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The Oil Sands Weekly

The Oil Sands Weekly

CNRL on track for a record 2017 . . . 

Canadian Natural Resources (CNRL) released a rather exuberant quarterly update this week. President Steve Laut called 2016 a "milestone year for the company" as it continues to drive costs lower and boost production. Among the key updates:

  • Horizon achieved record Synthetic Crude Oil (SCO) production of 178,000 bbl/day in Q4 at record low operating costs of $22.53/bbl.
  • For the full year 2016, the facility averaged 123,265 bbl/day at an average operating cost of $25.20/bbl, 12% lower than 2015.
  • $1.05 billion in capital is earmarked for the remainder of Horizon's Phase 3 expansion now almost 90% complete. Phase 3 is scheduled to start-up in Q4, adding another 80,000 bbl/day of SCO capacity.
  • Horizon surpassed 20,000 bbl/day in February, higher than its design capacity of 182,000 bbl/day.

Despite a strong start to the year, 2017 guidance remains unchanged at 170,000 to 184,000 bbl/day, reflecting in part a 24-day shutdown sometime this fall to tie-in Phase 3 components. The company is still considering a $70 million debottlenecking project, which will add 5,000 to 15,000 of SCO capacity but require a much longer shutdown. A decision is expected sometime in the second quarter.

Total annual production volumes across the CNRL's entire portfolio averaged 805,782 boe/day, down 5% from the previous year on lower drilling activity. The company plans to spend a total of $3.9 billion in capital this year and increase overall production by 6%.

CNRL posted a fourth quarter profit of $566 million, narrowing full year losses to $204 million, much improved from a $637 million loss reported in 2015. The company also boosted its quarterly dividend 10% to $0.275 a share, the 17th consecutive year of dividend increases.

MEG Energy gets the ball rolling on May River expansion . . . 

MEG Energy has kicked-off the regulatory review process for its May River SAGD Project with the Alberta Energy Regulator (AER).

May River is located just west of MEG's Christina Lake operations and has an ultimate design capacity of 160,000 bbl/day. The company plans to develop the property in three phases - Phase 1 and 2 at 40,000 bbl/day each and a final phase of 80,000 bbl/day. 

If all approvals are received on time, construction could begin as early as 2019 with first-steam anticipated for about 2023.

Environmental filings are available for review on the AER's website.

Pengrowth submits amendment to expand Lindbergh expansion . . . 

Pengrowth Energy announced plans to further expand its Lindbergh SAGD facility by another 10,000 bbl/day.

The company received its Environmental Protection and Enhancement Act (EPEA) approval for the Phase Two expansion at Lindbergh last May, allowing it to increase production to 30,000 bbl/day. However, Pengrowth recently submitted an amendment to increase maximum production to 40,000 bbl/day.

Full year production at the Phase One Lindbergh SAGD facility was 15,296 bbl/day at an average steam-to-oil ratio of 2.39. 

The company's 2017 capital spending program includes the drilling of new wells at the site, the first since production began in the spring of 2015. Pengrowth plans to drill seven new well pairs, two infill wells, and expand the associated infrastructure, which should increase Phase One production to 18,000 bbl/day by the end of this year.

Proven and Probable reserves at the Lindbergh lease were boosted to 318 million barrels.

Pengrowth also submitted an EPEA application in December for its Selina thermal project, located 30 kilometers northeast of Lindbergh. Selina will have a design capacity of 12,500 bbl/day. Pengrowth has a 50% stake in the property, jointly owned with Koch Oil Sands.

For the full year 2016, Pengrwoth produced an average of 57,058 boe/day, in line with prior guidance.

Alberta ready to fight for TransMountain expansion . . . 

In this week's Speech from the Throne, Lieutenant Governor Lois Mitchell announced that the Alberta government will seek intervener status on upcoming court challenges related to the federal government's approval of Kinder Morgan's Trans Mountain Expansion Project (TMEP).

Lawyers representing 11 groups are seeking to overturn approval of TMEP on environment grounds including the city of Vancouver, several First Nations communities and various enviro-litigation teams. The Federal Court of Appeal is seeking to consolidate the various legal appeals into one combined lawsuit. 

Mitchell assures Albertans their government is ready defend the province and its key industry in court. The provincial government also says they remain committed to getting Energy East built in their continued pursuit to diversify energy exports away from US markets.

Capital spending in Alberta's energy patch showing no signs of life . . . 

In their latest ST98 report, the AER says it expects capital spending in the province's energy patch to be about $26.2 billion, a tad higher than last year's $26.0 billion and still 35% lower than $40 billion spent in 2014.

According to last year's data, Alberta produced 67% of the country's natural gas and 81% of Canada's crude oil. More than 60% of Canada's oil production is bitumen produced from the oil sands.

The AER also says Alberta still has 165 billion barrels of bitumen in the ground, along with 1.6 billion barrels of crude and 28.2 trillion cubic feet of natural gas. Alberta's energy regulator expects West Texas Intermediate (WTI) prices to average about US$53 a barrel this year.

Alberta falls to #47 . . . 

In their latest survey of 104 mining and exploration jurisdictions around the world, the Fraser Institute concludes that Saskatchewan is the world's most attractive place to do business, followed by Manitoba

The survey of approximately 2,700 companies takes into account factors such as taxation, regulatory policy, infrastructure, political stability, land claims, labour laws, skills availability and trade barriers. 

Alberta fell to #47, down from #34 last year and #14 in 2013. Alberta also deteriorated significantly in its PPI score (Policy Perception Index), from the second best Canadian province in 2015 to the fourth lowest Canadian jurisdiction last year.

Argentina ranked dead last, along with India, Zimbabwe, Mozambique and Venezuela. The survey was carried out during the second half of last year.

Adjusting to a lower carbon world . . . 

The Alberta government released its annual progress report this week on its emissions reduction funding program. Emissions Reduction Alberta (ERA) provides funding for projects that reduce greenhouse gas emissions or help Albertans adapt to the effects of climate change. 

The agency says their goal is to help Alberta corporations succeed in a lower-carbon world. Funding for the program comes from Alberta's Climate Change and Emissions Management Fund, paid into by the province's largest emitters who have failed to meet their annual emissions reduction targets.

The government funded 52 projects last year, 39 of which were completed. Some of the projects include solar panel installations, methane reduction at well heads, carbon capture, solvent-based bitumen extraction in-situ and the use of biofuels to produce spray foam instead of petroleum-based feedstock.

ERA provided about $68 million in funding last year, down from $94 million in 2015, with another $113 million worth of approved funding in the pipeline. The government says the program will eliminate about 7 megatonnes of GHG emissions through 2020, the equivalent of taking 1.4 million cars off the road for one year.

Tallying the costs of North Saskatchewan River spill . . . 

Husky Energy says clean-up costs for last July's pipeline spill will be $107 million, revised higher from an initial estimate of $90 million. The company says $88 million has been recovered through insurance with the balance being billed to its midstream subsidiary Husky Midstream LP.

The pipeline failure resulted in about 1,400 barrels of heavy oil and diluent being spilled into the banks of the Saskatchewan River.

Husky says the rupture was caused by ground movement. The government of Saskatchewan is conducting a separate investigation with a final report expected at the end of March.

The line remains out of service pending conclusion of each investigation.

This week's TransCanada news . . . 

TransCanada has agreed to sell its 49.3% stake in the Iroquois Gas Transmission System and remaining 11.8% stake in the Portland Natural Gas Transmission System to its US-based MLP TC PipeLines. Both Iroquois and Portland deliver natural gas to customers in the US Northeast. TransCanada says the sale will help it fund $23 billion worth of near-term projects.

The province of BC has issued its environmental assessment certificate for the Towerbirch Expansion Project, operated by TransCanada subsidiary NOVA Gas Transmission. The expansion includes 87 km of new gas piping between BC and Alberta, centred around the town of Dawson Creek, BC. The interprovincial pipeline was approved by the National Energy Board (NEB) last October, subject to 24 conditions. The BC government added another 17 conditions, related to Aboriginal consultations, environmental monitoring and vegetation management. The project has an estimated price tag of $439 million and should be in service before the end of this year.

The White House confirmed that Keystone XL pipe is exempted from new "buy American" rules since it is not a new pipeline. Half of the pipe TransCanada purchased in 2012 was made in the USA with another 25% produced at the Saskatchewan Evraz plant. TransCanada says they are encouraged by the news. An official decision on Keystone XL from the US administration is still pending, although the pipeline was mentioned in President Trump first official address to congress.

TransCanada has also suspended its lawsuit against the US government, for obvious reasons. The company was seeking US$15 billion in damages.

Canada to the USA: We are your biggest and best customer . . .

Finance Minister Bill Morneau was in the US this week talking trade. In a speech given at New York's Columbia University, Morneau pointed out bilateral trade between the US and Canada topped $850 billion in 2015. Excluding energy, Canada is a net importer of US produced goods, and Canadians buys more from the US than the entire EU. Morneau says "to put it simply, we are your biggest and best customer."

Morneau also met with US Treasury Secretary Steven Mnuchin this week but no details were released on the discussions.

Alberta Premier Rachel Notley was also in Washington, DC this week discussing energy infrastructure, NAFTA, agriculture and softwood lumber. The premier said the purpose of the trip was for the US to "understand the tremendous mutual benefits" of bilateral trade between the US and Alberta, worth about $85 billion last year. The US is Alberta's largest trading partner. Notley is the first Canadian premier to visit with the new US administration. 

Exxon continues drive to lower costs at Kearl . . . 

In their 2017 investor meeting, ExxonMobil says it has five major projects coming on-stream over the next two years, adding another 340,000 boe/day of production to its bottom line.

The company has set a 2017 capital budget of US$22 billion, up 16% from last year. About one-quarter will be in "short-cycle investments" such as US shale, specifically in the Permian and Bakken basins, where Exxon expects to produce as much as 750,000 boe/day by 2025.

Exxon also says it remains committed to advancing "longer-term projects focused on growing higher-value production" such as offshore Atlantic Canada and the Alberta oil sands.

CEO Darren Woods says the company's job is to "compete and succeed in any market, regardless of conditions or price," adding that he remains committed to producing and delivering "the highest-value products at the lowest-possible cost through the most-attractive channels in all operating environments." Woods told investors that operating costs at the Kearl Oil Sands Mine have declined 50% over the past two years and the company is still looking at opportunities to improve efficiencies.

Other notable Canadian energy news . . . 

The city of Fort McMurray is still debating whether or not to cancel property taxes for homes destroyed during last May's wildfires. The deferral would be a revenue loss of $1.3 million for the city, adding further duress to an already strained municipal budget. Another vote is planned for later this spring.

Camp operator Horizon North Logistics has settled all insurance claims related to the destruction of its Blacksand Executive Lodge during the May wildfires. The company says it will receive a total settlement claim of $34.1 million but did not confirm if the lodge will be rebuilt. Former Suncor Executive VP Kevin Nabholz has been promoted to Chairman of Horizon's Board of Directors. Horizon also announced a new service agreement with the city of Fort Mac to provide modular homes to assist in the rebuilding effort.

Hong Kong based Sunshine Oilsands announced the commercialization of its West Ells Phase I SAGD facility this week. The company says the plant is now running at about 60% of its design capacity of 5,000 bbl/day.

The AER has fined Murphy Oil $172,500 for a 2015 pipeline spill near the town of Peace River. The leak went undetected for several months, spilling about 9,000 barrels of condensate. The AER concluded that the company failed to detect the leak within a reasonable timeframe, failed to report the release and failed in its duty to remediate the land.

Enbridge has cut condensate and light oil volumes on its Line 2A pipeline by 10% through next Tuesday. Line 2A remains shutdown after a construction crew struck the line in Strathcona County on February 17.

Environment and Climate Change Canada (ECCC) has fined Valero Energy $500,000 for 6 counts of failing to comply with a government order to monitor and remediate fish habitat after oil was spilled into a local stream near its Jean Gaulin Refinery in Lévis, Quebec. Valero pleaded guilty to all 6 charges. The funds will be placed into the ECCC's Environmental Damages Fund.  

Total Energy Services has increased its offer for Savanna Energy Services by about 10%, now offering Savanna shareholders an additional $0.20/share to be paid in cash. The new offer is open until March 24, 2017. Savanna says it is reviewing the offer with their financial and legal advisors.

Mischief charges have been laid against a 40 year old man in the town of Clarenville, NL related to a small explosion that occurred last October at the Come by Chance Refinery. The man allegedly placed a bag of acetylene in a temporary fabrication tent that later exploded during a routine shutdown. No one was injured. Shortly after the incident, owners NARL Refining announced about 500 layoffs.

Energy elite gear up for big energy conference . . .

The world's top energy players will be in Houston next week for the big CERAWeek 2017 event. 

Prime Minister Justin Trudeau will deliver a keynote address and receive the Global Energy and Environment Leadership Award for his "commitment to expanding Canada’s leadership role in the sustainable development of its natural resources to help to meet the world’s future energy needs." 

About 350 speeches will be delivered during the 4-day event, including Alberta Premier Rachel Notley, Federal Minister of Natural Resources Jim Carr, the CEO's of Enbridge, BP, ExxonMobil, Total, Statoil, Chevron, Shell, ConocoPhillips and PetroBras, OPEC's Secretary General, the UN's Climate Change Executive Secretary as well as energy ministers from Russia, India, Nigeria, Iraq, Saudi Arabia, UAE, Israel, the UK and finally, tech billionaire Peter Thiel.

US begins major roll back of oil & gas regulations . . .

President Trump is poised to unleash a number of energy-related executive orders next week. White House officials cite the Clean Power Plan and the federal coal leasing moratorium as programs that could be suspended or reversed. The Clean Power Plan was part of Obama's climate change initiatives, but never passed into law due to legal challenges.

Trump also intends to revamp the national biofuel standards while providing new incentives for ethanol and biodiesel production. The Renewable Fuel Standard has been a touchy subject for corn farmers, who have benefited greatly from the regulation, and independent oil refiners, who pay big dollars to purchase renewable fuel credits.

The "new" Environmental Protection Agency (EPA) has cancelled a prior requirement for all oil and gas companies to report methane emissions. Last November, the "old" EPA had asked more than 15,000 oil and gas operators in the US to disclose details of their total methane emissions, emission control devices and sampling practices at their operations. Newly minted EPA head Scott Pruitt says the withdrawal "will reduce burdens on businesses" and is leaving the door open for further reductions in reporting requirements. Methane's global warming potential is 25 times that of CO₂.

Still on the topic of the EPA, Reuters is reporting that the White House will likely seek to cut the agency's budget by 25% to US$6.1 billion, which will likely include a 20% staffing cut. One major item on the chopping block is the GHG reduction budget, rumoured to be slashed 70% to just $29 million. The EPA says they want to shift focus from global warming to prioritizing clean-up of industrial and hazardous waste sites as well as improving water infrastructure. The changes are part of the 2018 budget proposal that requires approval from the US Congress before being passed into law.

Other notable US energy news . . . 

Kinder Morgan has sold a 49% interest in its Elba Liquefaction Project to a fund managed by EIG Global Energy Partners for an upfront cash payment and future capital expenses of US$170 million. The project is currently under construction at the Southern LNG Company Elba Island LNG facility near Savannah, Georgia. Once completed, the plant will have an LNG export capacity of 2.5 million tonnes per year at an estimated price tag of US$1.3 billion. Operations should begin in the middle of next year.

Billionaire investor Warren Buffet has politely rejected a proposal from the Nebraska Peace Foundation to divest Birkshire Hathaway from its fossil fuel holdings. The non-profit group would like the billionaire to use his celebrity status to raise awareness about climate change. Berkshire's board says it only invests in companies that "comply with state and federal laws, including compliance with state and federal environmental regulations and laws which reduce the environmental impact of their operations." Buffet is the world's second richest person, behind Bill Gates, who has also been very critical of the fossil fuels divestment movement.

BP getting back to growth . . . 

In their latest corporate strategy update, BP says it is "getting back to growth" over the next few years and expects spending to average about US$15-$17 billion annually through 2021. 

The company will bring 7 new projects on line this year and 9 projects over the next 3 years. In their 2016 earnings release, BP conceded that breakeven costs had creeped up to US$60/bbl despite aggressive cost cutting. 

CFO Brian Gilvary says the company will continue its "tight focus on costs and capital discipline and seek further improvements throughout the group," striving to lower breakevens closer to the US$35-40 range.

BP divested US$75 billion worth of projects over the past 6 years.

Around the world this week . . . 

France's Total has agreed to sell some of its Gabon assets to independent oil & gas producer Perenco for US$350 million. The assets include Total's stake in 15 mature fields which produce about 13,000 bbl/day and various pipeline infrastructures. Total says the sale will help it reduce its breakeven costs for production. Shell is also in talks to sell its Gabon assets but has yet to confirm a buyer. Gabon rejoined OPEC last July after being shut-out for almost 20 years.

Total also signed on a previously announced Strategic Alliance with Brazil's Petrobras, trading ownership rights in several lucrative oil fields in exchange for technical cooperation, research and technology.

The government of Nigeria has filed new corruption charges against Royal Dutch Shell and Rome-based Eni relating to the 2011 purchase of a disputed oilfield, OPL 245. The government alleges the oil majors paid over US$800 million to Nigerian businessmen and politicians. OPL 245 is considered one of Nigeria’s richest oil blocks, estimated to contain over 9 billion barrels of crude. The oilfield has since been seized by the Nigerian government pending outcome of the court case.



WEEKLY ENERGY STATISTICS

US IMPORTS OF CANADIAN CRUDE
million bbl/day • preliminary data by EIA
US OIL INVENTORIES
million bbls • data by EIA

US OIL PROD'N & RIG COUNT
million bbl/day • data by EIA & Baker Hughes

3,394k
+287k ▲ 9.2%
BBL/D CDN EXPORTS TO US
9,032k
+31k ▲ 0.3%
BBL/D US PROD'N
520.18M
+1.50M ▲ 0.3%
BBL US INVENTORIES
609
+7 ▲ 1.2%
US RIG COUNT
CHANGE WK/WK  

According to the AER, Alberta produced 3.1 million bbl/day in December, down from a high of 3.26 million in November.

December data from the US Energy Information Administration (EIA) shows the country produced 8.78 million bbl/day in December, down from 8.87 million in November. The US imported just under 8 million bbl/day in December. About 3.4 million of those barrels came from Canada, representing 44% of all foreign oil imports into the US.

Gasoline demand in the US hit a record high of 9.326 million bbl/day in 2016, surpassing the highs of 2007. Americans drove a record 3.22 trillion miles (5.2 trillion km) last year, the fifth consecutive yearly increase and a 2.8% gain from 2015. Total oil demand in the US is almost 20 million bbl/day.

Reuters is estimating OPEC produced 29.87 million bbl/day in February, down from 29.96 million in January and 31.17 million in December. That would put OPEC compliance at about 94%.

Bloomberg tracking data estimates Saudi Arabia shipped just 7 million bbl/day in February, a decline of 126,000 bbl/day from January.

Russia has so far cut about 100,000 bbl/day, a far cry from its pledge to cut 300,000 bbl/day. Energy Minister Alexander Novak says it is premature to discuss extending the production cuts, noting that it would depend on global stockpiles and rate of output increase from countries like the US, China and Norway.


WEEKLY MARKET SUMMARY

CURRENCIES • WEEKLY CLOSE
Friday close • data by Bank of Canada & ICE

101.55
+0.46 ▲ 0.5%
USD INDEX
74.74
-1.54 ▼ 2.0%
CDN DOLLAR
2.49%
+0.18 ▲ 7.8%
US 10Y Bond
1.70%
+0.10 ▲ 6.2%
CDN 10Y Bond
CHANGE WK/WK  

The Bank of Canada held interest rates unchanged this week at 0.5%. The Bank says Canadian employment and payroll data shows "persistent economic slack" and they remain "attentive to the impact of significant uncertainties weighing" on the economy.

In a speech given in Montreal this week, Deputy Governor Timothy Lane says new carbon taxes introduced across Canada in January will have a "transitory" effect on inflation. The governor warns the audience that although warmer Canadian winters may sound very appealing, climate change is indeed bad for the economy overall.

This week's economic updates from Statistics Canada . . . 

January's Industrial Product Price Index (IPPI) rose 0.4% in January on higher energy prices.

  • Energy and petroleum products rose +2.7% for the month on higher prices for gasoline (+3.0%), heavy fuel (+8.6%), diesel (+1.3%) and jet fuel (+4.5%).
  • Excluding energy, IPPI increased only 0.1% m/m.
  • Year-over-year, IPPI for energy and petroleum products is up 23%, including a 22% increase in gasoline, 36% increase in light fuels, 27% gain in diesel and 53% jump in heavy fuel oils.
  • Excluding energy, IPPI is down 0.2% y/y.

The Raw Materials Price Index (RMPI) increased 1.7% m/m. Crude oil products rose 0.9% in January, following a 14% increase in December.

  • Conventional crude rose 1.0%.
  • Excluding energy, RMPI is up 2.4% m/m.
  • Year-over-year, RMPI rose 23.0% mainly on higher prices for crude oil (+58% y/y). January marks the highest yearly increase for crude energy products since January 2010.

Fourth quarter GDP expanded 2.6% (from Q4/2015), bringing full year growth to 1.4%, up from 0.9% in 2015. Strong government and household spending offset weakness in business spending and domestic demand. The energy sector continues to be a drag on the Canadian economy, reflected in part in the weak business spending numbers.

Notable US economic data moving markets this week . . .

  • Fourth quarter GDP growth in the US was 1.9% y/y, less than economists were expecting. Strong consumer demand was more than offset by weakness in government and business spending. Q3 GDP was revised to 3.5%. For the full year 2016, the US economy grew just 1.6%, down from 2.6% in 2015.
  • US initial jobless claims fell to their lowest level in 44 years.
  • The chances of a March rate hike has increased considerably, now about 90%. The news sent the US dollar higher this week, gaining 0.5%.

OIL PRICES • WEEKLY CLOSE
Friday close, USD/bbl • data by CME Group

55.90
-0.09 ▼ 0.2%
BRENT USD/BBL
53.33
-0.66 ▼ 1.2%
WTI USD/BBL
50.07
-1.02 ▼ 2.0%
CDN LT USD/BBL
39.04
-1.26 ▼ 3.1%
WCS USD/BBL
CHANGE WK/WK  

Oil prices averaged as follows for the month of February (USD/bbl):

  • Brent: $56.00 +1.0% m/m
  • West Texas Intermediate (WTI): $53.50 +1.6% m/m
  • Canadian Light: $50.40 +1.7% m/m
  • Western Canadian Select (WCS): $39.50 +1.8% m/m

After a strong finish in 2016, natural gas prices continue to fall through the first two months of 2017. The average gas price in February declined about 12% from the January average for both Henry Hub and AECO. Natgas prices declined again this week on an unexpected build in US inventories.

OPEC sources say Saudi Arabia wants to see Brent prices closer to US$60 a barrel through the rest of this year. Allegedly, US$60 is high enough to encourage investment in new fields but low enough to discourage ramp-up of US shale output. Officially, OPEC does not target oil prices but rather focuses on balancing supply and demand.


ENERGY SECTOR PERFORMANCE
Friday close • data by TSX & NYSE
CANADIAN & US EQUITIES
Friday close • data by TSX & NYSE

SECTOR SUMMARY
Friday close • data by TSX & NYSE
TSX ENERGY STOCKS • WEEKLY CHANGE

Veresen (VSN) reported a fourth quarter loss of $55 million including a one-time impairment charge of $140 million. For the full year 2016, net losses totalled $20 million, versus a gain of $60 million in 2015. The company says its Sunrise, Tower and Saturn Phase II natural gas processing facilities are tracking below budget, with construction about 55% complete. Both Tower and Sunrise should be in service by the end of this year, while Saturn Phase II should come on line by the middle of next year.

Vermilion Energy (VET) reported a 9% increase in Total Proved reserves to 176 million boe, while Total Proved Plus Probable reserves rose 11% to 290 million boe. The company produced 63,526 boe/day last year, a 16% increase from 2015. For the full year 2016, Vermilion posted a net loss of $160 million, down from a $217 million loss in 2016. The company also announced plans to issue up to US$300 million in new 8-year bonds to help repay a portion of outstanding debt on its revolving credit facility.

Whitecap Resources (WCP) increased their 2016 Total Proved Plus Probable reserves by 28% y/y to 356 million barrels of oil equivalent (boe), including 261 million barrels of oil. Total Proved reserves increased 26% y/y to 252 million boe. The company is targeting an average production rate of 57,000 boe/day this year and does not anticipate any significant increases in service costs.

PrairieSky Royalty (PSK) reported fourth quarter royalty production of 23,978 boe/day or 23,308 boe/day for the full year (47% liquids). Funds from operations were $200 million in 2016 (+13% y/y) while net earnings declined 68% to $20 million. The company increased its dividend 4% to $0.75 per share annually.

Secure Energy Services (SES) reported a net loss of $48 million for the full year 2016, much improved from a loss of $160 million the previous year. The company spent almost $151 million in capital last year but expects to spend just $50 million this year. Secure says 2016 was a "challenging year" for the oil and gas industry but expects 2017 to be much better thanks to more stable oil prices. The company has also suspended its Dividend Reinvestment Plan (DRIP).

Crew Energy (CR) produced an average of 22,844 boe/day last year, an increase of 23% over 2015, while operating costs declined 29% y/y to $5.88/boe. Net losses in Q4 were $40 million, bringing full year losses to $65 million. The company says it managed to lock-in major service costs through the end of 2017 and remains "well positioned" to advance its long-range growth plan, targeting growth of over 60,000 boe/day over the next three years.

Bonavista Energy (BNP) reported a fourth quarter loss of $12 million, bringing full year losses to $96 million. Divestiture of non-core assets helped the company reduce its debt-load by $433 million or 33%. Production averaged 68,550 boe/day in 2016, down 14% from 2015, while operating costs declined 15% to $5.60/boe. The company says fundamentals have improved, allowing it to deploy additional capital in 2017.

Natural gas producer Peyto Exploration (PEY) reported a 19% decline in full year earnings, falling to $112 million. Production averaged 96,975 boe/day last year, exiting 2016 at 105,000 boe/day. The company says it plans to deploy more capital in 2017 but it will maintain its focus on reducing costs and improving efficiencies.

Energy service provider Enerflex (EFX) reported a net loss of $45.5 million in the fourth quarter, bringing full year losses to $104.5 million. CEO Blair Goertzen says the company's financial results "reflect the challenging business environment," particularly in Canada, Asia and Australia. However, Enerflex saw a rebound during the second half of last year, particularly in the North American market.

Fuel distributor Parkland Fuel (PKI) reported a net profit of $47.2 million in 2016, up 19.5% from the previous year. The company delivered a record 10.4 billion litres of fuel and petroleum products last year, an 8% increase from 2015.

NYSE ENERGY STOCKS • WEEKLY CHANGE

Marathon Petroleum (MPC) has dropped-down various terminal, pipeline and storage assets to its master-limited partnership (MLP) MPLX for US$2.02 billion in cash and stock. The assets include 62 product terminals, 604 miles (972 km) of pipelines, 73 storage tanks and 8 natural gas liquids storage caverns. Marathon is still mulling a spin-off of its Speedway retail gasoline stations.

Camp operator Civeo (CVEO) hit another 52 week high on the NYSE this week.


UPGRADES & DOWNGRADES
  • ExxonMobil (NYSE:XOM): Upgraded from Underperform to Neutral at Credit Suisse. The company increased its price target from US$78 to US$83.
  • Williams Co (NYSE:WMB): Upgraded from Buy to Conviction Buy at Goldman Sachs.

NEXT WEEK'S EVENTS

Monday:

Tuesday:

  • International Merchandise Trade released by StatsCan @ 8:30am ET
  • API Weekly Statistics Bulletin released @ 4:30pm ET
  • EIA Short Term Energy Outlook
  • Chevron 2017 Security Analyst Meeting
  • Q4/2016 earnings: Baytex Energy, Gibson Energy, Whitecap Resources, NuVista Energy and Tourmaline Oil

Wednesday:

  • Fourth quarter Labour Productivity released by StatsCan @ 8:30am ET
  • EIA Weekly Petroleum Status Report released at 8:30am ET
  • Q4/2016 earnings: Essential Energy Services, Kelt Exploration, Savanna Energy Services, Seven Generations, Trilogy Energy

Thursday:

  • Fourth quarter Capacity Utilization released by StatsCan @ 8:30am ET
  • EIA Weekly Natural Gas Storage Report
  • Q4/2016 earnings: Athabasca Oil Corp, Canadian Energy Services & Technology

Friday:

  • February Labour Force Survey released by StatsCan @ 8:30am ET
  • Baker-Hughes Rig Count released @ 1:00pm ET
  • Q4/2016 earnings: Northern Blizzard Resources

Next edition of the Oil Sands Weekly: Friday March 10, 2017 @ 8pm MT.

The Oil Sands Weekly

The Oil Sands Weekly

The Oil Sands Weekly

The Oil Sands Weekly

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