An analyst who covers the Canadian oil and gas sector says he is seeing some of the best investing opportunities in about two decades. 

Jeremy McCrea, an equity research analyst at Raymond James, said in a Tuesday interview with BNN Bloomberg that he has “never been this bullish in 20 years of doing this.”

He said balance sheets for companies operating in the oil and gas sector are “near nothing for the whole sector,” and many in the sector are focusing on profitability.

“I always say it's not actually so much how value is being dispersed but how value is being created,” McCrea said.

He noted that these bullish conditions within the sector are taking shape while investor sentiment for oil companies slowly bounces back – something that he noted will take time.

“I've never seen it as economic as we are seeing it today here and you still haven't seen that sentiment come back,” he said. 

NAVIGATING VOLATILITY

McCrea said that he doesn’t like to use projections that oil prices will climb higher as an investment thesis because oil prices are very to predict.

Instead, McCrea said that he looks at the rate of change when making investment decisions.

“You'll have 30 names in the sector that go up and down with the commodity. What you're trying to really identify is: what are the five names who are doing something better,” he said. 

McCrea said the current energy environment is in “somewhat uncharted territory,” and Saudi Arabia has been “sort of handed the ball” in terms of determining oil prices. 

Last month West Texas Intermediate (WTI) reached US$90 per barrel, following efforts by OPEC+ to reduce oil output. On Tuesday afternoon, oil was trading at $90.13.

“When I say uncharted territory, we were always able to add new supply when oil prices went up. But you're not seeing that this time around in North America, which was a key reason why oil prices have stayed stable,” McCrea said. 

However, he noted North America does not seem to have the ability to add significant amounts of oil inventory.