Author Archives: prosperitysaskatchewan

Feds introduce legislation on payments from resource firms to governments

Feds introduce legislation on payments from resource firms to governments
Shawn McCarthy
OTTAWA — The Globe and Mail
Published Friday, Oct. 24 2014, 11:49 AM EDT
Last updated Friday, Oct. 24 2014, 1:58 PM EDT
The federal government has introduced legislation requiring energy and mining companies to report all revenue paid to foreign and domestic governments, but is delaying its impact on corporate payments made to First Nations for two years to allow for consultation.
The long promised legislation was part of an omnibus bill introduced Thursday, and will impose fines for companies that fail to report payments exceeding $100,000.
It will cover all publicly traded companies and privately held ones that meet two of three conditions of having at least $20-million in assets, $40-million in revenue and 250 employees.
“Canada is recognized as a world leader in promoting transparency and accountability in the extractive sector both at home and around the world,” said Chris McCluskey, director of communications for Natural Resources Minister Greg Rickford. “We are enhancing this reputation with our G7 allies by establishing new mandatory transparency standards for extractive companies’ payments to all levels of government.”
Prime Minister Stephen Harper promised to pursue the so-called “publish what you pay” initiatives at a G20 meeting in the United Kingdom in 2013. Some industry groups had urged the provincial securities commissions to take the lead on the effort in order to be consistent with similar rules in the United States and the European Union.
The Canadian mining industry, in particular, worked with non-governmental organizations to encourage the adoption of mandatory reporting rules, arguing their efforts will receive greater social licence if citizens can clearly see the contributions companies make to local governments.
The international effort aims to curb corruption in the developing world, where multinational companies often operate amid poor accountability rules and little transparency for the taxes, fees and royalties they pay to governments.
The British government released its proposed legislation this summer, while the U.S. Securities and Exchange Commission is redrafting its regulations after losing a court challenge by the oil industry.
The Canadian Association of Petroleum Producers says it supports the principle of transparency but has had concerns about how it may be implemented.

NEW ST. LOUIS BRIDGE OPENS TO TRAFFIC

NEW ST. LOUIS BRIDGE OPENS TO TRAFFIC

Released on October 24, 2014

The Government of Saskatchewan officially opened the new St. Louis Bridge today.  The bridge, located on Highway 2 over the South Saskatchewan River, replaces the century-old St. Louis Bridge.
“The new bridge will better serve the regional economy and create a safer and more efficient transportation corridor for shippers,” Highways and Infrastructure Minister Nancy Heppner said.  “The bridge completes the final link in a 683 km-long primary weight corridor on Highway 2 from Assiniboia in the south to La Ronge in the north.”
“The St. Louis Bridge is over 100 years old, and it has served its purpose for many years,” Batoche MLA Delbert Kirsch said.  “This new bridge was part of a dream that people had for a number of years, and now this dream becomes a reality.”
Construction on the new bridge, which is 1.6 km east of the old bridge, began in 2011.  The project also involved building a new route to the bridge.
The new highway that connects to Highway 2 has been completed on the north side of the bridge while the south connector project is still under construction.  Motorists will need to use Highway 25 west to Highway 2 near St. Louis.
“The new bridge will serve the citizens and economy well,” St. Louis Mayor Les Rancourt said.  “The increased safety and dependability of the new bridge will benefit the entire province, while promoting additional tourism through this area.  We also anticipate future growth as a result of this new access to the community.  The old St. Louis Bridge holds great historical significance to our community, but we recognize that it’s time to move forward and accept the new bridge for all the positives that it has to offer.”
“We’re excited about the opening of the new bridge as it will promote trade and the movement of goods and services,” St. Louis Reeve Henry Gareau said.
“This opens the door for the local economy, particularly the agricultural producers in the area who frequently cross the river,” RM of Prince Albert Reeve Norma Sheldon said.
The old bridge at St. Louis is now closed, and pedestrians are cautioned to stay off for their own safety.
The government has invested a record $4.3 billion in transportation infrastructure since 2008.
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For more information, contact:
Steve Shaheen Highways and Infrastructure Saskatoon Phone: 306-933-5641 Email: steve.shaheen@gov.sk.ca

PotashCorp anticipates steady demand #potash

24 Oct 2014
The StarPhoenix
SCOTT LARSON THE STARPHOENIX — With files from The Canadian Press
Potash -Corp anticipates steady demand
Consumption picks up in China, India
Despite weaker crop prices, global demand for potash in 2015 should be much like this year’s number of 58 to 60 million tonnes, says Potash Corporation of Saskatchewan president and CEO Jochen Tilk.
“The trend in 2015 may look, in terms of production and consumption, similar to what 2014 should look like,” said Tilk, adding he expects potash consumption in the U.S. and Brazil to be static or drop slightly in 2015, but to be offset by greater demand in China and India.
Potash-Corp reported its third quarter earnings with $317 million in net income, or 38 cents per share.
The Saskatoon-based fertilizer company had $1.6 billion in sales dur ing the three mon ths ended Sept. 30, which was above estimates and up from $1.52 billion a year earlier. However, the company’s profit was five cents per share below estimates and down from $356 million, or 41 cents per share, in the third quarter of 2013.
The average price received for a tonne of potash was down compared with last year, though potash sales volume was 29 per cent higher than a year earlier.
While crop prices are lower this year, the need for nutrients is still there, and lower potash prices mean it is still affordable to farmers, Tilk said.
“The fundamental question is whether the pair of price and nutrient affordability is still there, and we think it is.”
After slashing about 1,000 workers (18 per cent of its workforce) in late 2013 when prices for potash tumbled, Tilk said he sees greater stability in the coming year.
“When we looked at the second half of 2014 and what we experienced, we realized nutrients were actually rather strong, particularly ammonia and potash,” he said. “We’ve called people back and brought some capacity back on line.
“No company likes to go through fluctuations,” he said. “We are trying to be responsive to markets, but at the same time we also recognize the impact it has on operations and on people, and we are trying to really minimize that and bring stability and consistency to our operations.”
Tilk said the company also hopes there isn’t a repeat of the past year’s rail transportation logjam, which affected farmers and potash producers alike.
“This year was a huge problem,” he said, adding the company is working with the railways to find solutions to bottlenecks and other answers to mitigate future problems.
Potash-Corp narrowed its full-year earnings guidance for 2014 to between $1.75 and $1.85 per share, compared to the previous range of $1.70 to $1.90 per share.
It said that potash and nitrogen performance during the third quarter improved over last year’s third quarter, but higher tax expenses and weaker contributions from offshore equity investments weighed on the results.
The average realized potash price for the quarter was $281 per tonne, down from $307 per tonne in last year’s third quarter.
25th anniversary celebrations
On Nov. 2, Potash-Corp will celebrate its 25th anniversary as a publicly traded company.
Part of the celebration will be ringing the closing bell at the New York Stock Exchange on Oct. 31.
“We’ve been invited to The New York Stock Exchange to ring the bell, to commemorate the ringing of the bell at the beginning when we were listed,” Tilk said.
The company encouraged employees to apply to go to New York, and five employees will be randomly chosen to attend the event and collectively ring the bell.
“I think it was a fantastic idea to recognize employees,” Tilk said.
The company was worth $289 million when it went public in 1989, and now has a market cap of around $30.4 billion. That doesn’t include all of the dividends that have been distributed throughout the last 25 years.

Potash Corp remains confident of market outlook despite weak prices #potash

Potash Corp remains confident of market outlook despite weak prices
Cecilia Jamasmie
October 24, 2014
The company expects 58 to 60 million tonnes of the nutrient to be shipped this year.
Potash Corp of Saskatchewan’s (TSX, NYSE:POT) chief executive Jochen Tilk said Thursday he believed prices for the fertilizer won’t follow down the slippery slope trailed by corn, soybean and other crops, which have hit all-time lows as of late.
Discussing the company’s third-quarter results, Tilk added potash demand may experience a modest decline in certain markets next year, including North America. But overall, he thinks global demand in 2015 will be similar to 2014 levels.
“While we expect lower farm profitability still has the potential to impact demand in certain regions, we also believe crop pricing remains within the band that is supportive of farmer economics and fertilization,” he said in a statement.
Potash Corp., the world’s biggest fertilizer company by market value, estimates that a healthy 58 to 60 million tonnes of the nutrient will be shipped this year, which is more than the 56.5-58 million it had estimated earlier.
“We continue to see encouraging signs in each of our major potash markets with a renewal of demand translating into higher sales volumes,” Tilk said.
And the firm’s Q3 results confirm such a statement — sales rose to $1.64 billion from $1.52 billion, beating the $1.53 billion average estimate.
Planned expansions
The Canadian firm, which also makes phosphate and nitrogen fertilizers, narrowed its 2014 forecast profit to $1.75-$1.85 per share from $1.70-$1.90, citing a reduction in estimated income from offshore investments and a higher tax rate.
However, it said it is approaching the end of a decade-long, US$8.3-billion investment program to boost its potash production capacity.
It added it expects to generate vast free cash flow in the years ahead after that program ends, opening the door to potential dividend hikes, acquisitions or both.

Brent crude up almost 3 per cent on reported Saudi cut

Brent crude up almost 3 per cent on reported Saudi cut
Barani Krishnan
NEW YORK — Reuters
Published Thursday, Oct. 23 2014, 4:08 PM EDT
Last updated Thursday, Oct. 23 2014, 4:09 PM EDT
Brent crude oil jumped nearly 3 per cent on Thursday, its most in over four months, after an industry source said Saudi Arabia cut output in September following the summer’s tumble in prices.
Strong euro zone economic data, better-than-expected Chinese manufacturing numbers and a rally in Wall Street stocks also boosted oil prices, traders said.
Brent’s front-month contract for December delivery settled up $2.12, or 2.5 per cent, at $86.83 (U.S.) barrel. It was the largest percentage gain in a day for Brent since June 12, and came after a session peak of $87.19.
U.S. crude’s front-month finished up $1.57, or 2 per cent, at $81.86, after an intraday high at $82.37. That was the biggest percentage rise since Sept. 16.
Both Brent and U.S. crude have lost at least a fifth of their value from June highs due to fears of oversupply.
Some analysts remained skeptical of Thursday’s price recovery, saying any rebound between now and next month’s meeting of the Organization of Petroleum Exporting Countries (OPEC) was likely to be short-lived.
“I’m not impressed,” said Walter Zimmerman, chief technical analyst at United-ICAP in Jersey City, New Jersey. “Considering how far Brent has fallen, from more than $115 to around $82, the nature of this rebound is more of a dead-cat bounce than a dramatic illustration that we have hit some kind of meaningful bottom.”
The 12-member OPEC meets on Nov. 27 to consider adjusting its output target of 30 million barrels per day for the first half of 2015 and so far only a minority of members have called for an output cut.
Prices rallied on Thursday after an industry source said the amount of crude supplied by Saudi Arabia to domestic and export markets last month fell to 9.36-million barrels from around 9.69-million barrels in August.
“A story like that would certainly move the market no matter who said it, because the Saudis themselves told OPEC they had raised production,” said James L. Williams, energy economist at WTRG Economics in London, Arkansas.
Saudi Arabia, the world’s largest oil producer, told OPEC’s September world oil supply report that it pumped 9.7 million barrels per day (bpd), up from around 9.6 million bpd in August. Barrels not supplied to the markets are put into storage.
“The question in every trader’s mind is what is OPEC going to do at its November meeting, and all that uncertainty has made the market go yoyo the past few days,” Williams said.
Saudi Arabia has previously sent signals it is comfortable with markedly lower oil prices and willing to maintain high supply levels to compete for market share.
Crude inventories in the United States, the No. 1 oil importer, meanwhile, surged by 7.1 million barrels last week to 377.68 million barrels, more than double what analysts had forecast.

Six reasons oil prices are set for a rebound

Six reasons oil prices are set for a rebound

Special to The Globe and Mail

Published Thursday, Oct. 23 2014, 3:40 PM EDT

Last updated Thursday, Oct. 23 2014, 4:43 PM EDT

Colin Cieszynski is senior market analyst at CMC Markets and a Chartered Financial Analyst.

Crude oil prices have been under heavy pressure over the last few months, falling to their lowest levels in years. Recent trading action, however, suggests the slide may be over and a rebound possible.

There are a number of factors combining to suggest that crude oil may be bottoming out.

Response to news Usually markets go up on good news and down on bad news, and when this doesn’t happen, traders tend to take notice. Yesterday’s big 7.1 mmbbl increase in U.S. inventories sent WTI lower but it did not break the $80.00 level, suggesting that selling may be washed out. Today’s strong response to more positive PMI and production news suggests that a change in direction may be starting.

Improved supply conditions One of the factors that had been driving crude down was the fear of a glut of supply in the marketplace, a big change from the last several years where there had been a fear of supply disruptions. It now appears that the price has reached a point where it is starting to hurt producers.

Saudi Arabia and Kuwait recently shut production at a less profitable for “environmental” reasons, while today’s reports that Saudi Arabia trimmed back production last month and that Libya has called for an OPEC production cut were well received by traders. This indicates that should the price fall much further, we could see a greater response from producers reducing supply by shutting in production.

Improved demand factors Another factor that had been dragging crude oil prices down was the fear that slowing economies in China and Europe could cut into crude oil demand. Today’s flash manufacturing PMI reports from China and Germany which were a bit better than expected appears to have eased some of these fears.

U.S. dollar impact fading Crude oil is priced in USD and much of the selloff over the last few months has been in tandem with a big rally in USD on anticipation of the end of QE3 and a more hawkish Fed. The greenback has levelled off lately, taking some of the pressure off of crude oil

Extreme pessimism The charts for WTI and Brent crude below both show RSI indicators that are their most oversold levels in two years. Also, in an interview I recently did on crude oil, I was asked if I thought WTI could go to $60. Both of these indicators suggest extreme pessimism has gripped crude oil markets which could set the stage for a significant rebound should the factors that have driven crude down so much lately start to ease.

Low political risk concerns There are times when political risk can be a significant component of crude oil pricing. This is not one of those times. Violence in the Middle East has not impacted supply, and Libya — where there had been supply fears earlier this year — has ramped up production lately.

The premium for Brent Crude over WTI crude which was up over $20.00 at one point a few years ago, it now down to less than $5.00. Any surprises that raise political risk could have a significant impact.

6 reasons oil 1

WTI crude oil has dropped dramatically in the last few weeks but has reached a zone of potential support. So far the $80.00 round number has been holding along with $77.00, the bottom of a huge trading channel that has been in place since 2011.

Initial potential resistance tests on a rebound may appear near $84.10, $86.25 and then the $90.00-$90.60 range between a round number and a Fibonacci level.

6 reasons oil 2

Brent Crude has broken down through its 2012 low but has dropped well into the $70.00-$90.00 trading range that prevailed before the Arab Spring sent Brent through the roof. Support appears to be emerging near $85.00 with more possible near $82.50 and $82.00. Initial resistance appears near $86.80 then $89.40.

37% more jobs posted on SaskJobs than EI recipients in Saskatchewan in August 2014

Oct 23, 2014
Statistics Canada
The number of EI recipients in Saskatchewan in August 2014 was up 2.1% from August 2013.
There were 10,510 EI recipients in Saskatchewan in August 2014, at the same time, there were 14,401  jobs posted on SaskJobs .ca alone.
There were 37% more jobs on one website than EI recipients in Saskatchewan.
Today there are 12,551 jobs posted at SaskJobs.ca
EI Oct 2014 1 EI Oct 2014 2

No joy for BHP investors at company AGM

No joy for BHP investors at company AGM
by: BARRY FITZGERALD
From: The Australian
October 24, 2014 12:00AM
BHP Billiton has dashed investor hopes for more certainty around the timing of increased shareholder returns — but it has offered some cheer on the economic front, tipping that growth in China would hold above 7 per cent.
Speaking at the British leg of BHP’s annual meeting season, chief executive Andrew Mackenzie last night talked up the fact that the company had returned $US64 billion to shareholders in dividends and buybacks in the past 10 years.
“Everything we are doing, including productivity accelerated by the demerger (of Newco), is aimed at increasing cash returns to you, our shareholders,’’ Mr Mackenzie said.
But he did not give any guidance to just when a step-up in cash returns would occur, saying only that when it did occur, it would be in a consistent, predictable and ­efficient manner.
His comments echo those made on August 19 at the release of BHP’s June year profit report. Disappointment that a share buyback or a major step-up in dividends was not announced with the result, and continued commodity price weakness have been key factors in BHP’s 15 per cent share slide since — a $US32bn ($36.4bn) value hit.
Chairman Jac Nasser told shareholders that events this year, including in recent weeks, had served as a reminder of how “unpredictable and volatile geo­politics and economics can be’’.
“Despite this, growth in emerging countries remains solid at around 4.5 per cent and some developed economies have bounced back,’’ Mr Nasser said.
Importantly for commodity markets, Mr Nasser said that while the property sector in China was slowing, other sectors were showing resilience. “Coupled with the ability to draw upon a range of other supportive measures, growth is still expected to come in above 7 per cent,” Mr Nasser said.
Ahead of the meeting, BHP shares fell 63c, or 1.84 per cent, to $33.64 on the ASX.
BHP is now down $6.04, or 15 per cent, on its August 19 level of $39.68.
At the time, Mr Mackenzie said that with net debt still above the desired level of $US25bn, and with iron ore prices in sharp retreat, BHP was “not quite ready’’. He said BHP wanted to start any capital management from a “position if strength’’.
That way, he said, the company would be able to implement an “enduring program that could be done in a more consistent and predictable manner’’.
Mr Mackenzie told last night’s meeting in London that shareholders should expect BHP’s productivity under his leadership to continue. “I am very happy to be predictable,” he said.
“We have already made significant cost savings and we will continue to drive costs down even further, targeting another $US3.5bn in annualised productivity gains by the end of the 2017 financial year. We reduced our capital expenditure by a third in financial-year 2014. We will reduce it again this year and we will only invest where we see a solid return.
“We will generate strong cashflow and, as a consequence, deliver good returns for you, our shareholders.’’
BHP’s June year profit was 23 per cent higher at $US13.83bn on which there was a 4 per cent increase in annual dividend to $US1.21. Earlier this week it released its production report for the first (September) quarter of its 2015 financial year.
Record production in eight operations and four commodities, plus outperformance in oil and coking coal, was not enough to change market expectations that in the face of the broad decline in commodity prices, profit this year is under the pump.
Market consensus is for a 7 per cent fall in profit to $US12.8bn, with production increases and cost-cutting not expected to be enough to offset falls in commodity prices from last (financial) year’s averages.

CROP REPORT FOR THE PERIOD OCTOBER 14 TO 20, 2014

CROP REPORT FOR THE PERIOD OCTOBER 14 TO 20, 2014

Released on October 23, 2014

Detailed report is here Crop Report For October 14 to 20

Harvest weather continues to be favourable as 95 per cent of the crop is now combined, which is consistent with the five-year (2009-2013) average of 94 per cent, according to Saskatchewan Agriculture’s Weekly Crop Report.
The west-central, northeastern and northwestern regions are all reporting 99 per cent of the crop in the bin.  The southwestern region has combined 97 per cent of the crop, the southeastern region 93 per cent and the east-central region 91 per cent.
Ninety-eight per cent of mustard, 97 per cent of barley and canola, 96 per cent of durum and oats, 95 per cent of spring wheat, 93 per cent of canaryseed, 83 per cent of chickpeas and flax and 62 per cent of soybeans have been combined.
Reported yields have been average overall; however, there are reports of above-average yields in some areas.  Little crop damage was reported this week.
Much of the province received rain this past week with some southern areas reporting nearly an inch.  Across the province, topsoil moisture conditions on cropland are rated as eight per cent surplus, 82 per cent adequate and 10 per cent short.  Hay land and pasture topsoil moisture is rated as four per cent surplus, 79 per cent adequate, 16 per cent short and one per cent very short.
Farmers are busy finishing harvest, moving cattle and completing fall work.
Follow the 2014 Crop Report on Twitter at @SKAgriculture.
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For more information, contact:
Shannon Friesen Agriculture Moose Jaw Phone: 306-694-3592

Wells get closer together as drillers cash in on boom

23 Oct 2014
Calgary Herald
BRADLEY OLSON AND DAN MURTAUGH BLOOMBERG
Wells get closer together as drillers cash in on boom
U. S. shale producers are cramming more wells into the juiciest spots of their oilfields in a move that may help keep the drilling boom going as prices plunge.
The technique known as downspacing aims to pull more oil at less cost from each field, allowing companies to boost profit, attract more investment and arrange needed loans to continue drilling. Energy companies see closely packed wells as their best chance to add billions more barrels of oil to U. S. production that’s already the highest in a quarter century.
“We would be dealing with more than a decade of inventory,” said Manuj Nikhanj, co- head of energy research for ITG Investment Research in Calgary. “If you can go twice as tight, the multiplication effect is massive.”
To make downspacing work, the industry must first solve a problem that for decades has required producers to carefully distance their wells. Crowded wells may steal crude from each other without raising total production enough to make the extra drilling worthwhile. Too much of that cannibalization could propel the U. S. production revolution into a faster downturn.
In the past, most wells were drilled vertically into conventional reservoirs, which act more like pools of oil or gas. Companies learned quickly that packing wells too closely together just drains the reservoirs faster without appreciably increasing production, like two straws in the same milkshake.
Shale rock is different, acting more like an oil- soaked sponge. Drilling sideways through the layers of shale taps more of the resource, while fracking is needed to crack the rock to allow oil and gas to flow more freely into the well. That’s why packing more wells together can work, said Lance Robertson, Marathon Oil Corp.’ s vice- president over Eagle Ford operations.
Because shale is so dense, the oil and gas can’t travel as far in the rock. As long as the fracking cracks don’t interlace, the more wells drilled, the more oil each field will produce, he said.
Working against producers are crude prices that last week dipped below $ 80 for the first time since 2012, escalating borrowing costs for drilling wells that have a tendency to peter out quickly. Harvesting oil and natural gas from dense rock layers is expensive, making operations even more vulnerable to sinking prices than in past boom- and- bust cycles. West Texas Intermediate oil fell $ 1.16 to $ 81.33 a barrel on the New York Mercantile Exchange at 1: 37 p. m.
So far, early results from downspacing experiments by a handful of companies have been mixed.
It’s “the billion- dollar question,” said Jonathan Garrett, a Houstonbased upstream analyst for energy consultant Wood Mackenzie Ltd. “Is downspacing allowing access to new resources, or is it drawing down the existing resources faster?”
An analysis of a group of wells on the same lease in La Salle County, in the heart of Texas’s booming Eagle Ford formation, showed that closer spacing reduced the rate of return for drilling to 23 per cent from a high of 62 per cent for wells spaced further apart, according to a paper published in April by Society of Petroleum Engineers.
In Louisiana’s Haynesville field, which mostly produces gas, data from producers and regulators shows that efforts to drill wells closer together has led to what industry insiders call “interference.”
That’s when a second or third well drilled close to an existing location produces less than the first.
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