Canadian dollar sinks below 88 cents as Saudis cut oil to $77

[Mr.Coffee]

Originally Posted by lorenavedon

I keep hearing stuff like this and how there are companies that are profitable at much lower prices. A few major producers that can still turn a profit at low prices will not sustain the Alberta economy and the tens of thousands of people moving here every year for these mythical million dollar zero experience jobs everyone thinks is out here. Job creation in Calgary is not because of a few major companies. It's the thousands of small companies that depend on other small companies consistently feeding them small jobs, projects, pipelines, wellsites etc. If you think a few major producers in the oil sands is going to sustain a city of 1,300,000 people and $600,000 average house prices you have another thing coming. A profitable company in tough economic times will still scale back to increase efficiencies. These few companies will still lay off as many people as possible and run on skeleton crews while smaller EPCMs will continue to lay off until they go bust due to lack of small projects. Around Calgary right now there is nothing but layoffs. Just because you know of an engineer that has it good working for Suncor is not a reflection of the economy right now among small EPCMs that are laying off staff all over the place. I don't think there is room at Suncor or EnCana for 50,000 new people that no longer have work. The economy moves slow, just wait until next year when these laid off people start to run out of savings and EI and have to chose between putting food on their table and paying off their $600,000 mortgage. People need to remember that a profitable company keeping things stable does not create or sustain jobs. To sustain jobs at engineering companies you need a constant stream of NEW projects. There are no NEW projects. Everything has been put on hold or canned altogether.

Tough to take this seriously when there isn't 1 drop of grey in your palette. The world rarely operates in such a black and white manner despite our best wishes it would be for ease of understanding. What do you do for a living? Are you in oil and gas?

The reality is that the energy sector that bolsters the Albertan economy isn't only predicated on the price of oil. The WCSB is primarily a natural gas rich basin. Many of the juniors, intermediates and drilling going on in this province is for natural gas which, from what I saw today, was showing December futures at over $4. This was on news of a colder winter. Since nobody can really predict the winter, and since nat gas is basically a moving benchmark based on existing storage levels and cold weather forcing heating use, not the price of oil, many companies that primarily produce natural gas aren't really all too bothered by the price of WTI dropping. Spoke with the president and CEO of a small public start up, they are profitable at $2. Maybe not drilling immediately, in certain areas and in certain ways (ie. maybe not long reach laterals but maybe in cheaper shallow vertical, with stacked multi-pay plug and perf competions that you can bang out in a day per well).

The reality is that if this sector suffers a correction, and I think you're right in that we are facing a cooling of the economy, it will force our raping cost structures to lower and services will be forced to reduce prices until they can get work and development can start again. In fact, I believe a service correction on pricing is absolutely necessary in this province because things were getting too noncompetitive vs our competing plays and jurisdictions like the Eagleford (Texas) or Marcellus (Pennsylvania / East US). Producers may get hit, they may lay off some (not all, like you like to predict) and things will correct and it will be back to normal.

The long term concern of the province, however, is not this little price war spurred by foreign politics but the longer term and ultimate decline of hydrocarbons as a primary energy source. I believe the UN released some pretty damning information that points at the oil and gas industry specifically, with respect to quite literally the human race's survival requiring the slow down of oil and gas. That will become an issue more and more as climate change continues to worsen. If you want to play Nostradamus you should start to focus on things like this. Meanwhile, you're act needs a bit more grey and balance in order for people to take you seriously, because while yes things aren't looking amazing, it really is not going to be the end of the world or 1.3MM people on the street looking for jobs.

I can tell you right now, we just got our budget for next year. Is it reduced? Yeah, a little... but we're still planning on drilling several wells. The company needs people to do that.

[Mr.Coffee]

I should also add that if you talk to any older or senior oil and gas worker, they'll tell you the industry is cyclical, it always has been and always will be. Nothing lasts forever, I think everyone already knows that.

[fundmark19]

Companies are shifting more to permanent employees rather than contractors in the last 12 months. Companies are being pickier about the type of people they are hiring but hiring is still taking place I don't see any doom or gloom from my end

[Yellefan]

Originally Posted by lorenavedon

employment has been slowing down already since early this year. The low oil prices will do nothing but fuel continued layoffs. The unemployment numbers are meaningless when %99 of the people working in EPCMs are contractors that don't factor into these numbers. People here made a lot of money and have large nest eggs so even when they stop getting new work / contracts they can last quite a while before panic sets in. If things don't pick up, 2015 doesn't look so hot.

As someone who works for an EPC I'd say your number is way off. I'd say 1-2% of our people are contractors-- how would an EPC make money otherwise paying contractors? Bill Bill Bill

[lorenavedon]

Originally Posted by Yellefan

As someone who works for an EPC I'd say your number is way off. I'd say 1-2% of our people are contractors-- how would an EPC make money otherwise paying contractors? Bill Bill Bill

I don't think some of you are aware of what a contractor is. They're basically an employee like everybody else but they run their money through their incorporated company first before paying themselves. It's just another way of getting paid. EPCMs prefer paying regular employees as contractors as they avoid all the hassles of a staffed employee (benefits, 2 weeks layoff notice, vacation time, sick time, etc). Almost every job I've had the company would insist that if I didn't have my own company they would pay to set it up for me just so they could hire me as a contractor instead of in a staff position. This is extremely common in Alberta. I've had interviews where they said that they wouldn't even consider hiring anyone on staff and that if I wasn't incorporated to not even bother.

[fundmark19]

Originally Posted by lorenavedon

I don't think some of you are aware of what a contractor is. They're basically an employee like everybody else but they run their money through their incorporated company first before paying themselves. It's just another way of getting paid. EPCMs prefer paying regular employees as contractors as they avoid all the hassles of a staffed employee (benefits, 2 weeks layoff notice, vacation time, sick time, etc). Almost every job I've had the company would insist that if I didn't have my own company they would pay to set it up for me just so they could hire me as a contractor instead of in a staff position. This is extremely common in Alberta. I've had interviews where they said that they wouldn't even consider hiring anyone on staff and that if I wasn't incorporated to not even bother.

As someone who works exclusively with a large EPC when cost savings came down the pipeline contactors were eliminated for the most part and it is a skeleton perm employees who are left. The hiring that does happen has been focused on perm employees. There are a couple of contractors still who cover mat leaves and what not but it is not like it used to be. This is on the finance and accounting side of the business I can't speak for engineering side.

[ExiledFlamesFan]

Originally Posted by Mr.Coffee

I should also add that if you talk to any older or senior oil and gas worker, they'll tell you the industry is cyclical, it always has been and always will be. Nothing lasts forever, I think everyone already knows that.

Exactly. And any Calgarian should be well aware. Our petro based economy has its ups and downs. We just went on a great 4 year boom but things are already coming back to earth.

http://business.financialpost.com/20..._lsa=8d94-b68a

[Ace]

^That article is also projecting production increases

[ExiledFlamesFan]

Originally Posted by Ace

^That article is also projecting production increases

And it will be the first of many O&G companies to report falling profits.

[_Q_]

Originally Posted by lorenavedon

I don't think some of you are aware of what a contractor is. They're basically an employee like everybody else but they run their money through their incorporated company first before paying themselves. It's just another way of getting paid. EPCMs prefer paying regular employees as contractors as they avoid all the hassles of a staffed employee (benefits, 2 weeks layoff notice, vacation time, sick time, etc). Almost every job I've had the company would insist that if I didn't have my own company they would pay to set it up for me just so they could hire me as a contractor instead of in a staff position. This is extremely common in Alberta. I've had interviews where they said that they wouldn't even consider hiring anyone on staff and that if I wasn't incorporated to not even bother.

I think we all know what a contractor is.

I know this is all anecdotal, but I've worked for 4 different EPCs and the number of contractors at each company was very small, as in less than 10% of the staff. In fact I can only think of 1 contractor right now at my current job out of about 80 employees.

I'm sure everyone around here has had similar experiences to me, but this is now getting a bit off topic.

[Bill Bumface]

I'm really glad someone could come in and finally explain what a contractor is... lol. I've always wondered! I didn't even realize that I used to be one!

[Hack&Lube]

Originally Posted by hulkrogan

I'm really glad someone could come in and finally explain what a contractor is... lol. I've always wondered! I didn't even realize that I used to be one!

How could you be incorporated and not even know it?

[ranchlandsselling]

Originally Posted by Hack&Lube

How could you be incorporated and not even know it?

Too busy taking out $600k mortgages and hording inner city land. With all that who has time to follow what's going on in their own life.

[Johnny199r]

It would be nice to see a sustained period of lower oil prices for those thinking about buying a house (me) in Alberta. It may not result in a 2007-2008 type decline in real estate prices, but any little bit would sure be nice.

[Hack&Lube]

Originally Posted by Johnny199r

It would be nice to see a sustained period of lower oil prices for those thinking about buying a house (me) in Alberta. It may not result in a 2007-2008 type decline in real estate prices, but any little bit would sure be nice.

I don't know. I was recently at some condo presales and there were like 200 chinese people there scrambling after scraps and waving money and signing papers in a competitive frenzy like it was some mad auction.

Even if oil prices are depressed, will these external factors come into play? It's already a big deal/big issue in Vancouver and parts of Asia.

[Ace]

Originally Posted by Johnny199r

It would be nice to see a sustained period of lower oil prices for those thinking about buying a house (me) in Alberta. It may not result in a 2007-2008 type decline in real estate prices, but any little bit would sure be nice.

I just spoke to another builder claiming another price increase in a week. Not sure what to make of that.

[Bill Bumface]

Originally Posted by Hack&Lube

How could you be incorporated and not even know it?

Maybe I was being sarcastic when opening a company at the desk of the Registry too

[Johnny199r]

Originally Posted by Hack&Lube

I don't know. I was recently at some condo presales and there were like 200 chinese people there scrambling after scraps and waving money and signing papers in a competitive frenzy like it was some mad auction.

Even if oil prices are depressed, will these external factors come into play? It's already a big deal/big issue in Vancouver and parts of Asia.

Ive lived in two condo buildings. In both buildings it seemed that 50% of occupants were Asian. I dont know why they flock to condos so much.

Im not sure if that is translating to houses in Alberta too.

[Travis Munroe]

I recently spoke to a new development sales person who has worked in the industry for quite some time. He said he has never seen so many pre sales coming in from China to people who had never seen the site or show suite.
Take it for what its worth as it was 1 persons take but he also mentioned that many of the pre sale purchasers were previously investing in Vancouver.

[Bill Bumface]