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If U.S. stock index futures are any indication, major U.S. stock market indexes will carve out fresh 12-year lows on Friday morning when markets open, after investors recoiled from steep losses overseas, a mammoth-sized revision to the U.S. economic contraction in the fourth quarter and a government deal with Citigroup Inc. that seriously dilutes existing shareholders.


With about an hour before markets open, futures for the Dow Jones industrial average were down 139 points, to 7039. During Monday's stock market swoon, the Dow closed below 7115 for the first time in 12 years. Similarly, futures for the S&P 500 were down 17 points, to 735, after closing at a low of about 743 on Monday, before showing signs of rebounding later in the week.


U.S. gross domestic product was revised down to a contraction of 6.2 per cent, annualized, in the fourth quarter - far below an earlier reading of 3.8 per cent that had been well above projections from economists. Although economists had anticipated a downward revision to the quarter's GDP, this was worse than the expected 5 per cent drop.


"In the final analysis, it is clearly evident that the U.S. economy was significantly weaker in the fourth quarter than was first thought, which has a certain irony to it as the initial number was significantly less grim than the initial market expectation," said Millan Mulraine, economics strategist at TD Securities, in a note. "And while we do not believe that this horrendous pace of economic contraction will continue at quite this rate, we expect the economy to remain very weak from some time, with further gaudy declines probable."


Meanwhile, Citigroup Inc. struck a deal with the U.S. government which involves a stock swap that will see the administration take control of more than one third of the struggling bank. As part of the deal, more than $50-billion (U.S.) worth of preferred shares will be converted into common shares. According to the Wall Street Journal, the deal will wipe out about three quarters of the existing shareholders' stake in the bank.

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Federal Reserve: Best-case scenario

Monday, February 23, 2009

In its economic update released last week, the U.S. Federal Reserve forecast that the U.S. economy would contract 0.9 per cent in 2009 and then improve to 2.9 per cent growth in 2010. Wishful thinking? Vincent Delisle, a strategist at Scotia Capital, believes so – but he looked at how the S+P 500 is likely to respond under the Fed's best-case scenario, Scotia's base-case scenario and a worst-case scenario.

The Fed's scenario would likely translate into S+P 500 aggregate per-share earnings of $65 (U.S) in 2009 and $80 in 2010, up from $55 in 2008. Attach a price-to-earnings ratio of 16 onto those figures, and the implied price targets for the S[amp]amp;P 500 would be 1050 in 2009 and 1275 in 2010. During late-morning trading on Monday, the S[amp]amp;P 500 was down to 763.

“If the Fed is right, then this market is a screaming buy,” Mr. Delisle said. “Admittedly, the Fed's outlook is likely to be revised lower as the year progresses, but as optimistic as their scenario may seem now, we would note that bullish scenarios always look the most outrageous in stormy periods.”

Unfortunately, he puts the Fed's best-case scenario at just a 20-per-cent chance of success (ouch) – or even odds with the worst-case scenario. That one looks like this: Stress conditions in credit markets stir again, throwing a cold towel on improving economic conditions. Earnings for the S[amp]amp;P 500 fall to $45 a share in 2009 and improve only slightly to $55 in 2010. As a result, the implied price targets (using a lower P/E ratio) for the S[amp]amp;P 500 would fall to just 550 in 2009 and 650 in 2010 – suggesting another bout of volatility.

Depressed? At least the base case scenario has a 60-per-cent chance of success, in Mr. Delisle's view, and looks reasonable for equity markets. Under this scenario, U.S. gross domestic product contracts 2.9 per cent in 2009 and rises 1.7 per cent in 2010, which is gloomier than the Fed's estimates. S[amp]amp;P 500 earnings flat-line at $55 this year and rise to $70 next year. Using a P/E ratio of 14 (mid-way between the best-case and worst-case scenarios), the implied target for the index is 850 in 2009 and 1000 in 2010.


© Copyright The Globe and Mail




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Bust-town, Alta.

GORDON PITTS

From Saturday's Globe and Mail

February 20, 2009 at 9:56 PM EST

FORT SASKATCHEWAN, ALTA. — In a snow-swept field northeast of Edmonton, a slender green smokestack rises like an impudent finger gesturing rudely at the economic carnage around it.

The stack is surrounded by industrial debris, including big tube-like steel vessels that cost more than $5-million apiece. The clutter suggests the scene at a messy apartment where the occupant got an unexpected phone call to vacate in a hurry.

This is the would-be home of a massive bitumen upgrading project, which, after a $530-million investment in land, equipment and technology, now lies abandoned by all but security guards. Its corporate owner, BA Energy, is in bankruptcy protection.

The site and the surrounding fields are where Upgrader Alley, a hotly anticipated $80-billion complex of oil sands processing and related industry, has hit its physical and symbolic dead end.
Columba Yeung has developed a technology that he touts as a more energy-efficient and productive way of turning bitumen into synthetic crude.

Columba Yeung has developed a technology that he touts as a more energy-efficient and productive way of turning bitumen into synthetic crude.
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Of all the Alberta victims of the energy price implosion, the retreat from Upgrader Alley is the most crippling for the province and the country. Fort McMurray will continue to churn out raw bitumen from its mines and steam-fed underground wells, but the upgrader boom around Fort Saskatchewan, a half hour from Edmonton, cannot go ahead under the current economics.

It is a blow to countless dreams, not only in the 533-square-kilometre Fort Saskatchewan industrial complex but also the counties around it – an area that, even before the upgraders, had been branded Alberta's Industrial Heartland. It will be a crushing setback to Edmonton and its manufacturing complex of Nisku, south of the provincial capital, where a lot of the fabrication would have taken place.

Above all, it will dash Alberta's hopes of being not only the grubby mine site for oil sands extraction, but a value-added centre for upgrading raw bitumen into synthetic crude oil – and possibly a petrochemical cluster built around the byproducts of the process. The province's long-running pursuit of industrial diversification is once again on hold.

The hope was that the Heartland would upgrade two million barrels of bitumen a day. Now, there are fears that the action will shift south, as new and existing upgraders on the Gulf Coast or the U.S. Midwest suck away the lion's share of that new processing.

“That would be a horrible thing for the province,” says Debbie Hamilton, chief administrative officer for the town of Redwater, a village of 2,100 that has dreams of becoming a bedroom community for the upgraders. “It's like raping our natural resources.”

Upgrader Alley would have come with a huge environmental price. The Pembina Institute, an environmental research group, estimates that, with all plants operating under original projections, the upgraders would have generated as many greenhouse gas emissions as 10 million vehicles – and consume 10 times as much water as the City of Edmonton.

Those kinds of numbers will buttress the anti-oil-sands sentiment in the administration of U.S. President Barack Obama. But Alberta could also argue that if separate upgraders are now built in, say, Fort Saskatchewan, Omaha and Chicago, the total environmental footprint is much bigger because these are one-off investments. In Upgrader Alley, producers could cluster for efficiencies in areas like carbon capture and water use.

“I think that kind of logic would be something Canada and Alberta would want to discuss with the new U.S. administration,” says Joseph Doucet, a professor of energy policy at the University of Alberta.

Officially, there are still plans to build or expand eight upgraders in the region, which already boasts about 20 hydrocarbon processing plants and refineries.

But in reality, only one new project is a sure thing – a large expansion of Shell Canada Ltd.'s upgrader on its Scotford refinery site, where construction is now under way a little more than a kilometre away from BA Energy's abandoned operation.

All the others are under review or delayed, including the massive $10-billion project to be built by Petro-Canada and its partners; sites owned by foreign players Total SA (France) and StatoilHydro ASA (Norway); and independent “merchant” operations such as North West Upgrading Inc. and BA Energy itself.

The projects would have drawn an estimated 22,000 construction workers to the area by 2012, and as many as 12,000 permanent jobs. Now, when 4,000 workers wind up their building jobs at Scotford over the next two years, there is no assurance they will find a place to work locally. (Shell has 1,000 permanent workers on the site.) “A year ago, the big problem was, where will we find workers?” says Neil Shelly, executive director of the Alberta Industrial Heartland, a coalition of municipalities. “Today, we're switching to: How do you find work for these people?”

The shifting economics has choked off a local land boom, which Mr. Shelly calls “the Gold Rush of 2005 to 2007” – the period when, it seemed, every Fort McMurray operator was nailing down land positions here – even if they didn't have a project in mind. “It was like a tulip market back then,” he laughs.

The land grab fired entrepreneurial plans in housing, services and hospitality. But now the noon-hour crowds are dwindling even at the Atlantic Kitchen fish and chips restaurant a couple of blocks away from the constituency office of the local MLA, Premier Ed Stelmach.

“I'm a little bit worried now,” says Agnes Street, the restaurant's owner who relocated to Alberta from Newfoundland 13 years ago. The movement of her fellow Newfoundlanders is always a sure barometer of the state of Alberta's economy, and now, she says, the exodus is all back home.

Inside the halls of Alberta's legislature, there remains a keen optimism that the Heartland is not dead, but asleep.
Columba Yeung has developed a technology that he touts as a more energy-efficient and productive way of turning bitumen into synthetic crude.

Columba Yeung has developed a technology that he touts as a more energy-efficient and productive way of turning bitumen into synthetic crude.
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“We hope soon to see a turnaround,” said Finance Minister Iris Evans. “We're optimistic that [shelved upgraders] will go ahead. The opportunity to develop our petrochemical and refining industries is part of a very great advantage of Alberta's future.” Upgrader Alley has been a victim of the oil price as it has tumbled from $147 (U.S.) a barrel to below $40 in less than eight months. But the writing was on the wall at least a year before the meltdown, as operators were scared off by soaring costs of construction and processing in Alberta. Upgrader Alley is as much a casualty of the Alberta boom as its subsequent bust.

The industry hates the term “tar sands,” but Mr. Shelly says it is entirely appropriate to describe bitumen from Fort McMurray – the stuff has the consistency of road tar on a hot summer day.

For it to be refinery-ready, it needs to be upgraded into synthetic crude, which means applying extreme pressure and heat to the gooey substance to separate coke, sulphur and other byproducts. At the moment, close to 70 per cent of the upgrading is done in Canada. Most of that work is done in Fort McMurray, but that area, with already massive mines and upgraders, faces huge cost and logistical challenges for future upgraders. So the idea was to dilute the bitumen and pipe it 400 kilometres to Fort Saskatchewan.

Fort Saskatchewan (pop. 17,000) is one of those places that garners dramatically different responses – a chemical engineer's dream, but an environmentalist's nightmare. Since the 1950s, energy processors have been drawn to this rolling farmland and bush along the North Saskatchewan River. It's near the hub of major pipelines; both major railways have lines running close to the site. While Fort Mac is isolated and hardscrabble, Fort Saskatchewan is almost a suburb of Edmonton with its amenities and urban lifestyle.

What's more, the area is blessed with huge salt caverns beneath the surface. When water is added and the salt solution flushed out, you have millions of cubic feet in storage capacity for natural gas and gas liquids. In addition, you have a ready supply of water from the North Saskatchewan.

The result is the largest hydrocarbon processing facility in Canada, home to operations of Dow Chemical, Sherritt International, Nova Chemicals and Agrium Inc., among others. The Industrial Heartland park boasts 3,500 direct jobs, but the number doubles in indirect employment.

According to Mr. Shelly, the potential to pipe in bitumen would have taken the Heartland to a new level of adding value. He paints a vision of using byproducts, such as petroleum coke, to fire up a chemical cluster patterned after industrial complexes in Europe, such as in Marl, Germany.

But in the crazy world of gyrating energy prices, the perverse economics of the oil sands took hold. First, there is the plunge in oil prices, which combined with the still lofty costs of labour and construction, put projects in peril.

But the killing blow was the arcane pricing of bitumen, which has raised doubts about the economics of upgrading the tarry oil in Canada. The idea behind Canadian upgraders was to capture the differential in price between raw bitumen and the more expensive synthetic crude that is produced through upgrading.

Under normal circumstances, that gap amounts to about 40 per cent of the price of West Texas intermediate crude, but in the past year it was narrowed to about 20 per cent.

The price of bitumen is set in the U.S. South and Midwest. In the past, upgraders in the region took a lot of their heavy oil from Venezuela and Mexico. But for reasons of politics and declining investment, those sources are in decline, and the U.S. players are looking north for supply. That demand is raising the price of raw Canadian bitumen and reducing the price differential sharply with upgraded crude.

As the gap narrows, it becomes more efficient to fill upgrading capacity in the U.S. – or to bolt an upgrader on to an existing refinery – instead of adding an expensive greenfield project in Fort Saskatchewan. The narrowing margins, combined with high construction costs, outweigh the expense of piping diluted bitumen from Fort McMurray to Galveston or Chicago.

Yet, amid the downturn, there is also a recognition that Upgrader Alley may not live up to its early billing.
Columba Yeung has developed a technology that he touts as a more energy-efficient and productive way of turning bitumen into synthetic crude.

Columba Yeung has developed a technology that he touts as a more energy-efficient and productive way of turning bitumen into synthetic crude.
Related Articles

“It was never clear that all of [the upgraders] were going to go ahead,” provincial energy spokesman Jason Chance said. “We're confident that many of those projects will come back. But there's a mistaken assumption that there are no benefits to the province if we sell our bitumen to other jurisdictions. What we know and believe is that the best value for Albertans comes in selling a whole range of products ... If it's all about one product, and an upgraded product, you're putting all of your eggs in one basket and we're not interested in seeing that happen.”

One great hope for the Heartland area is that the Alberta government uses more of its muscle to get upgrading done in Alberta. Particularly promising is a commitment to receive royalties from the oils sands in the form of actual bitumen – royalty-in-kind – instead of cash. Under this scenario, Alberta would use its bitumen supply to force-feed at least one new upgrader in the area. And if you build one, more will presumably follow.

“With bitumen in kind, you may have product for at least one large upgrader right there,” says Prof. Doucet, the University of Alberta energy specialist. Once that upgrader is a sure thing, the province could assemble infrastructure in Fort Saskatchewan to pool resources – water, steam, electricity, even space – among several plants. The economies of scale could be significant. “If you do it effectively, that should get you lower fixed costs per barrel,” he says.

The government repeated its commitment to a bitumen royalty in its oil sands development plan released last week and hopes to make a decision in “the next several weeks” on whether to begin soliciting companies for proposals, Mr. Chance said. That may be the best hope for BA Energy, which ran out of money last year, shut down its site and filed for bankruptcy protection. The story is poignant because BA is the brainchild of Columba Yeung, an entrepreneurial maverick in an otherwise Big Oil environment. Mr. Yeung was born in Hong Kong to a Catholic family – hence, the name Columba, an Irish saint. Trained in Canada as an engineer, he was once a key manager for Shell Canada, and was instrumental in designing the Scotford refinery.

Mr. Yeung, who controls BA's parent, Value Creation Inc., is an engineering genius who developed a unique technology that he touts as a more energy-efficient and productive way of turning bitumen into synthetic crude. But he ran into the global credit crunch, and, as an independent, lacks ready cash. He did not return a phone call for this article, but court documents have indicated BA is in talks with a large global company.

Whatever the outcome, it puts a serious crimp in his dreams of being a player in the Alberta oil patch. Still, he owns a big piece of real estate in the oil sands northwest of Fort McMurray. To succeed in the bitumen business, “you have to have a lot of dirt,” he said two years ago.

BA Energy has a lot of land and some of it may be bitumen-rich dirt. But what is missing now, as all the oil sands players have discovered, is capital and a profitable business model.

Albertans should have known that not everything on the drawing board would get done in Upgrader Alley. Now with just one project in the works, they are hoping something, anything, gets done.

With files from reporter Nathan VanderKlippe in Calgary

Hoard cash at your peril – the smart money smells opportunity

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Globe And Mail
February 21, 2009 at 6:00 AM EST

In case you're thinking the economic and market news can't possibly get any worse, this week's global headlines should put a lid on any outbreak of dangerously early optimism.

Severe recession has taken a firm grip on the leading economies, business confidence is plunging, corporate earnings are in full retreat, commodities are still getting hammered and world markets are responding with fresh waves of fearful selling.

“Market hits new crisis low,” blared a Wall Street Journal headline yesterday. And that was before a further headlong retreat in the United States that was slowed only by reassurances from the White House that the Obama administration still believes in a privately held banking system.

In Canada, where the future of the banks is about the only thing investors don't have to worry about (yet), the benchmark S&P/TSX composite index fell another 2.9 per cent, bringing the shortened week's decline to an ugly 8.4 per cent.

“We're in the middle of a kind of massive economic crisis,” Paul Volcker, the former Federal Reserve chief and current Obama adviser whose anti-inflation policies triggered the 1981-82 recession, helpfully chimed in.

Okay, we get it. We're headed straight downhill. It has reached the point where once redoubtable buy-and-hold types aren't doing much buying and even less holding.

But take a look at the wily market veterans who have been through these dreadful downdrafts before. Most are plowing money into stocks, seemingly oblivious to the ill winds.

These are value investors who focus on long-term stock performance and are able to block out all the economic noise, not to mention the painful short-term consequences of staying in a game where everybody still seems to be playing a losing hand.

One such stalwart is Bill Wheeler, a 62-year-old Vancouver investment pro who plainly regards cash as a wasted investment opportunity.

Sure, he's concerned about the current state of the markets, but it won't change a strategy forged in the tough markets of the mid-1970s and early '80s. “If I were sitting on a bunch of cash today, I'd put it in the market now, because I think it's good value,” says Mr. Wheeler, chairman of Leith Wheeler Investment Counsel Ltd. “I don't believe you can make money timing the market. Who knows if you're going to be offside for a month or six months? I doubt you're going to be offside for a couple of years.”

Leith Wheeler opened its doors in 1982, at a time when money managers who held loads of cash were at the top of the heap – much as they are today. Over the next couple of years, “we were pretty smug” that the firm also had a strong cash position, he recalls.

But then a young staffer studied the results. The firm would have fared better if it had been more fully invested in good stocks. These outperformed the market in the down phase and did even better as it recovered. “That was pretty much a wake-up call,” Mr. Wheeler says.

“People in the savings mode should view this as a bit of a gift,” he says of current valuations. “It's an opportunity to purchase stocks that are likely to give you much higher returns from these levels in the years ahead than we've seen in the last few years.”

As for investors waiting on the sidelines for clear signs of an upturn, his advice is to stop looking: “There won't be anything. The market will go up when things look bleak and there'll be no explanation.”

Those expecting stocks to retrace each advance could be left behind.

He closes on a thought that would get a commendation from Donald Rumsfeld.

“How did professional investors miss a market drop of 50 per cent [in 2008]? The answer is that at any one point in time, the market is pretty smart. It factors in all the known issues. And it changes when an unknown issue becomes known. ... The more time I've spent in the market, the less I think is predictable.”


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Canaccord's Bankers Pet Target Analysis

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Bankers Pete Tgt Raised To C$2.30 From C$1.40 By Genuity >BNK.T

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Im Back and Obama signs, market withers

I have been away for the last week, I see markets are worse then when I left...

Obama signs, market withers

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U.S. President Barack Obama signed the $787-billion (U.S.) stimulus package into law on Tuesday, unleashing money to help turn around the sputtering economy. However, skeptical investors merely shrugged, keeping major stock market indexes on their path towards those November lows that had once been seen by optimists as the lowest point for stocks during the current volatility.


The Dow Jones industrial average closed at 7552.60, down 297.81 points, or 3.8 per cent - or just over 100 points from its low on Nov. 20. The broader S&P 500 closed at 789.17, down 37.67 points, or 4.6 per cent - its lowest close since Nov. 21.


Among the 30 Dow components, Wal-Mart Stores Inc. was the only stock to end the day with gains, rising 3.7 per cent after investors applauded its upbeat forecast for the rest of the year.


Meanwhile, financials were slaughtered: Bank of America Corp. fell 12 per cent and Citigroup Inc. fell 12.3 per cent. General Electric Co. fell 5.5 per cent. And General Motors Corp., which is scheduled to report its recovery plan on Tuesday evening, fell 12.8 per cent.


In Canada, the S&P/TSX composite index closed at 8378.70, down 299.40 points, or 3.5 per cent - a steep decline that looks even nastier when you consider that the Canadian index had surging gold stocks working in its favour.


Financials and energy stocks were the big weights around the index. Financials were weak because of concerns that European banks were heavily exposed to the deteriorating economy of Eastern Europe and that a number of U.S. financial firms could be on the verge of being nationalized.


Royal Bank of Canada fell 5.5 per cent, Toronto-Dominion Bank fell 5 per cent and Manulife Financial Corp. plunged 10.6 per cent.


As for energy stocks, the decline in the price of crude oil to $34.93 a barrel, down $2.58, was the cause. Suncor Energy Inc. fell 7 per cent and Canadian Natural Resources Ltd. fell 6 per cent.


On the upside, investors used the stock market volatility as a reason to flee into gold, sending it higher to $967.50 an ounce, up $25.30. Barrick Gold Corp. rose 1.1 per cent, Kinross Gold Corp. rose 4.6 per cent and Goldcorp Inc. rose 3.4 per cent.

Copyright 2001 The Globe and Mail

Tusk Rockets Up On Takeover

Market gives thumbs down

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If the stock market is any indication whether the financial rescue plan floated on Tuesday by Tim Geithner, U.S. Treasury Secretary, will succeed, the answer is no. For now.


Stocks weren't exactly in fine shape before the mid-morning presentation, but turned decidedly weaker the moment Mr. Geithner approached the podium with - as critics are now saying - little to say beyond broad objectives.


The Dow Jones industrial average closed at 7888.88, down 381.99 points, or 4.6 per cent. The broader S&P 500 closed at 827.16, down 42.73 points, or 4.9 per cent, the sharpest one-day dip since Jan. 20.


Although financial stocks were hit particularly hard - with Bank of America Corp. down 19.3 per cent, Citigroup Inc. down 15.2 per cent and JPMorgan Chase & Co. down 9.8 per cent - the selloff was remarkably widespread, leaving few stocks untouched.


Among the 30 stocks in the Dow, all fell. Some of the more defensive names in the index suffered the least, in a relative way, but you wouldn't know it from their severe declines: Procter & Gamble Co. did the best, but fell 2.8 per cent. McDonald's Corp. fell 2.9 per cent and Johnson & Johnson fell 3 per cent.


At the S&P 500, more than 98 per cent of the index's stocks fell, with casualties in every subindex. Financials fell 10.9 per cent over concern that Mr. Geithner's plan was too vague to make a bet on any particular names. But the defensive health care group fell 3.3 per cent and consumer staples fell 3.2 per cent.


Fortunately, the stock market has been more than a touch volatile during official announcements on these sorts of matters in recent months, surging on anticipation of a plan, only to sell off when that plan is revealed - making stock market action for the rest of the week anyone's guess.


In Canada, the S&P/TSX composite index closed at 8817.89, down 229.39 points, or 2.5 per cent. There, a surge in the price of gold - and a modest bump in gold-mining stocks - helped provide some offset to the selloff. Gold rose by $21.40 (U.S.) an ounce, to $914.20, sending Goldcorp Inc. up 2.1 per cent and Barrick Gold Corp. up 0.8 per cent.


However, financials fell sharply, with Royal Bank of Canada down 3.5 per cent and Manulife Financial Corp. down 5.9 per cent. Energy stocks also added to the carnage after the price of crude oil dipped to $37.55 a barrel, down about $2. EnCana Corp. fell 4.4 per cent and Suncor Energy Inc. fell 5.7 per cent.

Copyright 2001 The Globe and Mail

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Bankers Pet + More Oil

Pescod Talks Capitulation

Alberta promises relief for energy juniors

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NATHAN VANDERKLIPPE AND DAWN WALTON

Globe and Mail Update

February 6, 2009 at 4:36 AM EST


CALGARY — The fortunes of the oil patch are turning so quickly that Alberta Premier Ed Stelmach is promising help for junior energy companies amid warnings of more trouble ahead.

As low oil prices and tight credit markets starve the industry of needed cash, Mr. Stelmach yesterday pledged an incentive program that would provide "short-term targeted assistance" for junior and mid-capitalization energy players.

Mr. Stelmach's move came as the Canadian Energy Research Institute (CERI) released a report estimating that nearly $100-billion in spending already planned for the oil sands, much of it among the industry's biggest players, will never materialize.

The impact of such a dramatic slowdown in what until recently was a booming province will ripple across the Canadian economy, affecting government coffers and household incomes for years to come, the independent non-profit institute said.

In Alberta, where thousands have been laid off and forecasters say 2009 provincial royalty revenues will drop by $5-billion, the pinch is being felt keenly.

"It's clear we are facing a serious global financial and economic downturn that will significantly impact our country and our province," Mr. Stelmach said in a luncheon speech to the Calgary Chamber of Commerce.

Consultation with the banks has already taken place to encourage them to provide access to capital for smaller energy players, he said.

Mr. Stelmach declined to outline precisely how lenders would be guaranteed a return for their investments.

Provincial Energy Minister Mel Knight has been tasked with looking at the cash flow situation facing junior energy firms. An inability to access debt and equity financing has left some struggling to survive.

Mr. Knight said he will consult with industry before releasing more details, but ruled out any changes to the province's new royalty regime, which was designed to give the public purse a bigger take of windfall profits but was scaled back somewhat.

"It'll be a tax incentive, a tax credit incentive of some sort to deal with the issues that are specific to the junior, mid-cap players in the province," he told reporters. "The incentive packages are non-cash incentives. ... We're not giving cash to anybody."

The incentive will, however, do little to help oil sands projects that have foundered, many for the same reasons that smaller players have struggled.

The rapid reversal in the world economy has sent so much money fleeing from the oil sands that it may now produce only half the output that had been expected by 2015, according to the CERI report.

Since last September, the institute has tallied a staggering $230-billion in oil sands capital spending plans that have been knocked off the books of companies delaying or axing a huge array of projects.


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Of that, CERI senior economist David McColl estimates that just over half will be brought back on stream in future years as oil prices rise and confidence in the economics of the oil sands strengthens.

That leaves fully $97-billion that CERI says is now unlikely to be spent in the oil sands over the next 20 years, though it still expects the total capital outlay in that time to reach $218-billion.

"There is going to be less royalty revenue coming in, less taxes, less household income. It has an impact on everybody," Mr. McColl said. "It does signify that there is a material impact that is happening from the financial crisis, the lack of liquidity and other projects being delayed. And there's more to come."

It's happy hour

It's happy hour

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The gloomy economic news on Thursday morning wasn't enough to sideline investors, who saw glimmers of hope that helped drive North American stock market indexes higher.


The Dow Jones industrial average closed at 8063.07, up 106.41 points, or 1.3 per cent. The broader S&P 500 closed at 845.85, up 13.62 points, or 1.6 per cent.


Both indexes began the day with losses soon after the investors learned that initial jobless claims in the United States jumped by 35,000 last week to a 26-year high of 626,000. At the same time, same-store sales at retail chains were down in January, with some stores reporting double-digit dips.


The glimmers of hope? MasterCard Inc. reported that its fourth quarter earnings fell 21 per cent - but, reflecting what is more important to the market, the earnings beat analysts' forecasts by a substantial margin. The shares rose 14.1 per cent.


As well, David Trone, an analyst at FPK, said that Goldman Sachs Group Inc. and Morgan Stanley were healthy enough to repay the $10-billion (U.S.) that each received in government bailout funds last year - suggesting to particularly upbeat investors that the beaten-up financial sector may be in better shape than originally feared.


Goldman Sachs rose 5.6 per cent and Morgan Stanley rose 5.4 per cent. Other stocks in the sector followed suit, possibly driven by a rumour that the Securities and Exchange Commission, as part of a government rescue plan, might be on the verge of relaxing an accounting rule that has been forcing financial firms to write down the values of illiquid assets. Bank of America Corp. rose 3 per cent. Citigroup Inc. rose 1.2 per cent.


Meanwhile, Wal-Mart Stores Inc. rose 4.6 per cent after it bucked the trend of declining same-store sales last month, providing yet more evidence that cash-strapped shoppers continue to flock to discount stores.


In Canada, the S&P/TSX composite index closed at 8860.98, up 167.89 points, or 1.9 per cent. Commodity producers were among the biggest movers, after modest gains by gold and oil. Gold rose $12 an ounce, to $914.20. Crude oil rose 85 cents a barrel, to $41.17. Barrick Gold Corp. rose 4.2 per cent, Suncor Energy Inc. rose 1.5 per cent and Canadian Natural Resources Ltd. rose 5.2 per cent.


Financials were also strong, with Royal Bank of Canada rising 2 per cent and Bank of Nova Scotia rising 2.6 per cent.


However, Bombardier Inc. fell 4.6 per cent after the transportation company announced plans to lay off nearly 1,400 workers amid deferrals and cancellations in its business jet market.

Copyright 2001 The Globe and Mail

QEC Insider Update On Sales

Re: RE: Recent insider sales, birch
in response to Re: RE: Recent insider sales, birch by Rocco90
posted on Feb 03, 09 06:22PM

Guys,

As promised, I did follow up with Anela today to ask about insider sales. She did confirm that Ian Nicholson sold 25,000 shares at $2.01 per share and 20,800 shares at $2.14 on the 6th of January for tax purposes. He still holds 156,200 shares.

So, I wasn't dreaming. In fact, what I have found out is that sometimes when insiders sell and those amounts get put into larger blocks, the TSX insider trading summaries show the entire block as an insider trade. Perhaps why I was so shocked at the size. There is usually an adendum that follows later the next day separating these out. Just learned something new.

This all being said, I asked the question of you because there are many in the forum that seem to be more in tune with day to day occurances in the company than I, so just wanted to know what anyone else knew, wondering whether or not it was the right time to buy more. Didn't think some would see that as a negative (impacting my points/rating), but only as positive input to keep an eye on what is going on. I am a novice at this, so I will keep watching and not ask questions like this.

Truely sorry again.

All the best.

Source

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Lottery 'insider' jackpots hit $198 million

Lottery 'insider' jackpots hit $198 million

COLIN MCCONNELL/TORONTO STAR

Kelly McDougald, CEO of the Ontario Lottery and Gaming Corp., touts new anti-fraud measures at news conference where a forensic audit showing dramatic jump in insider winnings was released on Feb. 4, 2009.

Total is double the amount of early estimates, prompting gaming bosses to tighten security again
February 05, 2009

PAOLA LORIGGIO
STAFF REPORTER
A forensic audit has found that lottery retailers, employees and their families have taken home $198 million in prizes in the past 13 years, far beyond the $106 million previously estimated by the Ontario Lottery and Gaming Corp.

The dramatic jump in the dollar figure is due in part to the corporation's broadened definition of "insiders," which now includes family members and those living with OLG employees or lottery retailers, said the Crown corporation's CEO Kelly McDougald. The audit by Deloitte and Touche also counted data files that had been excluded in the initial tally, she said.

The lottery corporation has further tightened security to thwart "atypical behaviours" tied to insider fraud, such as retailers pocketing free Encore tickets won by customers or guessing the hidden four-digit validation codes on instant-win scratch tickets.

As a result, the OLG will discontinue free ticket prizes on Encore starting in April, and replace validation codes on scratch tickets with barcodes by next year.

Two years ago, the OLG responded to widespread criticism of its practices by launching a series of anti-fraud measures that included self-serve ticket checkers at most retail outlets and making it mandatory for customers to sign tickets before retailers validate them. They also instituted background checks for lottery retailers and automatic investigations of prize claims of $10,000 or more by retailers and other insiders.

"Today marks the next phase in the transformation of OLG's lottery operations," McDougald told a news conference where the audit was released yesterday.

Lawyer Greg Harris, who represents four Toronto school teachers defrauded of a $5.7 million win in 2004, said the report – and the OLG's readiness to share data – show the corporation has changed dramatically since the insider fraud scandal surfaced.

"They used to deal with (fraud complaints) in an adversarial manner," said Harris, whose clients received their prize in December 2007 after the retailer's arrest. "They realized the error of their ways."

"The new regime really seems to have the public's interest at heart."

Yesterday, the corporation also pledged to invest $3 million to keep its database updated in real time, allowing it to flag unusual patterns and shut down the related lottery terminals.

The audit and new initiatives follow two years of efforts by the corporation to curtail insider fraud, a practice thrown into the public eye in 2007 by the CBC's fifth estate. The program showed the OLG as unwilling to investigate insider fraud, even when it suspected a retailer of illegitimately claiming a $12.5 million Super Seven jackpot.

Ombudsman Andre Marin released a scathing report later that year denouncing the OLG's lax security measures and calling for increased protection for lottery players. The ombudsman is expected to comment on the OLG audit this morning. A spokesperson for the OLG would not say how many complaints of insider fraud are under investigation. McDougald said the audit shows the OLG has successfully reduced fraud since it implemented the ombudsman's recommendations. Now, thanks to the database, "we have the ability to predict fraudulent behaviour and mitigate against it," she said.

"We're building in smart, preventative measures that shut down terminals if the system sees anomalous behaviours."

Some 1,700 terminals were temporarily shut down due to atypical behaviours between April 2007 and last month, said Lenna Bradburn, chief security and compliance officer. In that same period, 38 employees were temporarily suspended and 17 contracts were terminated, although not necessarily in connection with fraud, she said.

McDougald said the entire database, which contains some 200 billion pieces of data, has been turned over to Ontario Provincial Police.

Dave Ross, spokesperson for the OPP, said a team of 14 officers is investigating insider and suspicious winnings. He would not specify how many cases are outstanding at this time, but said more charges could be laid once the OLG data has been reviewed.

The $750,000 study took five months, and is believed to be the largest analysis of its kind published by a lottery corporation in the world.

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Earnings win direction

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Earnings win direction

RTGAM



Make Money While You Sleep Check This Out!

If the stock market had been a battle zone on Wednesday, with crummy earnings butting against slightly better than expected U.S. economic data, the earnings won the day.


The Dow Jones industrial average closed at 7956.66, down 121.70 points, or 1.5 per cent - after moving in a tight, though mostly positive trading range until the early afternoon. The broader S&P 500 closed at 832.23, down 6.28 points, or 0.8 per cent.


Financials were mostly lower, with Bank of America Corp. falling 11.3 per cent to a new multi-year low and Wells Fargo & Co. falling 5.8 per cent on renewed uncertainty over the Obama administration's big fix for the sector, and whether it will work.


But high-profile consumer stocks that had reported their quarterly results were the big targets of the selloff. Kraft Foods Inc. fell 9.2 per cent after it reported a 72 per cent drop in fourth quarter earnings that missed expectations. Walt Disney Co. fell 7.9 per cent after its quarterly earnings dipped 32 per cent, also coming in below expectations.


In Canada, the S&P/TSX composite index - which had missed out on the late-day gains by U.S. stocks on Tuesday - enjoyed the opposite problem on Wednesday, closing at 8693.09, up 64.46 points, or 0.8 per cent.


Commodity producers were the main reasons for the gains, even though moves by gold and crude oil were hardly eyebrow-raising. Gold hit $902.20 (U.S.) an ounce, up $9.70. Crude oil fell 46 cents to $40.32 a barrel. Still, Barrick Gold Corp. rose 3.7 per cent, Goldcorp Inc. rose 4.9 per cent and Suncor Energy Inc. rose 3.3 per cent. As well, Potash Corp. of Saskatchewan Inc. rose 4.7 per cent.


Meanwhile, financials were weak, with Bank of Montreal falling 3 per cent and Toronto-Dominion Bank falling 1.6 per cent.

Copyright 2001 The Globe and Mail

QEC Building A Base For A Run To 2.00+

CALGARY, ALBERTA--(Marketwire - Jan. 12, 2009) -



Questerre Energy Corporation ("Questerre" or the "Company") (TSX:QEC)(OSLO:QEC) reported today that drilling operations have been successfully completed on the St. David well in the St. Lawrence Lowlands, Quebec.

Drilled to a target depth of 1995m on schedule and budget, St. David is the third well in the four-well farm-in program. The well has been cased as a potential gas producer. St. David was recently logged to evaluate the Utica and Lorraine shale/siltstone zones and the Trenton Black-River group. An analysis of these logs is ongoing to select prospective intervals for stimulation and testing.

Subject to equipment availability, completion and testing will commence after spring break-up. The Company expects the operator will spud the fourth and final well in the program, St. Edouard, in late February.

Questerre also reported on the status of the La Visitation and Gentilly wells in the Lowlands. Completion operations with multiple fracs on the recently drilled La Visitation well are currently underway. On the Gentilly well, the operational issues surrounding the packer have been resolved in order to allow testing of the Lorraine to resume shortly. Questerre anticipates preliminary results from these wells will be available during the second quarter.

Michael Binnion, President and Chief Executive Officer of Questerre, commented, "Drilling results on St. David were very positive as we saw promising gas shows in the Utica and Lorraine." Mr. Binnion also commented, "The pilot programs in the Lowlands are rapidly ramping up with several operations underway simultaneously. All these operations are designed to provide extensive technical data critical to assessing the commerciality of the play. We are very pleased that the operator does not compromise in this regard. We believe we remain on track to have an adequate sample of quality results to make a preliminary assessment of the commerciality of the Quebec shales in 2009."

Questerre is a Calgary-based independent resource company actively engaged in the exploration, development and acquisition of high-impact exploration and development oil and gas projects in Canada.

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Ford and GM In Freefall

President Obama may be forced to dig deeper into taxpayer pockets to bail out the American car industry after General Motors and Ford admitted to the lowest vehicle sales for 26 years.
General Motors, America's biggest car maker, said that it had sold 49 per cent fewer new vehicles in January, compared with the same period the year before while Ford admitted that new car sales had fallen by 40 per cent last month. Chrysler, which is a private company owned by the private equity firm Cerberus, is believed to have suffered a 49 per cent decline.

Pescod says...OUCH

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QEC Partner : Forest Oil Corporation (NYSE:FST) News

Forest Oil Corporation (NYSE:FST):

Estimated proved reserves increased 26% to a record 2,668 Bcfe in 2008

Reserve replacement ratio in 2008 was 549% from all capital activities with finding, development, and acquisition costs of $2.61 per Mcfe

Organic reserve replacement ratio in 2008 was a record 281%, with finding and development costs of $2.54 per Mcfe

Net sales volumes for 2008 are estimated at a record 189.6 Bcfe, an increase of 22% compared to 2007

Anticipated non-cash ceiling test impairment of approximately $1.5 billion after-tax

Fourth quarter and year end 2008 teleconference scheduled for Tuesday, February 24, 2009, at 12:00 PM MT

Forest Oil Corporation (NYSE:FST) (Forest or the Company) today announced its estimated proved oil and gas reserves and estimated production results for the year ended December 31, 2008. The Company reported the following highlights:

* Record estimated proved reserves of 2,668 Bcfe, replacing 549% of production with finding, development and acquisition costs of $2.61 per Mcfe
* Net sales volumes are estimated to be a record 518 MMcfe/d for the year ended December 31, 2008, an increase of 22% compared to 2007

H. Craig Clark, President and CEO, stated, “Forest’s investment results for 2008 were very solid given the difficult cost environment seen by the industry. For the year, our drilling program added reserves organically at $2.54 per Mcfe, in line with our current three-year average of $2.26. Our acquisition program added reserves at $2.68 per Mcfe and includes all costs related to adding over 150,000 net undeveloped acres primarily in Forest’s core East Texas/N. Louisiana and Panhandle areas. Production grew 22% from total investments and 17% organically during 2008. Reserve replacement from all activities was 549% and a record 281% organically, both excellent, as the amount spent on our exploration and development capital program approximated discretionary cash flow.

Our estimated proved reserves at December 31, 2008 were a record 2,668 Bcfe despite a reduction of 212 Bcfe for revisions, which were predominately price related due to lower year end prices. In summary, we believe these to be excellent investment results. The resulting reserve base, our large undeveloped land position, and low cost structure provide us with a very solid foundation in our core areas with many investment options moving forward.”

2009 GUIDANCE

For the year ended December 31, 2009, Forest intends to invest between $500 million and $600 million on exploration and development activities, which the Company expects to be funded through internally generated discretionary cash flow in 2009. Forest will concentrate its drilling activities in its core areas with a focus in 2009 on its East Texas/North Louisiana corridor, including Haynesville/Bossier drilling, and Buffalo Wallow areas and will have limited spending throughout its other productive regions.

H. Craig Clark, President and CEO, further stated, “Our capital plan for 2009 reflects our desire to stay within anticipated cash flow, while our planned well count reflects a significant increase in capital employed in horizontal drilling. Over 33% of our capital is planned to be spent on drilling horizontal wells. Further, in 2009, we will rely almost exclusively on our Lantern rig fleet to drill our vertical and horizontal wells. In the fourth quarter of 2008, we employed as many as 43 third party rigs on our operated projects. We expect this number, which is now eight, to go to one in 2009 as Forest does not have long-term rig contracts. Our current operated rig count, including Lantern rigs, is 15.

Our capital plan is designed to deliver approximately the same net sales volumes and estimated proved reserves in 2009 as in 2008 and will keep our attractive land base intact while focusing on capital efficiency and reducing drilling costs.

It is critical for us to take all possible steps to protect our asset base in this difficult time to allow our shareholders to benefit from our large inventory of projects when more reasonable project economics and capital markets return. We believe the reduction in 2009 activity by us and the industry will ultimately help reduce service costs significantly. Our 2009 plan does not anticipate significant cost reductions at this time.”

FOURTH QUARTER AND YEAR END 2008 EARNINGS RELEASE DATE AND TELECONFERENCE

Forest has scheduled its fourth quarter and year end earnings release to be issued after the close of trading on the New York Stock Exchange on Monday, February 23, 2009.

A conference call is scheduled for Tuesday, February 24, 2009, at 12:00 PM MT to discuss the release. You may access the call by dialing toll free 800.399.6298 (for U.S./Canada) and 706.634.0924 (for International) and request the Forest Oil teleconference (ID # 84156257). A Q&A period will follow.

A replay will be available from Tuesday, February 24 through March 10, 2009. You may access the replay by dialing toll free 800.642.1687 (for U.S./Canada) and 706.645.9291 (for International), conference ID #84156257.

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SuperBowl Finally Lives Up To Its Name

The Toes On The Ground Prior To Being Pushed Out Of Bounds= Touchdown!

Following the greatest Super Bowl in history, we offer the generally anticlimactic Monday morning musings and meditations on the world of sports:

- In a word, omigod. The morning after, it's still hard to put Sunday's showdown in Tampa in perspective.

I mean, James Harrison makes maybe the greatest individual play in Super Bowl history. And by the end of the game, it was almost forgotten. The Arizona Cardinals were dead and buried twice. They were this close to authoring one of the great comebacks in the annals of "The Big Game." Then the Pittsburgh Steelers came off the canvas and delivered the knockout blow.
It was like the 14th round of the "Thrilla in Manilla" played out over four hours with a Bruce Springsteen concert thrown in and it really was that good.
Then again, it wasn't like the NFL didn't owe us one of these.
- The tendency is to look at the Steelers and compare them to the NHL's New Jersey Devils. They play a system. They plug interchangeable parts into that system. The system keeps rolling along.

That's true to a point. But it also diminished the sheer genius of the Steelers organization. Following their win over the Cardinals -- which had more than a few nervous moments -- their defence will be rated among the best in NFL history. That unit features just one first-round draft pick in safety Troy Polamalu. Linebacker Harrison is also the first undrafted player to be named the NFL's defensive player of the year.

Think about that one for a moment.

I mean, it seems the Steelers have had the same team since Bill Cowher took over in '92. Greg Lloyd and Kevin Greene gave way to Joey Porter, who gave way to Harrison and Lamarr Woodley. Rod Woodson gave way to Polamalu.

And the quarterbacks. The Steelers went to the Super Bowl with Neil O'Donnell. They went to the playoffs with Kordell Stewart and Tommy Maddox. Since '92, they've recorded at least 10 wins in 11 of the 17 seasons and they had precisely two losing years in that time.

Add it up and it's one thing to make those changes and stay competitive. But the Steelers have made those changes and stayed on top for the better part of two decades in the NFL's salary-cap era.

That's impressive.

- As much as the drama over coach Alain Vigneault's future has been the hot-button issue in this marketplace for the last two weeks, the more important story for the Vancouver Canucks will take place in and around the trade deadline.

At that point, GM Mike Gillis has to decide if this team is worth keeping together or if he has to blow it up and start all over. And there's no safe play here. It's either/or because Gillis can't risk losing the Sedins and/or Mattias Ohlund on the unrestricted market this summer.
Put it this way. As bad as things are now, can you imagine the nightmare the organization would face if a team -- say the Toronto Maple Leafs with their new GM Brian Burke -- signed the twins on July 1.

It's a very difficult decision, as tough as any in the history of the franchise. But the potential take for those three players could be massive and this opportunity isn't going to repeat itself any time soon for the Canucks.

If Gillis believes he can win with the Sedins and Ohlund now and in the future, he has to sign them before they become UFAs. If he believes the team has to go in a different direction, he has to move them.

Either way, we're about to find something out about the Canucks' first-year GM.
- And then there's the world in which the Detroit Red Wings live.

While much has been made about Henrik Zetterberg's staggering 12-year, $73-million US contract, the cap hit for the Wings works out to $6 million per season.
That, in turn, might allow them to sign pending UFAs Marian Hossa and Johan Franzen this summer.

"Yeah. it's possible," GM Ken Holland said. "If both [Hossa and Franzen] want to stay, and if the cap goes up a little, there's an outside chance. It'll still be tough, but if other players are as motivated to make it work as Henrik was, there's a chance."

Complicating things are reports that the NHL salary cap might fall as much as 20 per cent in two years. That will leave it in the $45-million range and even the Wings might have trouble making that work.

- Interesting scene at GM Place on Saturday morning where six players showed up for the Canucks' optional morning skate before the game with Minnesota.
Five of those players were healthy scratches that night. The sixth was Roberto Luongo, who put in a full practice.

- Sign of the times: Remember when a Colorado Avalanche home game used to be among the toughest tickets in the NHL?

The Avs haven't been above 16,000 in their last 10 games at Pepsi Center.
- Colin Campbell has the perfect opportunity to send a message about head shots with Los Angeles's Denis Gauthier. The hit on Montreal's Josh Gorges, where Gauthier left his feet to deliver an elbow, is exactly the kind of hit the NHL has to eradicate.

Gauthier is also a repeat offender. This suspension has to hit double digits.
- Heard this one at the gym the other day:

Guy walks into a bar with his dog and says to the bartender: "The cable's out at my place and the dog and I always watch Canucks games together. Can we watch it here?"
Bartender says: "OK, but you'll have to go to the end of the bar."
Game starts. Canucks score. Dog jumps up, races the length of the bar, does a back flip in front of the bartender and gives him a high five.

Bartender says: "That's amazing. What does he do if the Canucks win."
Guy says: "I don't know. I've only had him three years."

OK, it isn't the greatest joke in the world. But the point is people are now making jokes about the Canucks and that's dangerous.