News Releases

Archive for May, 2015

Tax Season Oilsands firm delays its forecast over new Alberta government

An oilsands company has cancelled its presentation of future spending plans because of the new NDP government in Alberta and potential new policies.

Canadian Natural Resources announced Wednesday it will not be hosting an open house presentation with investors.

“Due to the current uncertainty surrounding the government of Alberta’s review of royalty, taxation, environmental and greenhouse gas policies, detailed future capital allocation plans for each of the company’s assets cannot be finalized at this time,” the company said in a release.

The company will instead have a conference call next month to discuss its strategy to combat low oil prices.

“I think they are certainly sending a message,” says Sonny Mottahed of Black Spruce Merchant Capital in Calgary. “But I wouldn’t call it purely semantics or posturing. If capital needs to find a new home, you will find places with the most appropriate risk-adjusted rate of return.”

Several oil and gas industry leaders have expressed fear about what new policies the NDP government will introduce. The anxiety seems to persist.

“There’s certainly lots of uncertainty. People are holding their breath and pausing to wait and see what happens,” says Mottahed.

Notley responds

Alberta premier Rachel Notley responded to the company’s comments by saying she welcomes industry feedback, but she is sticking with her intentions to review royalties and address greenhouse gas emissions.

“I think a lot of people and indeed other leaders within the oil and gas industry have suggested there is uncertainty that is created by climate change issues. Frankly, failing to deal with those issues creates as much uncertainty as dealing with them,” said Notley to reporters in Calgary.

The premier says she has spoken to Canadian Natural Resources chairman Murray Edwards over the phone and described it as a good conversation. Notley told reporters that the government owes it to Albertans to review royalty rates, to ensure the system is fair. She also said any changes to energy sector policy will be done in consultation with industry.

“To suggest that we never change anything ever, ever, ever going forward, I don’t think is particularly responsible,” she said.

Royalty review

A former member of the Alberta government’s 2007 royalty review panel says Canadian Natural Resources may be getting too far ahead of itself in pausing its planning process out of fear of what might happen.

“It’s not up to me to say whether it is gamesmanship or not,” said Judith Dwarkin with ITG Investment Research. ”The fact is, raising the prospect of a review of royalties does introduce another element of uncertainty into the operating environment of the industry.

“We don’t know how the review will be done, how long it will take and what its conclusions might be. So to get too excited about it at this point might be jumping the gun a bit.”

Canadian Natural Resources declined an interview but did issue a statement.

“The company will continue to allocate capital prudently in this low commodity price environment and detailed future capital allocation decisions will be finalized when greater clarity on these issues are attained,” a spokesperson said in an email. ”Canadian Natural looks forward to working together with the Alberta government to deliver our mutual goal of a prosperous Alberta that creates jobs and benefits for all Albertans.”

Canadian Natural Resources executives were diplomatic in their remarks earlier this month when discussing the change in government.

“We are committed to working with the new government,” said chief executive Steve Laut to investors at the company’s annual general meeting. “We share a common goal; a strong, prosperous Alberta that’s fair to all Albertans.”

The NDP were elected with a majority of seats and ended more than 40 years of PC government. Notley ran on a campaign to review oil and gas royalties and increase corporate taxes from 10 per cent to 12 per cent. The government has not set a timeline for when the review will take place and it is not clear whether the outcome will change the royalty structure.

Notley has said repeatedly that industry has nothing to worry about. In the 24 hours after her election night victory, she reached out to several large oil and gas company executives to start building a relationship with the energy sector.

While some industry leaders have voiced their concern about the NDP, others have had a very different tone. Encana CEO Doug Suttles told reporters earlier this month, ”you would almost have to be from another planet not to understand how important oil and gas is to Alberta and Albertans.”

Canadian Natural Resources is an oil and gas company operating in western Canada and internationally, including in the North Sea.

Click Here to View Original Article

Posted in: News & Updates

Leave a Comment (0) →

Oilpatch reaching out to new energy minister

Alberta’s oilpatch is reaching out to the province’s new NDP energy minister, vowing to work together to rescue the sagging economy, key industry players said Monday.

Led by the Canadian Association of Petroleum Producers, energy industry associations say they are eager to meet with Margaret McCuaig-Boyd, who was sworn in to serve in the key government post Sunday.

“I think we share the same goal as the Alberta government right now and that’s keeping Albertans working,” said Jeff Gaulin, CAPP’s communications vice-president. “We’re in this together and I think at the end of the day that if we recognize that it’s a very delicate and challenging time, we’ll make smart decisions about what policies are needed to keep the industry attractive.”

Hammered by the collapse of crude oil prices, oil company revenues are forecast to drop by $50 billion this year — more than the country’s total revenues from the mining industry, he added.

“We know that jobs are down or at risk, so it’s a very challenging time for the industry, for the people who work in it and for governments such as Alberta, who depend on revenues from it,” he said.

Gary Leach, president of the Explorers and Producers Association of Canada, said he is looking forward to telling the new minister about the industry’s contribution to the economy.

“We’re hoping to meet with her in the near future to discuss all the challenges there are in front of the industry at the present time,” he said.

Industry officials say now would be an inappropriate time to increase royalty rates and corporate taxes or introduce a new tax on carbon.

Mark Salkeld, president of the Petroleum Services Association of Canada, said the last royalty hike, implemented during a global recession, resulted in 35 member companies closing down and 20,000 employees losing their jobs.

“A lot of our members are in towns across Alberta on the front lines of oil and gas activity and changes to the industry or decisions or policies that impact the oil and gas industry impact our members directly,” he said. “We would prefer not to have any more negative impacts on the industry.”

Mark Sholz, president of the Canadian Association of Oilwell Drilling Contractors, said McCuaig-Boyd will receive a warm reception from industry associations like his who want to find out more about the royalty review.

“I think historically there are concerns related to what happened historically back in 2007-08 with the last royalty review,” he said. “It was very harmful to the industry, so it is important for us to sit down and collaboratively work through some of the government’s platform planks and issues.”

Sholz said he wasn’t concerned about the new minister’s lack of oilpatch experience.

“We have seen examples in the past where a minister has come through the door without energy specific experience and has done very well,” he said.

Gaulin said CAPP didn’t think it is an issue either.

“We’re very confident we can work with the new energy minister in Alberta — just as well as we have with predecessors,” he said.

But Martin Pelletier, portfolio manager at Calgary investment firm TriVest Wealth Counsel, panned Premier Rachel Notley’s decision not to appoint a more experienced MLA.

“Maybe it’s sending the wrong message to the energy industry.”

Sonny Mottahed of Black Spruce Merchant Capital in Calgary said he would have preferred to see oil and gas expertise on the energy minister’s resume.

“The oil business has so many moving parts. I tend to think you need to have some background in it to be able to fully understand and appreciate everything that’s involved in it,” he said.

McCuaig-Boyd, 62, told reporters Sunday she was a good listener and that oil companies “don’t have to worry.”

A former teacher, school administrator, college official and business consultant, McCuaig-Boyd served as vice-president of the Fairview campus of Grande Prairie Regional College, where she was the liaison with the industry.

Brenda Kenny, president of the Canadian Energy Pipeline Association, said in a statement the industry has worked successfully with various governments over the past 60 years of operation, and “this one is no different.”

Click here to view original article

Posted in: News & Updates

Leave a Comment (0) →

Alberta energy minister inexperience a concern for industry

May 25 Canada’s oil and gas industry is concerned about the inexperience of Alberta’s new energy minister, but is ready to give her the benefit of the doubt for now as she takes on the closely watched role, analysts and executives said on Monday.

Marg McCauig-Boyd, a one-time teacher with a master’s degree in administration and leadership from San Diego State University, was on Sunday appointed as energy minister by new Premier Rachel Notley.

Notley’s left-wing New Democratic Party toppled a 44-year-old conservative government in a May 5 vote, but only a few of its lawmakers have ever held public office.

“She really has absolutely no experience,” said Sonny Mottahed, chief executive of Black Spruce Merchant Capital. “You would think you’d need someone with a background (in energy), just because it’s such an intricate and detailed monstrosity of a business.”

McCauig-Boyd did not immediately respond to a request for comment.

Alberta is the largest supplier of U.S. oil imports and the industry contributes about a fifth of the province’s revenue. Alberta’s oil sands are one of the world’s largest crude reserves, but also generate greenhouse gas emissions that draw international criticism.

Chief among the new minister’s priorities are a review of the amount of royalties paid to the province by producers. The NDP must also come up with a replacement to the current C$15 per tonne levy on major greenhouse gas emitters like oil sands producers, expiring in June.

“It’s going to be a steep learning curve,” said Michael Dunn, an analyst at FirstEnergy Capital. “It’s hard to imagine (the new government) being able to do enough due diligence to do something quickly.”

Changes to the province’s climate change regime are also a concern, with the oil sands’ environmental impacts seen as a key reason that pipeline projects like Keystone XL remain blocked.

“It’s a big, complicated file and climate change is at the top of the list,” said Chris Severson-Baker, managing director of the Pembina Institute, an environmental think tank.

Though the minister’s inexperience is a concern to many, the Canadian Association of Petroleum Producers has formed a working group to offer her advice on policy.

“We can work with the minister,” said Jeff Gaulin, a spokesman for the Canadian Association of Petroleum Producers. “We’re confident she understands what it’s like to live in an oil and gas economy and can bring that perspective.”

Click here to view original article

Posted in: News & Updates

Leave a Comment (0) →

Who? Alberta’s new energy minister Marg McCuaig-Boyd an unknown in the oilpatch

CALGARY – The name Marg McCuaig-Boyd doesn’t ring a bell for many in Alberta’s oilpatch.

The newly elected NDP politician was named Alberta’s energy minister this weekend.

Martin Pelletier of TriVest Wealth Counsel in Calgary says he was surprised Premier Rachel Notley didn’t choose a more high-profile name for the portfolio.

Sonny Mottahed, the CEO of Black Spruce Merchant Capital, says he’d liked to have seen someone with more oil and gas experience appointed to the file.

McCuaig-Boyd’s candidate bio highlights jobs she’s had in education and administration, as well as consulting with small- and medium-sized businesses.

She also lives in a part of the province where there’s a lot of oil and gas activity.

She could not immediately be reached for comment.

Click here to view original article

Posted in: News & Updates

Leave a Comment (0) →

Oilpatch, Bay Street take stock of NDP election victory in Alberta

CALGARY – The new reality of an orange-tinged Alberta was beginning to sink in across the oilpatch and Bay Street on Wednesday and, though there were some jitters, many are awaiting more details before they pass judgment.

The NDP’s landslide election victory in a province that’s been a Progressive Conservative bastion for 44 years stunned Sonny Mottahed, president and CEO of Black Spruce Merchant Capital in Calgary.

“I’m pretty shocked, quite shocked,” he said. “There’s been quite a bit of chatter this morning about capital already looking at a way to invest outside of Alberta just across borders into B.C. and Saskatchewan.”

The NDP has said it would raise corporate taxes to 12 per cent from 10 per cent and examine whether Albertans are getting their fair share of royalties.

The last time Alberta increased royalties, under former premier Ed Stelmach in 2007, there was an uproar from the industry and the changes were rolled back months later. At the time, the global economic downturn was just taking hold and producers were concerned the royalty increase would only compound their woes.

Mottahed said raising taxes and royalties in the current economic environment — with crude prices just beginning to bounce back from six-year lows — would be similarly “catastrophic.”

“I think people are now going to be sitting in boardrooms and devising plans and thinking what to do.”

Energy stocks were hurting on Wednesday. The group as a whole was off about 2.75 per cent. Major oilsands producer Cenovus Energy Inc. (TSX:CVE) was down six per cent, while Suncor Energy Inc. (TSX:SU) and Canadian Natural Resources Ltd. (TSX:CNQ) were down about three per cent.

“It’s a bit of a knee-jerk reaction, in my opinion, but at the end of the day what the NDP has brought in is a level of uncertainty, especially on the royalty structure side,” said Glenn Paradis, portfolio manager at Canoe Financial.

That means it’s going to be harder for Alberta energy companies to make spending decisions, said Paradis.

On Wednesday, incoming premier Rachel Notley said her government would “work collaboratively” with industry leaders and that decisions wouldn’t be made without their input.

Jeff Gaulin, vice-president of communications at the Canadian Association of Petroleum Producers, said the group is “very confident that we will be able to work with the new Alberta government.”

CAPP has made contact with Notley’s team and is expecting to meet with her in the coming weeks.

“The oil and gas industry works with governments of all political stripes across the country, at the federal level, at the provincial level and at the municipal level,” he said.

During the campaign, Notley also said she would take a less hands-on role in stumping for certain pipeline proposals — unlike past Progressive Conservative premiers who actively promoted projects like Keystone XL and Northern Gateway.

The CEO of Enbridge Inc. (TSX:ENB), the company aiming to build the contentious Northern Gateway oil pipeline to the West Coast, said he’s not worried.

“Energy is such a critical issue to Alberta. I’m really not that concerned that it’s not going to get the right attention or the right support from the new government,” Al Monaco said.

Asim Ghosh, CEO of Husky Energy Inc. (TSX:HSE), said it’s “business as usual” for its oil and gas operations in Alberta.

“I just remind you we’ve been around as a company for 75 years,” he said.

“You can’t change the wind but you can adjust your sails — that’s our approach. We don’t change our business approach because of political changes.”

— With files from Ian Bickis in Calgary and Alexandra Posadzki in Toronto.

Click Here to View Original Article

Posted in: News & Updates

Leave a Comment (0) →