Oil plunge to dim sparkle of Canada’s first balanced budget in 7 years

Financial Post

OTTAWA — The dive in oil prices last year means the budget that Canadian Finance Minister Joe Oliver delivers on Tuesday will contain fewer big treats for voters in October’s election than the Conservative government had hoped.

[np_storybar title=”Finance Minister Joe Oliver has it right” link=”http://business.financialpost.com/fp-comment/terence-corcoran-finance-minister-joe-oliver-has-it-right”]
Terence Corcoran: Oliver appears to be sending a signal that now is not the time to begin fresh operating deficits to stimulate the economy. The future is unpredictable, but so far Oliver has it right. Read on
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When Oliver releases a fiscal plan at about 4 p.m. Ottawa time that will end a seven-year run of deficits just in time for October elections, as the governing Conservatives prepare to run on their reputation as fiscally responsible tax-cutters.

The Conservatives, seeking a rare fourth consecutive election win, had initially forecast a $6.4 billion budget surplus for the 2015-16 fiscal year and made no secret…

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Canada’s oil, gas companies lack long-term strategy amid price plunge, survey shows

Financial Post

Canadian oil and gas companies have been quick to initiate short-term fixes to withstand the downturn, but haven’t spent much time focusing on long-term strategy to sustain their business in an era of low oil prices, according to a new survey.

[np_storybar title=”Calgary’s C-suite feels the heat in oilpatch downturn: ‘We will see a bit of house-cleaning’” link=”http://business.financialpost.com/news/energy/calgarys-executive-suite-feels-the-heat-in-oilpatch-downturn-we-will-see-a-bit-of-house-cleaning”]

A handful of executives in Calgary’s downtown towers have been casualties of the severe oilpatch downturn, but current corner-office occupants should be able to keep their jobs – for now
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Nine out of 10 Canadian oil and gas companies surveyed by management consultancy Ernst & Young reported having either minimal or no long-term strategic cost management strategies in place to counter the current unfavourable economic conditions.

Like their global counterparts, Canadian oil and gas companies reacted swiftly to a 50% drop in prices since September by reining in capital costs, cutting…

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Oil rot spreads as loan default claim puts Connacher Oil and Gas on brink

Financial Post

A New York lawsuit is threatening to make Connacher Oil and Gas Ltd. a casualty of crude’s collapse in Canada’s oil sands as creditors squeeze small producers in one of the priciest places to extract the fuel.

As oil prices resumed their slide to a new six-year low this week, creditors filed suit on Monday demanding Connacher immediately repay a $128.4 million loan. If successful, the suit would make it difficult for the company to stay in business unless it finds some other source of capital, according to Moody’s Investors Service Inc.

Connacher is among smaller oil-sands companies that drew interest from debt investors willing to finance upstart developments when U.S. crude prices averaged more than $90 a barrel. With prices now about half that, those so-called junior developers are fighting to stay afloat.

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“In this new pricing environment, my view is it’s going to be a struggle…

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Low oil to have ‘both positive and negative effects’ on Canadian economy, Ottawa told

Financial Post

OTTAWA — Barring a lower-for-longer period for oil prices, the impact of the plunge in crude costs is both good and bad for Canada — a view that has gained traction since the collapse in energy markets almost a year ago.

[np_storybar title=”A thousand Alberta oilsands workers got surprise layoff notices from Husky Energy contractor” link=”http://business.financialpost.com/2015/03/12/about-1000-oilsands-workers-laid-off-unexpectedly-at-husky-energys-sunrise-project/”]

About 1,000 construction workers employed by a contractor at Husky Energy Inc.’s Sunrise oilsands project were laid off unexpectedly on Wednesday, a union official confirmed.

Izzy Huygen, a Fort McMurray, Alberta, representative of the Christian Labor Association of Canada, said many of the workers had expected their jobs to last until summer but were informed of the layoffs on Wednesday morning.

Continue reading.
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However, there is wide agreement the drop in oil prices will have economic implications across the country, one way or the other, industry leaders and economists told a House of Commons finance…

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Tales from the oil sands downturn: ‘You need to have a fair bit of intestinal fortitude to be in this business’

Financial Post

The pain of crude’s collapse is beginning to bite in Alberta, from the oil sands boomtown of Fort McMurray to the corporate boardrooms of Calgary.

[np_storybar title=”Calgary homeowners and buyers left wondering what’s next as once-sizzling housing market chills” link=”http://business.financialpost.com/2015/02/23/calgary-homeowners-and-buyers-left-wondering-whats-next-as-once-sizzling-housing-market-succumbs-to-chills/”]The city’s real estate sector has cooled tremendously thanks to a precipitous decline in oil prices and that has people speculating what will happen to housing prices. Read on
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As the $340-billion petro-economy confronts an oil market meltdown, a decade-long investment spree is being reversed, layoffs and spending cuts are in full swing at companies such as Suncor Energy Inc., and everyone from oil drillers to real estate agents is feeling the pinch.

In Fort McMurray, where the oil is so near the surface it oozes out of the ground in places and coats people’s boots, the mayor is reconsidering city projects. In Calgary, which boasted Canada’s biggest concentration…

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RBC predicts oil price rebound will help province avoid recession in 2015

Calgary Herald

An RBC Economics report suggests a rebound in oil prices, starting by the middle of this year, will help Alberta avoid a recession.

The report, by senior economist Robert Hogue, said an uptick in prices will “help rebuild confidence in the province and prevent activity from entering a full-blown contractionary spiral.”

While Hogue’s analysis says the province won’t see a recession, it suggests a dramatic slowdown in economic growth — it forecasts real GDP growth of 0.6 in 2015, down from 2.7 predicted in the bank’s December outlook. GDP growth was 4.1 per cent in 2014.

Hogue said the most immediate effect of the slide in oil prices in Alberta is a significant drop in capital spending plans by oil companies. The Canadian Association of Petroleum Producers has forecast that member companies would cut investments by 33 per cent in Western Canada in 2015, including a 24 per cent reduction in the…

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Plunging oil prices prompt sudden rate cut from Bank of Canada

Global News

WATCH: Eric Sorensen explains why the Bank of Canada made the surprise interest rate cut and why it matters to you.

The Bank of Canada stunned economy experts and financial markets on Wednesday by cutting its benchmark overnight interest rate by one-quarter of a percentage point, to 0.75 per cent.

That might not sound like much, but the surprise move is the wrong direction financial experts want rates headed in as consumers confront record debt loads. A fresh cut to interest rates will encourage more borrowing.

The immediate risks for the national economy presented by plunging oil prices however outweigh consumer debt considerations, according to the bank.

“This decision is in response to the recent sharp drop in oil prices, which will be negative for growth and underlying inflation in Canada,” it said in a statement.

Canada’s central bank is responsible for influencing interest rates charged by private banks and lenders, as well as…

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Bank of Canada expected to slash outlook most since 2008 as oil rout plunges economy into ‘another era’

Financial Post

Canada’s central bank will make some of the deepest cuts to its economic and inflation outlooks since the 2008 financial crisis, economists said, as the drop in oil prices raises the prospect of lower interest rates this year.

[np_storybar title=”Five reasons 2015 already sucks for Canada’s economy” link=”http://business.financialpost.com/2015/01/20/dont-expect-a-rate-hike-before-2016-canadians-because-2015-already-seriously-sucks/”]The sour start to the year is prompting more economists to push back forecasts for a Bank of Canada rate hike and lower their forecasts for growth and the Canadian dollar. Find out why
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Governor Stephen Poloz will release the bank’s quarterly monetary policy report at 10 a.m. today in Ottawa, along with the January rate decision. The Bank of Canada is expected to keep its main rate at 1%, where it’s been since 2010, according to a Bloomberg survey of 21 economists.

The Canadian dollar fell to its weakest in five years Tuesday on speculation the more than 50% drop…

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Schlumberger to cut 9,000 jobs as low oil prices bite

Financial Post

Schlumberger Ltd., the world’s biggest oilfield-services company, said it would cut 9,000 jobs and take a $1.27-per-share charge in the fourth quarter as it prepares for an “uncertain environment” after the collapse in oil prices.

“In response to lower commodity pricing and anticipated lower exploration and production spending in 2015, Schlumberger decided to reduce its overall headcount to better align with anticipated activity levels for 2015,” the company said. “Schlumberger recorded a US$296-million charge associated with a headcount reduction of approximately 9,000.”

Net income dropped to US$302-million, or 23 cents a share, from $1.66 billion, or $1.26, a year earlier, Houston-and Paris- based Schlumberger said today in a statement on Businesswire. Excluding one-time items, Schlumberger earned $1.50 a share in the fourth quarter, beating the $1.46 average of 34 analysts’ estimates compiled by Bloomberg.

Energy companies, coping with a 42% decline in oil prices during the last three months of…

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Stocks, consumer confidence, housing gripped by crashing oil prices

Global News

Oil’s collapse is deepening, cutting a wide swath across Canada’s economy in the process.

Outright fear gripped Canadian energy stocks on Monday after an influential analyst report suggested crude prices could fall to as low at $43 a barrel (U.S.), sparking a sell-off of major oil patch firms like Suncor, Imperial Oil and Encana.

The report helped send oil prices to levels not seen since mid-2009 when the Canadian and global economy were mired in recession. International oil prices have now fallen more than 35 per cent since the summer.

U.S. investment bank Morgan Stanley said it believes oil could crumble to the low-$40s range, with “peak oversupply” flooding the market during spring or early summer 2015.

The read-through: further turbulence lies ahead, for stock markets, the Canadian dollar, government revenues and the economy. “Markets risk become unbalanced,” the Morgan Stanley report said.

A report from CIBC also released Monday suggests…

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