Tonight
david_pescod@canaccord.com
CONNACHER OIL & GAS (T-CLL) $4.01 -0.28
UTS ENERGY (T-UTS) $5.45 -0.74
We’ve seen increases in royalty and other payments
being forced upon oil companies by countries from England
to Venezuela to you-name-it and some of them have
had outrageous increases. Yesterday it was headline
news across most of the papers in Alberta, as the “Our
Fair Share” Report of the Alberta Royalty Review Panel
and because of it, today many oil sand companies got
absolutely clobbered because of the suggestions of big
increases coming for royalty payments in Alberta.
Despite huge increases in oil prices lately, equally
huge if not bigger, have been the increases in cost projections
for oil sands projects because of huge wage
increases as well as increases for everything from steel
to engineering to you-name-it. So the report that suggests
big increases for royalties in Alberta, has scared
the b-Jesus out of some stocks today and some of these
stocks lead the way down today.
Our own suspicion is that it only makes sense in
these times of high prices for the Province to increase
some of its rates, but with so many of the bigger oil
sands projects and also the upgrading facilities getting a
little shaky now, and with natural gas in the toilet, it
would only make sense that the Province have an increase,
but not outrageous increases because it could
quickly (make that very quickly) have more than a few
companies back track on those projects...real quick!
Personally, we find it more than a little embarrassing
and we remind people that this review panel is just making
suggestions. We wonder whether these are the
same people that made suggestions for Hugo Chavez.
Meanwhile, the response has been pretty dramatic as
Dennis Gartman, the well thought of American commentator
today puts out a “Special Report on Canada”.
He writes, “We have been relentlessly bullish of all
things Canadian for a very, very long while. The party
seemed to us to only just be getting good, but the party
ended last evening and we didn’t know it until this morning…”
He is referring to the Alberta Royalty Review Report.
He continues, “In this light...we may be premature
and we may be responding too swiftly...we want out of
all things Canadian and we want so immediately. We
can return at a later date, or when these proposals are
turned down by the legislature involved. Until then, discretion
is the far, far better part of valor. Goodbye Canada;
it was great fun while it lasted.”
Meanwhile, one oil and gas analyst we follow closely,
when asked for his comments, when he finally stopped
swearing, suggested that the Royalty Review suggestions
“would be an absolutely horrendous mistake,
much bigger than the federal change on income trusts”
which infuriated so many Canadians just a year ago.
Meanwhile, First Energy wrote of “Albertastan? Misguided
Intentions and the Fair Share Option” and Tristone
Capital writes, “Go West, Go East or Overseas”
suggesting investors abandon Alberta for better opportunities
elsewhere. |
