Canadian Insight

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Updated on Thursday, May 13, 2021

Enbridge Line 5 in operation despite threats from state governor— May 13, 2021

The May 12, 2021 deadline for Enbridge to stop using Line 5 Pipeline has passed and it continues to operate.

Michigan Governor Gretchen Whitmer has threatened Enbridge that if it continue to use the pipeline the state of Michigan will garnish all operational profits for Line 5.

A statement from Enbridge reveals that the company has no intent to stop using Line 5 pipeline unless it is ordered by a federal court.

Line 5 supplies over half a million barrels of crude oil into northeastern states, Ontario and Quebec. The pipeline was built in 1953. It snakes around the Great Lakes and crosses under water at the Straits of Mackinac.

 

Canadian Railways stepping up crude  oil shipments into eastern Canada— May 5, 2021

Observations throughout western Canada point to an increased travel of railway crude oil tankers . One instance showed a CP train heading through central Saskatchewan with well over a hundred and fifty crude oil tankers heading east.

It is obvious that refineries in Sarnia, Ontario and points east are preparing for alternative sources of crude oil should the Enbridge Line 5 be shut down. State of Michigan Legislature has passed a law closing that line on May 12, 2021 due to safety reasons.

 

House of Commons Committee affirms importance of Line 5— April 19, 2021

An all-party Canadian House of Commons Committee has released a report stipulating the importance of the Enbridge Line 5.

The report states that governments on both of the sides of the border should resolve the dispute between the Michigan state and Enbridge.

The House of Commons Committee  held hearings with labor, business groups and labor unions. Talks also included Energy ministers of Alberta, Saskatchewan and Ontario. Several organizations provided written statements in support of Line 5.

Committee members and all participants unanimously agreed of the importance of Line 5. It’s not just another pipeline. It is the lifeline to Ontario, Quebec and northeastern points in US.

It is unfortunate that the federal governments of Canada and US are not at the forefront in resolving the dispute.

 

The clock is ticking on Enbridge Line 5 before it’s shutdown — March 31, 2021

In just a little over a month, on May 12, 2021, Enbridge Line 5 will be forced to close down by the state of Michigan.

On November 2019, Michigan Governor Gretchen Whitmer  will withdraw easement rights which had previously allowed Enbridge Line 5 to carry crude oil through that pipeline.

It appears that the governing Trudeau left leaning Administration has swept this under the rug and believes that this serious energy problem will solved with solar panels and wind mills.

This line is a very critical energy artery for the provinces of Ontario and Quebec. It delivers half of the crude oil required by refineries for the two provinces.

Ontario alone receives 540,000 barrels of crude oil for the refineries in Sarnia. These refineries supply 100% of all fuel needed by the Pearson Airport.

Should Enbridge Line 5 be closed it will require a miracle to fill the void.

Shutting down Enbridge Line 5 would require 2,000 semi truck units, or 800 rail cars of crude oil a day to keep refineries in eastern Canada in a normal day operation.

Closure of the refineries in Sarnia area alone would affect the employment of 5000 skilled labor jobs and  23,500 associated jobs.

 

Supreme Court Ruling on Canada’s carbon tax introduces very serious implications March 31, 2021

Last week’s  Supreme Court ruling that the federal government has the legal right to tax carbon emissions has very serious implications.

This ruling has made it legal for the federal government to encroach on provincial rights to tax and infringe on provincial jurisdiction to govern.

It is viewed by Western Canadians as another demonstration by the federal government to refuse to listen and alienate the west even further.

Some political pundits fear that this decision by the Supreme Court will help push Alberta and Saskatchewan to separation from Canada.

 

CP Railway announces takeover of Kansas City Southern  — March 23, 2021

Canadian Pacific Railway announced that it will proceed to takeover Kansas City Southern Railway. The proposed  deal is worth US $25 billion.

The resultant merger would make a railway network expanding from Canada into the US Gulf states and Mexico.

The merger could impact the crude by rail volumes and increase movement of Canadian crude oil into the Gulf coast refineries.

The cancellation of Keystone XL project has stopped expansion of crude oil sales into southern US and exports into the global marketplace.

The business combination of the two railways is expected to pass by US and Canadian regulators by second quarter of 2022.

 

Energy Information Administration predicts US will import more oil than it exports in 2021 &  2022—February 18, 2021

 Energy Information Administration reports that  US crude oil imports are expected to increase in 2021 and 2022. This is a reversal to 2020 when US was exporting more crude oil then it had imported.

EIA predicts that US will increase its crude oil imports from 2.7 million barrels per day in 2020 to 3.7 million barrels per day in 2021 and 4.4 million barrels per day in 2022.

US crude oil production had declined in 2020 by 0.9 million barrels per day in 2020. EIA expects will average at 11.3 million barrels per day in 2021 and rise to 11.9 barrels per day by the end of 2022. This is still lower than the peak in 2019 which reached 12.9 million barrels per day.

 

Russia’s oil giant showing interest  in the Canadian oil patch—February 8, 2021

It is interesting to note that while US interest in Canada’s oil patch is waning, an unfamiliar investor may be about to grasp an opportunity  Russia’s oil giant, Lukoil,  is showing interest in making a significant stake in Western Canada’s oil patch.

Privately owned, Velvet Energy, is partly owned (48%) by Canada Pension Plan Board and Pincus LLC of New York. Apparently the two investors want to cash out their share in Velvet Energy.

Last week, word has leaked out that Lukoil was setting up to purchase the stakes held by CPPB and Pincus LLC.

Indications are that Lukoil’s own properties in Russia are on a rapid decline and it’s looking for new opportunities to add to its operations.

 

Keystone XL isn’t dead —February 5, 2021

In an all night marathon, the US Senate passed a GOP amendment in supporting the Keystone XL pipeline project. The amendment received support of two Democrat senators and passed 52 to 48..

The Republican Party’s amendment called for a fund to be established to improve relations with Canada after President Biden revoked the Keystone XL federal permit and has put thousand of jobs in jeopardy.

Senator John Kennedy offered his support for the bill and the pipeline project. He went on to say, “The Keystone XL pipeline supports American jobs, American energy independence and America’s national security. Why President Biden shut it down and the 48 Senate Democrats just voted to keep it closed is beyond me.”

 

Biden Administration about to make a leftist turn—January 21, 2021

Newly sworn in President Joe Biden is about to show how much his administration will lean to the left. Word is  that Biden is about withdraw the permit to build the Keystone XL pipeline.

Biden’s move is about to begin a rocky relationship with its closest neighbor and ally. Premier Jason Kenny has already expressed that the province of Alberta will have no choice but take legal action against US.

 There is still hope that the new US government will consult and meet with the government representative of Alberta and Canada as well as TC Energy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our most recent ‘Shouts & Toots’  from the Oil Patch  — May 13, 2021

Alvopetro Energy Ltd. (ALV:TSX) announced its first quarter 2021 financial results, formalization of our dividend policy and upcoming plans for a small lot common share buy-back. Company's funds flow from operations improved to $4.8 million ($0.05 per basic share and $0.04 per diluted share) in the quarter. Company reported a net loss of $1.1 million in the quarter compared to net income of $2.8 million in the fourth quarter, due to an unrealized foreign exchange loss of $2.1 million.

Company averaged daily natural gas sales in the quarter of 12.5 mmcfpd with associated natural gas liquids sales from condensate of 98 bopd bringing our overall sales volumes in the quarter to 2,175 boepd, an 11.5% increase from the fourth quarter.

Alvopetro Energy Ltd. is an International oil and gas company with offices in Calgary and operations in Brazil. Company has a market cap of $35 million and approximately 97 million shares outstanding.

CES Energy Solutions Corp. (CEU:TSX) announced company's results for the three months ended March 31, 2021. CES generated revenue of $260.6 million, representing a sequential increase of $47.8 million or 22% from Q4 2020 revenue. Revenue generated in the US during Q1 2021 was $168.0 million representing an increase of $30.8 million or 22% from Q4 2020. Revenue generated in Canada during Q1 2021 was $92.6 million representing an increase of $17.0 million or 23% from Q4 2020.Net income for Q1 2021 was $5.1 million compared to a net loss of $225.7 million in Q1 2020.

CES Energy Solutions Corporation is a Calgary based company focused on providing consumable chemical solutions throughout the lifecycle of oilfield. This includes solutions at drill-bit, at point of completion and stimulation, at wellhead and pump-jack, and to the pipeline and midstream market. Company has a market cap of $634 million and approximately 266 million shares outstanding.

Headwater Exploration Inc. (HWX:TSX) announced its operating and financial results for the three months ended March 31, 2021. Company reported a net sales of $23.1 million and a net loss of $(12.73) million in tghe first quarter of 2021. Company generated average production of 4,805 boe/d representing an increase of 192% over the fourth quarter of 2020. It achieved adjusted net income of $6.4 million ($0.03 per share basic).

During the first quarter, Headwater drilled 12 producing 8-leg horizontal wells. Numerous drilling strategies were tested including changes to drilling mud systems, drill bit design, strategies to improve steering, and techniques to increase penetration rates. Tracer surveys were conducted on several of the producing wells to understand relative contribution from each lateral.

Headwater Exploration Inc. is a Calgary based oil and gas company with natural gas and petroleum operations in New Brunswick, Quebec and offshore St. Lawrence. Company has a market cap of $177.5 million and 144 million shares outstanding.

Pan Orient Energy Corp. (POE:TSX) announced on May 13th its 2021 first quarter consolidated financial and operating results. Adjusted Thailand funds flow from operations of $4.3 million ($35.46 per barrel) in the first quarter of 2021 increased 34% compared with $3.2 million ($23.54 per barrel) in the fourth quarter of 2020. Net income attributable to common shareholders for the first quarter of 2021 was $1.1 million ($0.02 income per share).

Pan Orient is a Calgary based oil and gas exploration and production company with operations currently located onshore Thailand, Indonesia and in Western Canada. Company has a market cap of $135 million and approximately 55 million shares outstanding.

Surge Energy Inc. (SGY:TSX) announced on May 13th that it has closed the previously announced bought deal public offering of flow-through common shares. Surge is also pleased to announce that its first lien credit facilities have been extended through to July 1, 2022.

Surge Energy Inc. is an oil-weighted production and development company based in Calgary. Company has its operations in western Canada. Surge has a market cap of $450 million and approximately 309 million shares outstanding.

Touchstone Exploration Inc. (TXP:TSX) announced on May 13th its operating and financial results for the three months ended March 31, 2021. Company generated an operating netback of $21.98 per barrel from an average Brent price of $61.04 per barrel, our highest operating netback reported since the fourth quarter of 2019. It Recognized a net loss of $460,000 ($0.00 per share) compared to a net loss of $9,240,000 ($0.05 per share) in the 2020 equivalent quarter.

Touchstone Exploration Incorporated is a Calgary based international oil and gas company with operations in Trinidad and Tobago. Company has a market cap of $34 million and approximately 161 million shares outstanding.

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Africa Energy Corp. (AFE:TSX) announced that its Annual General and Special Meeting of Shareholders will be held in Canada on Thursday, June 10, 2021 at 9:00 am (Pacific Time) at Suite 2000, 885 West Georgia Street, Vancouver, British Columbia. Company encourages shareholders to instead vote their shares in advance of the Meeting.

AKITA is a Calgary based Canadian oil and gas drilling contractor with operations in Canada and the United States. Company is engaged in providing contract drilling services, primarily to the oil and gas industry. It is also involved in the drilling related to potash mining and the development of storage caverns. Company has a market cap of $155 million and approximately 38 million shares outstanding.

Bonterra Energy Corp. (BNE:TSX) announced its operating and financial results for the three month period ended March 31, 2021. Company reported petroleum sales revenue $48.7 million and a net loss of $(1.68) million in the first quarter of 2021.

Production averaged 11,909 BOE per day in Q1 2021, 18 percent higher than the preceding quarter, reflecting a successful drilling program that re-commenced in the fourth quarter of 2020, along with the reactivation of wells that had been voluntarily shut-in due to low commodity prices.

Bonterra Energy Corp. is a Calgary based conventional oil and gas producer with operations in Alberta, Saskatchewan and British Columbia. Company has a market cap of $228 million and approximately 33 million shares outstanding.

Crescent Point Energy Corp. (CPG:TSX) announced on May 12th its operating and financial results for the quarter ended March 31, 2021. Company reported a cash flow of $303.7 million and a net income of $21.7 million. Company reduced net debt by over $135 million in first quarter, driven by continued excess cash flow generation.

Crescent Point's average production in first quarter 2021 was 119,384 boe/d, comprised of over 90 percent oil and liquids. Company successfully converted approximately 30 producing wells to water injection in first quarter 2021. Crescent Point expects to convert a total of over 135 wells in 2021 as part of its waterflood program.

Crescent Point is a Calgary based oil and gas company with operations in western Canada. Majority of its assets are in Saskatchewan. Company has a market cap of $2.9 billion and approximately 550 million shares outstanding.

Enbridge Inc. (ENB:TSX) announced on May 12th that the US federal court case receives broad support from government, business and labor from Michigan, Canada, and throughout the region regarding Line 5 Pipeline.

Vern Yu, Enbridge Executive Vice President and President Liquids Pipelines commented, "This broad support underscores that efforts by the State of Michigan to shutdown Line 5 have far reaching and severe implications across the region and North America – well beyond Michigan's border."

Enbridge Inc. is a Calgary based energy generation, distribution, and transportation company in the U.S. and Canada. Its pipeline network consists of the Canadian Mainline system, regional oil sands pipelines, and natural gas pipelines. Company has a market cap of 83 million and approximately 1.9 million shares outstanding.

Keyera Corp. (KEY:TSX) announced a cash dividend for May 2021 of 16.00 cents per common share. The dividend will be payable on June 15, 2021, to shareholders of record on May 25, 2021. The ex-dividend date is May 21, 2021. This dividend is an eligible dividend for the purposes of the Income Tax Act (Canada).

Keyera Corporation is a Calgary based company with extensive interconnected assets and depth of expertise in delivering midstream energy solutions. Its predominantly fee-for-service based business consists of natural gas gathering and processing; natural gas liquids.

SECURE Energy Services Inc. (TEV:TSX) announced that they have filed the joint management information circular in connection with the special meetings of holders of SECURE common shares and holders of Tervita common shares, options to purchase common shares, restricted share units and performance share units, each scheduled to be held on June 15, 2021.

Secure Energy Services Inc. is a Calgary based company which provides treatments and disposal services to the oil and gas industry. Company has a market cap of $1.5 billion and approximately 159 million shares outstanding.

More news on Oilpatch Review

 

Quote of the day

Caskie Stinnett, "A diplomat is someone who can tell you to go to hell in such a way that you will look forward to the trip."

Did you know?

The first offshore oil wells were drilled in southern California prior to 1900's. Records indicate that Henry L. Williams drilled the first offshore oil well in 1896 in the Santa Barbara Channel which contains a portion of Summerland oil field. Following the discovery, Wooden peers were built from the mainland into the channel. Rigs were constructed on the spot along a network of peers. By 1902,  there were 412 oil wells in the channel connected by 14 piers.

 

prices compiled and updated on a regular basis by Canadian Insight

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     WCS  / WTI

 Price Spread -$13.98

  May 13, 2021

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