1. 2008 Canadian Energy Survey* Survey of 2007 Results
John Williamson
National
Energy & Utilities Leader
PwC
*connectedthinking
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2. PricewaterhouseCoopers’ Energy & Utility Practice
2008 Canadian Energy Survey
PricewaterhouseCoopers’ Energy & Utility Practice
PricewaterhouseCoopers LLP has been serving the energy industry for more than 100 years and is the leading provider of business solutions to the global energy industry.
More than 550 professionals assist our Canadian energy clients in every market sector
More than 3,100 Energy specialists are assigned full time to the Global Energy Group and excess of 300 partners serve Global Energy companies worldwide
This Survey provides a performance outlook in numerous sectors that comprise Canada’s energy industry and summarizes the financial and operating information of the top 100 Canadian public oil & gas companies and 24 oil & gas income trusts for the fiscal years ended in 2007.
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3. 2008 Canadian Energy Survey
Tax Update
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4. 2008 Canadian Energy Survey
Tax Update
In December 2007, the federal government enacted additional tax rate reductions - decreasing corporate tax rates from per cent in 2007 to 15 per cent in 2012
Canadian companies are ‘casting their nets out further’ – PwC can assist in ensuring provincial allocation rules are met, while advising on short and long term implications of international ownership and financing arrangements
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5. Scientific Research and Experimental Development (SR&ED)
2008 Canadian Energy Survey
Scientific Research and Experimental Development (SR&ED)
The 2008 federal budget has enhanced SR&ED tax incentives by increasing:
Annual expenditure limits
Taxable income and capital phase-out ranges
Provisions now allow for certain salary or wages incurred outside Canada to quality for the SR&ED credit
The Alberta government has introduced a SR&ED credit of up to 10 per cent - up to $4 million of eligible expenditures incurred, for a maximum annual credit of $400,000. This applies to all eligible expenditures incurred after December 31, 2008
PwC’s SR&ED team can help you with:
Scoping of projects
Claim preparation
Audit defense and appeals, if necessary
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6. 2008 Canadian Energy Survey
IFRS Update
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7. 2008 Canadian Energy Survey
IFRS Update
The CICA has approved Canada’s move to IFRS effective January 1, 2011
Extractive industries are struggling to assess the impact that IFRS will have on current accounting frameworks
Oil and gas companies are paying particular attention to the identification of Cash Generating Units (CGUs), as this will impact impairment assessments of resource properties
The message for all companies is to start asking questions about this now
PwC is actively involved with many energy clients in IFRS evaluations through a proven testing methodology used in the UK and other IFRS-adopted countries
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8. 2008 Canadian Energy Survey
Junior Oil and Gas
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9. 2008 Canadian Energy Survey
Junior Oil and Gas
Continues to be an important part of the Canadian energy industry
Junior market will continue to strengthen in two main areas: technology and resource exploration
Canadian energy sector remains well-represented around the world with our knowledge of complex resources and advanced recovery techniques
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10. 2008 Canadian Energy Survey
Oil Sands
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11. 2008 Canadian Energy Survey
Oil Sands
A clear economic shift is occurring due to oil sands development. We are seeing a movement from central to western Canada
It is estimated that within the next 10 years, in excess of $250 billion will be spent on construction alone in Alberta
PwC has a broad range of expertise to assist your company through acquisitions, joint ventures, production sharing or diversification
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12. 2008 Canadian Energy Survey
Environmental
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13. 2008 Canadian Energy Survey
Environmental
Since January 1, 2007, significant environmental developments have taken place at the federal and provincial levels with respect to greenhouse gas regulations
A ‘patchwork’ of environmental management initiatives have emerged across the country, with Alberta being the first province in Canada to pass regulations requiring both reporting and reductions of greenhouse gas emissions
Ontario, British Columbia and Manitoba have expressed their intentions to participate in an international carbon trading scheme. And Quebec has introduced a carbon tax on petroleum products
PwC’s Climate Change practice can assist companies with:
Green technology feasibility assessments
Verification of project emission reductions
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14. 2008 Canadian Energy Survey
Statistics
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15. 2008 Canadian Energy Survey
Financial Statistics
The Top 100 E&P companies showed growth in financial performance compared with 2006: gross revenues grew an average 17 per cent
Among the Top 100 E&P companies, average cash flow from operations increased by 10 per cent to $443 million
Capital expenditures grew 8 per cent to an average of $464 million
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16. Operational Statistics
2008 Canadian Energy Survey
Operational Statistics
Operating costs increased again this year - rising 9 per cent due largely to escalating labour and materials costs
Among all companies, gas reserves as a percentage of total reserves averaged 57 per cent in 2007 – a 1 per cent increase from the previous year
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17. 2008 Canadian Energy Survey
Trusts
Trusts included in the 2008 Canadian Energy Survey decreased from 32 to 24 as a result of merger and acquisition in 2007
Total market capitalization of the trusts in the survey decreased to $60 billion, a decline of 6 per cent from the prior year
The average cash flow per share for conventional trusts has increased to $3.42 in 2007 from $3.39 in 2006 due mainly to the higher crude oil and natural gas liquids prices
Distributable income increased by 11 per cent
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18. 2008 Canadian Energy Survey
2008 Outlook
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19. 2008 Canadian Energy Survey
2008 Outlook
For first quarter 2008, crude oil prices have continued to be strong
Commodity prices are expected to remain at high levels for 2008 given projected growth in Asia and continued and escalating geo-political unrest in certain OPEC nations
The pressures of rising costs, a strong Canadian dollar and the commitment to manage environmental concerns are impacting earnings
We are an energy reliant society, therefore we will see continued exploration and development by companies of all sizes
Long term - the impact of proposed spending in the energy industry will reach across the entire country and will provide benefits to many
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20. Thank you.
John Williamson
© 2008 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers.
PwC
9/18/2018