How Trump’s ‘drill, baby, drill’ plan could spur U.S. investment in Canada #CanadaFinance

U.S. President Donald Trump’s plan to “drill, baby, drill” may require help from Canada. Bay Street fund manager Eric Nuttall says dwindling U.S. inventories could see America’s shale producers explore oil and gas investments in Canada while Trump is still in office.

“U.S. production is entering a period of plateau, and you know, ultimately, a decline,” Nuttall told Yahoo Finance Canada in an interview.

“I do believe that U.S. shale companies will come to Canada as a necessity to replace their depleted inventory,” he added. “I would think in the next couple of years.”

Nuttall manages oil and gas-focused funds on behalf of Ninepoint Partners, a Toronto-based alternative investment firm overseeing about $7 billion in assets. In early 2020, he famously stuck to his guns when COVID-19 sent oil prices plunging to negative territory. The stock market rebound yielded blistering triple-digit returns for investors.

Oil and gas has become a hot-button issue in the Canada-U.S. trade war started by Trump. As it stands, American imports of Canadian energy products are subject to a 10 per cent tariff at the border.

U.S. shale has entered its twilight. The best years are behind them.Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners

Trump aims to invigorate American energy production, while also driving down prices for U.S. businesses and consumers. Of course, weaker prices are a disincentive for production growth, as rates near the break-even cost for producers.

Last week, White House senior counselor Peter Navarro predicted the U.S. benchmark (CL=F) could fall to as low as US$50 per barrel, versus about US$68 currently.

The U.S. Energy Information Administration (EIA) forecasts average daily production of 13.5 million barrels of oil in 2025, up 200,000 barrels a day from last year. The EIA forecasts a small increase to 13.6 million barrels a day in 2026.

“We strongly believe that U.S. shale has entered its twilight. The best years are behind them. The rates of return are going to be falling. Wells are becoming less productive,” Nuttall said.

“What you see are the actions of companies, led by the most informed people, that are telling you, and in some ways they’re outright telling you, that we’re running out of inventory.

“Contrast that to Canada,” he added. “We have companies with decades and decades of stay-flat inventory measured 30, 40, 50 years, or longer, where the quality does not erode over time.”

Last week, at a major oil and gas conference in Texas, Pioneer Natural Resources co-founder Scott Sheffield was asked about the American oil industry’s capacity to grow production. ExxonMobil (XOM) acquired Pioneer for around US$60 billion in a deal announced in 2023, cementing Exxon as the dominant player in America’s Permian Basin.