Canadian Insight

Online oil and gas magazine keeping investors informed ...

Updated on Thursday, July 30, 2020

Keystone XL pipeline project faces more hurdles  — July 9, 2020

US Supreme Court has upheld a lower court ruling which temporarily blocks the continued construction of the Keystone XL pipeline project.

The setback underscores the continued legal delays in construction. Since the beginning of the announced project over a decade ago, environmental groups have thrown legal challenges.

TC Energy is still optimistic that the pipeline will be completed. The project on the Canadian side of the border is unaffected.

 

Canadian Oil Producers Association recommends federal government intervene in attracting more investment into the oil & gas industry  — June 8, 2020

CAPP announced today that it has asked the federal government to identify measures to support economic recovery while other global oil producers are still focused on battling the Covid-19 pandemic.

CAPP stated that Canada should take advantage of the opportunity as the country recovers at a much faster pace than other nations. Waiting longer will only increased global competition.

CAPP stated that the federal government should not overlook the economic contribution from the oil and gas industry. The oil and gas sector generates more than $100 billion in gross national product annually. It should be noted that this industry alone, produces a half million jobs across the country.

 

 

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.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our most recent ‘Shouts & Toots’  from the Oil Patch  — July 30, 2020

Crescent Point Energy Corp. (CPG:TSX) announced its operating and financial results for the quarter ended June 30, 2020. Company's Board of Directors is also pleased to announce the appointment of a new director.

Company reported a cash flow of $66.6 million and a lost of $(145.1) million in the second quarter of 2020. Adjusted funds flow totaled $109.0 million during second quarter 2020, or $0.21 per share diluted. Net debt as at June 30, 2020 equated to approximately $2.3 billion and reflects over $450 million of net debt reduction in the first half of 2020.

Company's average production in second quarter 2020 was 120,842 boe/d, which includes the impact from production shut-ins announced during the quarter and lower overall activity. This production was comprised of over 90 percent oil and liquid.

Company's average production in second quarter 2020 was 120,842 boe/d, which includes the impact from production shut-ins announced during the quarter and lower overall activity. This production was comprised of over 90 percent oil and liquid.

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.

Husky Energy Inc. (HSE:TSX) announced on July 30th its second quarter results for 2020. Cash flow from operating activities was a loss of $10 million, including changes in non-cash working capital. Net earnings were a loss of $304 million. Net debt at the end of the second quarter was $5.1 billion. 2020 capital expenditures remain on track within the previously guided range of $1.6-1.8 billion.

Total production averaged 60,500 boe/day, compared to 62,600 boe/day in the first quarter of 2020. Capital expenditures and development activities have been reduced to minimum levels.

Board of Directors has approved a quarterly dividend of $0.0125 per common share for the three-month period ended June 30, 2020. The dividend will be payable October 1, 2020 to shareholders of record at the close of business on September 1, 2020.

Husky Energy Inc. is a Calgary based oil and gas company with operations in western Canada, the United States, and the Asia-Pacific and the Atlantic region of Canada. Company has a market cap of $14.8 billion and approximately 1.0 billion shares outstanding.

Osidian Energy Ltd. (OBE:TSX) announced on July 30th its second quarter results for 2020. Company reported cash flow for the second quarter was $2 million and company reported a loss of $(22) million.

As a result of the proactive and timely actions to reduce costs during the quarter and the outstanding performance and contribution of our first half development program, Obsidian Energy was able to exceed all guidance targets in a very challenging macro environment.

Average production was 25,872 boe/d compared to 27,092 boe/d in the first quarter of 2020 and 27,835 boe/d in the second quarter of 2019. As a result of the lower crude oil pricing environment, the Company shut-in production deemed temporarily uneconomic which impacted average production by approximately 2,100 boe/d in the second quarter of 2020.

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.

Whitecap Resources Inc. (WCP:TSX) announced on July 30th its second quarter results. Company reported sales of oil and gas totalled $150 million and a loss of $ (78.2) million in the second quarter of 2020.

Company's credit facilities have two financial covenants being debt to earnings before interest, taxes, depreciation and amortization not exceeding 4.0 times and EBITDA to interest not less than 3.5 times. Whitecap's second quarter debt to EBITDA ratio was 2.0 times and EBITDA to interest ratio was 12.7 times.

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.

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Bengal Energy Ltd. (BNG:TSX) announced that it has agreed the terms of a Farmin Agreement with Santos QNT Pty Ltd. covering a portion of Bengal's ATP 934 oil and gas exploration tenement in south western Queensland.

Under the terms of the Farmin Agreement, Santos will pay 100% of the well costs of a one well work program with an estimated cost of AUS$ 2.7 million. Bengal's ATP 934 exploration project and development PLs area covers approximately 1,729 square kilometres (427,000 acres).

Under the Farmin Agreement, Santos has the right to earn a 60% interest in approximately 420 square kilometres in the southern portion of the ATP 934 tenement (the "Farmin Lands"), offsetting recent successful Santos operated exploration wells. The remainder of Bengal's ATP 934 exploration and development portfolio is not subject to, or affected by, this Farmin Agreement. Bengal intends to continue its own exploration campaign on the remaining area having successfully commuted its commitments into the next term of ATP 934 through a special amendment approved by the regulator.

Bengal Energy Ltd is engaged in the exploration of oil and natural resource business activities. It involved in development and production of crude oil and natural gas. It derives its revenues from the sale of the exploration business and has operations spread across Canada. Company has a market cap of $7.7 million and approximately 102 million shares outstanding.

Enbridge Inc. (ENB:TSX) announed on July 29th its second quarter 2020 financial results and provided a quarterly business update. Company reported that its adjusted earnings were $1,133 million or $0.56 per common share, compared with $1,349 million or $0.67 per common share in 2019.

Company now has an inventory of approximately $11 billion of secured projects at various stages of execution, including $0.3 billion of new projects announced in Gas Distribution and Storage and $0.7 billion in Renewable Power during the second quarter.

During the second quarter, the Company has continued to advance the execution of several secured projects, while assuring that COVID-19 precautionary measures are in place to protect the health of construction crews.

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.

Gran Tierra Energy Inc. (GTE:TSX) announced that the Company will release its 2020 second quarter financial and operating results on Tuesday, August 4, 2020, after market close. A conference call to discuss the 2020 second quarter results will be held at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time) the following day, Wednesday August 5, 2020.

Gran Tierra Energy Inc. is a Calgary based with a focus on its operations in Calgary. Company has a market cap of $369 million and approximately 367 million shares outstanding.

Renaissance Oil Corp. (ROE:TSX) announced that effective June 1, 2020, it had retained Haywood Securities Inc.as its financial advisor to provide financial advisory services to the company.

As consideration for the Services provided by Haywood, the company agreed to pay Haywood an advisory fee of C$100,000 to be satisfied by the issuance of common shares of the company at a deemed price of C$0.06 per share. On July 24, 2020, services were completed and the date on which Haywood's engagement ended.

Renaissance Oil Corp is Vancouver based company engaged in the acquisition, development and production of oil and natural gas in Mexico. Its properties include Mundo Nuevo, Topen, Malva, and Ponton. Company has a market cap of $41 million and approximately 280 million shares outstanding.

 

More news on Oilpatch Review

 

Quote of the day

Dolly Parton, “The way I see it, if you want the rainbow, you gotta put up with the

 

 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 $9.35

  July 30, 2020

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