality Reducing Buyers

Bloomberg – 4/1/2020

“The [shale] industry was just vaporizing capital over the last five years. The U.S. unconventional business was not working, and specifically, the returns that were being earned were atrociously poor…The technology really is incredible – it was a revolution – but what happened was it got way overdone. In the sober light of day, maybe about 15% or 20% was economic. Three-quarters-plus was completely uneconomic.”

 The Wall Street Journal – 10/20/2020

“There is no market for about 80% of the roughly 500 oil and gas producers in North America...It’s not as simple as smashing together some private equity [oil and gas] companies that have no buyer,” said Mr. Waterous, who was previously the head of investment banking and energy at Bank of Nova Scotia. “The vast majority of these are not good assets.”

Reuters – 3/24/2021

Oil Industry M&A - Few Buyers Reducing Premiums

Forbes – 10/27/2020

“This M&A is entirely defensive…The industry got over capitalized. It was way too big and now it has to shrink. That’s why we’re seeing all-stock deals with very small premiums. The future looks tough — sellers are waving the white flag.”

The Globe and Mail - 2/23/2021

“The industry went through a four-decade obsession with growth, starting in 1973 with the first Arab oil embargo,” Waterous says. “That was a period when the industry was in an age of scarcity, and all things oil were driven for growth. Now that this age of scarcity has passed, we have to focus on the underlying profitability of the business.” That’s why the sector has seen a flurry of mergers recently, including Cenovus Energy’s $23.6-billion takeover of Husky Energy in October and Whitecap Resources’s all-stock purchase of TORC Oil & Gas in December. “There will be fewer companies out there,” Waterous says, “but overall, the health of the industry will be better—and that’s going to help attract investors to the sector.”

Financial Post – 15/4/2021

Private money is behind as many as 500 producers in the US, accounting for about a third of total American oil output in recent years. The bulk are now lossmaking and will never repay the cash ploughed into them, said Waterous.

 “We think about 80 per cent of them are illiquid,” he said. “There is no bid. So 400 of the 500 are unsaleable.”

Failing companies are likely to be starved of capital and forced into “blow down” mode, said Waterous, producing what oil they can as quickly as possible and as long as possible, just to keep some cash trickling in.

 “This business is broken,” said Waterous. “The industry is going through a multiyear process of wringing capital out of the sector, not bringing new capital in.”

WEF Investment Strategy

Globe and Mail – 6/19/2020

“We think the North American energy industry is going to create a lot of special situations. We are a deep-value special situations investor… A large portion of the North American oil business over the next several years is going to be recapitalized, restructured and repositioned. For the U.S. oil business, this is going to be, ‘Honey, I shrunk the industry.’”

The Globe and Mail – 8/14/2020

WEF’s ultimate aim to consolidate [Strath Resources and Cona Resources] was “the oil patch’s worst kept secret,” Mr. Waterous said in an interview. “There’s never been such an important need for the industry to consolidate itself, for companies to merge to gain scale. So that’s what we’re doing – getting bigger to have operational economies of scale and better access to capital.”

The Economist – 10/10/2020

Waterous Energy Fund, a private-equity firm that has bought more than half of the Canadian reserves sold in the past three years, has a simple strategy, says its boss, Adam Waterous: “Hold production flat and maximize sustainable free cashflow.”

Bloomberg - 12/10/2020

Adam Waterous, chief executive officer of Calgary-based private equity firm WEF, is among investors expecting more profitability from the oil sands than shale. He estimates U.S. crude production will fall by about 2.5 million barrels a day in the next year as oil prices are still too low to earn attractive returns…“The best days of the U.S. oil industry are definitely behind us,” he said. “We are very bullish on Canadian oil sands where others are not.”