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  • How The $3.3 Billion Deal Can Help Cenovus Going Forward [View article]
    CVE is currently in a very strong position to ride out the oil prices. They have done a good job of cutting costs considerably and over the next 12 months or so will show increased production as a result of the projects they are completing. More cost cutting is on the way as well. CVE was always a conservative well managed company and the latest sale of its fee tittle lands makes it even more so. CVE also owns 50% interest it two large U.S. refineries that should help it counter the low crude prices. IMO they will surprise on the positive side going forward.
    Jul 19, 2015. 10:32 AM | 2 Likes Like |Link to Comment
  • Saudis' Real Target May Be Canadian Oil Sands [View article]
    IMO - The Saudis are targeting all production outside of Opec and even some within. As for the Canadian Oil sands, one needs to understand that they are high capital cost to get into production but one producing they are very long life and low operating cost producers. This is unlike shale which requires a lot of capital all the time just to maintain production due to the high depletion rates.
    What the Saudis have done to the oil sands is curtain any future production 3 - 5 years out rather than impact any immediate or production increases over the next year or two. Cenovus energy is a very good example of the impact on the industry - their projects that were 75% complete and scheduled for completion over the next year or so are going ahead as scheduled thus adding to production. Their further dated projects have been slowed down or put on hold awaiting further clarity on longer term oil prices. End result is increased production over the next year or two with a slow down in longer term production. Other companies are also doing the same thing.
    The other part of the equation is costs which many players in the industry have already dropped by 30% with more savings as a result of technical improvements and to a lesser extent lower labor on the way.
    The Canadian dollar which tends to follow oil up and down also gives the oil sands an edge as the oil is priced in US dollars while many of the costs are in Canadian dollars.
    What the Saudis have done is delayed mid to longer term oil sands production till a combination of price and technology makes is favorable again.
    Oil sands have always been long term producers and will continue to be, IMO
    Jul 17, 2015. 10:32 AM | 10 Likes Like |Link to Comment
  • Mongolia to issue $1B in bonds to help ease cash shortfall [View news story]
    GOM says one thing while doing another.
    Jul 15, 2015. 02:40 PM | Likes Like |Link to Comment
  • Vale surges 7% on plan to cut iron ore supply [View news story]
    Actually Vale is shutting down its own high cost production and replacing it with new low cost production it has coming on line.
    Jul 13, 2015. 03:25 PM | 2 Likes Like |Link to Comment
  • Vale surges 7% on plan to cut iron ore supply [View news story]
    Vale - IMO is in the worse shape of the big three global iron ore producers (debit and political problems plus distance to major markets). It's political masters have probably told it that more focus on profitability was required and it seems to have come to the conclusion that BHP and Rio can lead the charge for Market share. Longer term, more higher cost production has to be forced out of the market.

    Jul 13, 2015. 03:23 PM | Likes Like |Link to Comment
  • U.S. Rooftop Solar Is Rapidly Gaining Support [View article]
    What ever they do, they should avoid the Ontario model which is a joke. The Ontario model is heavily subsidized by rate payers as they pay 5 to 10 times the going rate for the electricity produced. Solar systems installed under their so called FIT program are also 3-5 times more expensive than what these systems could be supplied and installed for outside of the program. Ontario's green energy program is also one of the key drivers in Ontario having one of the highest electricity rates in North America.
    The only thing it is good for is as a case study on how not to do it!!!
    Jul 13, 2015. 01:47 PM | 2 Likes Like |Link to Comment
  • Greece Is Fixed Again - Now Onto China [View article]
    China can move far faster and far more decisively than Europe can - its one of the strengths of a single party dictatorship and especially a capitalist one. Relating an overpriced stock market to economic performance is
    lame at best. A market trading at 50 -80 times earnings and more is overpriced regardless of what the economy is doing and especially so in China where interest rates are running higher than inflation by a nice margin. Even at 10% growth, when you can get real positive interest rates as opposed to 50 -80 times earnings and mostly zero for dividends, it should be a no brainer of avoiding the market like the plague.
    As for Mobius - his funds have sucked for the past 20 years. - That about sums him up!
    The Chinese market is also mostly driven by individual share holders rather than institutions which means much higher volatility. Why are the institutions staying away?? - go back to the no brainer statement.
    Going Forward, once the government gets control of the market - and it looks like they have that - movement in the market will be very slow for a while.

    Jul 13, 2015. 10:45 AM | 1 Like Like |Link to Comment
  • ArcelorMittal Mexico announces massive layoffs [View news story]
    When I look at MT, I see a company that has spent considerable time and resources in growing their business to become the largest steel manufacturer in the world. They are now more than half way through streamlining and consolidating their business. I expect that when finished, they will have a very efficient and profitable operation with plants throughout the world. Having said the above, steel is a very cyclical business and we are now bouncing along the bottom of that cycle. The cycle will turn and MT will prosper, the only question is timing. In the mean time, they batten down the hatches and move to protect themselves from unfairly dumped steel.
    Jul 13, 2015. 10:26 AM | Likes Like |Link to Comment
  • ArcelorMittal asks South Africa for steel tariff protection [View news story]
    That is the story of steel - desperate over producers from China and a few other countries dumping anywhere they can while the home industries look for relief.
    Jul 13, 2015. 10:18 AM | Likes Like |Link to Comment
  • Oil advances as Iran nuclear talks miss deadline [View news story]
    Obama is desperate for a legacy and so he will cave to Iran - its all Keary has been slowly doing at these negotiations.
    Jul 11, 2015. 09:16 AM | Likes Like |Link to Comment
  • Oil advances as Iran nuclear talks miss deadline [View news story]
    Iran has been demanding more and more and the US has been giving more and more. Obama is desperate for a legacy and it shows!!!!
    Jul 11, 2015. 09:05 AM | 2 Likes Like |Link to Comment
  • Copper Price Forecast, July 2015: China Demand Rules All [View article]
    India could be a surprise for copper as expansion is the name of the game under the current government which will drive copper demand. Question si will it be enough to make up for weakness elsewhere?

    Jul 10, 2015. 08:38 PM | Likes Like |Link to Comment
  • Deadline day for new Greek proposal [View news story]
    The idea of "once you join, you can not leave" is nuts to say the least. It is the equivalent to outlawing divorce. it would be especially messy for Greece and no one wants to go there but once it happens life goes on and things usually get better. The "contagion" thing is a sham as well as once other countries see the difficulties Greece will face, it will be the last choice for them.

    Jul 9, 2015. 09:53 AM | 5 Likes Like |Link to Comment
  • Cenovus Energy Sells Lands: Is A Dividend Cut Next? [View article]
    A view from the inside


    Sitting with “a lot of cash right now,” Cenovus Energy Inc. is considering where to spend that money, mulling over restarting some of the oilsands projects it had halted or slowed, financing its conventional projects and buying back shares, an industry conference heard.

    Earlier this year, to preserve capital, Cenovus shut down its stratigraphic drilling program, slowed down on projects that were less than 70 per cent complete (Christina Lake phase G, Foster Creek phase H and Narrows Lake, and did very little work at Grand Rapids) and reduced its workforce by 15 per cent (about 800 contractors and employees).

    The company also completed a bought deal financing worth $1.5 billion.

    At the end of June, Cenovus announced it was selling its royalty business to Ontario Teachers’ Pension Plan for gross cash proceeds of $3.3 billion, effective April 1 and expected to close by the end of July.

    With an improved financial outlook, the company is now considering its options, said Harbir Chhina, Cenovus’s executive vice-president of oilsands, told the 2015 TD Securities Calgary Energy Conference.

    Before the end of July, Cenovus will provide an update on its plans that could see restarting projects or bringing back its conventional business, which had been producing 70,000 to 80,000 bbls per day and was economical at $50 per bbl, said Chhina.

    Maybe both.

    “We can trigger some of those projects and bring some of the oilsands projects back too and firm up our balance sheet a little bit. Maybe at these prices even consider some share buybacks, so all the options will be looked at here,” said Chhina.

    In addition, to preserve capital, the company had introduced a three per cent-discounted dividend reinvestment plan and is now considering shedding it, he said. (In the company’s Q1 report, it said more than one-third of Cenovus shareholders participated in the discounted DRIP, resulting in cash savings for the company of approximately $81 million.)

    According to Chhina, the company has saved about $200 million — approximately $120 million in operating costs with the remainder in general and administrative and capital costs.

    “We are giving some money back to the conventional business,” he said, naming its Weyburn project but adding its Pelican Lake project, where the company has been evaluating the use of surfactants to supplement polymer technology, needs higher oil prices to be profitable.

    The company is currently working on Foster Creek phase G and Christina Lake phase F, which are making money at WTI prices in the $40- to $50-per bbl range, he told the conference.

    “We believe Christina Lake G is probably the first one that should go into the hopper and then Foster Creek H and then Narrows A, in that order. We’ll look at the dividend too,” he said.

    Existing phases of Foster Creek and Christina Lake are producing above nameplate capacity with steam-oil ratios of 1.7 at Christina Lake and 2.4 at Foster Creek.

    A nearby forest fire shut down operations at Foster Creek for 10 days in May but restarting went smoothly and production is now flush, he said.

    Adding to its rosy financial picture, Cenovus’s cost structure is coming down rapidly. “We’re starting to see a big difference,” he said.

    The company’s operating costs fell by 20 to 25 per cent from the first quarter of 2014 to the same quarter of 2015, he said, adding some parts of sustaining capital such as for pads, pipelines and earthworks have dropped by 30 per cent on new bids.

    He believes those costs could plunge by a further 30 per cent.

    In addition, recently the company changed the design of its drilling pads, saving 40 to 50 per cent on their metal content and the equivalent amount in their cost, said Chhina.

    With plans to ship 10 to 20 per cent of its production by rail, last month Cenovus bought Canexus Corporation’s rail terminal in Bruderheim, Alta..

    Last year, when Cenovus was railing oil to the West Coast it was seeing an uplift of $10 to $20 per bbl but that has now fallen to between a negative amount and $5 per bbl; however, the company continues to believe rail will be a key part of its business in future and that the Bruderheim terminal will provide it with flexibility, said Chhina.

    On average, the company transported more than 13,000 bbls per day gross of crude oil by rail in the first quarter of this year to markets in Canada and the United States, including 18 unit train shipments.

    The company continues to invest a great deal of money and effort into technology, which is what will improve the entire industry’s cost structure, he said.

    “Things are going to get cheaper. There is less competition, less money available, all of those things are going to happen and then you throw technology on top of that, it’s going to be a big plus,” he said.

    As part of its commitment to developing new technologies, for two days in May Cenovus employees stopped work and attended sessions wherein Canadian astronaut Chris Hadfield lectured on safety, motivation and, in the development of new technologies, the “benefits” of failing “early, fast and cheap” in the search for successful new techniques and processes that will boost production and lower costs.

    “Except for oil prices and share prices, everything is working really well,” Chinna told the conference.

    Jul 9, 2015. 09:27 AM | 3 Likes Like |Link to Comment
  • Encana - Why Investors Should Not Expect A Turnaround, In 5 Charts [View article]
    Encana also has some of the best land positions. They are steadily dropping costs and as well should be one of the big players supplying the upcoming LNG plants. They are very well positioned to ride the current situation and prosper in the future.

    Jul 8, 2015. 04:58 PM | Likes Like |Link to Comment