Alberta oilsands companies: Suncor buys Petro Canada

Why has Suncor bought Petro Canada?

Suncor has proposed to buy rival Petro Canada to form Alberta Oilsands largest oil company. The $15 billion US ($18 billion Canadian) stock purchase by Suncor of Petro Canada would be the second biggest purchase of an Alberta oilsands in the history of oilsands mergers and acquisitions in Alberta Canada. The purchase is said to help Suncor energy slash costs by reducing redundancy and become a more focused Alberta oilsands company. This is crucial in a period where we see oil prices at lows of $30 to $40 US per barrel and without any idea of how long US oil prices will remain at this level. Survival in the long term is what Suncor has been really good at and that is why they are Canada’s largest integrated Alberta oilsands company. This is an all-share deal and rates as the biggest Alberta oilsands takeover in history. The deal will help Suncor save over 1 billion in annual savings, a significant amount considering the limited access to financial resources in the current economic environment.

Is the Alberta Oil sands cheap?

The purchase of Petro Canada by Suncor begs the question of whether it is a good time to buy other Alberta oil sands companies. Are the Alberta oil sands cheap at this moment in time. Like Alberta real estate in Edmonton and Calgary which has seen a fall of over 30 percent in the last year, oil sands companies have likewise seen significant declines. The stock market, Toronto Stock exchange, Dow Jones, and S&P 500 are all significantly down over the last year and every stock that trades on the exchange has been brought down. It is more a lack of confidence in the financial markets as a result of the global financial crisis that is creating this current buying opportunity. But if Alberta oil sands is cheap right now, who can financially afford to buy it right now. There are very few big players in the Alberta oil sands industry who have also not been significantly hurt by the global financial crisis. Surviving the short term is a key priority for all Alberta oil sands companies despite any cheap buys. We may see other global companies from the Middle East or Asia (China in particular) make a serious offer for cheap Alberta oil sands companies. The Suncor offer for Petro Canada does seem to indicate that it is indeed a time for cheap Alberta oil sands purchases. Suncor, however, will also see significant savings in the purchase due to cost reductions which is an additional incentive for the current purchase.

Are there other Alberta oilsands companies going to be purchased soon?

What other Alberta oilsands companies are going to be snapped up in the next 12 months. It is only a matter of time before the buying spree continues. With the firming of US oil prices at $50 US per barrel, there seems to be more confidence in the medium term for Alberta oilsands companies. The stock market has recovered significantly in the beginning of April 2009 and this points to a growing consumer confidence. Alberta oilsands companies that may be bought first will be the bargain shoppers who are looking for companies with great pieces of land in the Athabasca region but short on financial capital. Companies such as BA Energy will be one of the targets of these Alberta oilsands investors who are eyeing the potential of owning prime Alberta oilsands real estate. The long term trends of the oil industry are still rosy as the demand for oil will continue to be much higher than the annual supply. This and the inability to find alternative cheap sources of energy is the reason that conventional oil will continue to rule the world.

Alberta Oil is cheap supply for US Obama

Ed Stelmach says US will need Alberta Oil

Alberta oilsands produces a reliable and secure oil source for the US. Ed Stelmach sent a clear message to the Obama administration when he said US will need Alberta oil in the future. It is important for the US to recognize that Canada’s Alberta rich oil sands is a secure and cheap source of oil for the growing US Demand. Fossil fuels including the oilsands will provide more than 80% of the supply needed to satisfy world demand for oil. It is in the best interest for the US to work closely with Canada in implementing a viable solution to develop the oilsands responsibly. Expel the myths and produce the facts of Alberta oil and let the world know what the Alberta oilsands companies can do to protect the environment. In 2008, the Alberta Government created a $2 billion dollar fund to promote solutions to solving the dirty oil problem. This and other solutions from the oilsands’ companies themselves will serve to promote this abundant resource for the growing demand for oil consumption.

Obama concerned about Alberta Dirty Oil

Obama has an aggressive plan to combat climate change. He says that we can not punish the future by exploiting the present and we will not tolerate the increase in green house gas emissions while he is President. This is a direct blow to Alberta oilsands companies and the growing environmental concern about ‘dirty oil’. Alberta’s dirty oil image is a picture of an environmental disaster waiting to happen. We are shown images of Northern Alberta’s oilsands production in Fort McMurray, the Athabasca region, and how the destruction and carnage of the environment is occurring without concern. Environmentalist are adamant that dirty oil in Alberta cannot continue and they will work harder in showing the world the truth that is happening to this ecosystem. Obama further stated that his presidency will reduce the US’s dependence on ‘dirty oil’ for good. Ed Stelmach of the Alberta government on the other hand has been working vigorously in fighting the environmentalist by dispelling the myths behind their stories.

Dirty Alberta Oil: Myths and Facts

Myths about Alberta oilsands are abundant. But what are the true facts of what the Alberta oilsands is doing to the environment. With a $2 billion dollar investment by the Alberta Government in researching solutions to develop the oilsands more cautiously, we are sure to hear a lot of buzz about the oilsands in the near future. One of the myths about the oilsands is the amount of impact that oilsands has on the environment. A study was done comparing the emissions that currently are produced by coal production, a large polluter in the US and China, versus the oilsands. When compared with this polluter, the oilsands represents less than 1 percent of the emissions being emitted by coal production. Another myth follows about the oilsands environmental impact due to tarsands pools created from extracting the oil and leaving the toxic remains behind. Of course the toxic remains have always existed in the area even without removing the oil. The environmentalist are concerned that the process of extracting the oilsands will create a bigger impact than if no production was done. While this may be true of only some rare situations, the truth is that the tarsands production is very careful in leaving behind tarsands pools in a way that will not be worse than the original case. Of course the results are hard to prove by both sides given the short amount of time that has passed since the production of the oilsands.

Alberta Oil Sands Companies: Suncor Energy

Suncor develops Alberta Oilsands in the Athabasca Region

Suncor Energy Inc. is an integrated energy company with large holdings in the Alberta Athabasca region. The company was founded in 1967 and currently employs more than 6,500 employees. Being an integrated energy company, Suncor has large holdings in the Alberta Oilsands Athabasca region, explores, produces and develops natural gas, has downstream operations in Ontario and Colorado that market the company’s refined products. In addition to it’s oil and natural gas, Suncor also has investments in renewable energy including wind power farms and Suncor’s ethanol facility, a known biofuel, in Ontario. Though its main focus is on the development of the Alberta Oilsands and is one of the first Alberta Oilsands companies to locate in the Athabasca region.

Suncor and Alberta Oilsands production

Suncor Energy Inc. main focus is Alberta Oilsands production. The Alberta Oilsands is an oil rich area that has more commercially viable oil than anywhere in the world and the reserves are only getting larger with improvements in technology. Suncor has been developing its Alberta Oilsands since 1967 and continues to be one of the biggest Alberta Oil sands companies in the area. By recovering oil, known as bitumen, from the oil sands and refining it to produce products that include feedstock and diesel fuel, Suncor provides an economically viable product that is in high demand around the world. The two methods that Suncor uses to recover oil from the Alberta oil sands is surface mining and in-situ (similar to conventional oilwell production). Through advances in Alberta oilsands technology and computers and engineering techniques, the current proven reserves in Canada’s Alberta Athabasca region is only second to Saudi Arabia. However, our potential reserves given an improvement in the technology in the future are far in excess of anywhere else in the world.

Suncor Energy Inc.on the NYSE and TSX: SU

Trading on the Toronto Stock Exchange, TSX, and the New York Stock Exchange, NYSE, under the symbol SU, Suncor is a global energy company with access to private capital. Suncor has a dividend reinvestment option that allows current shareholders to easily and cost effectively reinvest their regular quarterly dividends into more shares of Suncor. The stock price of Suncor hit an all time high in 2008 of $73. With the current fall in oil prices, Suncor has fallen back to its 2004 and 2005 price range of $20 to $30 per share. The value of Suncor is highly dependent on the price of oil and the world demand for oil products. While the oil prices remain in the range of $30 - $40, the price of Suncor and other Alberta oil sands companies including BA Energy, Husky Energy, and Petro Canada will all be affected by the weakness in the commodity price. When the price of oil peaked at $140 per barrel we saw the high reach $73 per share so there is a large range of share prices in the current market. With global demand expected to continue to be robust and after the financial crisis is passed, we expect to see another jump in the price per barrel of oil. While alternative energy such as windpower, biofuel, and solar panel are still in its infancy, we can also continue to expect the reliable consumption of oil to continue.

Alberta Oilsands Companies Feature: Husky Energy

Husky Energy and the Alberta Oilsands

Husky Energy is an integrated energy and energy related company. Incorporated in Calgary, Alberta, Husky Energy has operations all across Canada. Vertically integrated oil company with a listing on the TSX: HSE, Husky Energy is a developer, an integrator, and a retail seller of oil. Husky Energy is a large player in the Alberta Oilsands in Northern Alberta. Husky energy has a 100 percent interest in oil sands leases east of Kearl Lake, about 60 kilometers northeast of Ft. McMurray. The company’s website is www.huskyenergy.com.

BP Energy and Husky Energy

In December 2007, BP Energy acquired half share in Sunrise field in Northern Alberta, operated by Husky Energy. The deal will have Husky acquire a half share of BP’s Toledo oil refinery in Ohio US. This joint venture will form an integrated North American oil sands business. A 50/50 joint venture will be independently operated and developed. BP’s purchase of Husky’s Sunrise project gives BP a bigger stake in the Alberta oil sands market. The Sunrise oil sands field is expected to have its first production of bitumen in 2010 with up to 200,000 barrels of oil per day (bpd) within 10 years. The total production cycles is expected to last 40 years. Husky’s Sunrise projects is located in the Athabasca oil sands region in the north-eastern part of Alberta. The joint venture gives Husky an integrated oil sands venture with upstream and downstream businesses. BP is one of the world’s largest oil and gas companies with operations in 100 countries over six continents.

Husky Energy and Husky Market and Mohawk Gas

Husky Energy operates retail gas stations and a retail restaurant. Its own brand of gas stations, Husky Gas has been around for more than a decade in the Canadian market. Husky Energy has teamed up with CAA, the Canadian Automobile Association, to collect CAA points on every fill up of gas. The other retail outlets at certain Husky gas stations include the convenience store Husky Market and the restaurant Husky House. Very well known in the Western Canadian Provinces, the Husky Energy brand is becoming a bigger player in the retail space. Husky Energy has also recently purchased Mohawk Gas and added their brand to its own. Consumers who visit a Mohawk Gas are now filling up their cars with a Husky Energy product and can collect CAA points along with their purchases. Currently Husky has more than 500 retail locations which make it the third largest retail oil and gas company in Canada.

Recent News with Husky Energy

Husky Energy follows other Alberta Oilsands companies in slowing its production in the Alberta oilsands for 2009. Husky Energy has decreased its investment from $300 million in 2008 to $65 million for 2009. While this is a strategic move in the current low US oil price environment, Husky Energy has not commented on whether it is pulling out of the Alberta oilsands market. Husky did say they are continuing with the Sunrise oil sands project, located about 60 kms northeast of Ft. McMurray, Alberta. BP and Husky expect costs to continue come down in the Alberta Oilsands. The Sunrise project is at the pre-engineering stage where its optimal design is being assessed. Other companies that have announced slowdowns in 2009 include Royal Dutch Shell PLC, Statoil ASA, ConocoPhillips, Petro-Canada and Suncor Energy Inc.

Slower pace of development good for Alberta Oilsands

Alberta Oilsands will benefit from the slower pace

The slow down of the development in the Alberta Oilsands and Northern Alberta region will actually have a positive long term affect on the environment. The past few years have been a frenetic pace for Alberta oil sands companies and oilsands developers to quickly develop and buy up more land in Northern Alberta. The higher price of oil caused a euphoria in investment capital being poured into Alberta oilsands companies without any consequence to the environmental impact. The recent slowdown in development will actually benefit Fort McMurray and the Athabasca Region as the region gets some time and breathing room. Some much needed time to take a look at what can be done to develop the valuable resources that the Alberta oilsands offers and to positively impact the communities that they operate in. Yes, the slower pace of development is actually a blessing in disguise and will give Alberta Oilsands companies time to develop a long term strategic plan that will take into account the communities and the environment in relation to the profit potential.

Developing an Environmental plan for the Alberta Oilsands

Many environmentalists and governmental agencies have criticized the Alberta Oilsands companies in their lack of a solid plan for the development of the Alberta oil sands region. This lack of a plan will not only have long term negative consequences to the environment but also affect all the surrounding people living in the communities of Northern Alberta and the Athabasca region and Fort McMurray. A lack of a solid plan is a direct correlation to a lack of responsibility and accountability for the environment that these Alberta Oilsands companies have. It is unacceptable to not have a viable environmental plan for the Alberta Oilsands and many environmentalists around the world are lobbying their governments to take actions to prevent any further damage to the Northern Alberta and Athabasca regions. It is important to immediately address the long term consequences of developing the Alberta tarsands and making sure that the environmental impact is minimized. Having a solid environmental plan for the Alberta oil sands will be a first step in reaching this shared goal and the Alberta Government is also in agreement with this position.

Alberta Oilsands and the Aboriginal Communities

Many Aboriginal Communities, including the Metis Settlement, are affected by the development activities of the Alberta Oilsands. The concerns for health and the destruction of their lands is a primary objective that the Aboriginal communities including Chief Allan Adam of the Athabasca Chipewyan First Nation is striving so hard to achieve. As so many Aboriginal Communities will be affected by the Alberta oil sands companies, it is vital that the rights and concerns of these people be dealt with immediately. We cannot build first and make a plan later for the environmental impact. This is not acceptable and will be a major obstacle for the further rapid development of many Alberta oilsands projects. On the other hand, there has been some good news regarding the environmental plan for the Alberta oilsands and the Aboriginal Communities. There has been a lot of positive development towards drafting of solid plans to protect the environment from the rapid development happening in the Athabasca region. However, as with most talk, people want to see action and it is this action that will help the Aboriginal Communities.

Canadian Oil Sands Trusts and Alberta oil prices

Dividends cut at Canadian Oil Sands Trusts in Alberta

Canadian Oil Sands Trusts invests in Northern Alberta and provides a regular dividend to its investors. Recently, Canadian Oil Sands Trust announced a cut in their regular distribution to its investors. In fact this cut in distribution to its investors was more than expected by the market. Canadian Oil Sands trusts slashed its regular distribution in response to Syncrude Oil’s cut in its quarterly distribution by 80% to 0.15 per unit. Canadian Oil Sands Trust is the largest investor in Syncrude Oil, a major oil sands player. This cut in distribution by the company may lead to increased selling pressure of the company’s shares as investors who are looking for higher yielding shares sell their stock. Canadian Oil Sands trusts has been a high yielding income play of the Alberta Oil Sands and has been able to deliver a high return to its investors. But with the recent financial crisis and the fall in Alberta oil prices to sub $50 levels, this has caused increased pressure for all Alberta oil sands company to slash their quarterly distributions.

Alberta Oil prices and Canadian Oil Sands Trusts

How linked are Alberta oil prices and the prices of shares of Canadian oil sands trusts? There is obviously a very close relationship between the level of Alberta oil prices and Canadian oil sands trusts. As the price of oil falls, the income levels of the companies that the Canadian oil sands trust invests in is significantly reduced. Companies such as Syncrude Oil is one of the companies that has had to aggressively slash its quarterly dividend in order to maintain its financial position. Other Alberta oil companies will surely follow suit and this will lead Canadian Oil Sands Trust to have less income to distribute to its shareholders. However, the price of oil is expected to stabilize around the $50 level with increases expected in 2010. Most analysts currently have a long term buy on Canadian Oil Sands Trust investment as this represents a cheap buy in the current market. However a short term sell is also recommended for this stock.

Canadian Oil Sands Trusts as Investments

Canadian Oil Sands Trust gives investors in Alberta Oil with a solid Oils Sands investment through its 36.74% interest in Syncrude Project. Syncrude Oil is a leader in the Alberta Oil Sands industry and has been in operation since 1978. Currently Syncrude Oil can produce Alberta light high quality crude oil at 350,000 barrels per day. Syncrude Oil operates oil sands operations in the northern Alberta region of Athabasca. By investing in Canadian Oil Sands Trusts as an investment vehicle, investors get a high quality Alberta oil sands investment and can take part in the growth of the oil prices. Canadian Oil Sands trusts provide a regular dividend that gets paid back to investors as a distribution and a return of their initial capital. By returning a larger percentage of an investor’s investment over time, the return on Canadian Oil Sands Investment is seen as a conservative investment.