Replies to post #2027 on The Rising Influence of Rising Affluence

[DewDiligence]

Players in the Oilsands



This table comes from the article in the previous post.

[DewDiligence]

CVE Is Conducting a Partnership Auction

http://www.reuters.com/article/2011/02/18/cenovus-idUSL3E7DI0W620110218

›Fri Feb 18, 2011 2:09pm EST

CALGARY, Alberta, Feb 18 (Reuters) - Cenovus Energy Inc (CVE), Canada's No. 2 independent oil exploration and production company, said on Friday it's seeking a joint-venture partner to speed development of its Alberta oil sands holdings and boost the value of its reserves.

The company, which reported a 17 percent drop in its fourth-quarter operating profit on Friday, said it has been approached by several would-be partners and plans to launch a competitive process that could see a deal close by year-end.

"We literally have decades and decades of growth opportunities in front of us," Brian Ferguson, the company's chief executive, said in an interview. "One of my obligations ... is to find ways to realize some of that value in a more current time frame."

A number of Canadian oil and gas producers have recruited joint-venture partners over the past year to raise the capital to speed development of reserves that could otherwise sit idle.

The largest such deal came earlier this month, when Encana Corp (ECA) sold a half stake in its Cutbank Ridge shale gas assets to PetroChina for C$5.4 billion ($5.5 billion), the largest foreign gas deal by a Chinese company.

Cenovus paid particular attention to a deal last November in which Thailand's PTT Exploration and Production acquired 40 percent of Statoil's Alberta oil sands project for $2.3 billion. John Brannan, Cenovus's chief operating officer, said the company has oil sands properties near Statoil's project that aren't being valued by investors.

"They hardly give us any value for our properties in that area," he said. "We have the opportunity to grow the value of that particular position if we could get the dollars that they got in the Statoil deal."

Ferguson said Cenovus doesn't plan to set a limit on the size of any joint-venture deal.

Cenovus already has a oil sands production and refining joint venture in place. It shares ownership of its Foster Creek and Christina Lake oil sands projects with ConocoPhillips (COP) and has a half interest in Conoco's Wood River, Illinois, and Borger, Texas, refineries.

RESERVES RISE

The company, which is best known for its steam-driven oil sands projects in Alberta, also said its share of fourth-quarter production at its Foster Creek and Christina Lake oil sands was up 12 percent to 60,789 barrels per day before royalties.

It expects production of 56,000 bpd net from Foster Creek, and 16,000 bpd net at Christina Lake, this year.

However the company expects a 3-5 percent rise in costs, mainly due to a higher bill for labor. Cenovus's operating costs at Foster Creek and Christina Lake averaged $11.28 a barrel in 2010 [that’s the cash cost excluding DD&A].

For the fourth quarter, Cenovus, posted operating income of C$140 million, or 19 Canadian cents a share, down from C$169 million, or 23 Canadian cents a share, a year earlier. Analysts, on average, were expecting earnings of 30 Canadian cents a share, excluding items, according to Thomson Reuters I/B/E/S.

Cash flow for the quarter nearly tripled to C$648 million, helped by higher oil production and strong oil prices.

Cenovus's conventional oil and natural gas liquids production fell 4 percent to 47,066 bpd in the quarter.

The company said its proved oil and gas reserves stood at 1.7 billion barrels of oil equivalent at Dec 31, 2010, up 19 percent over the year, while its estimate of potential bitumen reserves on its oil sands properties rose 13 percent to 6.1 billion barrels.‹

[DewDiligence]

IMO hasn’t been mentioned on this board except in passing
(e.g. in #msg-59578616). Does anyone here own it? What I
do not fully understand is why IMO’s valuation is so much
higher than other large integrated oil companies. I would have
thought XOM’s 70% stake would put a lid on IMO’s valuation.

http://www.reuters.com/article/2011/04/28/imperialoil-idUSN2729535820110428

›Imperial Profit Climbs on Higher Output, Margins

Thu Apr 28, 2011 1:49pm EDT
By Jeffrey Jones

CALGARY, Alberta, April 28 (Reuters) - Imperial Oil Ltd's (IMO) first-quarter profit rose 64 percent on higher oil sands production and rich refining margins, Canada's second-largest oil producer and refiner said on Thursday.

Imperial, the Canadian affiliate of Exxon Mobil Corp (XOM), earned C$781 million ($822 million), or 91 Canadian cents a share, up from a year-earlier C$476 million, or 56 Canadian cents a share. That lagged an estimate of 96 Canadian cents a share, the average among analysts surveyed by Thomson Reuters I/B/E/S.

However, excluding C$60 million of stock-based compensation charges, earnings per share were about 98 Canadian cents, Chief Executive Bruce March said after his company's annual meeting.

Revenues rose 11 percent to C$6.9 billion.

Imperial, which is developing the C$8 billion Kearl oil sands project in northern Alberta and is lead partner in the C$16.2 billion Mackenzie gas pipeline proposal in Canada's Far North, said results were helped by higher output from its Cold Lake, Alberta, oil sands development and its 25 percent stake in the Syncrude Canada oil sands joint venture.

Imperial and its industry peers benefited from U.S. benchmark oil prices that averaged $94.60 a barrel in the quarter, up 20 percent from the year before.

However, a glut of heavy crude due to tight export pipeline capacity pressured Canadian prices. Imperial said prices for its tar sands-derived bitumen averaged C$55.76 a barrel, a 10 percent drop.

Meanwhile, the stronger Canadian dollar tempered results, it said.

Overall oil and gas production averaged 310,000 barrels of oil equivalent a day, up 7 percent.

The Kearl project, a 50-50 joint venture with Exxon Mobil, is 60 percent complete and due to start up late next year. The partners are reworking the design into a two-phase project rather than a three-phase. New cost estimates as a result of the reworking are expected over the next month, March said.

The development has hit some snags because of legal challenges to Imperial's plan to move 200 oversized modules for use at Kearl on a highway through Idaho and Montana before heading north through Alberta.

A hearing in Idaho is expected to wrap up some time next week and a Montana judge is expected to rule in mid-May on whether to grant a temporary restraining order.

Imperial is assessing the cost of the delays and potential moves such as breaking some of the modules up into smaller pieces, March told reporters.

"This has got a lot of moving arms and legs when you think about legal challenges and making them smaller to go through a different route on the U.S. Interstate system," he said. "We don't have that nailed down yet, but you wouldn't expect there would be lower costs."

Net income in refining and marketing surged by C$237 million to C$276 million as margins widened and the company reduced maintenance downtime at its refineries, Imperial said.

The company's shares were off 69 Canadian cents, or 1 percent, at C$49.62 on the Toronto Stock Exchange on Thursday. They have climbed 17 percent in the past year.

Exxon Mobil owns 69.6 percent of Imperial's shares. The U.S. oil major reported a 69 percent jump in quarterly profit to $10.65 billion on Thursday, its highest since the third quarter of 2008.‹

[DewDiligence]

Canada’s new government is good news for oilsands investors, IMO.

http://online.wsj.com/article/SB10001424052748704810504576305352498474430.html

›A Green Light for Canada's Leader

MAY 7, 2011
By PAUL VIEIRA

OTTAWA—When Canadian Prime Minister Stephen Harper forms his third government this month, he will return to Parliament with a free hand to push through economic policies that his Conservative Party has struggled to enact during five years of minority rule.

Mr. Harper campaigned largely on his economic track record. Now with a comfortable majority, he is expected to push for spending cuts aimed at reducing Canada's swollen budget deficit; clarify rules on foreign ownership of Canadian companies; and push through stronger economic and security ties with the U.S.

Mr. Harper has also championed some free-trade pacts and is in talks with the European Union over a sweeping trade deal, and his victory will ease their passage in Parliament.

"I suspect the prime minister is going to try to do over the next few years some very significant, legacy-like economic policies," said Lawson Hunter, who heads the competition and antitrust practice at Canadian law firm Stikeman Elliott.

The federal parliamentary election on Monday dramatically reshaped Canada's political landscape, elevating Mr. Harper's Conservatives into a comfortable majority in the House of Commons—a first for a right-leaning party since 1988.

The election also slashed the ranks of two powerful political parties that have fought Mr. Harper over a number of key policy initiatives.

Mr. Harper won 167 of Parliament's 308 seats, up from 143 in the last session of Parliament. Canada's centrist Liberal Party, which has ruled Canada for 32 of the past 50 years, won just 34 seats, down from 77. The Bloc Quebecois, a separatist party in French-speaking Quebec, lost all but four of its 47 seats.

Mr. Harper still has to contend with an emboldened left-leaning opposition, the New Democratic Party. The NDP nearly tripled its representation, to 102 seats. The party has been one of Mr. Harper's harshest economic critics, calling for increased government spending, particularly on health care, and opposing many global trade and foreign-investment initiatives.

The NDP's leader, Jack Layton, buoyed by his surprisingly strong showing, has promised to fight Mr. Harper. But Canada's parliamentary system makes it difficult for even a strong opposition party to effectively block policy initiatives of a majority government. Another election isn't required for more than four years.

That gives Mr. Harper more room than he has ever had to push his policies. Since coming to power, his Conservatives have had to win support from at least one of Canada's three main opposition parties to pass significant legislation, including the budget.

Business groups are hoping for big changes. "Policies, not politics, must be the focus," said Jayson Myers, president of the Canadian Manufacturers and Exporters, an Ottawa lobby group.

On the campaign trail, Mr. Harper tried to placate worry that a Conservative majority would push hot-button social issues that some members of his party have championed, including curtailing abortion rights. Instead, he framed his campaign as a referendum on his economic stewardship.

Mr. Harper's previous governments ran up a 56 billion Canadian dollar (US$58.4 billion) deficit, partly due to stimulus spending to mitigate the impact of the global economic and financial crisis. That spending helped, but Canada also benefited from a strong banking system and housing market. More recently, higher commodities prices have bolstered government coffers and strengthened the Canadian dollar.

In his last budget, in March, Mr. Harper forecast a surplus by 2016. Opposition parties refused to back the document, helping to topple the government and trigger the election.

On the campaign trail, Mr. Harper pledged to bring his deficit-reduction measures up a year, by cutting an extra C$11 billion over four years. The Conservatives had also promised to cut corporate tax rates further—a measure opposition leaders opposed. Those cuts will now go ahead.

Mr. Harper's Conservatives are also expected to clarify foreign-ownership rules, a political minefield during his years atop a minority government. Last year, his government rejected a takeover attempt by Australia's BHP Billiton of Potash Corp. of Saskatchewan, amid political opposition to the deal.

Canada has welcomed foreign investment, but the BHP-Potash rejection raised worries the country was taking a protectionist turn. Prior to the election, the government pledged to clarify which sectors would be out of bounds for foreign ownership.

Such rules, many say, would make decisions on foreign investment more transparent, reducing worry about political interference in cross-border deals.

Last year, the Conservatives promised to liberalize foreign investment in the telecommunications sector, in particular, to foster increased competition in the fast-growing wireless market.

"I think that will be one of the priorities over the next couple years," said Jack Mintz, head of the University of Calgary's public policy school. "To try to take some of the politics out of foreign investment approvals."‹

[DewDiligence]

Cnooc buys OPTI Canada, an oilsands landowner, for $2.1B:

http://online.wsj.com/article/SB10001424052702303795304576457121216529368.html

[DewDiligence]

Oilsands update—Barron’s likes SU, CNQ, and IMO:

http://online.barrons.com/articles/12-ways-to-play-the-energy-slump-1414217234

Canadian oils…beckon, notably Suncor Energy (SU), Canadian Natural Resources (CNQ), and Imperial Oil (IMO). They…have long reserve lives, thanks to access to huge oil-sands deposits in Alberta, and that removes much of the exploration risk that afflicts their international brethren.

One investor calls the Canadian majors “no brainers,” given their multi-decade reserves in a politically safe country. Suncor…has gotten more shareholder-friendly; its dividend yield now is 3%. Its cash costs in the oil sands are low—about $30 per barrel.

The north-of-the-border majors benefit from the weak Canadian dollar, now about 89 U.S. cents, because their costs are skewed to their home currency, while their revenues are linked to the greenback.

I’ve steered clear of this group of companies because of the risk of higher taxes (#msg-59578616), but that concern might no longer be valid. (Comments?)

IMO (Imperial Oil) is a special case insofar as it’s a majority-owned subsidiary of XOM, and I generally don’t like being a minority shareholder. #msg-62561185 has a Barron’s feature on IMO that’s somewhat dated.