Canadian Insight

Online oil and gas magazine keeping investors informed ...

Updated on Thursday, October 29, 2020

Cenovus Energy buying out Husky Energy — October 26, 2020

Cenovus Energy announced that it will be taking over Husky Energy to create a new integrated oil and gas company.

The boards of each company have entered to a definitive agreement under which Cenovus and Husky will combine in all stock valued at $23.6 billion.

The transaction has been approved by both boards.  It is expected to approved by both shareholders and finalized in the first quarter of 2021.

Husky shareholders will receive 0.7845 of a Cenovus share. They will also receive 0.0651 share purchase warrant for each Husky common share.

 

Saskatchewan’s Premier Scott Moe concerned with the possible Joe Biden win in US presidential election — October 19, 2020

Premier Scott Moe announced last week that he is very concerned with the possible outcome and consequences in the US presidential reelection.

Premier Moe stated that the Democratic candidate, Joe Biden, has repeatedly stated that he would kill the Keystone XL pipeline when he is elected.

The Keystone XL pipeline was rejected by the former president Barack Obama and vice president Biden. There is reason to believe that this would happen again.

The pipeline project is very important to western Canadian oil industry. It would connect western Canada with Gulf oil markets.

 

Joe Biden’s win in US presidential election will have serious repercussions for the oil industry — October 1, 2020

The election of Joe Biden will not only have many changes for all Americans but even more serious repercussions for the American and Canadian oil and gas industry.

Joe Biden has repeatedly stated during his campaign that his government will re-enter the Paris Climate Agreement and  focus on ‘Green Energy’. Biden government intends to bring US emissions to net zero by 2050.

Biden plans to halt all off shore drilling and exploration on federal lands to stop global climate change. He has openly stated that his government would support all climate  related lawsuits against the oil and gas industry.

The policy which will seriously hurt western Canada is the option lost to export heavy crude into the Gulf states. The Democrats headed by Joe Biden intend to stop further construction of the TC Energy Keystone XL pipeline

 

 

OPEC tangled in a losing scenario — September 29, 2019

OPEC’s control over oil prices may be drawing to an end.  The rising global oil inventory is about to get another shot with Libya returning back to exporting oil. Despite sanctions against Iran, it has managed to increase its oil exports.

Earlier this summer, OPEC thought that it had oil exports and oil prices under control and began relaxing its supply quotas.  Saudi National Oil Corporation had plans to increase its oil exports by 160,000 barrels per day by the summers end.

The corona virus pandemic showed signs of relief in mid-summer. It is  now on the increase and is once again skewing the global oil demand. Infections have skyrocketed in India and on the rise in Europe and North America.

Several reports indicate that tankers are now being booked to store crude oil. Mercuria, a multinational commodity trading group, recently announced that crude oil stocks are expected to build before there are any signs in an increase in demand.

 

Alberta’s Premier Jason Kenny is optimistic that oil industry will survive and flourish —September 17, 2020

Alberta’s Premier Jason Kenny stated that his government has not given up on east-west pipeline system that would carry Alberta oil to Saint John, New Brunswick.

The recent re-election of the Progressive Conservative government in New Brunswick and the new Conservative leadership of the Erin O’Tool has created more hope for the oil industry to revive and flourish .

The Alberta premier believes that the election of the Conservative government in Ottawa will make a significant difference to the state of the oil industry.

 Kenny went onto explain that the only reason why the Energy East Pipeline failed was because of the Notley NDP government in Alberta and the Trudeau Liberals in Ottawa. Both want the pipeline to fail.

 

 

Trans Mountain pipeline on schedule to be operational by end of 2022—September 16, 2020

Trans Mountain CEO Ian Anderson reported that the pipeline expansion is on budget and on schedule to open by the end of 2022.

The expansion will triple the capacity of the pipeline connecting Alberta’s central oil collection point at Hardisty with the west coast loading terminal in Greater Vancouver.

Last February it was announced that construction costs had risen from the original estimate of $5.2 million to $12.6 billion. This was mainly due to cost overruns from delays by protestors and legal challenges.

There are thirteen committed  oil producers who will be using the pipeline once it is completed.

 

 

Crude oil markets are expected to be stable for remainder of this year and improve in  2021 —August 10, 2020

According to HIS Markit Energy Advisory Service, global crude oil markets have stabilized and are expected to trade between $40 to $45 per barrel for the remainder of this year.

The renown advisory agency predicts that crude oil prices will begin to improve in the second half of 2021. It predicts that oil prices will rise by $5 to $7 next May and pass the $50 mark by mid-summer. 

Improved and more stable oil prices are expected to alleviate the pains in oil industry. Investment capital should once again return to the oil and natural gas sector by this time next year.

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our most recent ‘Shouts & Toots’  from the Oil Patch  — October 29, 2020

AltaGas Ltd. (ALA:TSX) announced on October 29th its third quarter 2020 financial results and provided an update on the Company's operations and outlook, including COVID-19 considerations.

Normalized net income was $12 million ($0.04 per share) compared to normalized net loss of $62 million ($0.22 per share) in the third quarter of 2019, demonstrating marked improvements and reiterating AltaGas' focus on improving earnings durability.

Randy Crawford, President and Chief Executive Officer commented, "Our third quarter financial results continue to reflect the stability and resiliency of our diversified business and provide the predictable and reliable performance that we and our stakeholders expect.

AltaGas Canada Ltd is a Calgary based company which owns and operates a diversified basket of energy infrastructure businesses. Company has a market cap of $1.0 billion and approximately 30 million shares outstanding.

BNK Petroleum Inc. (BNK:TSX) announced the results of the Annual General Meeting of shareholders of the Company held in Vancouver, British Columbia on October 28, 2020. All of the resolutions put forward at the meeting were approved.

BNK Petroleum Inc. is an international oil and gas exploration and production company focused on its shale oil and gas properties in the United States. Company has a market cap of $73 million and approximately 233 million shares outstanding.

Calfrac Well Services Ltd. (CFW:TSX) announced that a final order hearing was held yesterday, in the Court of Queen's Bench of Alberta, to consider the approval of its plan of arrangement, under the Canada Business Corporations Act. If approved, the final order will allow for the implementation of the Company's Amended Recapitalization Transaction upon the satisfaction or waiver of the other conditions to closing, as previously disclose.

Calfrac Well Services Ltd is a Calgary based company which provides specialized oilfield services, including hydraulic fracturing, coiled tubing, cementing and other well completion services to the oil and natural gas industries in Canada, the United States, Russia, Mexico and Argentina Company has a market cap of $400 million and approximately 145 million shares outstanding.

Crescent Point Energy Corp. (CPG:TSX) announced on October 29th its operating and financial results for the quarter ended September 30, 2020. Company generated approximately $120 million of excess cash flow during third quarter, demonstrating continued capital discipline. Adjusted funds flow totaled $235.7 million during third quarter 2020, or $0.44 per share. Company had a net income of $500,000.

Crescent Point's average third quarter production was 113,383 boe/d, comprised of over 90 percent oil and liquids. Crescent Point has converted approximately 110 producing wells to water injection, as part of its waterflood program, and expects to convert a total of approximately 135 wells in 2020.

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 (HSE:TSX) announced on October 29th its third quarter results. Company reported funds flow of $148 million and a cash flow of $79 million. Company experienced a net loss of $7 billion.

Total production averaged 55,700 boe/day, compared to 60,500 boe/day in the second quarter of 2020. Capital expenditures and development activities remained at minimum levels in the third quarter.

Husky continues to progress the rebuild project at the Superior Refinery under strict health and safety protocols. The recovery of business and property damage insurance payments related to the refinery is expected to increase in future quarters as activity levels increase.

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.

Whitecap Resources Inc. (WCP:TSX) announced on October 29th its operating and unaudited consolidated financial results for the three and nine months ended September 30, 2020.

Company reported a revenue of $248 million and a net income of $12.8 million in the third quarter of 2020. Production for the quarter averaged 66,681 boe/d which was significantly higher than company's expectation of 62,000 – 63,000 boe/d.

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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Africa Oil Corp. (AOI:TSX) announced on October 28th an operations update. Company reported a significant gas condensate discovery on the Luiperd prospect located on Block 11B/12B offshore South Africa. This discovery follows the adjacent play-opening Brulpadda discovery in 2019, which proved a significant new petroleum province in the region. The Company holds an indirect interest in the project as a result of its equity interests in Africa Energy (31.3%) and Impact Oil & Gas Limited (31.1%).

Garrett Soden, Africa Energy's President and CEO, commented, "We are thrilled to announce the second consecutive discovery on Block 11B/12B offshore South Africa. We congratulate Total as operator for drilling the Luiperd-1X deepwater well safely and efficiently during the coronavirus pandemic and austral winter season. The Luiperd discovery reconfirms this world-class exploration play with substantial follow-on potential.”

Africa Energy Corp. is a Canadian oil and gas company with exploration assets offshore South Africa and Namibia. Company is based in Vancouver. Africa Energy has a market cap of $419 million and approximately 472 million shares outstanding.

Canadian Natural Resources Limited (CNQ:TSX) announced on October 28th that in connection with the Company’s 20% working interest in South Africa Block 11B/12B, the operator has made a significant gas condensate discovery on the Luiperd prospect, located in the Outeniqua Basin, 175 kilometers off the southern coast of South Africa. This discovery follows the previously announced Brulpadda discovery in 2019.

The Luiperd well was drilled to a total depth of approximately 3,400 meters and encountered 73 meters of net gas condensate pay in well-developed, good quality, Lower Cretaceous reservoirs. Following a comprehensive coring and logging program, the well will be tested to assess the dynamic reservoir characteristics and deliverability.

Canadian Natural Resources is a Calgary based oil and gas company with operations in western Canada, the North Sea and Offshore Africa. Company has a market cap of $42 billion and approximately 1.2 billion shares outstanding.

Gear Energy Ltd. (GXE:TSX) announced that the beneficial holders of in excess of 66 2/3% of its outstanding $13,185,000 aggregate principal amount of convertible unsecured subordinated debentures have agreed to certain amendments to the Debentures.

Amendments to the Debentures will be effective as of December 1, 2020, provided that the Conversion Price Amendment will be effective upon receipt of the Shareholder Approval, and the Company expects to enter into an amended and restated debenture indenture to give effect to such Amendments on or before December 1, 2020.

Gear Energy limited is a Calgary based oil and gas company with operations and assets in western Canada. Company has a market cap of $158 million and approximately 219 million shares outstanding.

Hemisphere Energy Corporation (HME:TSX) announced on October 28th an update on its corporate and operational activities. Over the past number of months, Hemisphere has dedicated significant time and resources to evaluating its Atlee Buffalo G oil pool as an excellent candidate for conversion from water to polymer flood. The long term value of this enhanced oil recovery project is significant in terms of incremental and accelerated reserve recovery, and management expects to begin polymer injection by mid-2021. An application has been submitted to the Alberta Energy Regulator for approval and engineering design is well underway.

During the third quarter, corporate production increased slightly to 1,685 boe/d (99% heavy crude oil), and average realized oil pricing improved by 225% to approximately $37/boe, as compared to the second quarter.

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.

More news on Oilpatch Review

 Quote of the day

Mike Hutchison, “The instant you have lost hope in tomorrow, is the instant you lose meaning for today.”

 

Did you know?

Saskatchewan is Canada’s second largest oil producer. Low four tier royalties and drilling incentives has sparked a new oil and gas interest in the province. In 2009 there were 1,843 oil and gas wells drilled.  At Present, Saskatchewan is producing approximately half a million barrels of oil on a daily basis. Some analysts predict that the province will surpass Alberta as the leader in conventional oil production in a few years. 

 

 

prices compiled and updated on a regular basis by Canadian Insight

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Victoria

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Saskatoon

Regina

Brandon

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Ottawa

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Montreal

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St. John’s

 

 

$ / liter

 

1.199

1.209

1.049

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1.019

0.959

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0.989

0.999

1.049

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0.989

1.089

 

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     WCS  / WTI

 Price Spread -$10.35

  October 29, 2020

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