Oil and gas companies have had to delay and halt certain projects as they await the results from the impending Alberta royalty and climate change reviews. Here is how 5 intermediate/senior companies are preparing for the results and dealing with current political uncertainty.
Encana deferred investment plans in Alberta until the provincial government completes its royalty and climate change reviews.
Chief executive Doug Suttles said the company is deferring the decision to build its next gas plant in the Duvernay area even though plant capacity is the limiter to growth in the area.
“It will mean the growth will a little slower because we’ll make that decision after we see the outcome of their current reviews,” Suttles told analysts on a conference call to discuss the company’s third quarter.
From November 12, 2015 Canadian Press Story
As a result of current commodity prices and the ongoing Alberta royalty and climate change reviews, we have determined that we will finalize and announce our 2016 capital expenditure program on February 10, 2016 after we have had the opportunity to consider the results of these reviews and any possible impact that any changes to the regulatory regime in Alberta will have on our business.
Our Board of Directors has approved a preliminary 2016 capital budget of between $210 and $240 million, drilling between 50 and 60 net wells, which is forecasted to generate production of between 76,000 and 79,000 boe per day. Continued focus on capital and operating efficiencies will remain a high priority for 2016. This budget will remain flexible as we assess uncertain commodity prices and any potential impact of the Alberta royalty review and any changes to climate policies. When coupled with our reduced dividend, this capital budget is designed to achieve a total payout ratio of between 85% and 95% for 2016. The remaining funds from operations will be used to strengthen our financial position.
In light of the continued weakness in commodity prices and uncertainty associated with future Alberta Royalty rates, Pengrowth has reduced its 2015 capital spending by 10 to 15 percent to a range of $190 to $210 million for the full year. Pengrowth anticipates that any future capital expenditures will be deferred until there is greater certainty with respect to the future Alberta Royalty structure, and a sustained recovery in commodity prices coupled with reduced cost structures, is evident.
Canadian Natural Resources
The Company maintains a vast portfolio of asset opportunities, a strong balance sheet and a defined, flexible growth plan for each of its products and areas in which it operates. The strategy and plan for a low commodity price environment will be outlined during the conference call. However, due to the current uncertainty surrounding the Government of Alberta’s review of royalty, taxation, environmental and greenhouse gas policies, detailed future capital allocation plans for each of the Company’s assets cannot be finalized at this time. Therefore, the Company will defer the detailed Open House until greater clarity can be attained, to allow for finalization of this capital allocation.