Author Archives: prosperitysaskatchewan
Note this recent story from Crescent Point http://prosperitysaskatchewan.wordpress.com/2014/04/14/saskatchewan-torquay-oil-discovery-the-potential-to-be-the-equivalent-size-of-our-viewfield-bakken-play-oil/
Crescent Point Energy is Canada’s largest Bakken Producer. Note from the above story, “To put it in context, this play has the potential to be the equivalent size of our Viewfield Bakken play.”
Crescent Point Announces Strategic Torquay Consolidation Acquisition of CanEra Energy Corp. and Upwardly Revised 2014 Guidance
CALGARY, ALBERTA–(Marketwired – April 23, 2014) - Crescent Point Energy Corp. (“Crescent Point” or the “Company”) (CPG.TO)(CPG) is pleased to announce that it has entered into an arrangement agreement (the “CanEra Arrangement”) to acquire all of the issued and outstanding shares of CanEra Energy Corp. (“CanEra”), a privately held southeast Saskatchewan oil and gas producer with a large Torquay land position and production of approximately 10,000 boe/d (the “CanEra Assets”). Total consideration for CanEra is approximately $1.1 billion, including approximately 12.9 million Crescent Point shares, $192 million of cash consideration and the assumption of approximately $348 million of net debt.
The CanEra Assets include more than 260 net sections of land with Torquay potential, of which more than 200 net sections are exploratory land and 60 net sections are in Crescent Point’s core Flat Lake area. In total, Crescent Point now has exposure to more than 880 net sections of land with Torquay potential, of which more than 280 net sections are in the core Flat Lake area. The CanEra Assets also include high-quality, long-life southeast Saskatchewan conventional production of approximately 10,000 boe/d with low decline rates, high netbacks and significant free cash flow. The successful completion of the CanEra Arrangement is also expected to drive a seven percent reduction in Crescent Point’s total payout ratio in 2015, due to the strong cash flow-generating capability of the acquired assets and low associated maintenance capital requirements.
“There are two major aspects of this deal that fit really well with our business plan for stable, long-term growth,” said Scott Saxberg, president and CEO of Crescent Point. “The assets consolidate and complement our conventional assets and will generate significant free cash flow, and the 260 net sections of Torquay land we gain provide further exposure and upside potential in a play that we’re very excited about.”
Assuming the successful completion of the CanEra Arrangement on or about May 15, 2014, Crescent Point is upwardly revising its 2014 guidance for production and funds flow from operations. The Company’s 2014 exit production rate is expected to increase by seven percent to 145,000 from 135,000 boe/d and its average daily production in 2014 is expected to increase by five percent to 133,000 boe/d from 126,500 boe/d. The Company’s funds flow from operations for 2014 are expected to increase by six percent to $2.38 billion from $2.25 billion. Capital expenditures for the year are expected to increase by 1.4 percent, or $25 million, which is expected to maintain CanEra’s current production levels for the year.
The successful completion of the CanEra Arrangement is expected to increase Crescent Point’s Torquay exposure in its core Flat Lake area by 27 percent to more than 280 net sections. The CanEra Assets to be acquired include 60 net sections of land in the core of the Company’s Flat Lake area in southeast Saskatchewan. The Company has identified more than 80 net Torquay drilling locations on these lands. As Crescent Point announced on April 14, 2014, the Company has delineated a significant Torquay discovery in Flat Lake and is pleased with results to date. Combined with the CanEra Assets, Crescent Point has identified more than 480 low-risk Torquay drilling locations on these combined lands.
The CanEra Arrangement also builds on the Company’s significant Torquay exploratory land position, adding more than 200 net sections to its existing 400 net sections for a combined total of more than 600 net sections of exploratory land. Including the more than 280 net sections of core Flat Lake land, Crescent Point now has exposure to more than 880 net sections of land with Torquay potential.
“This acquisition adds to our low-risk drilling inventory in the Flat Lake area and provides increased exposure on the greater exploration trend,” said Saxberg. “We have a successful track record of finding and developing new resource plays that have enhanced our growth and we are excited about the potential we see in the Torquay.”
Based on an estimated annual decline rate of approximately 16 percent, Crescent Point expects annual maintenance capital of approximately $40 million in order to maintain production from the CanEra asset base in the 10,000 boe/d range for 2015. Anticipated free cash flow of approximately $180 million from the CanEra Assets would result in an estimated seven percent reduction in Crescent Point’s total payout ratio, assuming a WTI oil price of US$100.
“The low decline rate of CanEra’s assets should work in tandem with our successful waterflooding programs in the Bakken and Shaunavon to continue lowering our corporate decline rate and to enhance the dual-track growth plan we’ve implemented,” said Saxberg.
The CanEra Arrangement further consolidates Crescent Point’s Viewfield Bakken light oil resource play and is expected to facilitate the Company’s waterflood plans in the area. CanEra is the largest remaining working-interest partner in the Viewfield Bakken waterflood project.
Under the terms of the CanEra Arrangement, Crescent Point has agreed to acquire all of the issued and outstanding shares of CanEra for an aggregate of 12.9 million Crescent Point shares and cash consideration of $192 million. In addition, Crescent Point expects to assume approximately $348 million of CanEra net debt, including deal costs. The Company’s aggregate consideration for CanEra is approximately $1.1 billion, based on a price of $44.50 per Crescent Point share.
The acquisition is consistent with Crescent Point’s strategy of consolidating large oil-in-place assets. With its long-life and low-decline assets, the CanEra Assets are expected to provide steady production and free cash flow, and to provide long-term production, reserves and cash flow growth, particularly in the Bakken and Torquay formations in Crescent Point’s core Flat Lake area.
Key attributes of the CanEra Assets to be acquired:
- Production of approximately 10,000 boe/d, approximately 96 percent of which is high-quality, long-life light and medium crude oil;
- More than 260 net sections of land with Torquay potential, of which more than 200 net sections are exploratory land and 60 net sections are in the Company’s core Flat Lake area;
- More than 80 net internally identified Torquay drilling locations;
- Netback of approximately $64.00/boe based on US$100.00/bbl WTI, Cdn$4.65/mcf AECO and US$/CDN$0.90 exchange rate; and
- Tax pools estimated at approximately $600 million.
Independent engineers have assigned reserves utilizing NI 51-101 reserve definitions, effective April 30, 2014, as follows:
- Approximately 52.1 million boe of proved plus probable and 34.4 million boe of proved reserves; and
- Reserve life index of 14.3 years proved plus probable and 9.4 years proved.
Based on the above expectations for the CanEra Arrangement, the estimated acquisition metrics are as follows:
- 2014 Cash Flow Multiple:
- 4.8 times based on production of 10,000 boe/d
- $111,400 per producing boe based on 10,000 boe/d
- Netback of approximately $64.00/boe
- $21.38 per proved plus probable boe (recycle ratio of 3.0 times)
- $32.39 per proved boe (recycle ratio of 2.0 times)
The above metrics are based on a price forecast of US$100.00/bbl WTI, Cdn$4.65/mcf AECO and US$/CDN$0.90 exchange rate.
The CanEra Arrangement is expected to be accretive to Crescent Point’s per share reserves, production and cash flow on a debt adjusted basis.
BMO Capital Markets acted as financial advisor to Crescent Point with respect to the CanEra Arrangement.
TD Securities Inc. acted as financial advisor to CanEra with respect to the CanEra Arrangement.
BOARDS OF DIRECTORS APPROVALS AND RECOMMENDATIONS
The board of directors of Crescent Point has unanimously approved the CanEra Arrangement and the board of directors of CanEra has unanimously recommended approval of the CanEra Arrangement. The CanEra board of directors has determined that the consideration to be received by CanEra shareholders pursuant to the CanEra Arrangement is fair to CanEra shareholders. The officers, directors and largest shareholders of CanEra, holding approximately 99 percent of CanEra’s issued and outstanding shares, have executed support agreements and have agreed to vote their CanEra securities in favour of the CanEra Arrangement.
The CanEra Arrangement is subject to customary regulatory, court and other approvals and is expected to close on or about May 15, 2014.
UPWARDLY REVISED GUIDANCE FOR 2014
Crescent Point continues to execute its business plan of creating sustainable value-added growth in reserves, production and cash flow through management’s integrated strategy of acquiring, exploiting and developing high-quality, long-life light and medium oil and natural gas properties in United States and Canada.
As a result of the CanEra Arrangement, Crescent Point is upwardly revising its 2014 guidance for production and funds flow from operations. The Company’s 2014 exit production rate is expected to increase by seven percent to 145,000 and its average daily production in 2014 is expected to increase by five percent to 133,000 boe/d. Crescent Point expects to maintain CanEra’s current production levels and to add 10,000 boe/d to its exit 2014 production rate by increasing its capital expenditures budget by $25 million.
Crescent Point’s funds flow from operations for 2014 are expected to increase by six percent to $2.38 billion.
“The CanEra deal is accretive to us in terms of production, reserves and cash flow in 2014 and should drive a seven percent reduction in our all-in payout ratio next year,” said Saxberg. “We expect an even bigger positive impact over the long term as these assets contribute to lower declines and enhance the dual-track growth plan we’ve implemented over the past several years.”
Crescent Point’s balance sheet remains strong, with projected average net debt to 12-month cash flow of approximately 1.1 times. The Company continues to execute its aggressive hedging program, using both WTI and WTI-differential oil hedges to provide a steady cash flow and reduce volatile North American oil price differentials. The Company’s hedging program has provided financial strength and stability since Crescent Point’s inception in 2001.
As at April 17, 2014, the Company had hedged 66 percent of its oil production, net of royalty interest, for the remainder of 2014. The Company had also hedged 34 percent, 19 percent and 4 percent of its expected oil production, net of royalty interest, for 2015, 2016 and the first half of 2017, respectively. Average quarterly hedge prices range from Cdn$90 per bbl to Cdn$94 per bbl. The Company also has an average of approximately 13,500 bbl/d of WTI oil differentials locked in for 2014. Crescent Point’s hedges provide upside participation when oil prices increase while also providing a steady cash flow.
Crescent Point believes it is well-positioned to continue generating strong operating and financial results through 2014 and beyond.
The Company’s upwardly revised guidance for 2014 is as follows:
|Oil and NGL (bbls/d)||115,000||121,300|
|Natural gas (mcf/d)||69,000||70,200|
|Annualized fourth quarter funds flow from operations ($000) (1)||2,460,000||2,680,000|
|Funds flow from operations ($000)||2,250,000||2,380,000|
|Funds flow per share – diluted ($)||5.59||5.79|
|Cash dividends per share ($)||2.76||2.76|
|Capital expenditures (2)|
|Drilling and completions ($000)||1,420,000||1,445,000|
|Facilities, land and seismic ($000)||330,000||330,000|
|Crude oil – WTI (US$/bbl)||100.00||100.00|
|Crude oil – WTI (Cdn$/bbl)||111.11||111.11|
|Corporate oil differential (%)||13||13|
|Natural gas – AECO (Cdn$/mcf)||4.65||4.65|
|Exchange rate (US$/Cdn$)||0.90||0.90|
|(1)||Annualized fourth quarter funds flow from operations is fourth quarter funds flow from operations multiplied by four.|
|(2)||The projection of capital expenditures excludes acquisitions, which are separately considered and evaluated.|
There are numerous uncertainties inherent in estimating quantities of crude oil, natural gas and NGL reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth above are estimates only. In general, estimates of economically recoverable crude oil, natural gas and NGL reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially. For these reasons, estimates of the economically recoverable crude oil, NGL and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary. Crescent Point’s and CanEra’s actual production, revenues, taxes and development and operating expenditures with respect to its reserves will vary from estimates thereof and such variations could be material.
Certain statements contained in this press release constitute “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. The Company has tried to identify such forward-looking statements by use of such words as “could”, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may”, “intend”, “projected”, “sustain”, “continues”, “strategy”, “potential”, “projects”, “grow”, “take advantage”, “estimate”, “well-positioned” and other similar expressions, but these words are not the exclusive means of identifying such statements.
In particular, this press release contains forward-looking statements pertaining to the following: the performance characteristics of Crescent Point’s and CanEra’s oil and natural gas properties; oil and natural gas production levels; capital expenditure programs; drilling programs; the quantity of Crescent Point’s and CanEra’s oil and natural gas reserves and anticipated future cash flows from such reserves; the quantity of drilling locations in inventory; projections of commodity prices and costs; anticipated benefits of the CanEra Arrangement; supply and demand for oil and natural gas; expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; expected debt levels and credit facilities; and treatment under governmental regulatory regimes.
There are risks also inherent in the nature of the proposed CanEra Arrangement, including failure to realize anticipated synergies or cost savings; risks regarding the integration of the two entities; incorrect assessment of the value of CanEra; and failure to obtain the required shareholder, court, regulatory and other third party approvals.
This press release also contains forward-looking statements and information concerning the anticipated completion of the proposed CanEra Arrangement and the anticipated timing for completion thereof. Crescent Point has provided these anticipated times in reliance on certain assumptions that Crescent Point believes are reasonable at this time, including assumptions as to the timing of receipt of the necessary regulatory and court approvals and the time necessary to satisfy the conditions to the closing of the CanEra Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary regulatory or court approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the CanEra Arrangement. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release concerning these times. Readers are cautioned that the foregoing list of factors is not exhaustive.
All forward-looking statements are based on Crescent Point’s beliefs and assumptions based on information available at the time the assumption was made. Crescent Point believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this report should not be unduly relied upon. By their nature, such forward-looking statements are subject to a number of risks, uncertainties and assumptions, which could cause actual results or other expectations to differ materially from those anticipated, expressed or implied by such statements, including those material risks discussed in our annual information form under “Risk Factors” and our Management’s Discussion and Analysis for the year ended December 31, 2013, under the headings “Risk Factors” and “Forward-Looking Information.” The material assumptions are disclosed in the Management’s Discussion and Analysis for the year ended December 31, 2013, under the headings “Dividends”, “Capital Expenditures”, “Decommissioning Liability”, “Liquidity and Capital Resources”, “Critical Accounting Estimates”, “Future Changes in Accounting Policies” and “Outlook” and include, but are not limited to: financial risk of marketing reserves at an acceptable price given market conditions; volatility in market prices for oil and natural gas; delays in business operations, pipeline restrictions, blowouts; the risk of carrying out operations with minimal environmental impact; industry conditions including changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; uncertainties associated with estimating oil and natural gas reserves; economic risk of finding and producing reserves at a reasonable cost; uncertainties associated with partner plans and approvals; operational matters related to non-operated properties; increased competition for, among other things, capital, acquisitions of reserves and undeveloped lands; competition for and availability of qualified personnel or management; incorrect assessments of the value of acquisitions and exploration and development programs; unexpected geological, technical, drilling, construction and processing problems; availability of insurance; fluctuations in foreign exchange and interest rates; stock market volatility; failure to realize the anticipated benefits of acquisitions; general economic, market and business conditions; uncertainties associated with regulatory approvals; uncertainty of government policy changes; uncertainties associated with credit facilities and counterparty credit risk; and changes in income tax laws, tax laws, crown royalty rates and incentive programs relating to the oil and gas industry. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Crescent Point’s future course of action depends on management’s assessment of all information available at the relevant time.
Barrels of oil equivalent (“boes”) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Additional information on these and other factors that could affect Crescent Point’s operations or financial results are included in Crescent Point’s reports on file with Canadian and U.S. securities regulatory authorities. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed herein or otherwise and Crescent Point undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required to do so pursuant to applicable law. All subsequent forward-looking statements, whether written or oral, attributable to Crescent Point or persons acting on the Company’s behalf are expressly qualified in their entirety by these cautionary statements.
Crescent Point is one of Canada’s largest light and medium oil producers, with a market capitalization of approximately $16 billion and an annual dividend of CDN$2.76 per share.
CRESCENT POINT ENERGY CORP.
Scott Saxberg, President and Chief Executive Officer
Crescent Point shares are traded on the Toronto Stock Exchange and the NYSE, both under the symbol CPG.
Contact: Crescent Point Energy Corp. Greg Tisdale Chief Financial Officer (403) 693-0070 (403) 693-0020 or Toll-free (U.S. & Canada): 888-693-0020
Crescent Point Energy Corp. Trent Stangl Vice President Marketing and Investor Relations (403) 693-0070 (403) 693-0020 or Toll-free (U.S. & Canada): 888-693-0020 http://www.crescentpointenergy.com
The Bre-X case finally closes
JEFF GRAY – LAW REPORTER
The Globe and Mail
Published Wednesday, Apr. 23 2014, 12:48 PM EDT
Last updated Wednesday, Apr. 23 2014, 1:48 PM EDT
The last of the litigation against Bre-X Minerals Ltd., launched by investors who lost millions in the 1990s when the company’s claims about Indonesian gold turned out to be fake, has been dismissed by an Ontario Superior Court judge.
In a ruling issued Wednesday, Justice Paul Perrell agreed with motions from the plaintiffs’ lawyers to discontinue two 17-year-old lawsuits that alleged Calgary-based Bre-X and some of its officers and directors had engaged in a “stock fraud” that cost investors at least a $1-billion, after the company’s fake drilling results were revealed and its shares plummeted.
The lawsuits named several of the key players in the drama that captivated the country in the late 1990s, including the now-bankrupt estate of the late David Walsh, the company’s former president who died in the Bahamas in 1998, and former Bre-X geologist John Felderhof and his ex-wife Ingrid. All denied any wrongdoing.
Earlier this year, lawyers for the investors declared that their case was hopeless, since freeze orders secured by Bre-X’s trustee, Deloitte & Touche Inc., on Cayman Islands assets held by the defendants had expired and the trustee had run out of money to continue its legal fight.
This despite allegations in court documents that the Felderhofs had made $75-million selling Bre-X shares between 1994 and 1996. But court filings last year said Mr. Felderhof, who now lives in the Philippines, has just $250,000 to his name.
The class-action legal team, led by Paul Pape and Harvey Strosberg, said any remaining money for the plaintiffs to pursue had since been spent on legal fees and living expenses. They argued that even if the case was successful, there is no reasonable expectation investors could ever be repaid. But they needed Justice Perell to release them from an earlier commitment they made to the court to continue the case.
Also at issue was the question of what to do with money held in trust and left over from a settlement with a company related to Bre-X.
Justice Perell granted Mr. Pape’s request that the two law firms, Pape Barristers and Sutts Strosberg LLP, receive $431,493, less 13 per cent HST, for their outstanding fees. That means the lawyers have taken in a total of about $850,000 in fees dating back to the litigation’s start. At their normal rates, they would be owed $2.6-million, the judge said.
Justice Perell also ruled that it would impractical to distribute the remaining $3.5-million in funds to investors in Bre-X, most of whom would recover just a fraction of a penny on the dollar. So he agreed that the leftover money should instead be distributed to charity, ordering that 80 per cent be given to the Law Foundation of Ontario’s access to justice fund, and that 20 per cent be given to the Telfer School of Business at the University of Ottawa.
The civil lawsuits, filed in 1997, were put on hold during Mr. Felderhof’s lengthy trial on quasi-criminal charges of insider trading and spreading false information, which began in 2000 and only ended in 2007, when he was acquitted of all charges.
Other cases related to Bre-X were discontinued last year, and similar lawsuits in the U.S. have also died out.
Wednesday’s ruling marks an anti-climactic finale to the Bre-X story, nearly two decades after the scandal emerged. Despite investigations by the RCMP, U.S. Federal Bureau of Investigation, the U.S. Securities and Exchange Commission and the Ontario Securities Commission, no one was ever brought to justice, and it was never determined who faked the gold-drilling results that fooled investors.
From Northern Gateway to Keystone, the undefinable ‘social licence’ movement is in control of jobs and growth
From Northern Gateway to Keystone, the undefinable ‘social licence’ movement is in control of jobs and growth
April 22, 2014
Last Updated: Apr 22 8:29 AM ET
As Milton Friedman predicted, corporate social responsibility has failed and left business more vulnerable
The Northern Gateway and Keystone pipelines keep getting hammered, the result of what seems like universal adoption of a new free-market killing concept known as a “social licence to operate.” The idea is an outgrowth of the anti-corporate governance crusades and NGO activism of the last few decades. First came stakeholderism, then corporate social responsibility(CSR). At least with CSR corporations were seen to be in charge of their own affairs, taking it upon themselves to curb their carbon emissions and diversify their workforces, or whatever, as they saw fit. Under social licence mandates, corporations must now negotiate directly with the people, in line with the old Communist maxim: “Everything belongs to the people.” The corporate sector fell for the idea, and now it is lost under what has become something of social licence to kill growth and jobs.
In a non-binding plebesite earlier this month, residents of Kitimat, B.C., appeared to reject Enbridge’s Northern Gateway gas pipeline and tanker port project. The 60-40 verdict was taken as a defeat for Enbridge, a sign that -–as the Vancouver Sun editorialized—the company “simply does not have the social licence necessary to proceed.” A few days later, U.S. President Barack Obama again postponed a decision on the Keystone XL pipeline, a blow to TransCanada and evidence that the company had failed to secure a “social licence” for the project that would give Washington the social authority to approve the project.
It’s not new, but over the last couple of years the idea that corporations need to obtain a “social licence to operate” has rocketed to the top of ideological hit parade. Some see it as a part of a major reform of capitalism, taking economic decision-making away from corporations and private initiative and imposing greater social control. Harvard’s Michael Porter, consultant to the corporate elites, sees an opportunity to “reinvent capitalism” by bringing “business and society back together.”
Apparently it’s not enough that business operates in a free-market economy governed by property rights, regulation, the rule of law and the market. Now business needs something more, some kind of project-by-project public consent to build plants, open mines, ship oil, or operate drive-through do-nut shops. More broadly, corporations need to secure social licences for their brands, from Coke to Exxon, or face constant war with NGOs and an endless parade of people with social, political and ideological grievances.
Exactly what these social licences entail remains mostly a mystery. Even its proponents refuse to, or simply cannot, define the concept. One of the chief proponents of the social licence movement, industry consultant Ian Thomson, waffled endlessly last week when he was asked repeatedly on CBC Radio’s The 180 with Jim Brown to explain what a social licence meant. “It is defined by the people, and we talk about community but a community is not necessarily a homogenous being. We look for a consensus position and what is driving that…So a social licence is based on people’s perceptions, it’s impermanent, it’s unwritten, it’s subject to change.”
All of which leaves any corporation looking for social licence approval at the perpetual mercy of the rising and falling tides of public opinion as fanned by activists, NGOs, the media and whatever the corporate communications consultants can come up with in response. When TransCanada faces mass demonstrations over Keystone, or a klatch of locals hit the barricades against Enbridge’s Northern Gateway, the social licence for the projects may be in doubt and therefore they should not proceed, no matter what the law or regulators or the market or politicians say.
That certainly appears to be the plan. “The reality today is that industry faces a triple licencing hurdle: a commercial licence, a policy/regulatory licence and a social licence,” says David Eisler, a senior fellow at the Johnson-Shoyama Graduate School of Public Policy at the University of Saskatchewan. Writing in Policy Options magazine last January, Mr. Eisler says the three licencing hurdles require “arriving at some form of public-private consensus as to what is concisidered a social licence, then agreeing on how to achieve and maintain it. And to get there, government must adapt its ways to play the necessary role and facilitate that pro cess.”
In short, the new capitalism overthrows the market and property rights appoints the government and politicians as overseers of endless direct public negotiations between corporations and the people.
How modern capitalism came to this sorry place is a story that goes back a couple of decades. Sir Wilfred Laurier Professor Jason Prno, in a paper last year in the journal Resources Policy, says the phrase “social licence” were coined by mining consultant Jim Cooney in 1997. Mr. Cooney is now with Canadian Business fo0r Social Responsibility, an outfit whose mission is to “accelerate and scale corporate social and environmental sustainability in Canada and challenge the ‘business as usual’ model.”
Today, the mining industry and most of the corporate world, under the influence of the corporate social responsibility mantra, also in some way acknowledges the “social licence to operate” mandate. Most corporate executives, however, are likely unaware that they are taking their businesses and the entire economy deeper in the anti-capitalist forest, where they are walking into a trap.
It’s a trap forewarned by Milton Friedman. The late free-market champion of capitalism is often damned for having said that the primary social responsibility of business is to maximize profits. Most recently, Michael Porter—laying the ground for his plan to “reinvent” capitalism—dismissed Mr. Friedman’s defense of profits as the main objective of corporate activity.
But Mr. Friedman had more to say on the subject, warning in 1970 that the idea of corporate social responsibility was a “subversive” doctrine that threatened markets and corporations, forcing business to do things it cannot do. Social responsibility “helps to strengthen the already too prevalent view that the pursuit of profits is wicked and immoral and must be curbed and controlled by external forces. Once this view is adopted, the external forces that curb the market will not be the social consciences, however highly developed, of the pontificating executives; it will be the iron fist of Government bureaucrats.”
Now here’s the terrible and ugly irony. Mr. Porter cites only Mr. Friedman’s famous comment on profits being the prime objective of business and ignores the Friedman warning about the negative consequences of business adopting corporate social responsibilities.
But then Mr. Porter, as part of his capitalism reinvention plan, says corporate social responsibility has been a disaster. “The more business has begun to embrace corporate responsibility, the more it has been blamed for society’s failures,” wrote Mr. Porter in Creating Shared Value, his 2011 Harvard Business Review reinvention manifesto. “The legitimacy of business has fallen to levels not seen in recent history”–as predicted by Milton Friedman!
And so now, with the CSR movement declared a failure, the CSR consultants and managers are moving onto the next phase, social licence programs. Under CSR, corporate executives retained control over their social responsibilities, adopting reforms, programs and policies as they saw fit They more they did, however, the more they highlighted their failures according to social criteria developed by consultants, activists and NGOs. With the growth in the social licence movement, corporate executives loose even more control and must now, apparently, answer directly to the people. Maybe it was part of the original CSR plan.
April 23, 2014
PREMIER WELCOMES POTASH SALE AND AGREEMENT WITH BANGLADESH
The premier was in Saskatoon to witness the signing of a potash supply contract between the Canadian Commercial Corporation and the Bangladesh Agricultural Development Corporation.
The contract is worth US$40 million, with a US$20 million option, and will see Canpotex Ltd. supply potash to Bangladesh through this first government-to-government sale arrangement between the two countries and corporations.
“This is an important deal for our potash industry and is significant on a number of levels,” Wall said. “It provides Canpotex with new opportunities and access to a country that really needs our potash to boost its agricultural production and achieve its food security goals.
“For our province, the deal means potash becomes a major new part of our export mix to Bangladesh, a very important export market for Saskatchewan, a market where Saskatchewan is Canada’s leader.”
Saskatchewan exported more than $326 million in goods to Bangladesh last year, accounting for about half of Canadian exports to that country. Provincial trade to Bangladesh was primarily in agricultural products, including pulses, wheat and canola seeds, and was up 17 per cent in 2013 over the year before.
Wall became the first Saskatchewan Premier to visit Bangladesh when he travelled to the country in March 2011 on a trade mission to develop agricultural and fertilizer opportunities. While there, the premier met with Bangladesh’s Prime Minister, Her Excellency Sheikh Hasina.
The premier also acknowledged the key role of senior trade policy officials in the Saskatchewan government in helping facilitate the potash agreement with Bangladesh.
Today’s signing ceremony between Canada and Bangladesh was also attended by federal International Trade Minister Ed Fast and federal Minister of State (Foreign Affairs and Consular) Lynne Yelich.
For more information, contact:
Op-ed: Foreign-trained workers support Saskatchewan manufacturing growth, job creation
By Derek Lothian, Executive Director, Saskatchewan Manufacturing Council, Canadian Manufacturers & Exporters
REGINA (April 23, 2014) — Saskatchewan manufacturers prefer to hire Saskatchewanians first. Not only is it a shared social obligation, it simply makes good business sense — with reduced training times, mitigated financial risk, and more predictable long-term employment outcomes.
Where that fails, Saskatchewan manufacturers prefer to hire staff from other regions of Canada.
The reality, however, is that internationally-trained workers — sourced from both the Saskatchewan Immigrant Nominee Program and the federal Temporary Foreign Worker program — remain an essential element of the province’s workforce strategy.
In 2013 alone, Saskatchewan manufacturers lost an estimated $1 billion in sales due directly to skills and labour shortfalls, equivalent to roughly 6.6 per cent of total production output. That’s a $3.15 billion hit to the provincial economy, because employers couldn’t find the right people to meet the demand for their products (despite manufacturers paying wages more than 11 per cent higher than the average for all industries).
There are several reasons why these pressures are felt so acutely in Saskatchewan’s manufacturing sector.
Take, for example, location. Industry does not stop at the city limits of Regina or Saskatoon. In fact, manufacturing powers small, rural communities right across this province — in some cases, comprising half of a given town’s total population. But these businesses are often far off the beaten path (several hours from the nearest major centre), and attracting skilled workers accustomed to more urban lifestyles can prove to be a daunting task at best.
And then there’s the pull from Saskatchewan’s thriving resource sector to contend with. Despite what may be picked up most frequently by the news cycle, jobs filled by foreign-trained workers are typically high-paying, high-skilled and amongst the most in-demand across a broad spectrum of industries. Sometimes, the only way to fill these positions is by looking abroad.
Very few will argue that Saskatchewan must do a better job developing its workforce from within. It’s a necessity. Yet, even fewer will argue that’s an easy task. The challenges are complex and wide-ranging. There is no silver bullet or overnight solution.
That’s why we must put aside politics and ideology, and focus instead on policies that improve, not punish, employers’ use of foreign-trained workers.
Make no mistake: These systems should and must be refined, to instill both a greater level of accountability and a greater level of consistency. Permanent immigration must also become much more responsive to markets like Saskatchewan with the most prevalent economic need.
But, as the old saying goes, let’s not throw the baby out with the bath water.
The overwhelming majority of manufacturers leverage these critical programs responsibly and respectfully to the communities in which they operate. It is this common sense approach that allows them to make investments, drive our economy, and create well paying jobs for all Saskatchewan residents.
Established in January 2013, the Saskatchewan Manufacturing Council is a CME-led initiative comprised of more than 40 leading industry executives, who have come together to speak with one voice on priority issues impacting the province’s manufacturing and exporting sectors.
- 30 -
For more information, contact:
Executive Director, Saskatchewan Manufacturing Council
Canadian Manufacturers & Exporters
23 Apr 2014
WALL STILL TOPS IN SASK.
Poll shows support for Sask. Party remains undiminished
REGINA — Support for the Sask. Party is still as strong as it was at the time of the 2011 election and shows no signs of waning, a new online poll finds.
“It’s hard to say where it’s going to go in the future, but it’s been pretty much a straight line for a long while now, so if things don’t really change out there in the arena, then it could continue the same way,” said Lang McGilp of Insightrix Research, which conducted the poll.
Electorate intentions have been “strikingly consistent” since the 2011 election, the poll found, with about 63 per cent of decided voters indicating support for the Sask. Party, compared to 27 per cent for the NDP. Although issues have been raised around areas such as “lean” efficiency management and ministerial travel spending, support for the Sask. Party hasn’t seemed to have taken a hit, McGilp said.
“Whatever kind of issues or things come up, it doesn’t necessarily seem to be sticking to them,” he said, noting that could change in the two years before the next election, which is expected in April 2016.
The poll also looked at leadership approval ratings. Approval of Premier Brad Wall remains strong, with 66 per cent support overall and 36 per cent who say they “strongly approve,” up from 28 per cent last year.
Approval of Wall’s performance tends to rise with age (77 per cent among those 55 years or more, versus 52 per cent among those aged 18 to 34) and is higher among men (73 per cent) than women (60 per cent).
The poll results also contain some good news for Opposition NDP Leader Cam Broten, whose personal approval ratings have risen from 32 per cent last year to 38 per cent in the latest poll. His approval rating is higher than Dwain Lingenfelter’s was at the time of the 2011 election, although support of decided voters for the NDP is actually down somewhat from that time.
McGilp said Broten is starting to pick up momentum and get his name out there, but that isn’t translating into people wanting to vote for the NDP.
“There’s definitely still a significant deficit that the NDP are facing and they really haven’t changed since the election,” he said.
NDP deputy leader Trent Wotherspoon noted that the poll highlights decided voters. He said he thinks there are voters out there who haven’t made up their minds. People like Broten once they get to know him, he added.
“We’re aware we have a lot of work ahead of us. We’re excited by that work. We have a next-generation team and a next-generation leader and we’re going to be working tirelessly to connect across Saskatchewan, to represent what matters and to earn the trust of Saskatchewan people,” Wotherspoon said.
Sask. Party cabinet minister Nancy Heppner said Broten doesn’t have much time before the next election to establish himself and his policies, calling the poll “a pretty horrible result” for the NDP. The Sask. Party is happy with its numbers, she said.
“We’re pretty pleased. I believe that we’ve worked hard to gain and retain the trust of the people of this province,” Heppner said. “We don’t take any of this for granted.”
A total of 807 randomly selected Insightrix saskwatch Research online market research panel members participated in the study from April 9 to April 13. Quotas were set to match the population of the province.
Since the research is conducted online, it is considered to be a non-probability proportion sample and margins of error are not applicable, according to Insightrix.
The company doesn’t do political polling for any party, but releases the results of regular polling to the public. McGilp said the Sask. Party got a “quick peek” at the numbers before their official release after an inquiry about recent data.
23 Apr 2014
National Post – (Latest Edition)
By Scot t Deveau
Railways find profit despite new rules
Congestion in Chicago hampers operations
The country’s largest railways managed to battle through one of the toughest winters on record to deliver betterthan- expected earnings Tuesday.
But the concerns for Canadian National Railway Co. and Canadian Pacific Railway Ltd. have shifted toward a potentially more lasting chill from regulators on both sides of the border as shipments backed up during the winter.
“I’m glad it’s over,” said Hunter Harrison, CP chief executive, who has been in the railroad business for 50 years.
“This is probably the worst operating conditions I have ever seen,” he said on a conference call.
The cold weather forced both CP and its larger rival, CN, to shorten the length of trains and slow shipments.
It also contributed to a record backlog of grain in Canada after a bumper crop last year, and added to the congestion in rail yards in Chicago, both of which caught the attention of regulators on either side of the border.
In Canada, the federal government has implemented several emergency measures to increase the flow of grain and tackle the backlog, including mandating that CP and CN each move 500,000 metric tons of grain a week.
Ottawa also proposed several other, more lasting measures, including increasing the distance at which railroads must transfer shipments at a regulated rate in the Prairies, known as interswitching, which the Canadian railroads argue will open their shipments up for poaching by U.S. railways.
Claude Mongeau, CN chief executive, said he was “disappointed” by the new rules and that he hoped cooler heads would prevail because there are more stakeholders than just the railways contributing to the backlog, including the grain elevators.
“I think it was taken in the heat of the moment for the wrong reason,” he said.
Handout Harsh winter weather caused delays throughout North America, leading to new rules and quotas being introduced in Canada.
Mr. Harrison echoed his rival’s concerns, saying new rules were a “knee-jerk reaction.”
“Will it be less efficient? Yes. Do the regulators understand that? No,” he said.
The weather further congested the Chicago rail yards with the city seeing roughly 79 inches of snowfall. The weather and backlog brought the yards to a virtual standstill and raised the ire of shippers, in particular fertilizer customers ahead of the planting season.
The U.S. Surface Transportation Board held hearings into the rail service deficiencies resulting in congestion in Chicago. The city is the largest rail hub in North America, seeing roughly 25% of all U.S. rail shipments pass through.
Mr. Harrison is well versed in the troubles there, and said Tuesday much of the problems arise from the fact that a lot of the traffic going into city doesn’t need to.
When he was running CN prior to his retirement in 2009, Mr. Harrison said he tried to mitigate the issues the railway faced in Chicago by trying to buy the Belt Railway Co. of Chicago and the Indiana Belt Railroad. But neither would sell, he said.
CN eventually settled on buying the Elgin, Joliet and Eastern Railway, which allowed CN shipments to bypass Chicago if they didn’t need to go there, he said.
Mr. Mongeau said the EJ&E has been “huge” in avoiding the issues in Chicago.
But for Mr. Harrison, who is back in the business and leading CP’s turnaround, those issues have resurfaced.
He said he thinks the troubles in Chicago make it more likely there will be further consolidation in the rail industry to alleviate pressure on the Chicago yards.
He noted that prior to previous mergers, Chicago was not a big interchange site compared to St. Louis, Kansas City, and ports on the Mississippi.
Mr. Harrison said through further consolidation, you could maintain competition, and have a much better flow of traffic, and re-route trains outside of Chicago.
While he didn’t mention it specifically, several analysts have questioned over the years why CP has not pushed for an acquisition of Kansas City Southern to further expand the Kansas City corridor where their networks meet.
“As you get further growth in Chicago, as the economy picks up, Chicago does not have the infrastructure going forward,” Mr. Harrison said. “There has got to be a better place along the Mississippi to interchange traffic East-West.”
“It’s just a matter of time. For some reason, we gotta get battered and bruised in this industry before we wake up,” he added.
Despite the tough winter, both CN and CP delivered first quarter results Tuesday ahead of expectations.
CN reported net income of $623-million, or 66¢ an adjusted diluted share, compared to $555-million, or 61¢ a share, for the same period last year and ahead of the 62¢ expected by analysts.
CP reported net income of $254-million, or $1.44 a share, compared to $217-million, or $1.24 a share, for the same period last year and the $1.41 a share expected by analysts.
Both railways held their guidance for the year despite the slow start to the year.
Claude Announces Q1 Production Results
SASKATOON , April 23, 2014 /CNW/ – Claude Resources Inc. (“Claude” and or the “Company”) today announced first quarter production results of 11,344 ounces, representing a 40% increase from the 8,082 ounces produced in the first quarter in 2013. The grade in the first quarter also increased significantly by 34% to 5.76 grams per tonne from the first quarter in 2013.
Table 1: Seabee Gold Operation Production
March 31 March 31
Tonnes Milled 64,370 61,877
Head Grade (grams per tonne) 5.76 4.31
Recovery (%) 95.1 94.3
Gold Produced (ounces) 11,344 8,082
Mike Sylvestre , Interim President and CEO stated, “Historically, our first quarter has always been a challenge and 2014 was no different. While we faced severe and abnormal winter conditions, we were able to complete the winter re-supply program and have our best first quarter production results in the last ten years. We have focused on improving our grades and that initiative is starting to pay off. We expect this trend to continue and we are confident that the mine grades will reconcile more closely to our reserve grade for the remainder of the year.”
The Company remains confident in meeting its 2014 production guidance of 47,000 to 51,000 ounces of gold. In addition, the Company continues to make progress in advancing the Santoy Gap towards production by the fourth quarter of 2014 by completing the fresh-air vent raise in the second quarter and continued mine development. The Santoy Gap currently hosts 266,100 ounces of gold in Mineral Reserves at 5.68 grams per tonne and is expected to increase production and margins by the beginning of 2015.
Claude Resources Inc. is a publicly traded gold exploration and mining company based in Saskatoon, Saskatchewan , whose shares trade on the Toronto Stock Exchange (CRJ.TO) and the OTCQB (CLGRF). Its asset base is located entirely in Canada and since 1991, Claude has produced over 1,000,000 ounces of gold from its Seabee Gold Operation in northeastern Saskatchewan . The Company also owns 100 percent of the Amisk Gold Project in northeastern Saskatchewan .
CAUTION REGARDING FORWARD-LOOKING INFORMATION
All statements, other than statements of historical fact, contained or incorporated by reference in this news release and constitute “forward-looking information” within the meaning of applicable Canadian securities laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (referred to herein as “forward-looking statements”). Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency exchange rate fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate” or “believes”, or the negative connotation thereof or variations of such words and phrases or state that certain actions, events or results, “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved” or the negative connotation thereof.
All forward-looking statements are based on various assumptions, including, without limitation, the expectations and beliefs of management, the assumed long-term price of gold, that the Company will receive required permits and access to surface rights, that the Company can access financing, appropriate equipment and sufficient labour, and that the political environment within Canada will continue to support the development of mining projects in Canada .
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Claude to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: actual results of current exploration activities; environmental risks; future prices of gold; possible variations in ore reserves, grade or recovery rates; mine development and operating risks; accidents, labour issues and other risks of the mining industry; delays in obtaining government approvals or financing or in the completion of development or construction activities; and other risks and uncertainties, including but not limited to those discussed in the section entitled “Business Risk” in the Company’s Annual Information Form. These risks and uncertainties are not, and should not be construed as being, exhaustive.
Although Claude has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Forward-looking statements in this news release are made as of the date of this news release and accordingly, are subject to change after such date. Except as otherwise indicated by Claude, these statements do not reflect the potential impact of any non-recurring or other special items that may occur after the date hereof. Forward-looking statements are provided for the purpose of providing information about management’s current expectations and plans and allowing investors and others to get a better understanding of our operating environment.
Claude does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.
SOURCE Claude Resources Inc.
Stocks & Offerings
Mike Sylvestre, Interim President & CEO
Phone: (306) 668-7505
Marc Lepage, Manager, Investor Relations
Phone: (306) 668-7501
Keystone dithering may be costing economy dearly
NEW YORK — Reuters Breakingviews
Published Tuesday, Apr. 22 2014, 7:52 PM EDT
Last updated Tuesday, Apr. 22 2014, 7:52 PM EDT
Regulatory dithering can cost the economy dearly. The U.S. government’s continued deferral of a decision on the Keystone pipeline is a case in point. One year’s economic benefit from the project may be worth as much as $1.8-billion (U.S.) in output. Yet if the answer is no, the energy system can be optimized in other ways. Win or lose, regulators need to make up their minds.
Keystone XL is an extension of an already constructed system that will carry crude oil from Alberta’s oil sands and North Dakota’s Bakken oil shale to refiners and the export terminal in Oklahoma and Texas. Because the main 854-kilometre segment crossed the U.S.-Canada border, it needed U.S. State Department permission to proceed. Environmental opposition to it has centred on its transit across the ecologically sensitive Ogallala Aquifer in Nebraska.
The economic benefit of the project can roughly be calculated as the crude price differential between Western Canadian Select (WCS) and West Texas intermediate (WTI) for the net additional Canadian crude that would be shipped through the extension. Based on an initial capacity of 700,000 barrels per day, three-quarters of which would be Canadian (the remainder would come from the Bakken), and subtracting the Canadian oil shipped through the existing Keystone pipeline, the net additional shipment would appear to be 370,000 daily barrels.
At today’s Canadian to Texas price differential of $18.30 a barrel, those shipments would roughly provide an additional economic benefit of some $2.5-billion. Subtracting a generously estimated capital charge of 10 per cent on the pipeline’s $7-billion cost estimate gives a net cost of a one-year delay, rather than outright rejection, to the project of about $1.8-billion.
However, if the State Department’s answer is “no,” oil companies can work with the changed energy environment in other ways that also create economic output. Maybe another pipeline proposal becomes more attractive, maybe rail shipments are increased, maybe other oil fields or non-oil energy sources such as gas, coal or solar power become relatively more competitive.
The point is, once the decision is made the market can adapt to it. Kicking the can down the road on Keystone even though the facts have been gathered and analysis done, simply puts all possibilities on ice and increases their eventual cost.