Canadian Insight

Online oil and gas magazine keeping investors informed ...

Updated on Tuesday, April 23, 2019

A new more positive direction for Alberta and its oil and gas industry — April 17, 2019

Jason Kenny and his United Conservative Party won a majority government yesterday. Kenny is a former Conservative cabinet minister in the Stephen Harper government.

Immediately after getting elected he announced that Alberta is open for business. He invited all domestic and foreign investors back into the province and stated, “Alberta is now open for business.” Kenny’s prime goal is to jump start Alberta’s economy.

Jason Kenny promised the electorate that he will scrap the Rachel Notely implemented carbon tax and fight the federal carbon tax in court. Kenny will be joining the other conservative governed provinces ( Saskatchewan, Manitoba, Ontario and New Brunswick ) in opposition the left leaning Trudeau administration.

President Trump jump staring new energy projects — April 15, 2019

President Trump has signed another order clarifying the president alone has authority to issue permits for cross-border projects such as pipelines.

This new order makes it much more difficult for states to block pipelines and other energy projects on the basis of environmental concerns.

President Donald Trump is eager to jump start energy projects such as the TransCanada Keystone XL oil pipeline. He has now taken action to assert executive power over such infrastructure.

President Trump, prior to the enactment of the above mentioned third order,  issued a new permit which replaces the one granted in March 2017. The order is intended speed up development of the controversial pipeline, which would ship crude oil from tar sands in western Canada to the U.S. Gulf Coast.

 

Kitimat LNG terminal may double in size according to its two principal investors — April 5, 2019

Chevron Canada Ltd and Woodside Energy Ltd have applied for a new license for their Kitimat LNG plant in northern British Columbia that could see it nearly double in size to produce 18 million tonnes per year.

The companies submitted an application to the National Energy Board this week, with a revised plant design that may include up to three LNG trains, instead of two.

The Kitimat LNG application follows the approval last October of the massive LNG Canada project, which is also located in Kitimat. That project is headed by Royal Dutch Shell. It will initially produce 14 million tonnes per year. The plant will have the option to increase to 28 million tonnes per year.

 

Alberta Treaty Chiefs rescind support of Bill-C69 — April 1, 2019

Alberta Assembly of Treaty Chiefs announced that they are no longer supporting Bill C-69. The Assembly of Treaty Chiefs passed a resolution late last year in support of the Bill. They have now rescinded their support of the controversial federal bill which transform the way projects are assed and approved.

The Alberta Assembly of Treaty Chiefs stated that they see negative impacts of Bill C-69 on their economic development and self-determination, particularly as a result of weakened investment in the energy sector.

According to Indian Oil and Gas Canada figures, royalty monies for 39 oil-producing nations have fallen by $200 million annually since 2012, resulting in a loss of over $18,000 per on-reserve family of six, per year.

Chief Roy Fox of the Kanai Blood Tribe commented, "Bill C-69 has not yet passed but we are already suffering its consequences. The lack of pipeline capacity and investment have caused a huge price differential for the Blood Tribe's oil and gas development." He continued, "I don't care much when leaders and lawyers say the bill is actually good for us as First Nations. Not in the real world it isn't. Not for the Blood Tribe."

Another notable Indigenous leader,  Chief Roy Fox, Makiinima, commented, "The Liberal Government campaigned on its commitment to obtain social license for new projects. It asserted that only communities could grant permission. I will tell you now: I don't grant permission, and I don't have any confidence in Bill C- 69. I am fearful, and I am confident, that it will keep my people in poverty."

President Trump issues a new permit for Keystone XL — April 1, 2019

President Trump is attempting to kick start the Keystone XL pipeline project once again. This is his second try at getting the pipeline project rolling after it had been stalled by several district court interventions.

Trump had the permit issued Friday, March 30, 2019; it replaces the one granted in March 2017. The order is intended speed up development of the controversial pipeline, which would ship crude oil from tar sands in western Canada to the U.S. Gulf Coast.

 

First Nations consortium willing to buy Trans Mountain pipeline — March 29, 2019

A consortium of First Nations, headed by Thunderchild First Nation of Saskatchewan, are planning to offer the federal government $6.8 billion for a majority ownership of the Trans Mountain pipeline.

The Thunderchild First Nation is well advanced in securing the necessary capital and has been holding meetings with several banking intuitions and oil companies.

When questioned on the First Nation’s plan to buy the pipeline, Federal Finance Minister Bill Morneau stated that the government will not negotiate the sale of the pipeline until this summer when the construction of the project is “derisked”.

 

Alberta government eases crude oil restrictions — March 19, 2019

Alberta government has announced that it will ease crude oil restrictions by 25,000 barrels per day in May and another 25,000 barrels per day in June.

The Alberta government introduced its output cuts in January to curb a growing glut of oil. The original cuts were intended to reduce Alberta’s output by 325,000 barrels per day but actually maxed out at 200,000 barrels per day.

With the two coming easements, the government will still restrict Alberta’s oil production by 150,000 barrels per day. There has been no word as to when the restrictions will cease.

The oil restrictions may have served some purpose in easing the oil glut in the province. Most oil companies are against the restrictions and have openly complained.

Premier Rachel Notely is expected to call a provincial election in the next two months. Polls show that her NDP party is trailing the United Conservative Party by a wide margin.

 

National Energy Board releases its recommendations on optimizing crude oil movement   — March 18, 2019

Federal government requested for the National Energy Board to do a study on examining short and long term solutions to optimize crude oil movement to markets. The NEB released its report last week.

The NEB report recommends in the short term: (1.) Creating predictable timelines and clear policies related to pipeline capacity to help market participants make more informed decisions. (2.) Developing better market data to help market participants and policy makers make investment decisions.

For the long term, NEB suggests: (1.) Upgrade bitumen to a higher quality product to reduce the volume of diluent needed and open up space on existing pipelines. (2.) Reverse pipelines currently importing diluent to export more crude oil. (3.) Ship undiluted bitumen in rail cars to increase the volume of bitumen exported by rail. 

Jean-Denis Charlebois, Chief Economist, National Energy Board commented, "The oil pipeline systems are currently running at capacity and market players are operating within the rules set up in tariffs and legislation. This report points to potential improvements that can be made and we have identified options for governments to pursue."

 

Expect weak oil and natural gas sales to stymie Canada’s growth — March 18, 2019

Canada’s largest banking institution, RBC, released its economic forecast for 2019. The prognosis does not look good.

RBC has downgraded its previous expected Canadian growth from 1.7% to 1.5%. It sees the energy sector slowdown affecting  the whole Canadian economy.

The severity of the energy sector weakness is expected to be short lived as compared to that of 2015 and 2016. Interest in energy investments should hold up well.

RBC expects present oil prices to continue for the year but gradually increase in 2020.

 

 

 

 

 

 

Our most recent ‘Shouts & Toots’  from the Oil Patch  — April 23, 2019

Crescent Point Energy Corporation (CPG:TSX) announced on April 23rd a corporate update. Company has selected the AFTI WatchDog as a key service provider to support its field automation strategy. AFTI WatchDog is the industry leader for low-cost oil well and pipeline monitoring.

AFTI WatchDog is a Calgary based company which, through its WatchDog platform, offers well site monitoring technology. WatchDog is used by most major producers in the Western Canadian Sedimentary Basin.

Crescent Point is a Calgary based oil and gas company with operations in western Canada. Company has a market cap of $2.4 billion and approximately 550 million shares outstanding.

East West Petroleum Corp. (EW:TSXV) announced on April 23rd a corporate update in regards to various ongoing matters. Company has moved on from the Juva transaction and is working with its core assets. Company continues to hold its oil and gas assets in New Zealand and Romania.

East West Petroleum is aware that TAG Oil Ltd. has reached an agreement to sell 100% of its New Zealand assets including the Cheal permits which are owned 70% by TAG and 30% by East West Petroleum. Management is currently assessing the options available to realize value from its 30% holding in the Cheal permits and the company has been approached by parties interested in acquiring our interest. Negotiations are ongoing.

In Romania the Company has been advised by the operator, Naftna Industrija Srbije, that the drilling of the Teremia 1001 well has been completed and operations are now moving to testing phase.

Company currently has cash of approximately $3.2 million and marketable securities with a value of approximately $1.1 million. All costs related to the Juva transaction have been paid, total being approximately $210,000. Company has also recently funded capital expenditures for well workovers for its New Zealand property in excess of $700,000.

East West Petroleum Corp. is a Vancouver based oil and gas company with interest in New Zealand and Romania. Company has a market cap of $9.0 million and approximately 90 million shares outstanding.

Pulse Oil Corp. (PUL:TSXV) announced on April 23rd that the first well of a two well drilling program successfully reached total depth in its first Bigoray well, located in central Alberta and Pulse is currently drilling the second well within Pulse's Bigoray assets. Pulse holds a 100% working interest in and operates the Bigoray assets.

Pulse's first well at Bigoray, targeting newly defined undrained attic areas of Pulse's Nisku D pinnacle reef, encountered in excess of 50 meters of oil pay, as interpreted by independent third party petrophysical evaluators. The well was drilled to a total depth of 2,750 meters and has been successfully cased, now awaiting testing operations.

Pulse also reported that permanent production is now underway in the Queenstown area of southern Alberta from the two new wells drilled in December 2018. Brief post-frac production testing of the wells gave the Company confidence to proceed to permanent production facility construction, including wellsite group and individual well testing facilities.

Pulse Oil Corp. is a Calgary based oil and gas company with assets and interests in the Bigoray area of Alberta. Company has a market cap of $29 million and approximately 144 million shares outstanding.

PrairieSky Royalty Ltd. (PSK:TSX) announced on April 23rd its first quarter operating and financial results for the period ended March 31, 2019. Company reported total revenues of $73.2 million, up 42% from $51.6 million in Q4 2018. Funds from Operations were $57.8 million ($0.25 per common share). Company's operating netback was $29.49 per BOE, up 73% from $17.07 per BOE in Q4 2018.

There were 209 wells (93% oil) spud on PrairieSky lands during the quarter which was slightly ahead of Q1 2018 when 198 wells (93% oil) were spud. Wells spud included 110 Viking wells in Alberta and Saskatchewan, 15 Clearwater wells, and 12 East Shale Duvernay wells.

PrairieSky Royalty Limited is a Calgary based. Company is the owner of subsurface mineral rights on a variety of royalty properties in western Canada. PrairieSky offers third party the right to explore, develop, or produce on its properties, the company then collects royalty revenue from the development of petroleum and natural gas. Company has a market cap of $4.5 billion and approximately 234 million shares outstanding.

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Bellatrix Exploration Ltd. (BXE:TSX) announced that the Ontario Superior Court of Justice has issued an interim order authorizing, among other things, the holding of the following meetings: (1) a meeting of holders of the company’s outstanding 8.5% senior unsecured notes due 2020, (2) a meetingof holders of the company’s outstanding 6.75% convertible debentures due 2021, and (3) a meeting of holders of the company’s common shares , in each case to consider and vote upon a corporate plan of arrangement under the Canada Business Corporations Act to implement the previously announced proposed recapitalization transaction.

Bellatrix Exploration Ltd is a Calgary based oil and gas company, engaged in the exploration, acquisition, development, and production of oil and natural gas reserves in the provinces of Alberta, British Columbia, and Saskatchewan. Company has a market cap of $53 million and approximately 81 million shares outstanding.

Journey Energy Inc. (JOY:TSX) announced an update on our Joint Venture with Kiwetinohk Resources Corp. in the East Duvernay, including the encouraging test rates achieved by the first two commitment wells.

Since entering into the Joint Venture arrangement on August 29th, 2018, Kiwetinohk and Journey have been actively advancing the development of the East Duvernay property. Kiwetinohk drilled, completed, and achieved encouraging test rates from the first two commitment wells. It drilled and rig released a second option well on March 31, 2019 with completion and testing operations anticipated to commence in the second quarter. Kiwetinohk also licensed option wells three and four respectively.

Journey Energy Inc. is a Calgary based exploration and production company focused on oil-weighted operations in western Canada. Journey's strategy is to grow its production base by drilling on its existing core lands, implementing waterflood projects, and by executing on accretive acquisitions. Company has a market cap of $69 million and 39 million shares outstanding.

Obsidian Energy Limited (OBE:TSX) announced on April 16th an operational update on its Cardium drilling program. Company drilled 14 wells in 2018 and averaged initial production rates over the first 30 days of 540 boe per day and 87% oil. The 2019 portion of that program included five wells, the last three of which came on production in the past week. These three wells are showing extremely robust initial production rates, with the pad averaging single day peak rates of over 1,000 boe per day per well.

Company will resume drilling of its fast cycle primary development program in the Cardium following spring break-up in July 2019 and plan to continue through to March 2020. All of company's planned 2019 locations will be fully licensed and drill ready in the very near future. Company remains committed to execute its program and keep its spend within funds flow from operations, and therefore will remain flexible and responsive to changes in commodity price.

Obsidian Energy is a Calgary based oil and gas producer with strategic assets in Alberta. Company is primarily focused on the development of its largest, light oil Cardium asset. In 2017 Obsidian Energy underwent a formal name change from Penn West Petroleum. Company has a market cap of $231 million and approximately 507 million shares outstanding.

Return Energy Incorporated (RTN:TSXV) announced data pertaining to the review of strategic alternatives process announced March 25, 2019 is now available through Sayer Energy Advisors. Parties interested in accessing detailed information regarding Return, its assets and the process timetable are encouraged to attend the Sayer website or alternatively contact either Ryan Ferguson Young, Alan Tambosso or Tom Pavic at the Sayer office.

Return Energy Inc. is a Calgary based oil and gas exploration and production company. It is engaged in the exploration for and development and production of petroleum and natural gas properties internationally in Alberta. Return has a market cap of $3.3 million and approximately 111 million shares outstanding.

Source Energy Services Ltd. (SHLE:TSX) announced its most current corporate update is now available on its website. Information is available under 'Investors - Presentations'.

Source Energy Services Ltd is a Calgary based company engages in the production, supply, and distribution of northern white frac sand. Its services include proppants, logistics, terminals, storage and transfer of chemicals, and field solutions. Company has a market cap of $82 million and approximately 61 million shares outstanding.

Whitecap Resources Inc. (WCP:TSX) announced that it intends to release its 2019 first quarter results before market open on Wednesday, May 1, 2019 and has scheduled a conference call and webcast to begin promptly at 9:00 am MT (11:00 am ET) on Wednesday, May 1, 2019. A live audio webcast of the conference call will be accessible on Whitecap's website.

Whitecap Resources Inc. is a Calgary based oil and gas company with operations in western Canada. Whitecap has a market cap of $2.0 billion and approximately 414 million shares outstanding.

 More news on Oilpatch Review

Quote of the day

Robert Browning, “Like dogs in a wheel, birds in a cage, or squirrels in a chain, ambitious men still climb and climb, with great labor, and incessant anxiety, but never reach the top.”

Did you know?

Drilling mud not only cools the drill bit but it prevents the collapse of unstable strata into the hole. It also prevents water from water-bearing strata to enter the hole. Even though it is commonly referred to as mud, it is actually an expensive mixture of chemicals, bentonite, barite and water. The cost of the mud can vary from $50,000 to $275,000 for one oil drilling operation. 

 

prices compiled and updated on a regular basis by Canadian Insight

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     WCS  / WTI

 Price Spread $19.15

  April 23, 2019

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