Globe says analyst agrees with Talisman, others on tax
2008-11-10 07:01 ET - In the News
Also In the News (C-CNQ) Canadian Natural Resources Ltd
The Globe and Mail reports in its Saturday edition that investment dealer FirstEnergy Capital Corp. has added its voice to the growing chorus of industry complaints that Alberta's new oil and gas royalty scheme is driving spending elsewhere. The Globe's Norval Scott quotes FirstEnergy analyst Robert Fitzmartyn in a research note as saying,
"There is strong evidence ... to suggest that investment is leaving the province." Mr. Fitzmartyn cites a drop in Crown land sales and flat drilling rig counts since the new royalty scheme was announced. Last week alone, major producers Talisman Energy and Canadian Natural Resources have indicated they will reallocate capital spending from oil and gas exploration in Alberta to opportunities outside of the province.
Some oil sands projects have also been delayed as producers fret over the economics of proposed multibillion-dollar investments, especially given that the financial crisis has pushed crude oil prices down from $147 (U.S.) a barrel in July to around $60 (U.S.).
The reallocation of capital means Alberta is unlikely to recoup the additional $1.4-billion in revenues it has said the higher royalties will create, according to Mr. Fitzmartyn.