Duncan Comments on Crescent Point Announcement

Crescent Point Energy announced Wednesday they would be reducing their workforce by 17 percent and making other changes as part of their new strategic plan.

Weyburn-Big Muddy MLA and Environment Minister Dustin Duncan said his thoughts are with the families affected by the layoffs, during an interview with Discover Weyburn News. Although he is not aware of anyone in the southeast directly affected by the layoffs at this time, he said he believes... READ MORE

TSX futures lower as oil slips; NAFTA talks in focus

Sept 5 (Reuters) - Futures pointed to a lower opening for Canada’s main stock index on Wednesday as oil prices fell after a tropical storm hitting the U.S. Gulf coast weakened, and ahead of a fresh round of North Atlantic Free Trade Agreement (NAFTA) negotiations.

Canada heads into talks in Washington to renew NAFTA determined not to back down on key issues despite threats from U.S. President Donald Trump to retaliate against the Canadian economy unless Ottawa gives ground quickly.

The reduced impact of Storm Gordon, which deviated away from oil-producing areas, helped offset support from forecasts of lower U.S. inventories and sanctions against Iran.

September futures on the S&P/TSX index were down 0.25 percent at 7:05 a.m. ET.

The Bank of Canada announces its interest rate decision at 10:00 am ET, while trade balance numbers are due at 08:30 a.m. ET.

The Toronto Stock Exchange’s S&P/TSX fell 101.58 points, or 0.62 percent, to 16,161.30 on Tuesday.

Dow Jones Industrial Average e-mini futures were down 0.3 percent at 7:10 a.m. ET, while S&P 500 e-mini futures were down 0.21 percent and Nasdaq 100 e-mini futures were down 0.25 percent.

TOP STORIES

Canada’s auto sales fell for the sixth straight month in August, as rising interest rates put a damper on demand for new cars.

Crescent Point Energy Corp named Craig Bryksa its new chief executive officer and said it would immediately reduce 17 percent of its workforce as the Canadian energy producer looks to turn around its business.

China’s Zijin Mining Group Co will buy Canadian gold and copper miner Nevsun Resources Ltd for about C$1.86 billion the companies said on Wednesday, after Nevsun rejected multiple bids from rival Lundin Mining Corp.

ANALYST RESEARCH HIGHLIGHTS

CRH Medical Corp : RBC raises target price to C$5.5 from C$5

COMMODITIES AT 7:10 a.m. ET

Gold futures: $1,194.8; rose 0.07 pct GOL/

US crude: $68.99; down 1.26 pct O/R

Brent crude: $77.40; down 0.99 percent O/R

U.S. ECONOMIC DATA DUE ON WEDNESDAY

0830 International trade for July: Expected -$50.3 bln; Prior -$46.3 bln

0830 Goods trade balance (R) for July: Prior -72.20 bln

0945 ISM-New York Index for Aug: Prior 797.5

0945 ISM New York Business Conditions for Aug: Prior 75.0

(Reporting by Debanjan Bose in Bengaluru; Editing by Sriraj Kalluvila)

SOURCE: REUTERS

Suncor holding off on crude expansion amid Canadian pipeline confusion

WINNIPEG, Manitoba (Reuters) - Suncor Energy Inc (SU.TO), one of Canada’s biggest oil producers, will not sanction further expansions of crude production until it becomes clearer when new pipelines will be ready, Chief Executive Steve Williams said on Wednesday.

A court overturned last week the Canadian government’s approval of the Trans Mountain pipeline expansion. That decision added to “troubling” pipeline delays, Williams said at a Barclay’s investor conference in New York.

“There is clearly a question of confidence in Canada,” Williams said.

“You will not see us approve those projects until we have more clarity on pipelines,” he said. “I would want to see actual, physical progress on the ground before I would commit.”

Canadian heavy oil production in Western Canada is expanding but construction of new pipelines has not kept pace, stranding supplies in the landlocked province and deepening a price discount to North American futures.

Oil producers have eagerly awaited the expansion of Trans Mountain, owned by the Canadian government, which would move Alberta crude to a British Columbia port. TransCanada Corp’s proposed Keystone XL pipeline may be delayed by a U.S. State Department environmental review, while Enbridge Inc’s (ENB.TO) Line 3 replacement has cleared key regulatory hurdles.

Suncor has sufficient committed pipeline space for its production, including Fort Hills, Williams said, and its own refineries shield it from exposure to the price discount on Canadian heavy oil.

Reporting by Rod Nickel; Editing by Chizu Nomiyama and Paul Simao

SOURCE: REUTERS

Trans Mountain pipeline ruling strikes 'devastating' blow to Canada's global reputation, energy sector warns

'This makes world investors continue to look at Canada as a place that can’t get its act together'

 
CAPP president Tim McMillan says the Federal Court of Appeal ruling that nullifies Ottawa's approvals for the Trans Mountain pipeline expansion project is very frustrating. (CBC)

A Federal Appeal Court ruling that halts construction of the Trans Mountain pipeline expansion is a serious blow to the energy industry that will further deter international investment in Canada, business leaders warn.

On Thursday, the Federal Court of Appeal quashed the approval of the contentious, $7.4-billion project that would nearly triple the flow of oil from Alberta's oilsands to the West Coast. The court ruled that Canada's efforts to meaningfully consult with Indigenous people, as required by law, fell short.

It also ruled that the National Energy Board regulator wrongly narrowed its review of the project not to include tanker traffic related to the project. 

The decision means the NEB will now have to redo its review of the pipeline. The federal government could appeal the decision to the Supreme Court of Canada.

Industry reaction was swift.

"The Explorers and Producers Association of Canada (EPAC) expresses its deep dismay at this devastating decision that further damages what's left of Canada's reputation as a country that can actually develop major projects in the resource sector," the association said in a statement.

The association said Canada's approval process for major resource projects is "close to collapse under the weight of too many conflicting interests."

"It's hard to conceive of a project that could have had more layers of review, consultation and approvals at the NEB and the federal cabinet," EPAC said.

"To have a court panel review all that work and conclude years later that it wasn't enough will give any project proponent a reason to doubt the wisdom of investing in Canada."

Canadian Chamber of Commerce president Perrin Beatty said the ruling "sends a profoundly negative message to investors both here at home and around the world about Canada's regulatory system and our ability to get things done even after the federal government has declared them to be in the national interest."

The president of the Canadian Association of Petroleum Producers (CAPP) agreed that the court ruling would add to Canada's growing reputation as a country where it's hard to do business.

 
Steel pipe to be used in the oil pipeline construction of Kinder Morgan Canada's Trans Mountain Expansion project sit on rail cars at a stockpile site in Kamloops, B.C. (Dennis Owen/Reuters)

"I think the global view of Canada today is very negative," said Tim McMillan.  

"An outcome of this court case like this makes world investors continue to look at Canada as a place that can't get its act together."

McMillan said Canada's lack of energy exporting infrastructure already costs the national economy about $15 billion per year and that the latest hurdle for the Trans Mountain expansion will make matters worse.

The Trans Mountain pipeline would allow Canada to diversify oil markets and vastly increase exports to Asia, where it could command a higher price. Canada has the world's third largest oil reserves, but 99 percent of its exports now go to refiners in the U.S., where limits on pipeline and refinery capacity mean Canadian oil sells at a discount. 

Analysts have said China is eager to get access to Canada's oil, but largely gave up hope that a pipeline to the Pacific Coast would be built. 

"It means we continue to miss out on the jobs, the opportunity to be global supplier," McMillan said.

"And those global markets are China, India, places that Canada could be the supplier of choice. But we continue to not get the infrastructure in the ground that allows us to do that."

Company 'committed' to building project

Shortly after the Appeal Court's ruling came on Thursday, Kinder Morgan Canada shareholders at a special meeting in Calgary voted overwhelmingly to approve the sale of the pipeline and expansion project to the Canadian government for $4.5 billion.

Kinder Morgan Canada president Ian Anderson said the company will work with Ottawa in determining what their next steps should be.

"We remain committed to building this project in consideration of communities and the environment, with meaningful consultation with Indigenous Peoples and for the benefit of Canadians," he said.

"Trans Mountain is currently taking measures to suspend construction-related activities on the project in a safe and orderly manner. The court decision was not a condition of the transaction between KML and the federal government."

Finance Minister Bill Morneau said the federal government is carefully reviewing the decision but is determined to proceed with the project, that he said, is in the best national interest and "critically important" for the economy.

'Optics are horrible'

David Baskin, president of Baskin Wealth Management in Toronto, said he was shocked the federal government didn't make its purchase of the project conditional.

"I can't possibly know what was in the mind of the federal government … maybe they could have put their purchase as being conditional on the position of the Court of Appeal, that might have been sensible," said Baskin. "The optics are horrible."

Baskin said he believes the federal government could use the country's principle of parliamentary supremacy — which means legislation enacted by parliament could supercede an order of the courts — to push the pipeline through, but whether they will or not is another story.

"Whether the Trudeau government would have the strength of its conviction to bring that legislation before parliament is the most interesting question," he said.  

Canadian stocks were dragged lower on Thursday as energy investors reacted to the ruling.

"I think there are going to be significant consequences for investors …and ultimately I think we will all suffer," said Joseph Doucet, dean of the business faculty at the University of Alberta.

Doucet said he wouldn't hazard a guess at what the likelihood of the pipeline being constructed is, but said the delay will certainly be costly and create significant uncertainty.

Baskin said he feels the ruling is a "bad decision" in terms of its impact to the economy as a whole, but there's one industry that's likely pleased: rail.

"The only thing that this does if it's not overturned is it means a lot more oil is going to go by rail than by pipeline. It's not like they're going to shut down the oilsands because of this decision," he said.

"If one were truly concerned about the long-term possible threats to the environment, shipping a lot more oil by rail doesn't really help."

Unresolved issues

The ruling highlights that the notion of what constitutes adequate consultation of Indigenous communities has been evolving in the courts, said Richard Masson, an executive fellow of the University of Calgary's School of Public Policy and former CEO of the Alberta Petroleum Marketing Commission.

"So it's not a big surprise, because that has been one of the issues that's tripped up projects along the way over the past number of years," he said.

He, too, said the ruling will contribute to a growing sense among world investors that Canada's rules are too inconsistent and unclear to be navigated.

"And so that's going to be very negative for investment for our country, which means fewer jobs and less economic development," he said.

Masson said Canada has a long way to go to resolve outstanding legal issues around Indigenous land rights.

"That sets up a confrontational environment that these companies have to try to navigate as they work to develop these projects," he said.

"So, fundamentally as a country, we need to do a much better job about resolving these issues so everybody is pulling in the same direction as we develop our resources."

SOURCE: CBC NEWS

U.S. judge orders review of TransCanada's Keystone XL pipeline route

WASHINGTON (Reuters) - A federal judge in Montana has ordered the U.S. State Department to do a full environmental review of a revised route for the Keystone XL oil pipeline, possibly delaying its construction and dealing another setback to TransCanada Corp (TRP.TO).

For more than a decade, environmentalists, tribal groups, and ranchers have fought the $8-billion, 1,180-mile (1,900-km) pipeline that will carry heavy crude to Steele City, Nebraska, from Canada’s oilsands in Alberta.

U.S. District Court Judge Brian Morris ruled late on Wednesday for the Indigenous Environmental Network and other plaintiffs, ordering the review of a revised pipeline route through Nebraska to supplement one the State Department did on the original path in 2014.

The State Department was obligated to “analyze new information relevant to the environmental impacts of its decision” to issue a permit for the pipeline last year, Morris said in his ruling.

Supporting the project are Canadian oil producers, who face price discounts over transport bottlenecks, and U.S. refineries and pipeline builders.

TransCanada is reviewing the decision, company spokesman Matthew John said. It hopes to start preliminary work in Montana in the coming months and to begin construction in the second quarter of 2019.

The company said this month it expects to make a final investment decision late this year or in early 2019.

The ruling is negative for TransCanada, since it adds uncertainty to timing, said RBC analyst Robert Kwan, and it was important that the pipeline be constructed during the current U.S. presidential cycle.

President Donald Trump is keen to see the building of the pipeline, which was axed by former President Barack Obama in 2015 on environmental concerns relating to emissions that cause climate change.

The White House did not respond to a request for comment. The State Department is reviewing the court’s order, a spokesman said.

The ruling was “a rejection of the Trump administration’s attempt to ... force Keystone XL on the American people,” said Jackie Prange, a lawyer for the Natural Resources Defense Council, an environmental group.

Trump pushed to approve the pipeline soon after he took office, and a State Department official signed a so-called presidential permit in 2017 allowing it to move forward.

However, Morris declined the plaintiff’s request to void that permit, which was based on the 2014 review.

Last year, Nebraska regulators approved an alternative route for the pipeline, which will cost TransCanada millions of dollars more than the original path.

In a draft environmental assessment last month, the State Department said Keystone XL would not harm water supplies or wildlife. That review is less wide-ranging than the full environmental impact statement Morris ordered.

Reporting by Timothy Gardner; additional reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Bernadette Baum and Paul Simao

SOURCE: REUTERS CANADA

Canadian dollar weakens as oil prices and stocks slide

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday as oil prices fell and a 13-month high for the greenback pressured emerging markets and global stocks.

Stocks have been volatile in recent days due to the prospect of an economic crisis in Turkey spreading to other emerging market countries, particularly those that borrow in U.S. dollars.

The greenback .DXY rose against a basket of major currencies as data showed U.S. retail sales grew more than forecast in July.

Canada exports many commodities and runs a current account deficit so its economy could be hurt if the flow of trade or capital slows.

The price of oil, one of Canada’s major exports, was pressured by a weakening global economic growth outlook and data showing rising U.S. crude inventories. 

U.S. crude oil futures CLc1 were down 1.1 percent at $66.31 a barrel.

At 9:21 a.m. EDT (1321 GMT), the Canadian dollar CAD=D4 was trading 0.4 percent lower at C$1.3117 to the greenback, or 76.24 U.S. cents. The currency, which touched a near 3-week low of C$1.3179 on Monday, traded in a range of C$1.3051 to C$1.3121.

Resales of Canadian homes rose 1.9 percent in July from June, notching the third straight monthly rise but remaining below the highs seen in recent years, the Canadian Real Estate Association said.

Canada’s manufacturing sales data for June is due on Thursday and the July inflation report on Friday.

Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries as government bonds benefited from safe-haven demand.

The 10-year CA10YT=RR rose 29 Canadian cents to yield 2.286 percent. Its yield touched its lowest since July 27 at 2.279 percent.

Energy Deals Decline in Canada as Oil Rally Heals Slump's Scars

  • Companies facing reduced appetite for equity-fueled takeovers
  • Enbridge accounts for almost half of this year’s buying

Investors have been pushing Canadian energy companies to merge so they can cut costs and combine resources. That isn’t going so well this year. The value of deals involving Canadian oil, natural gas and pipeline companies slumped 29 percent to $45.5 billion in the first seven months of the year, according to data compiled by Bloomberg. Exclude $22.3 billion in Enbridge Inc. outlays to absorb subsidiaries, and this year’s decline widens to 64 percent. Driving the drought is an oil rally that’s emboldened management teams to stay the course, as well as a lack of appetite for dilutive share issuances to fund takeovers. The trend is hampering consolidation that observers say is necessary to allow Canadian entities to compete with lower-cost shale drillers in the U.S.

Deals Drought

Rising oil prices have Canadian energy companies holding off on takeovers

“The ability to attack inefficiencies is much greater when there’s one group of people working on an asset rather than two,” said Rafi Tahmazian, who helps manage about C$900 million ($690 million) in energy investments at Canoe Financial in Calgary. “That’s just a better way to go in this world today, where we’re not focused on just growing production, we’re focused on the rate of return.” Tahmazian lays much of the blame for the decline on Canadian government policies, such as carbon taxes, that he says make the nation’s energy sector less competitive with rivals in other countries. A shortage of pipeline capacity in western Canada has also hurt domestic producers because it means they have to sell their crude and gas at discounted prices.

Desperation Eased

In contrast to the Canadian decline, U.S. deals increased 12 percent to $174.8 billion this year through July. Western Canada Select crude climbed 16 percent during the first seven months of 2018, outpacing West Texas Intermediate, the American benchmark. Although prices are still shy of the $100-a-barrel level of 2014, the worst of the slump that saw them dip below $30 is long gone. That’s eased the desperation that drove many Canadian wildcatters to sell when the outlook was dire, said Martin Pelletier, a portfolio manager at TriVest Wealth Counsel in Calgary. "When oil prices move higher, the incentive to sell, or the fear that things are going to get worse, goes away,” Pelletier said. “So management teams start to think, ‘Maybe I don’t need to sell. I can stay in business and compete." Yet bankers are still hesitant to buy new equity in energy producers, depriving them of the capital they need to take over rivals. That’s forced companies to rely heavily on their own stock to pay for transactions. For example, Vermilion Energy Inc. and Baytex Energy Corp. have both arranged all-stock buyouts. Across the Canadian energy landscape, all-stock transactions made up 39 percent of deals this year, compared with just 2.5 percent last year. “Three to five years from now, we’re going to go through another downturn, and a lot of these companies cannot survive,” Canoe’s Tahmazian said. “That could end up making them have to sell in a forced situation at a much lower valuation. It’s important that potential sellers recognize that is a risk for them.”

SOURCE: BLOOMBERG

TSX futures up as oil prices rise

July 30 (Reuters) - Canada's main stock index was on track to open higher on Monday, as energy shares were helped by a steady rise in oil prices. Oil has been rallying almost uninterruptedly for the past two weeks on rising trade tensions between the United States and China and slowing supply from Iran due to looming sanctions. First Quantum Minerals is scheduled to release second-quarter results after the close of markets. September futures on the S&P/TSX index were up 0.25 percent at 7:15 a.m. ET. The Toronto Stock Exchange's S&P/TSX fell 61.78 points, or 0.38 percent, to 16,393.95 on Friday. Dow Jones Industrial Average e-mini futures were up 0.1 percent at 7:15 a.m. ET, while S&P 500 e-mini futures were down 0.02 percent and Nasdaq 100 e-mini futures were down 0.2 percent. TOP STORIES Australia's Jervois Mining has bought almost 5 percent of shares in Ecobalt Solutions Inc , which is developing a high grade cobalt mine in the United States, days after two of its biggest shareholders called for management overhaul. ANALYST RESEARCH HIGHLIGHTS Agnico Eagle Mines Ltd . RBC raises target price to $55 from $49 Barrick Gold Corp . RBC cuts rating to sector perform from outperform Morneau Shepell Inc . CIBC raises price target to C$29 from C$27.25 COMMODITIES AT 7:15 a.m. ET Gold futures : $1221.4; -0.13 percent US crude : $69.94; +1.82 percent Brent crude : $74.88; +0.79 percent LME 3-month copper : $6213; -1.33 percent U.S. ECONOMIC DATA DUE ON MONDAY 1000 Pending Homes Index for Jun: Prior 105.9 1000 Pending sales change mm for Jun: Expected 0.1 pct ; Prior -0.5 pct 1030 Dallas fed manufacturing business Index for Jul: Prior 36.5 FOR CANADIAN MARKETS NEWS, CLICK ON CODES: TSX market report Canadian dollar and bonds report Reuters global stocks poll for Canada Canadian markets directory ($1 = C$1.30) (Reporting by Nayyar Rasheed in Bengaluru; Editing by Anil D'Silva)

Canada to Miss Deadline for Quickly Reselling Trans Mountain Pipeline

By Josh Wingrove, Scott Deveau, and Kevin Orland

July 20, 2018, 10:19 AM CST Updated on July 20, 2018, 11:31 AM CST

About a dozen parties are interested in the Trans Mountain oil pipeline, but the Canadian government won’t reach a deal to flip it before a marketing deadline with Kinder Morgan Inc. closes Sunday, according to people familiar with the situation.

The government’s C$4.5 billion ($3.4 billion) purchase of the pipeline and expansion project gave it to July 22 to co-market the pipeline with an eye to selling it to a third party. A quick sale would have effectively allowed the government to substitute in another buyer for the current deal to be finalized.
 
That deadline Sunday is set to pass. The deal will be finalized with the government as the new owner, and it will seek a new buyer without Kinder Morgan’s help, amid fears of legal and political delays. About a dozen parties have signed non-disclosure agreements as part of the process for a potential resale, and the project is seen likely to end up being bought by a Canadian-led consortium, as opposed to a single buyer, the people said.
 
 

The Trans Mountain sale is scheduled to close in either the late third quarter or early fourth quarter, as the project faces continued opposition from the British Columbia premier and awaits a key court ruling. Kinder Morgan’s Canadian unit declined to comment beyond previous statements that it is working with the government to find a buyer, and it referred questions on the status of those efforts to the government. A spokesman for Finance Minister Bill Morneau declined to directly say if there’d be a sale to a third party by July 22, but said the government won’t hold the pipeline forever.

No ‘Rush’

“We have no interest in being a long-term owner of a pipeline, but we will be the temporary caretaker,” spokesman Daniel Lauzon said by phone, when asked about a sale. “We won’t rush that.”

Finding a third-party purchaser by the Sunday deadline would be difficult because the obstacles that Kinder Morgan cited in its threat to abandon the project still exist, said Kevin McSweeney, a fund manager at CI Investments in Toronto. British Columbia has given no indication it will drop efforts to impose additional regulations on the pipeline, and a court case over the project is still under way, he said. Third-party purchasers are likely to be attracted to the pipeline once those issues are resolved, he said.

“A buyer would be reluctant to take it on for the same reasons that Kinder decided not to go forward,” said McSweeney, who helps manage C$13 billion. “Perhaps someone would be willing to purchase the project at a big discount, but I doubt the government would want to lock in a loss given the political acrimony this file has generated.”

High-Stakes Negotiations

Canada’s purchase of Trans Mountain deal was announced on May 29, and the government has already been marketing the pipeline. A regulatory document filed by Kinder Morgan this month has offered a glimpse of the high-stakes negotiations that led to the pipeline essentially being nationalized as Kinder balked at the political landscape.

On March 6 -- a month before it suspended work -- the company asked for clarity from the government and for a financial backstop arrangement. Talks carried on that month, with the company proposing the government “take specific legislative and executive actions” and agree to a backstop to “indemnify” the company for all expansion costs if it ever abandoned the project. In exchange, the government would have received an option to buy a 5 percent stake in the pipeline for a “nominal consideration.” The government expressed willingness to provide a backstop “subject to numerous conditions,” while the company “emphasized the urgency of the matter.”

The company suspended all non-essential work and spending on April 8. Two days later, government representatives “raised the possibility” of buying a 51 percent stake in the pipeline.

Kinder Morgan then floated the idea of a 100 percent sale, and on April 30, the company proposed a price of C$6.5 billion for the assets, including the existing pipeline and the expansion project.

The government responded on May 8 by presenting two alternative proposals. The first, which the government preferred, was for the company to proceed with construction relying on a government backstop. The second was to bundle the assets -- with the government guarantee -- and try to find a buyer. Under that proposal, if a sale couldn’t be arranged, the government would buy it for C$2.3 billion plus an unspecified share of C$1.1 billion in capital spending so far.

The next day, the board unanimously rejected the proposal, and the day after that, on May 10, Kinder Morgan CEO Steven Kean told Morneau by phone the proposed backstop “was unacceptable to the company because it did not provide certainty with respect to the ability to construct through B.C.” Talks continued. On May 22, the government offered C$3.85 billion, a figure based on an analysis by its financial advisers, Greenhill & Co., and suggested the deal close in December. The company thought that’d be too long.

On May 23, the company countered at C$4.5 billion, which after capital gains taxes would be C$4.2 billion. After a break of several hours, the government agreed on certain conditions, including the 6-week marketing window that elapses on July 22.

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