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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: ChanceIs who wrote (91285)	9/29/2007 11:46:41 AM
From: Bearcatbob	Read Replies (1) \| Respond to of 206176

The issue is simple. All projects have an economic justification and a threshold ROI requirement. Change the rules and the ROI changes. If if falls below the threshold criteria - the project gets cancelled. Very simple. It is a simple black and white numeric exercise.

To: ChanceIs who wrote (91285)	10/3/2007 4:32:30 PM
From: Dennis Roth	Respond to of 206176

Talisman May Cut Budget by C$500 Million on Royalties (Update4) By Sonja Franklin bloomberg.com [ Joining EnCana in threatening to cut back investment. ] Oct. 3 (Bloomberg) -- Talisman Energy Inc., a Canadian natural-gas and oil producer, said it's already cut its 2008 spending plan in Alberta by C$500 million ($502.6 million) because of low fuel prices and will slash another C$500 million should the province enact proposed increases in royalties. The royalty rates recommended last month by a government- appointed panel would make more gas wells uneconomical, leading to losses of jobs and taxes, Talisman director and former Chief Executive Officer Jim Buckee said in a letter to Alberta Premier Ed Stelmach. Calgary-based Talisman posted the letter today in a press statement. ``They're having trouble making the numbers go around,'' said Menno Hulshof, an analyst at Blackmont Capital Inc. in Calgary who rates Talisman shares at ``buy'' and doesn't own any. ``They have the flexibility to redeploy capital and will probably take advantage of that.'' The letter marks the latest opposition from oil and gas producers to the proposed increase in royalty rates. Calgary- based EnCana Corp., Canada's largest gas producer, on Sept. 28 said it will cut 2008 investment in Alberta by about C$1 billion if the proposals are implemented in full. The panel's recommendations would boost Alberta's share of oil-sands revenue to 64 percent from 47 percent. The government's share from oil and gas wells would rise 5 percentage points to 49 percent and 63 percent, respectively. Canadian Natural, Suncor Companies including Canadian Natural Resources Ltd., Suncor Energy Inc. and ConocoPhillips will likely follow Talisman and EnCana and reduce Alberta spending by as much as C$2 billion combined next year, said Chris Theal, head of research at brokerage Tristone Capital Inc. in Calgary. The reductions will be made mostly to gas-drilling programs, he said, without identifying his information sources. Such cuts and low gas prices will pare Canadian production by 900 million cubic feet a day in 2008, accelerating from a decline of 500 million cubic feet a day forecast for this year, Theal said in a telephone interview. Daily gas output in Canada, which accounted for 86 percent of 2006 U.S. imports of the heating and power-plant fuel, will average 16 billion cubic a day this year, Tristone estimates. Canadian Natural representatives didn't respond to requests for comment. Julie Baron, a spokeswoman for ConocoPhillips's Canadian unit, declined to comment. Suncor spokeswoman Patti Lewis said the company is reviewing its budget for next year and hasn't decided on any revisions. Production Decline Predicted Alberta, the largest source of gas imports to the U.S., will see production decline 5 percent annually should the changes be adopted, Tristone said Oct. 1. Buckee of Talisman said current gas prices and the fact that Alberta's gas reservoirs are mature don't leave room to raise the royalties. ``It's illogical, where we're already cutting spending, to offer to take a hit,'' Buckee said in a telephone interview. ``Total revenue available from a project is a pie, like in a pie chart. In Alberta, because it's a mature basin, the pie isn't very big.'' Calgary-based Petro-Canada said in a statement that it seeks a compromise to the recommended royalty increases. The company sent a letter yesterday to the government recommending a ``workable'' plan, Petro-Canada said. Without a ``reasonable royalty structure,'' the company said, many projects will be canceled or delayed. Government Response The Alberta government, led by Stelmach, is expected to respond to the panel's recommendations later this month. Statements like Talisman's ``will not change'' Stelmach's decision, his spokesman Tom Olsen said today. ``He is aware of concerns raised by all sides in this debate. He takes into account all information.'' Talisman's reserves are located primarily in North America and the North Sea, and about 54 percent are gas. The company said Sept. 5 that it may cut its North American spending next year by a third, to about C$1.5 billon, because of a decline in gas prices. Talisman fell 22 cents, or 1.1 percent, to C$19.50 in Toronto Stock Exchange trading. Buckee remains a board member after retiring as CEO and being replaced last month by John Manzoni, former BP Plc's head of refining. To contact the reporter on this story: Sonja Franklin in Calgary at sfranklin6@bloomberg.net Last Updated: October 3, 2007 16:13 EDT