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Updated on Friday, January 19, 2018
National Energy Board announces a new process to resolve future permit disputes — January 19, 2018
Canada’s National Energy Board announced today that it is implementing a new generic process in an attempt to resolve future disputes between Trans Mountain Pipeline ULC and provincial and municipal governments.
The Board has implemented a regulation where Trans Mountain Pipeline must adhere to its commitment to apply for or seek variance with the NEB regarding provincial and municipal authorization or permits.
Under this process, a decision must reached within a period of 3 to 5 weeks after filing a request with the National Energy Board.
In a request by Trans Mountain Pipeline, dated December 7, 2017, NEB has ruled that Trans Mountain Pipeline does not have to abide by two sections of the Burnaby municipal bylaws.
Following the NEB announcement, Kinder Morgan responded that it is pleased with the NEB decision and will adhere to all future requirements.
TransCanada receiving very strong commercial support for Keystone XL Pipeline — January 18, 2018
TransCanada announced that it has concluded and filled its open season for the Keystone XL project with 20 year contract commitments.
The Calgary based Canadian energy transporter stated that it has received very strong support for the project from Canadian and American politicians. Company thanked President Donald Trump and Premier Rachel Knotely for their support.
Last November, TransCanada received approval for the project but the pipeline route must be shifted away from sensitive ecological regions to safer alternative areas. TransCanada said that it is working with landowners along the new route.
Initial preparations for the pipeline are underway and primary construction work is expected to begin in 2019.
Renown advisor sees a positive recovery in Canadian oil industry — January 4, 2018
Deloitte's Resource Evaluation and Advisory group predicts that there will be a strong recovery in the global oil prices this year. The renown advisor sees a lesser rise oil prices in Canada but believes there is room for a remedy.
Deloitte’s analyst Andrew Botterill says, "Canadian oil prices lagged behind those in the United States during 2017 largely due to increased U.S. production and possible transportation difficulties getting Canadian oil into that market.”
Botteral goes on to state, "But if Canada can take advantage of declining Venezuelan and Mexican exports to the U.S. and access some of its heavy oil refining capacity, the price differential between WCS and WTI should at least be moderate compared to the historical differential."
While US is boosting its oil production quickly, it is also entering the oil exports scene at a historic pace. One third of US production is entering the export markets.
Canada has a golden opportunity in increasing its heavy oil into the US while Mexico and Venezuela disappear from marketing their heavy oil into the US. It’s a golden opportunity that Canadian oil producers should take advantage of.
Deloitte predicts that there will be a continued significant price spread between US’s WTI crude oil and Canadian WCS, but it will narrow with decreasing US bottle necks. Botterill predicts that WTI will trade at an average of $55 per barrel in 2018 and WCS will average during the same period at $46 per barrel. This is significantly better than the present WCS price situation.
$3.5 billion petrochemical plant to be constructed in Alberta — December 19, 2017
Calgary based Inter Pipeline announced that it is planning to build a $3.5 billion petrochemical plant north of Edmonton.
The complex will convert propane into a polypropylene plastic. This is the type plastic that is used extensively in manufacturing automobile and industrial parts.
Inter Pipeline stated that the project is expected to begin construction in mid - 2018 and be completed by be 2021. Company will use propane feedstock from its Redwater Olefinic Fractionator.
Government incentives and abundance of inexpensive propane convinced Inter Pipeline to proceed with the largest project it has ever participated in.
Trans Mountain Pipeline is one step closer to reality — December 11, 2017
Kinder Morgan Canada Limited received word last week from Canada’s energy regulator. Company has been given permission for the construction of the $5.8 billion pipeline project through the city of Burnaby.
The National Energy Board stated that Kinder Morgan may proceed with the pipeline project, provided that it has passed all of the requirements set out by the NEB ruling, and in particular, those affecting the city of Burnaby which the pipeline will passes through.
Unfortunately, there may still be further roadblocks set by other municipal governments which have yet to give operational permits. There are also possibilities that aboriginal groups, environmentalists, and even the provincial socialist government may set further road blocks for the project.
Kinder Morgan filed a motion with NEB in October and expressed concerns over statements made by the mayor of Burnaby city that he was against the pipeline project. The city council kept postponing permit approval despite the federal regulator and federal government approval.
President of Kinder Morgan, Ian Anderson was pleased with the NEB ruling but expressed concerns that the company is still waiting for a decision upon which the company requested a special body be set up to resolve similar situations in the future.
New innovations conversion plant to be constructed near Calgary — December 4, 2017
Greyrock Energy announced that it will construct a commercial gas to liquids plant at Carseland, Alberta, near Calgary. The project will incorporate Greyrock’s ‘Direct Fuel Production System and Grey Cat’™ catalyst.
The conversion plant will use natural gas to produce natural gas liquids as feed stocks for making premium grade diesel and naphtha. The diesel is a zero sulfur product with a very high cetane rating and superior lubricity.
The advanced fuel can easily be blended with regular diesel to reduce emissions. The product will also improve fuel economy, enhance vehicle performance and extend engine life.
Federal Natural Resources Minister wants to establish a Standing Panel — November 30, 2017
Honorable Jim Carr announced that he wants to see an establishment of a ‘Standing Panel’ which would oversee compliance issues after a project has been approved by the NEB.
The Federal Natural Resources Minister is responding to continued delays which have been preventing the twining of the TransMountain pipeline.
Provincial and municipal governments in British Columbia have stalled the pipeline project on the pretense that Kinder Morgan is not following provincial and municipal regulations and bylaws.
Minister Jim Carr commented, “The Government has taken an important step to ensure that when a natural resource project is approved, it proceeds in a timely fashion and continues to generate economic benefits for all Canadians.
The Government is supportive of establishing a process that would assist in resolving any conflicts over the issuance of municipal or provincial permits and avoid unnecessary delays to project construction or regulatory compliance."
Fraser Institute ranks British Columbia as least attractive Canadian province to invest in — November 28, 2017
A study done for the Fraser Institute now ranks British Columbia as the least attractive province in Canada for natural gas and oil investment.
Since the socialist government got elected last May, British Columbia has plummeted to the bottom of global rankings. Prior to the election, British Columbia was rising to become the most favorable province to invest in.
Alberta, once the leading province for oil and gas investments, has fallen to the middle of the pack. With the election of Rachel Knotely and her socialist government, higher taxes is turning away investors.
Newfoundland and Saskatchewan have now risen to the top of the pack for oil and natural gas investors.
"Investor confidence matters, and having a government that's openly hostile to resource development has apparently sent a chill throughout the oil and gas industry," said Kenneth Green, senior director of the Fraser Institute's Centre for Natural Resources and co-author of the 2017 Global Petroleum Survey.
Our most recent ‘Shouts & Toots’ from the Oil Patch — January 19, 2018
Ikkuma Resources Corp. (IKM:TSXV) announced on January 18th that it has granted 2,903,600 stock options to officers, directors, employees and consultants of Ikkuma at an exercise price of $0.38. The stock options have been granted pursuant to Ikkuma's 10% rolling stock option plan and will expire five years from the date of grant.
Ikkuma Resources Corp. is a Calgary based oil and gas company with operations in the Foothills Region of Western Canada. Company has a market cap of $40.4 million and approximately 109 million shares outstanding.
Kinder Morgan Canada Limited (KML:TSX) announced that the board of directors has declared a dividend for the fourth quarter of 2017 of $0.1625 per restricted voting share ($0.65 annualized), payable on February 15, 2018, to restricted voting shareholders of record as of January 31, 2018. KML's restricted voting share dividends are eligible dividends for Canadian income tax purposes.
Board Chairman and CEO Steve Kean said, "We expect the NEB to issue another decision in the near future on establishing a fair, transparent and expedited backstop process for resolving any similar delays in other provincial and municipal permitting processes, but at this stage we are still pursuing a primarily permitting strategy for the project, and are now projecting an unmitigated delay to a December 2020 in-service date."
In the fourth quarter, KML generated earnings per restricted voting share of $0.11, and produced DCF of $0.23 per restricted voting share relative to our declared $0.1625 per restricted voting share dividend, resulting in $7.3 million of excess DCF coverage above the company's dividend.
For 2017, KML generated net income of $160.7 million, Adjusted EBITDA of $388 million and DCF of $323 million. At year-end 2017, Trans Mountain Expansion Project spend totaled approximately $930 million, of which approximately $385 million was incurred by KML post-IPO.
For 2018, KML's budget contemplates a dividend of $0.65 per restricted voting share, achieve DCF (including capitalized equity financing costs) of approximately $349 million ($0.96 per restricted voting share).
Kinder Morgan Canada Limited is a Calgary based company which owns an interest in or operates an integrated network of pipeline systems and terminal facilities in Canada. Company's two business segments include Pipelines and Terminals. Kinder Morgan has a market cap of $1.7 billion and approximately 103 million shares outstanding.
Obsidian Energy LTD. (OBE:TSXV) announced that it confirms it is aware of a statement by FrontFour Capital Group LLC regarding their views on the direction of the company. I Obsidian Energy's corporate strategy is well defined and has the unanimous support of the Board of Directors.
Company delivered strong results throughout the past year, and provided an operational update earlier this week that confirms the business plan is working. Those operational successes, along with our highly capital efficient 2018 plans, are a product of robust capital planning and a project review process with both Management and the Board. A change of course would hinder Obsidian Energy's progress and ability to deliver on the value maximizing efforts already underway.
Obsidian Energy Ltd. is a Calgary based company with assets and operations in western Canada. Company has a market cap of $757 million and approximately 504 million shares outstanding.
TransCanada Corporation (TRP:TSX) announced on January 18th that it has successfully concluded the Keystone XL open season, securing approximately 500,000 barrels per day of firm, 20 year commitments, positioning the proposed project to proceed. Interest in the project remains strong and TransCanada will look to continue to secure additional long-term contracted volumes.
Today's announcement builds on the November 20, 2017 decision by the Nebraska Public Service Commission to approve the Keystone XL route through the state. The approved route was based on a comprehensive review of the evidence submitted by all parties in the hearing process as well as state agencies to ensure it has a minimal impact to the public and to Nebraska's natural resources.
Russ Girling, TransCanada's president and chief executive officer, commented, “Over the past 12 months, the Keystone XL project has achieved several milestones that move us significantly closer to constructing this critical energy infrastructure for North America.”
TransCanada is a Calgary based energy transporter which operates one of the largest natural gas transmission networks that extends more than 56,900 miles, tapping into virtually all major gas supply basins in North America. Company has a market cap of $52 billion and approximately 880 million shares outstanding.
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Crius Energy Trust (KWH.UN:TSX) announced will be holding an analyst day on Tuesday, January 30, 2018 for invited analysts to attend in person. For all investors, media and other stakeholders, a live audio webcast will be available.
For more information see company website at http://www.criusenergytrust.ca
Crius Energy Trust a Toronto based and unincorporated open ended limited purpose trust. The Company is engaged in the sale of electricity and natural gas to residential and commercial customers under variable price and fixed price contracts. Trust has a market cap of $514 million and approximately 57 million shares outstanding.
MATRRIX Energy Technologies Inc. ( MXX:TSXV) announced on January 17th that it has entered into an agreement to acquire all the issued and outstanding shares of D2 Drilling Inc., a private corporation which owns one heavy telescopic double drilling rig in the Weyburn / Estevan area of southeast Saskatchewan.
Under the terms of a share purchase agreement between MATRRIX and all shareholders of D2 , MATRRIX has agreed to acquire all the issued and outstanding shares of D2 for total consideration of approximately $3.53 million.
Pursuant to the Acquisition, MATRRIX will acquire one heavy telescopic double with strong historic utilization, and crews that deliver quality consistent with the Corporation's existing Stampede Drilling division based in S.E. Saskatchewan. Stampede will market the D2 rig alongside the six rigs currently within Stampede's fleet. The D2 rig is essentially a sister rig to the existing Stampede rigs, allowing Stampede management to share equipment and crews, maximizing efficiency, field performance, and cost control.
With the previously announced acquisition of 3 drilling rigs from Vortex Drilling Ltd. and the acquisition of 3 drilling rigs through its acquisition of Stampede Drilling Ltd., upon closing this acquisition, MATRRIX will have a contract drilling business consisting of 7 modern telescopic double drilling rigs, all manufactured since 2011, with proven mind and management in place.
MATRRIX Energy Technologies Inc. is a Calgary based company engaged in the providing horizontal and directional drilling services and technology for the oil and gas industry in North America. Its services include directional drilling, performance drilling and well planning. MATRRIX has a market cap of $24 million and approximately 61 million shares outstanding.
Yangarra Resources Ltd. (YGR:TSX) announced an operations update, outlines 2018 guidance and provides a hedging program update. Production for 2017 averaged approximately 5,750 boe/d which is a 91% increase on a production per share basis when compared to 2016. December 2017 production averaged approximately 7,500 boe/d (62% liquids) with fourth quarter 2017 production estimated at 6,700 boe/d. The Company's base corporate decline rate for 2018 is forecast to be approximately 31%.
Company drilled and completed sixteen wells in the bioturbated Cardium formation in 2017, five wells were drilled prior to spring breakup and 11 wells were drilled post breakup with an additional two wells drilling over year end. The first six wells drilled after break-up now have more than 30 days of production history and the IP-30 on those wells averaged 497 boe/d (80% liquids).
Company has 120 sections of Cardium land in Central Alberta and 940 gross (740 net) future Cardium locations (based on 1-mile horizontal lengths). Yangarra has increased its assumptions for original oil in place and original BOE in place due to recent exploitation of the bioturbated section below the traditional Cardium sand. Yangarra's Cardium land base, according to internal analysis and estimates, contains 886 gross (650 net) million barrels of OOIP and 1,800 gross (1,265 net) million boe of OBOEIP as at December 31, 2017.
Company's Board of Directors has approved an initial capital budget of $90 million for 2018. The 2018 capital budget includes the drilling of seven new wells in the first quarter and fifteen new wells in the second half. The budget is expected to increase the company's annual 2018 production to 9,000 to 10,000 boe/d with cash flow from operations estimated at $80 to $90 million.
Yangarra Resources Ltd. is a Calgary based oil and gas company engaged in the exploration, development and production of natural gas and oil with operations in Western Canada, with a main focus on Central Alberta. Company has a market cap of $434 million and approximately 81 million shares outstanding.
“Goodness is the only investment that never fails..”
Quotes are directly taken from a book entitled, ‘Phrase A Day Inspirations’, written by Bernie Shimko. ‘Canadian Insight’ wishes to thank Bernie and his wife Adeline for permitting the use of their inspiring quotes.
Did you know?
Any organic compound composed of carbon and hydrogen is classified as a hydrocarbon. One of the simplest hydrocarbons is methane and one of the most complex is crude oil. There are well over 200 different types of hydrocarbons.
prices compiled and updated on a regular basis by Canadian Insight
$ / liter
WCS / WTI
Price Spread ↑-$24.75
January 19, 2018
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