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The Oil Sands Weekly

The Oil Sands Weekly

Cold Lake Pipeline springs a leak . . . 

Inter Pipeline confirmed one of its pipelines leaked crude oil into a creek adjacent to its Strathcona Terminal in Edmonton. 

The company says it was made aware of the spill last Friday afternoon (April 21) after workers from Imperial Oil discovered the leak during routine maintenance. Crews managed to contain the spill before it reached the North Saskatchewan River.

The leak originated from the Cold Lake pipeline, which transports 558,000 bbl/day of diluted bitumen from in-situ operators in the Cold Lake region to both the Edmonton and Hardisty Terminals. The affected segment of pipe has since been isolated but the rest of the line remains operational. The company expects repairs will continue over the next few weeks. There were no impacts to production or crude deliveries on the line.

Inter Pipeline estimates the volume of crude released was approximately 141 cubic meters (or about 900 barrels), 85% of which has already been recovered. The Alberta Energy Regulator (AER) also reported some impacts to wildlife. The company expects remaining volumes to be fully removed over the next week.

Inter Pipeline says it is collaborating with both the AER and Environment Canada. The cause of the pipe failure is still under investigation.

Better than expected Q1 at Suncor . . . 

Suncor Energy (SU) reported better than expected first quarter earnings of $812 million thanks to higher oil prices and lower operating costs. Among the key highlights:

  • Bitumen production from its core oil sands business (excluding Syncrude) averaged 448,500 bbl/day, down 1% y/y.
  • Synthetic crude production (SCO) improved 3% to 332,800 bbl/day while operating costs declined 7% y/y to $22.55 per barrel.
  • Utilization at its upgraders in Fort McMurray also improved to 95% on fewer maintenance shutdowns.
  • Refinery throughput increased 2% to 429,900 bbl/day while Q1 refinery utilization improved to 93% on better performance at its Edmonton and Montreal facilities.
  • Total production was reported at 725,100 boe/day in Q1, up 5% y/y on the purchase of a 42% stake in the Syncrude project.

Syncrude produced a total of 263,150 bbl/day in Q1 (54% net to Suncor), dragged lower by a fire that took the facility offline in mid-March. Upgrader utilization at Syncrude fell to 75% while operating costs rose to $45.15/bbl.

Reliability issues drag Imperial's production lower . . .

Imperial Oil reported first quarter earnings of $333 million, much improved from a $101 million loss declared the same time last year. The profit included $151 million from the sale of former refinery lands in Mississauga, ON. Among the key highlights:

  • Production averaged 378,000 boe/day in Q1, down 10% from the same time last year blamed on Syncrude's March fire. 
  • Production at Kearl averaged 182,000 bbl/day, short of its nameplate capacity of 220,000 bbl/day. The company it is progressing a plan to improve reliability at the oil sands mine. 
  • Gross production at its Cold Lake in-situ facility averaged 158,000 bbl/day, down 4% from the same time last year due to the timing of steam cycles. Cold Lake has a nameplate capacity of 180,000 bbl/day and uses cyclic steam stimulation to extract bitumen from the oil sands deposit.
  • Refinery throughout averaged 398,000 bbl/day at a utilization rate of 94%, both metrics unchanged from last year.

CEO Rich Kruger says the industry needs to take note that global oil majors are fleeing the oil sands. However, the CEO says his objective is "to be the best of the best" and remains focused on improving asset performance.

Kruger added that Imperial doesn't typically discuss its mergers and acquisition plans but the company is keeping an eye on opportunities to add value from internal projects or through acquisition. Many have pointed out that parent company ExxonMobil would much rather buy an undeveloped greenfield asset.

Cenovus shares still under pressure . . . 

A disgruntled shareholder has petitioned the Ontario Securities Commission (OSC) to block Cenovus' recent acquisition of oil sands and natural gas assets from ConocoPhillips. The investor wants the company to put the deal to a shareholder vote.

Cenovus stock is down 20% since the deal was announced, due in part to the issuance of almost 400 million new common stock, diluting shares by 47%. The company insists a shareholder vote is not required for asset purchases or equity financing arrangements. 

Cenovus wants to sell $3.6 billion worth of non-core assets to help improve its balance sheet. RBC reported that CEO Brian Ferguson is open to "potentially monetizing some portion of the Deep Basin midstream assets." The natural gas properties were part of the package of properties purchased from ConocoPhillips. Ferguson also reiterated this week that the company's Pelican Lake and Suffield conventional assets have "attracted strong initial interest from a wide variety of potential purchasers."

As part of its first quarter earnings release this week, Cenovus reported a smaller-than-expected loss of $39 million, versus a loss of $423 million for the same time last year.

The company produced 181,501 bbl/day of bitumen in Q1 (pre-acquisition), up 32% from the same time last year. Most of the increase was attributed to the continued ramp-up of the Christina Lake phase F and Foster Creek phase G expansion projects. 

Once the deal closes, Cenovus will have regulatory approvals in place for 735,000 bbl/day of production out of its oil sands assets. Cenovus also says it plans to implement a solvent-aided process at its SAGD facilities to potentially enhance recovery, reduce stream requirements and improve netbacks.

Teck provides update on Fort Hills . . . 

Teck Resources provided an update on the upcoming Fort Hills oil sands project this week, as part of its first quarter earnings release. The company says construction is more than 83% complete, with the mining, ore preparation, primary extraction and infrastructure plants already turned over to operations.

Teck says construction activities are now focused on completing utilities and secondary extraction. At the end of the first quarter, more than 60% of operations personnel have been hired.

First oil is expected from one of three secondary extraction trains by the end of this year. The other two trains are scheduled to be completed and commissioned in the first half of 2018. The company expects production to reach 90% of nameplate capacity by the end of 2018. 

Teck Resources owns 20% of Fort Hills, which will be operated by partner Suncor Energy. Teck's share of capital expenditures is expected to total $640 million this year, putting the full project's total 2017 capital spend at about $3.2 billion. Last February, Suncor raised the Fort Hills total estimated cost to a range of $16.5 to $17 billion, while nameplate capacity was boosted to 194,000 bbl/day.

Suncor owns 50.8% of the project while France's Total owns the remaining 29.2%.

Too many asset sales, too few buyers . . .

During the company's Annual General Meeting this week, Suncor Energy CEO Steve Williams says he's open to more acquisitions in the oil sands, for the right price. Williams says the recent exodus of oil majors may create some "incredible opportunities" for the company, adding that he expects more international companies to sell their Canadian stakes in the near term. 

There is a limited pool of buyers for oil sands assets, now mostly owned by three large companies: Suncor, CNRL and Cenovus.

The CEO confirmed Total, BP and Chevron have expressed interest in selling their stakes in the oil sands. Williams added that buying Total's share of Fort Hills is not high on his agenda.

The CEO added he does not foresee sanctioning any growth projects for the next few years and is not planning any assets sales in the near term.

AER loses another round against creditors . . .

Alberta's Court of Appeal has upheld a recent decision that lets creditors off the hook for environmental liabilities of insolvent producers. 

The case stemmed from the bankruptcy of Redwater Energy, who went into receivership in 2015. The company owed $5 million to ATB Financial (a provincial crown corporation), who wanted to sell producing wells and leave non-producing wells to be cleaned up by the Orphan Well Association (OWA). The Alberta Energy Regulator (AER) appealed the case, arguing that any proceeds from asset sales should first go towards cleaning up abandoned wells.

The OWA is a non-profit agency funded by the oil and gas industry, charged with cleaning up abandoned wells. However, a slew of bankruptcies in recent years has left the program severely underfunded.

AER President Jim Ellis says he is "disappointed in the decision" adding that the court's ruling failed to recognize the AER's obligation to protect the public from liabilities of private companies. The regulator also expressed concerns the ruling will encourage more companies to abandon their environmental liabilities, leaving taxpayers on the hook.

The AER is now taking their appeal to the Supreme Court of Canada.

Kinder Morgan picks IPO route to fund Trans Mountain Expansion . . . 

Houston-based Kinder Morgan has filed for an initial public offering (IPO) of its Canadian subsidiary, Kinder Morgan Canada. The company had hoped to find a joint-venture partner to help fund 50% of its Trans Mountain expansion but now says spinning off its Canadian subsidiary provides the "best opportunity for obtaining acceptable financing terms for the project."

Besides the Trans Mountain Pipeline, Kinder Morgan Canada includes the Puget Sound pipeline, the Jet Fuel pipeline system, the Canadian portion of the Cochin pipeline, the North 40 Terminal and the Base Line Terminal in Sherwood Park, the Vancouver Wharves bulk materials terminal, the Edmonton Rail Terminal and the Alberta Crude Terminal.

The Trans Mountain pipeline currently transports 300,000 bbl/day of crude oil and refined petroleum products from the Edmonton area to Vancouver, BC and Washington State. The project has received all regulatory approvals to expand capacity to 890,000 bbl/day for an estimated cost of $7.4 billion. 

If all goes according to plan, the expansion is expected to be completed sometime in 2019. Timing of the IPO was not disclosed.

This week's other Canadian energy news . . . 

Suncor Energy confirmed Syncrude's March fire was caused by a leak in a naphtha pipeline, that cracked due to freezing and thawing. Damage was limited to a piperack adjacent to the upgrader's hydrotreater. Repairs are expected to be covered by insurance.

Pengrowth Energy has sold the remaining portion of its Swan Hills assets in Alberta for $185 million in cash. The sale has cut its full year 2017 production guidance by approximately 3,400 boe/day to a range of 43,500 to 45,500 boe/day. Proceeds from the sale will be used to reduce debt, including US$100 million in senior term notes due this July. Once the deal closes, Pengrowth's debt load will be reduced to $700 million, 60% lower from the end of last year.

Nexen Energy's Flemish Pass Exploration Drilling Project is now in front of the Canadian Environmental Assessment Agency (CEAA) to determine if an environmental review is required for the project. The project involves the drilling of two exploration wells in the Flemish Pass Basin, about 400 km offshore St. John’s, NL. The public is invited to submit their comments to the CEAA until May 15, 2017.

Drill, baby, drill . . .

US President Donald Trump signed a new executive order this week, instructing Interior Secretary Ryan Zinke to review additional locations for oil and gas exploration in offshore waters put off-limits by the previous Administration.

Just before his departure, former President Obama blocked lease sales in various Pacific, Atlantic, and Arctic waters for the next 5 years. The White House claims 94% of the country's continental shelf is currently off limits for exploration.

The President said his America-First Offshore Energy Strategy will renew offshore production, reduce the cost of energy, create countless new jobs and "make America more secure and far more energy independent." 

However, it is unclear if oil majors are keen to invest in contested waters given that state-licenses are unlikely to be approved. California, Oregon and Washington have been lobbying for a permanent moratorium on drilling and exploration in Pacific waters. More than 100 cities along the Atlantic coast have also passed resolutions against offshore drilling. Zinke acknowledged the process will be long and complex at best given all the opposition.

American Petroleum Institute (API) CEO Jack Gerard welcomed the news, noting that his industry would like to see more development in the Eastern Gulf of Mexico, which remains unpopular in the state of Florida. 

This week's other notable US energy news . . . 

A federal judge has fined Exxon Mobil US$19.95 million for pollution from its Baytown refinery and chemical plant in Texas between 2005 and 2013. The suit was filed in 2010 under the Clean Air Act, which allows citizens to sue when regulators fail to stop pollution. Judge Hittner estimated 16,386 days of violations during which 4.5 million kg of pollutants were released from the Baytown complex. Exxon has already paid a US$1.4 million fine levied by the Texas Commission on Environmental Quality. Exxon says it disagrees with the court's decision and may appeal the ruling. The 584,000 bbl/day Baytown facility is the second largest refinery in the US.

Anadarko Petroleum has shut in approximately 3,000 vertical wells in northeast Colorado after a home located near one of its older wells exploded. Anadarko says the wells will not be restarted until each well is inspected, taking 13,000 boe/day offline for up to four weeks. The 24-year old well was located 170 feet (50 meters) from the home, which was built in 2015. A state law passed in 2013 requires all homes to be at least 500 feet away from oil and gas wells. Two men were killed in the explosion and one woman was seriously injured.

A US appeals court has temporarily shelved a legal challenge of Obama's Clean Power Plan, as per a request made by the Trump Administration. The lawsuit was launched by various states and industry groups who were opposed to the government's efforts to curb greenhouse emissions, particularly from coal-fired power plants. Several other court challenges have also been put on hold now that US environmental regulations have been sent back to the drawing board.

BP announced the discovery of 200 million barrels of oil in the deepwater Gulf of Mexico. The company says new technology has allowed for sharper seismic images in areas below the earth’s surface, previously obscured or distorted by complex salt structures. BP says it can now drill new development wells in deepwater reservoirs with higher confidence and accuracy. The company is now using the same technology to find additional reserves in the Gulf of Mexico, Azerbaijan, Angola, and Trinidad and Tobago.

Around the world this week . . . 

Montreal-based SNC-Lavalin was awarded the FEED contract (front-end engineering and design) for Saudi Aramco's expansion of its Berri gas-oil separation plant located in Jubail, Saudi Arabia. The expansion has an estimated price tag of US$1.7 billion. However, the value of SNC's contract was not disclosed. Last week, SNC-Lavalin announced the purchase of UK-based WS Atkins for $3.6 billion, adding another 18,000 employees to the EPC firm.

Chevron has agreed to sell its three gas producing fields in Bangladesh to Chinese firm Himalaya Energy for an undisclosed amount. Chevron has been divesting its non-core assets in order to raise cash and redeploy funds into the US energy sector. Last week, the company announced the sale of its Canadian downstream facilities and is currently seeking a buyer for its Alberta oil sands properties. Himalaya Energy is owned by a consortium of China ZhenHua Oil and CNIC Corporation.

Royal Dutch Shell and several European partners have signed an agreement to finance 50% of the proposed Nord Stream 2 pipeline, which will run 1,200 km from Russia's Baltic Sea to customers in Europe. The line will be designed to transport 55 billion cubic meters of natural gas per year. Russia's Gazprom will own and operate the line, which has an estimated capital cost of €9.5 billion. Construction is expected to begin next year and be completed by the end of 2019.

BP announced the sale of its 50% stake in the Shanghai SECCO Petrochemical Company to Gaoqiao Petrochemical for US$1.68 billion. Gaoqiao Petrochemical is a wholly owned subsidiary of China Petroleum & Chemical Corp (Sinopec). SECCO is a major producer of olefins (ethylene and propylene), polymers and other derivatives including polyethylene, polypropylene and polystyrene. BP says it will use the proceeds for general accounting purposes.

The government of Ecuador has given Schlumberger US$150 million in central bank notes that can be put towards paying taxes. The deal is part of the country's efforts to repay US$1.1 billion in unpaid bills from state-owned oil firm Petroamazonas.

International energy firms, including Statoil, Repsol and Chevron, have pulled many of their expat employees out of Venezuela amid violent anti-government protests. The country remains in the midst of a deep economic crisis, causing shortages in food, medicine and basic goods.

Iraq has launched the third and final phase of expansion at its southern Halfaya oil field, which should double capacity to 400,000 bbl/day by 2018. The expansion is part of Iraq's plans to increase its oil output from the current 4.7 million to 5 million bbl/day by the end of the year. Halfaya is operated by PetroChina.



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

3,407k
+378k ▲ 12.5%
BBL/D CDN EXPORTS TO US
9,265k
+13k ▲ 0.1%
BBL/D US PROD'N
528.70M
-3.64M ▼ 0.7%
BBL US INVENTORIES
697
+9 ▲ 1.3%
US RIG COUNT
CHANGE WK/WK  

US rig counts reached a two-year high this week, climbing for the 15th week in a row. Rig counts in Canada are now down 90% since February.

Russia's energy minister Alexander Novak says his country has met their output reduction target of 300,000 bbl/day. Novak has yet to confirm whether Russia will participate in any OPEC agreement to extend production cuts through the second half of 2017.


WEEKLY MARKET SUMMARY

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

98.90
-0.98 ▼ 1.0%
USD INDEX
73.26
-0.79 ▼ 1.1%
CDN DOLLAR
2.29%
+0.05 ▲ 2.2%
US 10Y Bond
1.54%
+0.08 ▲ 5.5%
CDN 10Y Bond
CHANGE WK/WK  

This week's economic data out of Statistics Canada:

  • Gross domestic product (GDP) was unchanged in February, after three consecutive monthly gains. Real estate was the only stand-out sector, gaining 5.3% for the month. Oil and gas extraction was unchanged in February as lower conventional extraction offset gains in non-conventional oil production. Support activities for mining and energy continues to be strong, up 4.8% in February.
  • Average weekly earnings were unchanged for the month of February, averaging $968. Year-over-year, earnings are up 1.5% nationally. Alberta payrolls dipped 0.2% m/m in February, now down 1.1% for the past 12 months.
  • After a 2.3% increase in January, retail sales declined 0.6% m/m to $47.8 billion in February. Receipts at gasoline stations fell 3.6% on lower prices at the pump.
  • Wholesale sales also declined 0.2% m/m to $58.9 billion in February. The decline followed four consecutive monthly increases. 

US GDP continues to slow, expanding just 0.7% in the first quarter, down from 2.1% in Q4 and over 3% in Q3/2016. Lower auto and electricity sales offset increases in housing and oil drilling. Consumer spending was also weak, gaining just 0.3%. However, the US Bureau of Economic Analysis warns the data is preliminary, and a revision will be released on May 26, 2017.

The Trump Administration has promised "the biggest tax cuts in US history" which will include a reduction in corporate tax rates to 15%, incentives to repatriate earnings held offshore, reduction in personal taxes, lower capital gains taxes and elimination of the death tax. The government says it hopes to pass the new plan before the end of the year. The plan will be funded by eliminating deductions for high-income earners. Critics point out the 1-page proposal is very light on details and did not include cost estimates.

The US also confirmed they will not withdraw from NAFTA. Trump says that decision was made after discussion with Canada and Mexico, calling the conversations "pleasant and productive." The Canadian dollar rebounded from 14 month lows after new tariffs were levied on US imports of Canadian lumber, raising fears of a trade war.

Plans for a border adjustmenttax have been shelved for now.


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

51.73
-0.23 ▼ 0.4%
BRENT USD/BBL
49.33
-0.29 ▼ 0.6%
WTI USD/BBL
47.43
-0.19 ▼ 0.4%
CDN LT USD/BBL
40.08
+0.81 ▲ 2.1%
WCS USD/BBL
CHANGE WK/WK  

Despite a US$4 drop in oil prices over the past few weeks, average April prices were improved over March as follows (USD/bbl):

  • WTI: $51.12 (+2.9% m/m)
  • Brent: $53.82 (+2.4% m/m)
  • Canadian Light: $49.76 (+5.6% m/m)
  • WCS: $41.36 (+13.9% m/m)

The heavy oil discount narrowed to an average of $9.76 a barrel for the month, down from an average differential of US$13.40 in March. The narrower discount is due to the outage of Syncrude's upgrader, taking 350,000 bbl/day of light oil off the market.


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

Crescent Point Energy (CPG) reported a surprise quarterly profit on higher oil prices. Production averaged 173,329 boe/day in Q1, up 8% from Q4/16 but down 3% from the same time last year. Net profits rose to $119.4 million, versus a loss of $87.5 million in Q1/16. CEO Scott Saxberg says his focus this year is to execute the "organic growth plan" and expects the company to exceed its 2017 production guidance. The company has hedged 41% of its remaining 2017 oil production at $71/bbl (approximately US$52.50).

Precision Drilling (PDS) reported a first quarter net loss of $23 million, slightly larger than a $20 million loss reported for the same quarter last year. This is the third consecutive quarter of increased drilling activity for the company. CEO Kevin Neveu says "all signs point to a strengthening recovery" despite lagging day rates in Canada. The company's capital spend is expected to be $119 million this year.

PrairieSky Royalty (PSK) reported first quarter revenues of $80.3 million, up 64% from the same time last year. Net earnings increased to almost $21 million, up from less than $2 million in Q1/16. The company produced 26,812 boe/day in the first quarter, weighted about 50% liquids.

Vermillion Energy (VET) reported a net profit of $44.54 million in the first quarter, up from a loss of $86 million declared for the same time last year. First quarter production averaged 64,537 boe/day, up 6% from the previous quarter. The company expects to produce about 70,000 boe/day this year.

Calfrac Well Services (CFW) posted a first quarter loss of $19.5 million on revenues of $269 million, up 24% from the same time last year. The company's fracturing job count rose 67% percent on higher activity in both the US and Canada. Full year 2017 capital spend was bumped up from $25 million to $40 million on stronger than expected demand in North America.

Western Energy Services (WRG) declared a net loss of $4.4 million in the first quarter of 2017. Revenues were up 148% y/y to $84.2 million. Drill rig utilization improved from a low of 18% in Q1/2016 to 54% in the last quarter. However, pricing still remains 12% lower than the same time last year. The company has set a capital budget of $13 million for the full year 2017.

AltaGas (ALA) reported a net income of $32 million in first quarter, down from $55 million for the same time last year. Funds from operations rose 29% to $170 million. Pre-construction activities have begun on the company's Ridley Island Propane Export Terminal. Altagas' recent $8.4 billion acquisition of utilities-provided WGL Holdings is currently under regulatory review in the states of Maryland, Virginia and Washington, DC.

Canadian National Railway (CNR) reported an 8% increase in quarterly revenues on higher shipments of coal, grains, fertilizer, metals and materials. Revenues for petroleum and chemical products also rose 1% in the first quarter. The company says it sees strong demand for energy-related shipments going into the second quarter, including frac sand and refined products. CN's net income rose to $884 million in the first quarter, up from $792 million in the previous year quarter.

Suncor Energy (SU) announced plans to buy back up to $2 billion worth of shares over the next year and the early repayment of a US$1.25 billion bond.

Imperial Oil (IMO) increased their quarterly dividend by 7% to $0.16 per share. This marks the 22nd consecutive year of dividend increases for the company.

Pembina Pipeline stock (PPL) reached another 52-week high on the TSX this week.

New 52-week lows on the TSX this week include ACR Resources (ARX), Baytex Energy (BTE), Bonterra Energy (BNE), Cenovus Energy (CVE), Crescent Point Energy (CPG), Crew Energy (CR), Peyto Exploration (PEY), Raging River Exploration (RRX), Spartan Energy Energy (SPE), Western Energy Services (WRG).

NYSE ENERGY STOCKS • WEEKLY CHANGE

First quarter earnings at Exxon Mobil (XOM) more than doubled to US$4 billion on higher oil prices, improved refining margins and cost management. Production declined 4% y/y to 4.3 million boe/day on higher maintenance activity in Canada and Nigeria. Exxon also announced a 2.6% dividend increase this week, to US$0.77 a share. This marks the 35th consecutive annual dividend increase for the company.

Oilfield services provider Halliburton (HAL) reported a first quarter loss of US$32 million, much smaller than the US$2.8 billion charge reported in Q1 last year. Revenues rose 6% from the previous quarter to US$4.28 billion on increased activity among US shale producers. However, the company warned international markets remain weak "due to seasonality ... exacerbated by the current cyclical headwinds."

Baker Hughes (BHI) reported a 15% drop in first quarter revenues on lower spending in the Gulf of Mexico and pricing pressures internationally. Revenues declined to US$2.3 billion, versus US$2.7 billion for the same time last year. Net losses narrowed to $129 million for the quarter.

Valero Energy (VLO) reported a 38% drop in quarterly profits, blamed on weak refining margins and maintenance shutdowns at its Benicia, Texas City, St. Charles, and Meraux refineries. CEO Joe Gorder says the company delivered "another quarter with solid operating results despite a heavy maintenance schedule." Margins are expected to improve through the rest of 2017. Valero’s refineries achieved 91% throughput capacity utilization, averaging 2.8 million bbl/day in Q1, in line with results from Q1/2016. First quarter operating revenues rose 38% to US$21.8 billion.

Whiting Petroleum (NYSE:WLL) reported a first quarter net loss of US$54.2 million, narrower than a loss of US$174 million reported for the same time last year. First quarter production averaged 117,360 bbl/day, a drop of 20% y/y due in part to asset divestitures.

Camp-operator Civeo (CVEO) reported a net loss of US$21 million, narrower than a US$27 million reported in Q1/2016. The company's Canadian segment reported an operating loss of US$5.0 million on lower room rates and lower activity in the oil sands. Civeo also announced a 15-month contract renewal for the McClelland Lake Lodge to support ongoing construction at the Fort Hills project.

Marathon Petroleum (MPC) reported a surprise quarterly profit of US$30 million this week on strong performance from its midstream business unit. All three of Marathon's Gulf Coast refineries underwent maintenance shutdowns this past quarter, denting revenues from downstream operations.

Phillips 66 (PSX) reported first quarter earnings of US$535 million on a US$423 million gain booked on the sale of its petroleum coking venture. Strong performance in its midstream and chemicals business offset losses in its refining segment. The company says it is continuing to expand storage capacity at it Beaumont storage terminal, increasing capacity from 9 million to 10.2 million barrels.

Chevron Corp (CVX) reported first quarter earnings of US$2.7 billion, including $600 million from the sale of its Indonesian geothermal business. Q1 sales rose to US$32 billion, up almost 40% from the same time last year. Operating expenses declined 14% y/y while capital expenditures are down 30% from a year ago. Production increased 3% y/y to 2.67 million boe/day and the company says it is on track to grow output by 4-9% this year, excluding asset sales.

Paris-based Total (TOT) reported a blow-out first quarter, signalling a return to growth after several years of spending cuts and austerity. Net profits increased 56% to US$2.6 billion. The company also sanctioned the Aguada Pichana Este project within the Argentine Vaca Muerta shale gas region, the first since 2014. Total has also expanded its footprint in Uganda, Brazil, the Congo, Azerbaijan, Texas and the US Gulf of Mexico. Q1 production increased 4% y/y to 2.57 million boe/day, weighted 51% liquids. CEO Patrick Pouyanne said "this is a new era" for the company, noting there is now more room to expand capital spending. Excluding acquisitions, the company plans to spend US$14 to US$15 billion this year.

Total stock hit another 52-week high on the NYSE this week.


UPGRADES & DOWNGRADES
  • Mullen Group (TSX:MTL): Downgraded from Outperform to Market perform at Raymond James.
  • Pengrowth Energy (TSX:PGF): Upgraded from Reduce to Hold at TD Securities.
  • Precision Drilling (TSX:PDS): Upgraded from Market Perform to Outperform at Raymond James.
  • Western Energy Services (TSX:WRG): Upgraded from Market Perform to Outperform at Raymond James and from Sector Perform to Outperform at Scotiabank.

NEXT WEEK'S EVENTS

Monday:

Tuesday:

  • GMP Securities Energy Market Update in Calgary, AB
  • API Weekly Statistical Bulletin released @ 4:30pm ET
  • Q1/17 earnings releases: Encana, Secure Energy Services, ConocoPhillips, Devon Energy, Pengrowth Energy

Wednesday:

  • EIA Weekly Petroleum Status Report released @ 10:30am ET
  • Veresen 2017 AGM in Calgary, AB
  • Secure Energy Services 2017 AGM in Calgary, AB
  • FOMC interest rate announcement @ 2:00pm ET
  • Q1/17 earnings releases: Williams Co., Horizon North Logistics, Blackpearl Resources, ARC Resources, Trican Well Services, Whitecap Resources, Gran Tierra Energy

Thursday:

  • March Balance of Trade data released by StatsCan @ 8:30am ET
  • EIA Weekly Natural Gas Storage Report released @ 10:30am ET
  • Baytex Energy 2017 AGM in Calgary, AB
  • Pembina Pipeline 2017 AGM in Calgary, AB
  • Bank of Canada Stephen Poloz gives speech in Mexico City @ 4:10pm ET
  • Q1/17 earnings releases: Veresen, Pembina Pipeline, Penn West, Seven Generations, Enerflex

Friday:

  • March Labour Force Survey released by StatsCan @ 8:30am ET
  • Husky Energy 2017 AGM in Calgary, AB
  • TransCanada 2017 AGM in Calgary, AB
  • Enerplus 2017 AGM in Calgary, AB
  • Baker-Hughes Rig Count released @ 1:00pm ET
  • Q1/17 earnings releases: Husky Energy, TransCanada, Enerplus, Baytex Energy

Next edition of the Oil Sands Weekly: Friday May 5, 2017 @ 10pm MT.

The Oil Sands Weekly

The Oil Sands Weekly

The Oil Sands Weekly

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