Canadian Insight

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Updated on Wednesday, May 27, 2020

Irving Oil gets approval to source more crude oil from Alberta — May 5, 2020

Irving Oil has found a novel way of sourcing more crude oil from Alberta despite all the hurdles the Federal Liberal government in Ottawa has initiated. The biggest obstacle was stopping construction of Energy East Pipeline.

Irving Oil applied and received permission to have more oil shipped on foreign tankers. Western Canadian crude oil would be loaded onto tankers in Vancouver and then shipped through the Panama Canal and then onto Saint John, New Brunswick.

Irving stated that it would also be picking up western Canadian crude oil from Gulf Coast terminals in the southern US, whenever adequate supplies would be available. In the near future, it is anticipated that Keystone XL will be pumping more Western Canadian oil into the US Gulf terminals.

Keystone XL pipeline is currently under construction.  When completed, the oil pipeline will connect the collection terminal at Hardisty, Alberta with the key US Gulf oil terminals for exports.

Irving Oil had committed to build a $300 million oil terminal at Saint John. Initially, it was meant to be a shipping terminal for western Canadian oil. Now it will serve as an import terminal for the Irving refinery.

Irving Oil was one of the biggest supporters of the $15.7 billion dollar Energy East Pipeline which was proposed by TransCanada Corporation. It was to connect Western Canadian crude oil sources with the East Coast refineries.

 

Wet’suwet’ten Hereditary chiefs will sign agreement with government— May1, 2020

A joint statement from the governments and Wet’suwet’en people says that all parties have reached an agreement in implementing the rights and title of the First Nation.

This statement says that there is still much work ahead in the negotiations, including how all will work together.

This is all in the center of a dispute between some Wet’suwet’en people hereditary chiefs and the construction of the Coastal GasLink pipeline.

 

 

Keystone XL Pipeline gets a major boost from Alberta— April 1, 2020

Two major announcements were made in unison on March 31 in Calgary; one from TC Energy and one from Premier Jason Kenny of the Alberta government. 

Russ Girling, TC Energy President and CEO, stated in a news release that it would go ahead and begin building the Keystone XL pipeline when its safe for their employees.

Following the news release, Premier Jason Kenny and Russ Girling faced the media. Premier Kenny announced that his provincial government would contribute $1.1 billion (US) in a ownership agreement and would also offer $4.2 billion (US) in a credit facility

The pipeline company will be consulting with US and Canadian health authorities as to keep employees safe from the Covid-19 virus. Construction will begin immediately when instructed that it’s safe for all workers.

Russ Girling stated that TC Energy has reached agreements with multiple companies for service agreements which would guarantee 575,000 barrels per day for a 20 year period. The project holds 125,000 barrels per day in current contracts from Hardisty, Alberta.

The 1,210-miles (1,947-kilometres) pipeline project will be capable of safely delivering 830,000 barrels per day of crude oil from Hardisty, Alberta to Steele City, Nebraska where it will connect with TC Energy’s existing facilities to reach U.S. Gulf Coast refiners to meet critical needs for transportation fuel and useful manufactured products. With pre-construction activities underway, the pipeline is expected to enter service in 2023.

 

Worst crude oil crash in 29 years as Russia and Saudi Arabia attempt to grab a greater market share— March 9, 2020

OPEC and its main ally, Russia, seem to be parting their ways. Last week’s OPEC meeting in Vienna failed to reach an agreement. Both Russia and Saudi Arabia have made a U-turn and intend to step up their oil output. As a result, oil prices have plummeted by 30% in the past three days. Oil prices have fallen to the lowest since 1991.

It is possible that this is a coordinated attempt to stop US shale oil development by increasing global oil inventories and driving crude oil prices down. It is also possible that Russia has decided on its own to take its own course and not continue to cooperate with OPEC. 

Saudi Arabia and Russia are two of the three major oil players. There are possibilities that this is an attempt to stall or derail US shale oil development and progress. American oil production has surpassed Russia and Saudi Arabia. US  has pushed its way into the global markets.

The possibilities of the spread of the corona virus and its effect on the global economy and the global oil demand is adding to the market chaos. The introduction of the price war between Russia and Saudi Arabia is adding a significant component which the markets and investors have previously not expected.

 

MEG Energy  asks provincial regulator to shelve  its oil sands project — March 2, 2020

MEG Energy has asked Alberta Energy Regulator to shelve its oil sands project for a three year delay.

MEG Energy is postponing its project due to political and continuing uncertainties in the Canadian business environment.

Company states that due to overloaded pipelines and uncertainty in future pipeline construction, it has decided to wait for more positive changes.

The project was awaiting provincial regulatory approval.

 

British Columbia’s Liberal leader discloses evidence that foreign capital is funding pipeline opposition — March 2, 2020

British Columbia’s Liberal opposition leader, Andrew Wilkinson, released evidence that foreign capital funding has channeled at the very least $4.2 million to various pipeline protestor groups .

Andrew Wilkinson stated that US tax documents reveal that  five American organizations have been funneling funding to six Canadian groups which have launched blockades and  protests opposing Coastal GasLink Pipeline project.

U.S. based, Rockefeller Foundation, Tides Foundation, Wilberforce Foundation, Bullitt Foundation, and Gordon & Betty Moore Foundation have been funding the following protest groups in Canada: Wilderness Committee, Sierra Club B.C, West Coast Environment Law, Dogwood B.C. and Stand. Earth.

 

Teck Resources pulls out of a major oil sands project — February 24, 2020

Teck Resources is pulling out of a major oil sands project  which was approved by National Energy Board but was still awaiting approval of the Trudeau Administration. Political insiders felt that the project was going to be denied an approval.

The Frontier oil sands project was valued at $20.8 million dollars and was estimated to produce 260,000 barrels of crude oil per day upon completion.

Don Lindsay, Chief Executive Office of Teck Resources, placed the blame directly on the Trudeau Liberal government. Lindsay stated, “The growing debate around this issue has placed Frontier and this company squarely at the nexus of much broader issues that need to be resolved. It is now evident that there is no constructive path forward for the project.”

 

Trans Mountain Pipeline clears another  legal hurdle — February 4, 2020

Federal Court of Appeal has announced its decision on legal objections laid by four challenges from First Nations in British Columbia.

In a 95 page ruling, the Federal Court of Appeal stated that there was no legal basis to uphold the already federal government approved pipeline project.

The court stated that all of the hearings that were held  gave ample time for al necessary consultations and all reviews were done properly.

The decision now means that the pipeline project could continue to proceed but the First Nations could still challenge the ruling in the Supreme Court. They have a time window of sixty days for an appeal.

The Trans Mountain Pipeline expansion project was approved by the federal government in 2016. Approval was overturned by the federal Court of Appeal on August, 2018.

Once completed the Trans Mountain pipeline expansion could triple the volume of crude oil coming from Hardisty, Alberta to the western port of Vancouver.

Cost of the pipeline and expansion project to the Canadian taxpayer is estimated to be over $14 billion.

 

 

 

 

 

 

 

 

 

 

 

 

 

Our most recent ‘Shouts & Toots’  from the Oil Patch  — May 27, 2020

Hemisphere Energy Corporation (HMW:TSXV) announced on May 27th its financial and operating results for the three months ended March 31, 2020. Company achieved a revenue of $5.5 million and recorded a net income of $2.1 million. Company realized an operating netback of $3.5 million. It increased quarterly production by 43% to 1,973 boe/d (99% heavy crude oil and 1% conventional natural gas), as compared to the first quarter of 2019.

Hemisphere Energy Corporation is a Vancouver based oil and gas company. Its core operations are in Jenner and Atlee Buffalo areas in southeast Alberta. Company has a market cap of $11 million and approximately 90 million shares outstanding.

Horizon North Logistics Inc. (HLN:TSX) announced that at its special meeting held, shareholders gave their overwhelming support of the previously announced transaction with 10647802 Canada Limited, operating as Dexterra Integrated Facilities Management. North will acquire all of the issued and outstanding shares of Dexterra. Upon completion of the Transaction, a wholly-owned subsidiary of Fairfax Financial will control 49% of Horizon North and existing Shareholders will control 51% of the combined company.

Horizon North Logistics Incorporated is a Calgary based energy services company providing a full range of industrial. Company has a market cap of $306 million and approximately 166 million shares outstanding.

Leucrotta Exploration Inc. (LXE:TSX) announced on May 27th its financial and operating results for the three months ended March 31, 2020. Oil an gas sales for the company reached $5.79 million and company recorded a loss of $(89.4) million in the first quarter of 2020.

Company drilled, completed and tied-in a second Montney well at Two Rivers. It completed construction of the Two Rivers facility and commenced production of the two Montney wells. Subsequent to March 31, 2020, company disposed of certain non-core facility assets for proceeds of $2.2 million.

Leucrotta Exploration Inc. is a Calgary based oil and natural gas company operating in Canada. It is mainly engaged in the acquisition, development, exploration, and production of oil and natural gas reserves in northeastern British Columbia. Company has a market cap of $106 million and approximately 200.5 million shares outstanding.

Pembina Pipeline Corporation (PPL:TSX) announced that it has agreed to issue $500 million of senior unsecured medium-term notes. Offering will be conducted in two tranches consisting of $400 million in senior unsecured medium-term notes, series 16 having a fixed coupon of 4.67 percent per annum, paid semi-annually, and maturing on May 28, 2050; and $100 million principal amount to be issued through a re-opening of the company's 3.71 percent medium-term notes, series 7, due August 11, 2026. Closing of the Offering is expected to occur on May 28, 2020.

Proceeds are intended to be used to repay indebtedness of the Company under its unsecured $2.5 billion revolving credit facility due May 2024 incurred in connection with the acquisition of the U.S. portion of the Cochin Pipeline system, as well as to fund Pembina's capital program and for general corporate purposes.

Pembina Pipeline Corporation is a Calgary based transportation and midstream service provider that has been serving North America's energy industry for over 60 years. Pembina owns an integrated system of pipelines that transport various hydrocarbon liquids and natural gas products produced primarily in western Canada. Company has a market cap of $22 billion and approximately 506 million shares outstanding.

Southern Energy Corp. (SOU:TSX) announced its first quarter results. Company reported a sales revenue from oil and gas reached $3e.39 million and company reported a loss of $(10.2) million in the first quarter of 2020.

Company intends to maintain a disciplined and conservative capital expenditure program for the balance of the year, to protect the balance sheet as well as preserve value. Company has secured fixed price hedges on 6,000 Mcf/d of natural gas production, representing approximately 50% of current production volumes, at an average price of US$2.55/Mcf.

Southern Energy Corp. is a Calgary based oil and natural gas exploration and production company. Southern has a primary focus on developing conventional and unconventional light oil and liquids rich natural gas resources in the SE Gulf States of Mississippi, Alabama, and Louisiana. Company has a market cap of $20 million and approximately 204 million shares outstanding.

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Advantage Oil & Gas Ltd. (AAV:TSX) announced on May 26th the renewal of the Corporation's existing $400 million revolving credit facility, following completion of its annual review by the syndicate of lenders.

Upon closing of the previously announced sale of a 12.5% interest in the Glacier Gas Plant for $100 million in July 2020, Advantage and the lending syndicate have agreed to adjust the revolving credit facility to $350 million, resulting in a significant net increase in liquidity and further strengthening of the balance sheet.

Advantage Oil & Gas Ltd is a Calgary based natural gas and liquids development and production company. It operates a portion of assets located in the Montney resource play in Western Canada Company has a market cap of $374 million and approximately 186 million shares outstanding.

Ballard Power Systems (BLDP:TSX) announced that the Company will ring the Nasdaq stock market opening bell this morning in a celebration of its 25th year on the Nasdaq stock exchange, having been initially listed in 1995.

Ballard Power Systems is a Vancouver based Canadian company engaged in proton exchange membrane fuel cell development and commercialization. Company has a market cap of $864 million and approximately 232 million shares outstanding.

New Zealand Energy Corp. (NZ:TSXV) announced it would file its annual financial statements for the 2019 financial year, and the related managements discussion and analysis and reserves data, normally required on 29 April 2020, on or before 12 June 2020.

New Zealand Energy Corporation is an oil and gas company based in Wellington, New Zealand. Company has market cap of $2.3 million and approximately 232 million shares outstanding.

SECURE Energy Services Inc. (SES:TSX) announced that the Toronto Stock Exchange has accepted for filing the Corporation's notice of intention to make a normal course issuer bid. The NCIB effectively renews the existing NCIB, which is scheduled to end on May 27, 2020.

SECURE may repurchase from time to time up to a maximum of 10,796,069 common shares of the Corporation, representing 10% of the corporation's public float of 107,960,696 common shares at May 15, 2020.

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

“Planet of the humans”

This enlightening movie has been pulled from YouTube channel but producers are battling to get it back on for public viewing. We’ll let you know when and where you can watch it.

Quote of the day

Herb Brody, “Telling the future by looking at the past assumes that conditions remain constant. This is like driving a car by looking in the rear view mirror.”

 

 Did you know?

Simple variations of the famous pump jack, also known as the jack pump, grasshopper pump, or sucker rod pump were first used in the early 1900's. By 1913, the Simplex Pumping Jack became widely popular throughout the U.S. oil fields.  Walter C. Trout, who worked in Texas for Lufkin Foundry & Machine Company, is credited for designing the now familiar counterbalanced oilfield pump jack. Trout received a patent for his invention in1926.

 

 

prices compiled and updated on a regular basis by Canadian Insight

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     WCS  / WTI

 Price Spread $8.35

  May 27, 2020

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