Quote:
Originally Posted by Slava
First, let me say that I agree and its crazy that they've let this drag out. But the question I have is how much capital we're really talking about here. With WCS in the teens and no indications of a sudden rebound to anything economical its not like companies are chomping at the bit to deploy cash here. I definitely see that the uncertainty they've caused by these delays is bad, and I don't love a lot of their policies. If people want to say the carbon tax is a problem for the oil patch I can totally see that angle. I just think that the issues around how much investment are taking place are really out of their hands. Maybe a couple percent is related to the uncertainty from the royalty review and what, 98% is due to the fact that the commodity is uneconomical at this point. That's obviously a made-up number on my part. As much as I would love to say "its their fault" the reality is something different, unless there are obvious things I am overlooking?
btw, thanks for your posts here Frequitude. Its great to get some of the industry views and info for those of us who are elsewhere!
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I suppose there's two types of capital I'm thinking of. One is actual cash capex spent by companies (my world). The other is shareholder capital that invest in corporate equity (your world...might have described that incorrectly).
On first one, you are right. Not a lot of it today has to do with royalty uncertainty. The price of oil does. I would suggest that impact was higher back at $75 when more stuff was slightly economic.
Its the second one that I'm referring to. Shareholder capital waiting on the sidelines to figure out how to value Alberta oil and gas companies. It's a bit of a turn-of-phrase, but I am suggesting that there is a lot of shareholder capital sitting on the sidelines right now wanting to get back in to the oil & gas space but waiting for the new framework first. Again, that's way more your world than mine so I'm open to be educated on that.