Canadian Insight

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Updated on Friday, January 17, 2020

Supreme Court denies Horgan socialist government the right to regulate what a pipeline may carry — January 17, 2020

Canada’s Supreme Court ruled on Thursday that British Columbia’s provincial government cannot regulate what is transported in a major crude oil pipeline crossing its territory.

The Supreme Court ended the previous decision which set a challenge against Trans Mountain, but others remain. The pipeline is under construction and is expected to be in service by the summer of2022.

 

Delayed pipeline project will begin construction this February — January 15, 2020

Work will soon begin on Keystone XL pipeline. TC Energy announced that it will begin preliminary work in three northern US states in February. Construction permits are still pending US federal government approval but the company stated that it expects no long delays.

TC Energy stated that  it plans to start building pumping stations along the entire pipeline route in June. Work on a pipeline segment in Nebraska would also start in June, followed by the start of construction of some segments in Montana and South Dakota in August.

Last March, President Donald Trump signed a renewed permission for the Keystone XL pipeline. This is a move in his administration’s pursuit of maximizing production of oil, gas and coal for domestic use and global exports.

 

Poll indicates Quebecers prefer Western Canadian oil over foreign imported — December 11, 2019

A poll sanction by Montreal Economic Institute shows that Quebec politicians have it all wrong. Results show a vast majority of Quebecers prefer western crude oil over foreign imported crude.

Poll showed that an overwhelming majority of Quebecers (65%) prefer for the oil imported into Quebec to come from Western Canada, versus just 13% who prefer American oil and 5% who prefer oil from another country.

When questioned about the safest way to transport crude oil, 50% of the people interviewed stated  that pipelines are the safest means of transport, followed by 11% who think the train is safest.

Chief Economist and Chief Operating Officer of Economic Institute Montreal stated, "Quebecers are much more open to hydrocarbons than we might think. They understand that we need oil and that the energy transition will not happen overnight."

 

Gibson Energy announces a new diluent recovery project  — December 4, 2019

A 100,000 barrel diluent recovery project near Hardisty, Alberta is being planned by Gibson Energy. The project is expected to free up room in pipelines and railway tankers.

Diluent is a light oil mixed with sticky, and heavy bitumen to allow it to flow in a pipeline. It makes up as much as a third of the volume of blended bitumen

Gibson Energy will partner with US Development Group, LLC, to construct and operate the facility. Project is expected to be completed and operational in 2021.

 

Laying the TransMountain Pipeline soon to begin in Alberta— December 3, 2019

TransMountain CEO Ian Anderson announced that laying the pipe will soon begin after a span of 10 years since it was first announced.

The pipeline was twice approved by the federal government and was challenged in court numerous times. This resulted in many setbacks as the whole project had to go back to further consultations and reviews.

Kinder Morgan frustrated with all of the impediments sold the pipeline to the federal government in 2018 for $4.5 billion. The pipeline project met further court delays this summer.

 It was stated that the whole project will take three years to build and cost the federal government $7.4 billion.

 

 

One of Canada’s largest natural gas producers changing its name and moving out of Calgary — November 1, 2019

Encana Corporation’s CEO, Doug Suttles, announced on Thursday that it will be changing its name to Ovintia and moving its headquarters to the United States.

The head of Encana stated that the company is moving out of Canada to improve its operating and financial outlook. Suttles stated that the move to US will give his company better exposure in attracting financial investment.

Doug Suttles went on to say, “Over the last five-plus years, we have transformed our portfolio and our culture. We've created a high quality, liquids focused multi-basin portfolio. Our focus on innovation and efficiency is consistently delivering superior financial and operational performance.

A domicile in the United States will expose our company to increasingly larger pools of investment in U.S. index funds and passively managed accounts, as well as better align us with our U.S. peers. The change in corporate domicile will not change how we run our day-to-day activities.”

Suttles concluded that the move to the US is all about opening doors to a better the business climate.

 

Value Creation Group reaches agreement with two First Nations to help transform the Alberta oilsands into clean energy— September 9, 2019

Athabasca Chipewyan First Nation, Chipewyan Prairie First Nation, First Nation #468, and Value Creation Group have jointly announced an Alliance Agreement, targeting to reach a Definitive Business Agreement within fourth quarter of 2019. .

The Alliance Partners will jointly work with Government and industry, to bring to fruition and to transform the oil sands into clean oil industry – economically , competitively  and sustainably, while unearthing huge global oil markets.

Value Creation Group's proprietary technology scheme enables upfront de-carbonization and partial decontamination of bitumen very selectively and cost effectively.

This technology  drastically simplifies the subsequent upgrading and refining  technology complexities and severities , leading to step-changes in capital cost , operating and energy costs;  as a result reducing GHG emissions. 

Value Creation Group's upgrading  produces high quality medium crudes that best-fit conventional  conversion refineries which are by far the majority of global refineries.

 

Canada’s largest oil producer is concerned with the state of Keystone XL pipeline — September 5, 2019

The CEO of Suncor Energy recently commented on the setbacks surrounding the construction of the Keystone XL pipeline. Mark Little is concerned about the political battle that environmentalists have put up and the possible risks surrounding the pipeline project.

Suncor head stated that Canadian oil producers are counting on the TC Energy Corp. (formerly known as TransCanada Pipeline Corporation) to succeed in  constructing the pipeline.

The prime supporter of the project in the US is President Trump. With the American election coming in the fall of 2020, there are possibilities of political changes and further setbacks to the project.

Speaking at the Barclays investor conference in New York, Suncor CEO Mark Little said, Keystone XL is a massive investment and the political situation in the U.S. is I think increasing the risk associated with that... That’s one that a lot of people are doing soul-searching about right now because it’s also a very substantial investment. Now we still believe it will go ahead. But time will tell.”

 

Federal Court allows more challenges to Trans Mountain expansion — September 5, 2019

A Federal Court Of Appeal has allowed further challenges to the already government approved Trans Mountain pipeline expansion. The Appeal Court judge has allowed six out of ten indigenous groups for further consultation with the federal government.

The judge has stated that consultation procedures will have short deadlines and will proceed orderly. Expectations are that consultations will begin this month.

This will bring further uncertainty and be another setback for the pipeline project despite being approved twice by the federal government.

Canadian Association of Petroleum Producers expressed disappointment and stated that it was critical to get the pipeline project started and completed….organization stated, “Canada has an opportunity to provide the world with its sustainably produced oil and natural gas to help reduce net global emissions and to meet growing global energy demand.”

 

 

 

Our most recent ‘Shouts & Toots’  from the Oil Patch  — January 17, 2020

Crew Energy Inc. (CR:TSX) announced on January 17th that it has entered into a purchase and sale agreement with a third party midstream company for the disposition of a 22% net working interest in each of its Septimus gas processing facility and West Septimus gas processing facility located in Northeast British Columbia.

In conjunction with completion of the Transaction, Crew and the Purchaser will form a strategic alliance to participate collaboratively in future value creation opportunities. Separately, Crew has exercised its option to acquire an approximate 16% net interest in the NEBC Facilities for $11.7.

Crew Energy Inc. is a Calgary based oil and gas exploration and production company that acquires and develops crude oil and natural gas. The company operates in the Western Canadian Sedimentary Basic. The company's core operating areas are in Montney, British Columbia, and Lloydminster, between Alberta and Saskatchewan. Company has a market of $140 million and approximately 152 million shares outstanding.

East West Petroleum Corp. (EW:TSXV) announced that Mr. Nick DeMare, interim CEO, announces the granting of stock options to directors of the Company for the purchase of up to 1,300,000 common shares, at a price of $0.06 per share, for a period of five years.

East West Petroleum Corporations is a Vancouver based oil and gas company with assets and operations in New Zealand and Romania. Company has a market cap of $7.2 million and approximately 90 million shares outstanding.

Obsidian Energy (OBE:TSX) announced on January 17th an update on its Cardium development program. All 13 wells from the second half of 2019 were successfully brought online prior to the end of December. Results from the program continue to meet the strong production expectations for the area, with IP10 rates for the program averaging 520 boe/d (90% oil) per well (all 13 wells are included in the average), and IP30 rates for wells averaging 485 boe/d (83% oil) per well (11 of the 13 wells are included in the average).

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.

Valeura Energy Inc. (VLE:TSX) announced on January 17th a trading update for the year ended December 31, 2019. Fourth quarter 2019 production averaged 646 boe/d, comprised of gas produced from the company's ongoing conventional program. This is an increase of 22% over the prior quarter, and a demonstration of how the company's shallow gas work program of well workovers and recompletions can offset natural declines.

Valeura Energy Inc. is a Calgary based company currently engaged in the exploration, development and production of petroleum and natural gas in Turkey. Company has a market cap of $262 million and approximately 86 million shares outstanding.

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Enerplus Corporation (ERF:TSX) announced on January 16th the retirement of Ray Daniels as Senior Vice President, Operations, People & Culture after more than 35 years in the energy industry, including 12 years with Enerplus. Mr. Daniels will remain in his current position until he formally retires in April 2020. In conjunction with Mr. Daniels' retirement, the Company also announced that it has hired Wade Hutchings as Senior Vice President & Chief Operating Officer. Mr. Hutchings' appointment is effective February 11, 2020.

Enerplus is a Calgary based independent North American exploration and production company focused on its crude oil and natural gas assets in Canada and the United States. Company has a market cap of $2.8 billion and approximately 244 million shares outstanding.

MEG Energy Corp. (MEG:TSX) announced on January 16th that it plans to commence a private offering (the "offering") of US$800 million in aggregate principal amount of senior unsecured notes due 2027. MEG intends to use the net proceeds of the offering, if completed, and cash on hand to (i) redeem in full its US$800 million aggregate principal amount of 6.375% senior unsecured notes due January 2023 and (ii) pay fees and expenses related to the offering.

MEG also announced today that it has issued (i) a conditional notice to redeem in full MEG's US$800 million in aggregate principal amount of 2023 Notes at a redemption price of 101.063%, plus accrued and unpaid interest to, but not including, the redemption date; and (ii) a notice to redeem US$100 million aggregate principal amount of its 6.50% senior secured second lien notes due 2025 at a redemption price of 104.875%, plus accrued and unpaid interest to, but not including, the redemption date.

MEG Energy Corp. is a Calgary based company focused on sustainable in situ oil sands development and production in the southern Athabasca oil sands region of Alberta. Company has a market cap of $1.6 billion and approximately 297 million shares outstanding.

SECURE Energy Services Inc. (SES:TSX) announced that its Board of Directors has declared a dividend for the month of February 2020 of $0.0225 per common share payable on or about February 18, 2020 to shareholders of record on February 1, 2020. This dividend is an eligible dividend for the purpose of the Income Tax Act (Canada).

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.

TORC Oil & Gas Ltd. (TOG:TSX) announced that a cash dividend of $0.025 per common share will be paid on February 18, 2020 to common shareholders of record on January 31, 2020. The ex-dividend date is January 30, 2020. This dividend has been designated as an "eligible dividend" for Canadian income tax purposes.

TORC Oil & Gas Ltd is a Calgary based company engaged in exploration, development, and production of oil and natural gas reserves in the southeast Saskatchewan. Company has a market cap of $1.02 billion and approximately 217 million shares outstanding.

Whitecap Resources Inc. (WCP”TSX) announced that a cash dividend of Cdn. $0.0285 per common share in respect of January operations will be paid on February 18, 2020 to shareholders of record on January 31, 2020. This dividend is an eligible dividend for the purposes of the Income Tax Act (Canada).

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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ARC Resources Ltd. (ARX:TSX) announced a monthly dividend amount of $0.05 per share for February 17, 2020 to shareholders of record on January 31, 2020. The ex-dividend date is January 30, 2020. As at January 15, 2020, the trailing 12-month payments to shareholders total $0.60 per share.

Arc Resources is a Calgary based oil and gas company engaged in the acquisition, exploration, development, and production of conventional oil and natural gas in Western Canada. Company has a market cap of $3e.2 billion and approximately 354 million shares outstanding.

Centaurus Energy Inc. (CTA:TSXV) announced on January 15th that its partner has successfully completed and tested the CASE-501h multi-frac well in the Vaca Muerta Shale Formation at the Coiron Amargo Sur Este block in Argentina. This is the second of a five well program.

The well was drilled with an approximate horizontal lateral length of 2,000 meters at a vertical depth of approximately 3,100 meters. The CASE-501h was connected to early production facilities on November 9, 2019. CASE-501h achieved a 30 day average initial production rate of rate of 1003 barrels of oil per day with an average wellhead pressure of 4,885 psi, significant higher than the CASE-101h.

The CASE-401h horizontal multi-frac well, the third of the five well program, was completed and connected to early production facilities on January 7, 2020. Company expects to announce the CASE-401h IP30 results in due course.

Centaurus Energy Inc is an Argentinean based upstream oil and gas company which engages in conventional and unconventional oil and gas operations in Argentina. Company has a market cap of $51.7 million and approximately 544 million shares outstanding.

 

More news on Oilpatch Review

Quote of the day

Warren Buffett, “I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”

Did you know?

Liquefied Natural Gas (LNG) is natural gas that has been cooled to -162°C and becomes a liquid allowing it to be safely transported over long distances in special tankers. Natural gas in its liquid state is neither combustible or, explosive. LNG occupies 1/600 the space of natural gas in its gaseous state.

 

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     WCS  / WTI

 Price Spread $23.80

  January 17, 2020

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