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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: Cogito Ergo Sum who wrote (9765)	6/5/2003 3:16:48 AM
From: Richard Saunders	Read Replies (1) of 24928

Kastel, royalty related. Totally out of my element with specifics but I do believe what you're indicating is correct. Point I was trying to toss up - with the generic and simplistic comment - was that the larger cos. that would appear to be impacted by the potential gas shut-ins do pay significant coin to the provincial budget. The most recent Alta. budget document touts expectations of around $4.8 billion to roll in to the province in fiscal 2003/04 by way of "non renewable resource revenue". That too is based on an average of US$23.30/bbl for oil and CDN$4.05/mcf for gas......... longer term the AVERAGE annual revenue inflow is estimated at $3.5 billion. Clearly higher commodity prices are benefiting Alberta coffers and companies like Talisman, Encana, Nexen, Canadian Natural Resources and Paramount, etc. are part of that revenue source. The ongoing debate appears to be whether gas weighted producers in the approximate 90 mile by 180 mile area focused around Fort McMurray will be forced to curtail gas production in favour of that area's heavy oil miners. As alluded previously, it should be interesting to see how political things become and whether the AEUB will in fact be powerful enough to shut down area gas production -- somewhere around 2% of what was produced last year in Alberta. RIK hit the button with the comment about it was somewhat surprising the stunt hadn't been pulled prior to Alliance pipeline days when gas prices were much lower. It wasn't too many years ago when AECO-C prices averaged less than CDN$2/mcf and in 1995 they averaged $1.18 for the whole year. Now that prices are "high" any shut-in decision takes on a much more financially significant impact. Heavy oil is a developing industry and lots of projects are in various stages of planning/developing. To date there does appear to be one common theme that's constant in the majority of heavy oil projects -- INCREASING COSTS. It appears that on the basis of the directive issued by the AEUB on Tuesday (terrible tuesday for gassies in the Fort McMurray area?) the message is being given that preference will be given to the heavier oil producers that are intending to be using steam assisted gravity drainage to extract heavy oil. Time will tell if the proposed rules get modified and it will also make for some interesting billable hours for many lawyers that will be making presentations to the AEUB and higher up government levels over the next while. I'm learning too as we bumble along. At one time did have a position in POU however flipped out and didn't get side-swiped with Tuesday's unfriendly operational rule change. Suspect many folks with the trust are wincing and that too may also add to some political heat in the days ahead. Here are some links to more backgrounders. Alta. budget link (notice commodity pricing assumptions.....) finance.gov.ab.ca A speech given by Alberta Energy Minister in April regarding heavy oil. energy.gov.ab.ca More royalty details: energy.gov.ab.ca energy.gov.ab.ca

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