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INSIDE ALBERTA’S SHE’S BACK: THE RETURN DAVID YAGER ON

PETROCHEMICAL GAMBLE OF ALISON REDFORD THE RECOVERY

The Business of Energy

THE

THE MOST COMPREHENSIVE RANKING OF


CANADA’S TOP ENERGY COMPANIES
Top Oil Producer
SEVEN GENERATIONS
ENERGY
Top Gas Producer
PAINTED PONY
PETROLEUM
Top Midstream Company
TRANSCANADA
Top Service Company
PACKERS PLUS
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JUNE 2016 volume  issue 
CONTENTS

THE

Our complete ranking of the biggest oil, gas, midstream 26


and service companies of 2015. Plus a look back on the year The Deluge
that was—and the lessons we can all learn from it Sometimes the storm can seem
to last as long as the calm that
25 came before it

28
The Performers
Canada’s top energy companies
ranked by cash flow, netbacks
production, and more

40
The List
The definitive list of
Canada’s Top 200 energy
and services companies
32 Top Midstream Company 34 Top Gas Producer
48
The Departed
Bring out your dead! It’s never
easy to say goodbye. But in 2015,
we had a lot of practice at it

51
Go With The Flow
Energy service firms that are
closest to their producers’
cash flows will survive. Those
counting on capex budgets in
2016 will not
36 Top Service Company 38 Top Oil Producer BY DAV ID YAGER

FEATURES 64
55 58 64
Junior Highs Industrial Heartland: The World According
Don’t count the junior energy Chasing the Plastic Dragon to Alison
sector out just yet. These five Why the first Canadian hydrocarbon The divisive former premier
junior companies are ready to products to reach Asia might not be returns to the forefront of
pop when the market returns gas or liquids at all Canadian energy policy
BY JODY CHUDLEY BY ABDELGH ANI HENNI BY TODD COY NE
AND NICK W ILSON

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JUNE 2016 3
volume  issue  JUNE 2016

CONTENTS

THIS MONTH ON
ALBERTAOILMAGAZINE.COM

12
DEPARTMENTS BUILD YOUR OWN “THE 200” LIST
Check out our database of Canada’s Top 200 energy companies of 2015,
6 EDITOR’S LOG with more interactive categories than we could fit into the magazine. All
In the wake of devastating wildfires, the country our criteria are uniquely sortable, so you can create your own list today
has wrapped its arms around Fort McMurray. It hasn’t
always been so

11 OBSERVER
Oil country ablaze; an employee-owned services
company; and Enbridge tries to hit restart on the
Northern Gateway pipeline

70 SMART MONEY
Demand for equity financing is surprisingly strong, With new government funding
and an M&A trend is now poised to take off. Here’s comes a renewed focus. The
how to separate the winners from the losers spotlight is back on Alberta’s
BY MARTIN PELLETIER petrochemical industry. Your favorite energy
We continue our three-part podcast is back for
72 RETURN ON INVESTMENT
series exploring Alberta’s another month of clips
A small-time oilfield manufacturer is renewing his Industrial Heartland this and conversations about
business in the downturn with the help of renewable month with petrochemicals. the issues that matter in
energy—and an infusion of Swiss capital Go online to read more about your world. Download
Part Two of Heart Beat at it free from iTunes
74 LAST WORD
AlbertaOilMagazine.com/
How Canada’s energy sector can find $30 billion in
AIHrefineries
savings over the next five years
BY LANCE MORTLOCK

Visit AlbertaOilMagazine.com/EnergyInk
CONTENTS IMAGES ADRIEN VEZCAN, BRYCE MEYER, COOPER + O’HARA for the latest from our editors

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4 ALBERTAOILMAGAZINE.COM
EDITOR’S LOG

Spirit of Fort McMurray


THE PAST MONTH HAS SHOWN US A memories. Please pray for our family sick and infirm to an oil sands operator’s
lot of tragedy, compassion, hope and today. Our hearts are broken.” Emily was airport. From there they went to hospi-
pride. Oil workers and environmental- with Aaron Hodgson, who also died in tals in Edmonton or Calgary. Spring and
ists, easterners and westerners, urban- the crash involving a tractor-trailer just several staff members lost their homes to
ites and rural dwellers, and politicians after the two had escaped the flames. the flames.
of all stripes have rallied around Fort When Chris Burrows’s neighbor saw AFD Petroleum offered free gas
McMurray in the wake of the wildfires a 100-meter high wall of flames bearing to motorists who made it to its camp
that ravaged the Canadian oil town. down on their two homes, instead of at Mariana Lake, south of the city.
Neighbors risked their lives helping one fleeing, he tried to enter Burrows’s house They helped day and night until the
another. Aid poured in from across the to wake him. They both escaped their fuel ran out—unable to get more due
country. Albertans on the other side of homes that are now ashes. to traffic restrictions. The Fort McKay
the province threw open their doors to Paul Spring and his staff used their First Nation, about 60 kilometers north
evacuees. The individual stories of trag- helicopter fleet to rescue people, until of Fort McMurray, housed evacuees in
edy, loss and sacrifice, heroism and the the flames reached their hangar, forcing camp lodges until the lodges were
kindness of strangers tell the tale of the them to flee, themselves, by road. They filled beyond capacity. And still they
whole—the spirit of Fort McMurray. didn’t have time to fill up their tanks kept helping and giving. Syncrude
The blaze inadvertently took a and soon ran out of fuel. A man ap- sent its fire truck into the city, CNRL
firefighter’s daughter. Cranley Ryan, proached and said, “Can I give you guys supplied aircraft.
the deputy fire chief for Saprae Creek in anything? You saved me yesterday—me There are too many stories of selfless
Wood Buffalo, lost his 16-year-old Emily, and my family.” One of Spring’s helicop- actions of individuals and organizations
a triplet, in a car crash while fleeing ters had rescued them, including eight to tell. No one has charged a cent for
the flames. There could be no greater children, from a house cut off by fire. any service given. This is the proud but
heart-rending loss for a man who chose The man filled Spring’s tanks with 400 silent spirt of Fort McMurray.
a profession that puts his own life on the liters of fuel—for free, which is exactly
front line to rescue others. Her stepmoth- how Spring provided his impromptu
er, Melanie, posted a photo of the family rescue service. They continued piloting
on her Facebook page with the message, seven helicopters round the clock from NICK WILSON
“No words can be found, just precious a work camp further south taking the nwilson@albertaoilmagazine.com

Top 35 Under 35 The Diversity Issue Middle East Meltdown


In the Our list of the Canadian energy Despite its lingering cowboy image, Tensions between Iran and Saudia Arabia
next issue sector’s best and brightest Alberta’s energy sector is one of the are nothing new. Our reporter in the region
of AO minds who are already shaping most diverse anywhere. We’ve got the gives us a view into why this time might be
the future of the industry data to prove it much, much different

6
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LEADING INDICATOR
Observer NEWS
NUMBERS
PEOPLE
PLACES

A yard in Gascoyne, U.S. houses hundreds of


kilometers of pipe sections that are supposed
to make up the Keystone XL pipeline, should
it ever be approved. This photo was taken on
April 22, 2015. The pipe sections have been
sitting at this location for three years

The Indicator: 1.5 million


THAT’S THE NUMBER OF BARRELS PER DAY OF shrunk, leaving excess capacity that Canadian oil sands producers
Canadian crude that U.S. Gulf Coast refineries could process could fill. But shipping crude by rail from Canada to the U.S. Gulf
if pipeline access to the region was expanded. This 50-percent Coast is wholly uneconomic from the producer’s standpoint,
increase over today’s capacity is estimated by the Canadian according to a CERI study. The study found that net revenues
Energy Research Institute (CERI). In the past 10 years, heavy crude for Canadian producers average about US$13 per barrel before
imports from Mexico and Venezuela to those refineries have transportation costs.

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CPIMAGES JUNE 2016 11
THE ASK

Survive
and Thrive
It’s no secret that the downturn
in commodity prices has been
tough, not just on energy
companies, but on the service
providers that depend on them
too. Alberta-based Spartan
Controls is one of those providers,
and its employees have an added
interest in assuring the company’s
success—with no outside
shareholders, the employees are
the company’s sole owners and
they share in the company’s
profits accordingly.
Spartan is a process control,
measurement and automation sup-
plier for many different industries
in Western Canada, including oil
extraction and water treatment.
The company’s chief focus is on the
oil and gas industry, and last year
was not an easy one for the sector.
GRANT WILDE, president of Spar-
tan Controls, doesn’t mince words
when it comes to how the company
is weathering the downturn. Sure,
it’s getting leaner, but it’s also
getting more efficient. Today, em-
ployee ownership remains at the
core of the company’s culture and,
according to Wilde, it’s the back-
bone of the company’s persistence
during this recession too.

Grant Wilde, president


of Spartan Controls

12
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ALBERTAOILMAGAZINE.COM PHOTOGRAPH COOPER + O’HARA
What has been Spartan’s strategy during specialize in an area like oil and gas technologies and solutions can reduce
the oil slump? when the commodity is up. How do methane use or emissions and CO2 and
We’re focusing on what we can control. you find that balance at Spartan? NOX emissions. This can be achieved in a
The price of oil is not that. We’re managing We provide a very broad range of number of ways. One is optimizing process
our costs tightly; we’re helping our custom- automation solutions to all the process performance by using less energy inputs to
ers reduce their costs; we’re trying to help industries. So that means regardless of produce a certain amount of product. An
them improve their production efficiency; whether you’re building or operating a example would be reducing the amount of
and we’re helping them with their envi- pipeline, a power plant, a potash mine, a steam used to produce bitumen in a SAGD
ronmental compliance and safety. Those pulp and paper mill, a gas plant, a refinery, facility: it reduces the steam to oil ratio.
are broad key areas. Another area we’re an oil sands plant or even a waste water That would be one way to help. Another
heavily focused on is helping our custom- treatment facility, our instruments, valves, example is capturing vented hydrocarbons
ers improve their sustainable spending. control technology, package solutions and or methane and piping it into a gas engine
That would be in the areas of mainte- services have a fit in all of those industries. to burn them as a supplemental fuel
nance, reliability and overall performance. We are very industry diverse. Having said source. We reduce the amount of fuel
We have brought that together in some- that, the oil and gas industry is still by consumed and the CO2 emissions plus our
thing we call Spartan MRP. As our technol- far the largest single industry with the control technology allows the engines to
ogy is instrumenting and controlling a lot greatest amount of automation spend. It is run better.
of [our customers’] assets, we see that we our largest customer base and it’s critically For both these examples we are reduc-
have a significant role to play in helping to important to our business as it is critically ing inputs or operating costs and increas-
improve the ongoing operations of those important to the economy of Alberta and ing production or revenue potential. So
assets. For us, that means helping improve Canada. This unprecedented downturn is that’s the producer side. The service firms
their turnaround, increasing equipment very challenging for our business as it is side is trickier. Our REMVue technology
and facility reliability, improving overall for all of our customers. can also be used by well-service companies
plant performance and operations man- where they would have typically used
agement. We have a lot of initiatives on the How are you leveraging the low Canadian trucked-in diesel to run their equipment.
go and, frankly, we’re working harder than dollar to your advantage right now? They can now use local onsite natural
ever to support our customers in challeng- We are based in Western Canada, so gas at a reduced cost. A second piece to
ing times. although we do have a significant local the service company part of the equation
In the long term, we think those are automation packaging capability, services, is that service companies also have the
the things that we can do to continue to repair and labor pool component and opportunity to boost revenues, as some of
earn their business and, ultimately, loyalty some international exposure through our the modifications to existing facilities will
from our customers. There are areas local EPC engineering contractors and be required to take advantage of the new
that we can do better collectively and we fabrication customers, generally a low- environmental technologies.
certainly need to. It’s a global marketplace Canadian dollar is not a net benefit to our
and we have to compete in that global business. So, with less export opportunity What opportunities are there for Spartan
marketplace and sometimes the playing does come some significant local focus. as a result of the recent royalty review
field is not as level as we would like it to be. We’re doing all we can to creatively man- with regard to carbon pricing and
However, we have to work on those things age and grow our business here at home. methane regulations?
that are in our control and do the best that If the government can appropriately man-
we can. Cost-efficient and environmentally age carbon taxes—and those are soon to be
friendly technologies are all the rage right collected in a much broader way starting in
Having a diverse portfolio obviously now and likely will be for the foreseeable 2017—and the industry can leverage those
limits the risk incurred from a downturn future. Is that an area that Spartan is funds for innovation and improvement,
in one particular sector. Yet, it can focused on? then certainly there are significant oppor-
also be tremendously rewarding to Many of our environmental automation tunities for Spartan and our customers.

JUNE 2016 13
NEW ENERGY

On the Rise
Jenna Jamani won’t stop until she’s learned
everything there is to know about Fluor Canada
IF YOU ASK JENNA JAMANI WHAT HER JOB TITLE IS,
she pauses before answering “construction project engineer.” The
hesitation isn’t because Jamani isn’t sure what she does. Rather, it’s
because the 31-year-old has held a range of roles in her nine years
at Fluor Canada, and sticking with just one title doesn’t seem quite
accurate. “I’ve had the opportunity to do a lot of things within my
short career,” Jamani says. And she’s not kidding.
While studying for a degree in chemical engineering at
the University of Waterloo, Jamani was hired by Fluor for a
four-month internship. After graduation, the company wanted IN BRIEF
her back and hired her as a chemical engineer. While she liked
Age: 31
the work, after five years it started to feel stifling. “It really Birthplace: Sarnia, Ontario
kept me at my desk with a more cubicle kind of mentality. But Education: Bachelor of Applied
I wanted to open up the cubicle doors, my knowledge and my Science in Chemical Engineering,
network,” she says. Fluor was happy to help Jamani explore new University of Waterloo
roles and she transitioned into a sales position. Throughout the Current Position: Construction
Project Engineer at Fluor Canada
following years she went above and beyond the daily grind and
spearheaded several internal floor campaigns to raise money
for United Way. She even spent four months working for United
Way’s city-wide fundraising campaign as a loaned representative recommend it to anyone, but women in particular—come to
from Fluor. She liked non-profit work so much, she almost didn’t site. There’s nothing to be afraid of.”
leave. By 2013, Jamani was selected as a participant in Fluor’s Working for Fluor provides Jamani with the kind of
formal leadership development track, a program that identifies workplace diversity and personal growth that she craves. “One
candidates for potential company leadership positions. of the things that I’ve really loved about Fluor is that they’ve
Today, Jamani is a construction project engineer at a been really open to my career aspirations,” says Jamani. While
new upgrader site. It’s a varied role that changes daily due to she says she probably won’t spend the remainder of her career
unexpected twists and turns. But it’s a challenge Jamani is up for. as a construction project engineer, she is looking forward to
She says it reminds her of one of her favourite pastimes. “I liken whichever path it opens up for her next. “One of the things that
it to a soccer scrimmage where one person wears a red shirt and I really loved about my sales position was getting to work with
plays for both teams—for whatever team has the ball—and just an engaged group of people who talk about the strategy of our
moves back and forth. That’s kind of what being a project engineer business and how we’re going to improve our business. Maybe
has been like, getting engaged wherever you’re asked.” an opportunity will come up in the future where I can learn
The demanding nature of the job suits Jamani’s competitive more about our business strategy,” she says. For now, Jamani
and goal-oriented nature, and she encourages other women will keep taking advantage of every opportunity she’s offered.
to jump into traditionally male-dominated roles like hers. “I “There’s not really one perfect career path. It’s just learning
work with so many women who are leaders on this project. new things and hoping you can utilize that for your company
I’ve noticed a significant increase in gender balance even from in the long term. I really hope to jump at opportunities, to keep
five years ago,” she says. “You learn so much on site. I would growing and contribute in a positive way.” – By Willow White

14 ALBERTAOILMAGAZINE.COM PHOTOGRAPH BOOKSTRUCKER


ONEOFF DEALMAKERS

Back From the Dead? Gas to Tidewater


ENBRIDGE’S NORTHERN GATEWAY PIPELINE PROJECT IS ONCE
again showing signs of life, as last month the company sought a three- THE DEAL:
British Columbia greenlights TransCanada’s Coastal
year extension on starting construction in northern British Columbia. GasLink pipeline to Kitimat
The company applied to Canada’s energy board to extend its sunset
clause, giving it more time to achieve legal and regulatory certainty, as THE DATE: THE DOLLARS:
May 5, 2016 $4.8 billion
well as to continue discussions with First Nations and Métis groups along
the proposed route. The current sunset clause stipulates that construction
must begin by the end of 2016. THE PARTICULARS: THE PAYOFF:
The decision may come as a surprise to some industry watchers The BC Oil and Gas The pipeline will connect
(including us) and activists, who had all but concluded the project Commission has finally to the proposed LNG
was dead in the water due to conflicts with aboriginal groups and a greenlighted the last two Canada export terminal
proposed oil-tanker moratorium for B.C.’s north coast. Recently, the permits that TransCanada near Kitimat on B.C.’s
federal government, which ultimately has the power to approve or deny needs to push ahead northern coast. A final
the pipeline, has hinted that there may still be life left in the project with its Coastal GasLink investment decision from
and that it may allow for some leniency on the tanker moratorium. Pipeline Project. The the joint-venture partners
Alberta Premier Rachel Notley says she has discussed with federal project now has all 10 in LNG Canada is expected
cabinet ministers the possibility of bringing the pipeline to a less of its required plant and by the end of 2016. The go-
pipeline permits approved. ahead from LNG Canada
ecologically sensitive B.C. port than the one proposed at Kitimat. That’s
Eight of the permits are would kick off construction
even more surprising considering Notley, the leader of Alberta’s left- for pipeline construction, on the Coastal GasLink
leaning New Democratic Party, is on record expressing her opposition to and two are for pipeline- in 2017. It would also
the pipeline. related facilities, including be a massive vote of
Northern Gateway says it has no current plans to change the route, a natural gas compressor confidence in Western
but confirms it is open to change. Northern Gateway is now pitching the station and two gas Canadian gas exploration
project as “a true partnership between industry and First Nations and metering stations. and production at a time
Métis peoples,” and admits it could have done a better job building these TransCanada says its when the industry is facing
relationships earlier on. project team has had a stream of challenges and
“Our priority is to continue to build respectful relationships over 15,000 interactions question marks hanging
with First Nations and Métis communities,” said John Carruthers, and engagements with over its future. About 32
aboriginal communities percent of the $4.8-billion
president of Northern Gateway, in a statement last month. “From the
along the pipeline’s cost of the pipeline
beginning, Northern Gateway should have done a better job of building
proposed route. It says project will be spent
relationships with First Nations and Métis communities, particularly on First Nations people have locally in B.C. where it will
the west coast of British Columbia. While we had the right intentions, carried out over one-third create more than 2,000
we should have done a better job of listening and fostering these critical of the 350,000 hours of jobs during construction,
relationships and developing our plans together as true partners.” fieldwork. TransCanada says.

“[Canadians] gave us everything. And now


it’s time to return the favor.”
Rita Khanchet, a Syrian war refugee who now lives in Calgary, wrote this
message on her Facebook page before volunteering to help the victims of
the Fort McMurray wildfires in the heart of Canada’s oil sands

JUNE 2016 15
FREEZE FRAME

Up From
the Ashes
Following a hellish inferno,
Canada’s oil sands region rebuilds

MOST OF THE 1.2 MILLION BARRELS PER DAY


of oil sands production that were taken offline
by the Fort McMurray wildfires in early May
were expected to have returned by June. Shell’s
255,000-b/d Albian Sands operation was the
first to resume normal production on May 10.
There was no damage to it and other facilities
north of the city, which ceased operations due
to smoke and concerns for employee safety.
Similarly, after wildfires shut down opera-
tions near Cold Lake, Alberta, in the summer of
2015, normal production was restored within
two weeks. Underground pipelines are rela-
tively protected from forest fires, and electrical
system repairs can be done quite rapidly.
After a meeting between Alberta Premier
Rachel Notley and the senior executives of
major energy companies affected by the
fire, Suncor CEO Steve Williams said, “It’s
important to…get back into the rhythm and
start to support the economy. There’s a great
spirit of trying to make the economic impact
as small as possible.”
As of May 17, oil sands operators haven’t
lost any critical infrastructure, but they now
face major staffing issues as Fort McMurray,
the region’s only urban service area, will
require substantial resuscitation. Residents,
including oil workers, have yet to return to
their homes, while travel to the city remains
limited to essential services—a situation whose
end was still undetermined by press time.
With the region’s only highway in and out
still largely reserved as an emergency supply
route for oil sands equipment and aid vehicles,
oil sands operators may have to resort to
flying workers into their camps, dramatically
increasing costs for operators.

16 ALBERTAOILMAGAZINE.COM PHOTOGRAPH CHRIS SCHWARZ/GOVERNMENT OF ALBERTA


1.2
million 88,000 0.2

Barrels per day shut in Residents evacuated from the Percent of Canada’s GDP
by the fire Fort McMurray area growth lost to the wildfire,
according to TD Bank

JUNE 2016 17
THE NEEDS
ARE GREAT
BUT YOU CAN
HELP MAKE A
DIFFERENCE.
SUPPORT THOSE AFFECTED
BY THE FIRES IN ALBERTA.
PLEASE DONATE TO THE ALBERTA FIRES APPEAL.

redcross.ca
1-800-418-1111
Government of Alberta This page has been donated courtesy of Venture Publishing.
PA RT N ER C O N T EN T

THIRTY AND THRIVING


The Fort McKay First Nation celebrates 30 years
of successful business ventures

O VER A SPAN OF THREE


decades, the Fort McKay First Nation
(FMFN) businesses and companies
have embraced partnerships with the oil and gas
sector and become a vital contributor to Alberta’s
FMFN had to adapt to the changing economy if
the Nation was to have a say in how its community
and lands were evolving. Boucher and other leaders
had a vision that the community could have im-
proved services and programs if they participated
annually to the government in taxes.
For the FMFN, economic success has resulted
in a substantial increase in spending on infrastruc-
WXUHDQGVHUYLFHVZLWKDVLJQLÀFDQWDPRXQWRIWKH
FRPSDQLHV·UHYHQXHJRLQJGLUHFWO\EDFNLQWRWKH
energy economy. The FMFN is nestled in the in the new economy—and the FMFN businesses FRPPXQLW\´,Q)0)1VSHQWPLOOLRQ
KHDUWRIQRUWKHUQ$OEHUWDDQGLVÁDQNHGRQDOO and companies were launched. RQFRPPXQLW\SURJUDPVDQGVHUYLFHVµ2YHUWKH
sides by the oil sands. The Nation’s companies 1RZ\HDUVODWHUFRPSDQLHVPDNHXS SDVWÀYH\HDUV)0)1KDVUHFHLYHGJRYHUQPHQW
support the development of natural resources in an the FMFN portfolio and the economic impact in-transfer payments of approximatively $3 million
HQYLURQPHQWDOO\VXVWDLQDEOHPDQQHUZKLFKZRUNV KDVEHHQVLJQLÀFDQW´:KHQDJJUHJDWHG)0)1 DQQXDOO\´$OOIXQGLQJIURPWKHJRYHUQPHQWJRHV
to protect tradition, culture and the future of our businesses generated an average annual revenue directly into the community, rather than toward
community. This June, the Nation celebrates its of between $450 and $500 million over the last DGPLQLVWUDWLYHFRVWVµ$VDQDGGHGEHQHÀWDWUXVW
30-year anniversary in business. ÀYH\HDUVµVD\V%RXFKHU2IWKHZDJHVSDLG fund has been established to ensure the FMFN’s
,Q&KLHI-LP%RXFKHUNQHZWKDWWKH approximately $60 to $70 million is remitted stability and sustainable growth. The economic

FORT MCKAY FIRST NATION WWW.FORTMCKAY.COM


success of the FMFN businesses have not only Mel Benson, a respected First Nations oil vet- VRPHWKLQJFRPLQJEDFNWRWKHFRPPXQLW\DVD
EHQHÀWHGWKHLUFRPPXQLW\EXWDOVRKDYHKDGDODUJH eran who sits on the Board of Directors for both ZKROH%XVLQHVVVXFFHVVIRU)0)1LVGHÀQHGE\
impact on the entire region. Suncor and the Fort McKay Group of Companies providing for the community in a safe, environmen-
2QDYHUDJHWKH1DWLRQ·VEXVLQHVVHVHPSOR\ )0*2& FUHGLWVWKHVXFFHVVRIWKH1DWLRQ·V WDOO\UHVSRQVLEOHZD\µKHVD\V$QGWKDW·VH[DFWO\
WRSHRSOH7KHDQQXDOHDUQLQJV what’s happened.
RIZRUNLQJPHPEHUVRIWKH)0)1ZKR “Fort McKay’s 30-year history of success has been Neil Camarta, who sits on
are over 15-years of age, is $66,000. Indi- the Board of Directors along-
vidual households have an average yearly
achieved through its ability to balance environmental side Benson, says the Nation’s
LQFRPHRI7KH\HDUDYHUDJH protection and development without compromising three-decade anniversary is
annual salaries paid by the Nation were the strong values and culture of the Nation.” D´ELJGHDOµ&DPDUWDLVDQ
PLOOLRQDQGDFFRUGLQJWR%RXFKHU LQGXVWU\OHJHQGNQRZQIRUKLV
this money doesn’t just impact the econo-
– Jim Boucher, Chief of the FMFN leadership at Shell Canada where
P\RIWKH)0)12YHUWKHODVW\HDUVWKH he spearheaded the successful
FMFN and its businesses purchased goods from companies to the strategic and long-term vision of GHYHORSPHQWRI6KHOO·VELOOLRQ$WKDEDVFD2LO
YDULRXVVXSSOLHUVRIDSSUR[LPDWHO\PLOOLRQ %RXFKHU´:KHQ\RXWDONWR&KLHI%RXFKHUKH·V 6DQGV3URMHFW´7KH)0*2&KDVQRWRQO\VXU-
´7KHYDVWPDMRULW\RIWKHVHVXSSOLHUVDUHORFDWHG SUHWW\FOHDUDERXWZK\WKH\JRWLQWRWKLVµ%HQVRQ YLYHGIRU\HDUV³LWKDVWKULYHGµKHVD\V´,WKDV
LQWKH5HJLRQDO0XQLFLSDOLW\RI:RRG%XIIDORµ VD\V´7KH\ZDQWHGMREVDQGWUDLQLQJIRUFRPPX- grown to be a major player in the oil sands indus-
Boucher says. nity members and to see them progress through try. It has created wealth for its shareholder—the
WKHUDQNVµ7KH\ZDQWHGWRHQVXUHWKDWWKHUHZDV FMFN. And it has created many great career
30 YEARS IN BUSINESS
1986 1988 1996 1998 2001 2002
Fort McKay General Water and sewerage Jim Boucher is re-elected First North Catering is The Fort McKay Group of Poplar Point Camp Services
Contracting Ltd., Fort infrastructure is built in chief of the FMFN established Companies establishes a is established
McKay Developments Ltd., Fort McKay Board of Directors, and the
Environmental Services Ltd. major Fort McKay Limited
and Transportation Ltd. are Partnerships are formed:
established. Jim Boucher is Environment, Properties,
elected chief of the FMFN Services, General
Contracting, Muskeg
Mountain and Muskeg
Distributors

FORT MCKAY FIRST NATION THIRTY AND THRIVING


PA RT N ER C O N T EN T

RSSRUWXQLWLHVIRUWKHEDQGPHPEHUVµKHVD\V variety of infrastructure projects. 6HUYLFHV&DULERX(QHUJ\3DUN)RUW0F.D\


´&KLHI%RXFKHUGHFLGHGHDUO\RQWKDWKHZRXOG 2IWKHFRPSDQLHVWKH)0)1RZQVHLJKW 6DYDQQD2LOÀHOG5HQWDOV+DPPHUVWRQH3URGXFWV
WDNHPD[LPXPDGYDQWDJHRIWKHEXVLQHVVRS- are majority owned by the Nation, and two are and a recently acquired accommodation facility
SRUWXQLWLHVLQKLVEDFN\DUG+HPDGHLWKDSSHQ fully owned and operated by the Nation under the ZLWK1RUDOWD/RGJH7KHVHFRPSDQLHVDUHMRLQWO\
And he did that in a completely owned with the FMFN’s business
EXVLQHVVOLNHZD\µ7RGD\WKDW “The Fort McKay First Nation has been one of our SDUWQHUVZKLFKLQFOXGH$7&26WUXFWXUHV
vision has become a reality as the & /RJLVWLFV:DLZDUG0DQDJHPHQW
FMFN business portfolio is large,
valuable partners in supplying goods and services Savanna Energy Services Corp.,
GLYHUVHDQGJURZLQJ,QWKH since they first started operating in 1986. Working +DPPHUVWRQH&RUSRUDWLRQ(66
FMFN businesses and companies together has ensured our mutual success.” Support Services and the Athabasca
WRRNDQRWKHUVWHSIRUZDUGDQG Chipewyan First Nation.
ODXQFKHGWKH)0*2&DEUDQFK
– Mark Ward, CEO and president of Syncrude The continued success of Fort McKay
of the FMFN’s businesses, wholly businesses is only possible through mutu-
RZQHGDQGRSHUDWHGE\WKH1DWLRQ7KH)0*2& )0*2&)RUW0F.D\/RJLVWLFVDQG)RUW0F.D\ DOO\EHQHÀFLDOFROODERUDWLRQVZKLFKKDVEHFRPH
ZDVIRUPHGWRPHHWDPDUNHWQHHGLQWKHRLOVDQGV Strategic Services. Joint ventures, along with other DGHÀQLQJPRGHOIRUEXVLQHVVGHYHORSPHQW´<RX
DQGWRSURYLGHSURÀWHPSOR\PHQWDQGVNLOOVWR companies, were formed to further invest in oil ORRNIRUWKHULJKWSDUWQHU<RXWU\DQGHQVXUHWKDW
Nation members. The entire community has sands business opportunities. These joint ventures \RXVKDUHLQWKHVDPHRXWORRNWKHVDPHVWUDWHJ\
UHDSHGWKHEHQHÀWVRIWKLVGHYHORSPHQWZLWK LQFOXGH&UHHEXUQ/DNH/RGJH%DUJH/DQGLQJ DQGWKHVDPHGHVLUHGRXWFRPHµVD\V%HQVRQ´,I
freshly paved roads, 155 detached homes and a /RGJH)LUVW1RUWK&DWHULQJ3RSODU3RLQW&DPS you have common interests and both parties can

2003 2005 2008 2009 2010 2016


Savanna Oilfield Services is Caribou Energy Park is Fort McKay Industrial Park Barge Landing Lodge is Steep Bank Earth Ltd. FMFN celebrates 30 years
established developed as an add-on to is deemed reserve land and established is set up to manage the in business
the Fort McKay Industrial Creeburn Lake Lodge companies’ capital assets
Park and construction on is acquired
the Dorothy McDonald
Business Centre begins

FORT MCKAY FIRST NATION WWW.FORTMCKAY.COM


PA RT N ER C O N T EN T

FORT McKAY LOGISTICS


Fort McKay Logistics is one of the Nation’s
most successful companies. Logistics has
more than 20 years of experience with “good
safety performance, competitive pricing and
delivering results,” says board member Neil
Camarta. Logistics offers services ranging
from material management to delivery hauls.
They have over 155 pieces of equipment
including vans, tractors and forklifts. The
company works closely with Syncrude, trans-
porting goods to various sites in Edmonton,
Fort McMurray and more. A new warehouse
in Edmonton is allowing Logistics to expand
its operations.
Adam King, CEO of FMGOC, says
“Logistics brings value to clients by providing
lower costs due to continuous improvement
and quality assurance. We work closely with
our clients and our qualified team is very
hands-on and involved.” Logistics and other
FMFN businesses have earned more than
$2.6 billion in business from Syncrude, says
CEO and president Mark Ward. “The FMFN
has been one of our valuable partners in
supplying goods and services since they first
started operating in 1986. Working together
has ensured our mutual success,” says Ward.

contribute something to the partnership, you can accommodation service company with Noralta
PRYHDKHDGµ7RGD\WKH)0)1KDVJDLQHGDQ /RGJHWREHFDOOHG'HQH.RH:RUNIRUFH/RGJLQJ
unparalleled reputation as a reliable and consistent 6HUYLFHV%DUULH5REE&(2RIEXVLQHVVGHYHO- COMMUNITY IMPACT
business partner. opment for the FMFN, co-ordinated the recent The FMFN businesses and companies contin-
Customers of the FMFN businesses can also SDUWQHUVKLSDQGSXUFKDVH´:HWKLQNZH·YHJRWD
ue to protect their traditional lands, preserve
H[SHFWÀUVWFODVVUHOLDELOLW\DQGH[FHOOHQFH´&OL- strong partnership with Noralta. They have a great
their heritage and give back to give back to
ents choose to do business with us for a number UHSXWDWLRQIRUTXDOLW\VHUYLFHµVD\V5REE
the community. Thanks to the FMFN busi-
of reasons, including service, competitive cost and ´:HDUHRSWLPLVWLFWKDWZHKDYHDJUHDWIXWXUH
nesses and our clients, numerous infrastruc-
IRFXVRQVDIHW\µVD\V%HQVRQ&DPDUWDHFKRHV WRJHWKHUµ
Benson and agrees that com- ture projects have been built for the Nation
SDQLHVVKRXOG´FKRRVH)0)1 to enjoy. These projects include a community
“Our business and companies generate 98 arena complete with an NHL-sized hockey
for the right commercial
reasons—pricing, safety and percent of the budget for the First Nation, allow- rink, an 1,800-seat outdoor amphitheatre
VRRQµEXWDOVRDGGVWKDWWKH ing us to deliver resources for our community.” and, at the heart of Fort McKay, the Dorothy
)0)1´ZRUNVKDUGWRFUHDWH McDonald Business Centre. A new senior’s
– Jim Boucher, Chief of the FMFN
jobs for the young people in lodge is currently under construction.
the First Nation communi-
W\µ6XSSRUWLQJORFDOHPSOR\PHQWLVDNH\ZD\ :LWK\HDUVRIHFRQRPLFDGYDQFHPHQWXQGHU
in which companies in the region can exercise LWVEHOWWKH)0)1LVQRWVORZLQJGRZQ´,W·VEHHQ For more information about the Fort McKay
corporate responsibility. a journey with challenges, a journey with hope and First Nation and its businesses, visit
Despite Alberta’s oil and gas sector weathering DMRXUQH\ZLWKPDQ\VXFFHVVHVDORQJWKHZD\µVD\V fortmckay.com or call (780) 828-4220
DUHFHVVLRQWKH)0)1KDVEHHQPDNLQJVWUDWHJLF Benson. In the meantime, the FMFN community facebook.com/fortmckayfirstnation
PRYHV,QHDUO\WKH)0)1SXUFKDVHGDQ FRQWLQXHVWREHQHÀWDQGÁRXULVK @FortMcKay

FORT MCKAY FIRST NATION THIRTY AND THRIVING


TOGETHER
WE’RE
STRONGER
Your industry... your future

Become part of the united voice now (ZHTLTILYVM7:(*`V\^PSSILULÄ[MYVT!


and have input into our advocacy for:
࠮;OLYLJVNUP[PVUHUKZ[H[\ZHɈVYKLK7:(*TLTILY
࠮0UK\Z[Y`OLHS[OHUKZHML[`YLN\SH[PVUZ JVTWHUPLZ

࠮-LKLYHSWYV]PUJPHSHUKT\UPJPWHSNV]LYUTLU[ ࠮;PTLS`HJJLZZ[VPUK\Z[Y`UL^Z[YLUKZHUKYLZLHYJO
WVSPJPLZHUKWYVNYHTZ
࠮4LTILYW\ISPJH[PVUZZ\JOHZ[OL7:(*;V[HS
࠮(JVTWL[P[P]LI\ZPULZZLU]PYVUTLU[ *VTWLUZH[PVU:\Y]L`

“ PSAC does essential work, not just for the


P “
services sector but for the oil and gas sector
as a whole. Thanks for all you do.
Todd Van Vliet
President and General Counsel
Frac Shack International Inc.

Visit us at www.psac.ca to join today


Leaders don’t flinch.

When the going gets tough, the tough stay put. Through the credit crunch,
depressed commodity prices and global economic turmoil, we’ve done just that.
We never left the side of the people who’ve made Alberta an economic powerhouse,
and we continue to custom build solutions to help them do what they do best…lead.
Because Alberta means the world to us.

atb.com/Leaders

TM
Trademarks of Alberta Treasury Branches.
THE

THE BIGGEST OIL, GAS, MIDSTREAM AND


SERVICE COMPANIES OF THE YEAR

26 THE DELUGE 36 THE TOP SERVICE COMPANY OF THE YEAR:


Before we acknowledge all the stars that shone brightest through PACKERS PLUS
the darkness of 2015, let’s take a moment to assess the ground we It’s been said that every company is now a technology company.
stand on today Packers Plus has been doing more than just talking about it

28 THE PERFORMERS 38 THE TOP OIL PRODUCER OF THE YEAR:


Canada’s top energy companies ranked by cash flow per share, net
income, oil and gas production, operating netbacks and more
SEVEN GENERATIONS ENERGY
Going public at just the right time put enough wind in 7G’s sails—and
cash in its pockets—to hit staggering production levels in 2015
32 THE TOP MIDSTREAM COMPANY OF THE YEAR:
TRANSCANADA 40 THE LIST
The definitive ranking of how Canada’s best energy companies
With tens of billions of dollars in long-term growth planned, 2015 was
performed against the backdrop of one of the toughest years in
just a taste of things to come from TransCanada
recent memory

34 THE TOP GAS PRODUCER OF THE YEAR:


48 THE DEPARTED
PAINTED PONY PETROLEUM Be it through bankruptcies, acquisitions or restructuring, every
Smart companies follow where the market is heading. But smarter downturn claims its victims. And 2015 was a banner year for goodbyes
companies get there before the market does

51 GO WITH THE FLOW


Renowned energy services consultant David Yager offers
his guidance for thriving in the coming recovery

JUNE 2016 25
THE DELUGE
I NWELAST YEAR’S EDITION OF “THE 200,” WE SAID
WERE IN “THE CALM BEFORE THE STORM.”
This year, the deluge has swept companies into the maelstrom
be a situation of, ‘Everything’s great, everybody’s good,’ right
away,” he says. “That won’t happen for some time.”
And so the grim reports keep flooding in: Rig counts and
of plunging prices, lost revenues, and layoffs—and too many investment down; liabilities and layoffs up—and it’s taking
companies have not resurfaced. But blue skies will appear its toll. Lightstream Resources, which ranked 40th on last
again, with firms positioning for the bounce back. year’s “The 200” list, warned in May that it could fail to meet
Ian Wild, an executive vice president at ATB Financial a $121-million debt payment in mid-June if it couldn’t boost
says, “From a high level, right now it is likely that things will its balance sheet through asset sales. But it’s a tough price
get worse before they get better—it’s the storm before the environment for firms to find asset buyers. The 28,000-boe/d
calm.” People are focusing on $50 a barrel, but Wild doesn’t producer may wind up following Terra Energy, whose debt
think that will stimulate growth as companies are still drove it into receivership in April.
working to correct their balance sheets and working capital
positions, he says. DRILLING HAS BORNE THE BRUNT OF THE STORM.
Many firms have stretched payables and need to repair In April, the Petroleum Services Association of Canada (PSAC)
their relationships with contractors and suppliers. “So it won’t said drilling activity will be 36 percent lower than what it

26 ALBERTAOILMAGAZINE.COM
predicted just six months earlier—and PSAC was already business advisor to oil service firms. “We have challenges [and]
being grimly realistic back then. By the end of April it only how we respond determines the fate of the industry in the
expected 3,315 wells drilled in 2016, compared to more than future. Canadians don’t back down from a challenge; when
11,000 in 2014. That same month, a report from the Canadian their backs are against the wall they fight back, they innovate,
Association of Oil Drilling Contractors showed only 37 of the make tough business decisions, they scale operations to
Canada’s 671 rigs were being used—the lowest-ever count adjust to the downturn, retool, strengthen their team and get
since records began in 1984. PSAC CEO Mark Salkeld calls the ready for when a future opportunity presents itself.”
situation “dire” and says conditions are the worst he’s seen in
his 35-year career. PSAC had 265 members before the global AND LIFE ISN’T GRIM FOR EVERYONE, IN FACT.
slump of 2008. It’s now down to 168 as companies merged, For Suncor CEO Steve Williams, the downturn has been one
pounced on smaller competitors or shut up shop. long buying spree of battered, bruised and buried rivals.
Jobs have been going under too. More than 100,000 Last year Suncor bought a 10-percent stake in a Fort Hills
direct and indirect jobs have been gouged out of Canada’s oil development from Total, and this year it bought out Canadian
patch since the downturn. The employee count across PSAC’s Oil Sands’ and Murphy Oil’s Syncrude stakes to take control of
membership has been slashed by half. “We’re talking tens the project with 54 percent ownership. “We expect to be the
of thousands of people unemployed with no end in sight, no last oil company standing,” declared Williams. “That’s part of
indicators that we’re going to come out of this any time soon,” our business goal.” He said Suncor’s expansion will drive its oil
Salkeld says. Direct job losses this year will be between 16,000 output up 40 percent this year, with a 2019 target of 800,000 b/d,
and 24,000, according to Calgary-based Enform’s Petroleum a Suncor record, putting it in the pole position for the rebound.
Labour Market Information (PetroLMI) division, slightly less The Conference Board predicts oil producers will make
than last year’s 28,145 losses. a total profit of $809 million in 2017, and gas producers will
The Conference Board of Canada, an Ottawa-based bring in $172 million in earnings.
economic think-tank, expects the industry to take a loss for Longer term, Canada’s National Energy Board (NEB) predicts
the second year in a row. It forecasts oil producers will lose a natural gas production reaching 18 bcf/d and its domestic
total of more than $3 billion this year, following 2015’s record natural gas consumption increasing to 16.4 mcf/d in the next 10
$7-billion loss, and gas producers will lose $1 billion in 2016, years. In its scenario for US$80 Brent crude by 2020 and US$105
compared to last year’s $1.1 billion. by 2040, oil production will rise 56 percent by 2040.
But the industry is adjusting. Producers are innovating, Just one positive final investment decision (FID) on a
not just squeezing service firms to razor-thin margins. Some major LNG project or one green light to build a pipeline would
smaller service firms will consolidate and merge to lower give the entire industry a big confidence boost, and Malaysia’s
overhead costs. Those that managed their debt and are in Petronas may be the first player to give it that shot in the arm.
the right sector, such as service firms that focus on existing It says it expects to make the FID on its $36-billion LNG plant
oil sands operations rather than building new projects, or in B.C. by July.
provide cost- and emissions-cutting technology, will survive The Pacific NorthWest LNG project would signal Canada’s
and even prosper as output increases from 4.5 million b/d last emergence as a hub for exporting North America’s gas glut to
year to 4.8 million b/d in 2017. Asia. Even though a major project FID wouldn’t send product
“I am continuously amazed at the sheer grit and to the coast until 2020, it would show investors, producers
determination I see with oilfield service providers as they and overseas markets, that yes, Canada is not only the world’s
accept the challenge and make the best of a situation that fifth-largest producer of hydrocarbons, but it is expanding
ultimately they can’t control,” says Jeremy Rondeau, an MNP and breaking out of North America to become a global player. AO

JUNE 2016 27
THE TOP PERFORMERS OF 2015
There are several key metrics that are used to performers of 2015 in a series of specific fields to
determine the performance of a company, but those give readers a sense of where the outliers are. Visit
metrics rarely demonstrate that company’s overall AlbertaOilMagazine.com/The200 to see more
performance. So we picked out the best (and worst) in-depth categories not included in the print edition.

THE BIG PICTURE


Combined company values were mostly lower than
last year, but remained surprisingly buoyant

OIL-WEIGHTED COMPANIES SERVICE COMPANIES


93 COMPANIES 59 COMPANIES
The 2014 list
Combined Revenue $127,974,051,640 Combined Revenue $33,221,808,859 included 66 energy
Combined Assets $343,822,994,479 Combined Assets $40,432,017,726 service companies
for a combined
Combined Net Income -$24,725,796,316 Combined Net Income -$2,232,418,239 head count of
Combined Head Count 51,976 Combined Head Count 42,384 75,341

GAS-WEIGHTED COMPANIES POWER GENERATION COMPANIES


32 COMPANIES 6 COMPANIES
Combined Revenue $12,132,072,234 Combined Revenue $23,676,300,000
Combined Assets $57,769,807,806 Combined Assets $74,113,600,000
Combined Net Income -$9,440,705,056 Combined Net Income $3,104,000,000
Combined Head Count 4,992

MIDSTREAM COMPANIES
10 COMPANIES TOTAL TOTAL
COMBINED COMBINED
Combined Revenue $65,893,460,000 REVENUE ASSETS
Combined Assets $135,702,112,000 (BILLION $) (BILLION $)
Combined Net Income $589,067,000 26% decrease 4% decrease
$263

$652

$677
$351

Combined Head Count 14,837 year over year year over year

2015 2014 2015 2014

BIGGEST REVENUE
INCREASE (%)
1 NXT Energy Solutions 345%
THE KEY FIGURES 2
3
Striker Exploration
Jura Energy
335%
275%
Ikkuma’s revenue
growth over 2015
Revenues, net incomes, total assets and is impressive, but
4 Strikewell Energy 150% it hardly compares
earnings per share all provide insight into the 5 Petroshale 147% to its growth over
depth of the oil rout of 2015 6 Ikkuma Resources 78%
2014 of 1,378%,
enough to give the
7 Ironhorse Oil & Gas 73% company top spot
on last year’s list
8 Forent Energy 64%
9 Vital Energy 27%
10 Madalena Energy 27%

28 WWW.ALBERTAOILMAGAZINE.COM
BIGGEST REVENUE
DECREASE (%) BIGGEST ASSET
DECREASE (MILLIONS)
1 Pan Orient Energy -95%
Last year’s 1 Encana -$8,887
2 Petro Vista Energy -91% biggest decrease
3 PHX Energy Services -89% in revenue 2 Pacific Exploration & Production -$6,175
was Calvalley
4 Matrrix Energy Technologies -87% Petroleum, 3 Husky Energy -$5,790
which saw a 4 Penn West Petroleum -$3,928
5 Cordy Oilfield Services -72% fall of 53%
6 Epsilon Energy -71% year over year. 5 Suncor Energy -$2,144
The company 6 Pengrowth Energy -$1,619
7 TransGlobe Energy -67% announced
8 Granite Oil -65% it would be 7 Enerplus -$1,450
“restructuring” 8 Enbridge Income Fund -$1,446
9 Leucrotta Exploration -63% in April of 2015
10 Chinook Energy -62% 9 Lightstream Resources -$1,234
10 Trican Well Service -$1,224

BIGGEST NET LOWEST EARNINGS


INCOME INCREASE PER SHARE
1 Fortis $612,000,000 1 Pacific Exploration & Production -17.34
2 Crew Energy $349,658,645 2 Paramount Resources -8.52
3 Oando Energy Resources $303,922,000 3 Enerplus -7.39
4 Bellatrix Exploration $281,085,000 4 Sherritt International -7.07
5 Canexus $227,717,000 5 Encana -6.28
6 Connacher Oil and Gas $169,491,000 6 Baytex Energy -5.72
7 Virginia Hills Oil $157,313,000 7 Trican Well Service -5.51
8 Inter Pipeline $113,500,000 8 Penn West Petroleum -5.27
9 Granite Oil $73,983,000 9 MEG Energy -5.21
10 Clean Harbors $72,430,000 10 Lightstream Resources -4.79

BIGGEST NET HIGHEST EARNINGS


INCOME DECREASE PER SHARE
1 Encana -$8,591,000,000 1 Granite Oil 4.99
Encana’s drop in
2 Husky Energy -$5,108,000,000 net income in 2015 2 Fortis 2.61
3 Suncor Energy -$4,694,000,000 looks particularly 3 Ontario Power Generation 1.57
troubling—especially
4 Pacific Exploration & Production -$4,614,650,000 when considering 4 Hydro One 1.39
5 Canadian Natural Resources -$4,566,000,000 it had the fastest 5 Imperial Oil 1.32
net income growth
6 TransCanada -$3,133,000,000 in 2014. But the 6 Inter Pipeline 1.28
7 Imperial Oil -$2,663,000,000 company also 7 Keyera 1.19
reduced its asset
8 Enerplus -$1,822,479,000 base by $8.8 billion 8 Badger Daylighting 1.04
over the year,
9 Sherritt International -$1,468,000,000 including the sale 9 Pembina Pipeline 1.02
10 Crescent Point Energy -$1,198,000,000 of its $850 million 10 Logan International 1.0
Haynesville lands in
Smallest net income growth in 2014: Pacific Exploration & Production: August
-$1,903,000,000

BIGGEST ASSET HIGHEST NUMBER


INCREASE (MILLIONS) OF EMPLOYEES
1 TransCanada $5,958 1 Suncor Energy 13,190
TransCanada’s asset Total
2 Fortis $2,571 growth in 2015 was 2 Canadian Natural Resources 7,568 employees
3 Imperial Oil $2,340 more than double dropped by
that of any other 3 Imperial Oil 5,700 9% in 2015
4 PrairieSky Royalty $1,819 company. See page 4 Husky Energy 5,552 compared to the
32 for more on how year prior—a
5 Hydro One $1,778 the company intends 5 Hydro One 5,516 number that is
6 AltaGas $1,704 to expand 6 TransCanada 5,512 perhaps lower
than expected
7 Pembina Pipeline $1,674 7 Ensign Energy Services 4,404 due to the
8 Crescent Point Energy $1,149 8 Precision Drilling 4,337 relative stability
of power
9 Transalta $1,114 9 Calfrac Well Services 3,100 generation and
10 Cenovus Energy $1,096 midstream firms
10 Cenovus Energy 3,005
Total employees in 2015: 124,483

JUNE 2016 29
MOST PRODUCTION GROWTH,
OIL AND LIQUIDS (PERCENTAGE ABOVE 1,000 B/D)
1 Petroshale 75% While 49%
production
2 Paramount Resources 68% growth is
3 Ikkuma Resources 58% impressive,
Seven
4 Canacol Energy 58% Generations’
5 Oando Energy Resources 49% production
growth of 94%
6 Seven Generations Energy 49% from 2014 to
2015 is even
7 Perpetual Energy 47% more staggering.
8 Pine Cliff Energy 42% See page 38
to learn how
PRODUCTION GAINS 9 Sterling Resources 37% the company
managed it
10 Cardinal Energy 34%
Despite retrenchment in capital expenditures over
[OL`LHYWYVK\J[PVUZ[PSSNYL^ZPNUPÄJHU[S`
MOST PRODUCTION GROWTH,
NATURAL GAS (MCF/D)
1 Perpetual Energy 314,300
TOP OIL 2 Canadian Natural Resources 171,000
PRODUCTION (B/D) 3 Tourmaline Oil 221,432
4 Oando Energy Resources 103,882
1 Suncor Energy 577,800
5 Seven Generations Energy 70,000
2 Canadian Natural Resources 564,188
6 Husky Energy 68,000
3 Imperial Oil 344,000
7 Peyto Exploration & Development 61,800
4 Husky Energy 230,900
8 Birchcliff Energy 31,566
5 Cenovus Energy 206,947
9 NuVista Energy 28,158
6 Pacific Exploration & Production 156,000
10 Pine Cliff Energy 27,962
7 Crescent Point Energy 147,776
8 Encana 133,400
9 MEG Energy 80,025 MOST PRODUCTION GROWTH,
10 Baytex Energy 65,659 NATURAL GAS (PERCENTAGE ABOVE 1,000 BOE/D)
1 Perpetual Energy 75%
2 Ikkuma Resources 60%
TOP GAS
3 Oando Energy Resources 58%
PRODUCTION (MCF/D)
4 Questerre Energy 51%
1 Canadian Natural Resources 1,726,000 5 Seven Generations Energy 47%
2 Encana 1,635,000 6 Pine Cliff Energy 38%
3 Tourmaline Oil 807,888 7 Zargon Oil & Gas 36%
31% – Encana’s
4 Husky Energy 689,000 year over year 8 Tamarack Valley Energy 34%
5 Peyto Exploration & Development 474,200 production
decrease in 9 Storm Resources 32%
6 ARC Resources 444,900 natural gas, 10 Cardinal Energy 31%
as part of the
7 Cenovus Energy 441,000 company’s
8 Perpetual Energy 417,000 pivot toward
oil and liquids HIGHEST OPERATING
9 Enerplus 360,733 production NETBACK (PER BOE/D)
10 Bonavista Energy 337,000
Encana gas production in 2014: 2,350,000 mcf/d 1 Canacol Energy $57.86
2 Bengal Energy $52.84
3 Valeura Energy $46.48 $77.20 – Bengal
MOST PRODUCTION GROWTH, Energy’s operating
OIL AND LIQUIDS (B/D) 4 Advantage Oil & Gas $45.79 netback in 2014,
5 Bonterra Energy $37.78 the highest of
any company
1 Imperial Oil 62,000 6 Suncor Energy $37.47 on “The 200”
2 Canadian Natural Resources 32,994 7 Crescent Point Energy $36.19
3 Suncor Energy 42,900 66% – Imperial’s 8 Whitecap Resources $36.11
4 Crescent Point Energy 19,318 production gains 9 Raging River Exploration $35.51
at its Nabiye oil
5 Pacific Rubiales 18,924 sands project 10 Surge Energy $32.67
6 Seven Generations Energy 17,495 near Cold Lake
between April
7 Oando Energy Resources 12,261 and May of 2015
2015 2014

8 Paramount Resources 11,863 TOTAL 5,638,387


9 Canacol Energy 10,612 COMBINED 552,451
10 MEG Energy 8,839 PRODUCTION 5,085,936 Total combined
(BOE/D) production gain
year over year AO

30 WWW.ALBERTAOILMAGAZINE.COM
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CO-PRESENTED BY SPONSORED BY
“I BELIEVE THAT
FUNDAMENTALLY
AS LONG AS WE’RE
IN FRONT OF THE
RIGHT BASINS,
THERE WILL BE
GAS THAT NEEDS
TO MOVE.”
-TransCanada CEO Russ Girling

32 ALBERTAOILMAGAZINE.COM
Top Midstream Company
TRANSCANADA

RISK MANAGEMENT
With roughly $90-billion worth of planned expenditures over the long term,
TransCanada’s CEO eyes strategic expansion while limiting risk

L OW COMMODITY PRICES CAN TURN


even the most bullish companies into timid
observers. But that hasn’t been the case with
uncertainty over how TransCanada might raise the
funds to meet its ambitious growth targets, Girling
sees plenty of options—foremost among them
TransCanada, which inked a staggering US$13 leveraging TransCanada’s internal cash flow, which
billion acquisition of Columbia Pipeline Group he estimates to be somewhere in the order of $5
at the beginning of 2016, a move that earned the billion per year. “The single largest cost of operating
company a substantial foothold in the massive a midstream business is the cost of money,” he says.
Marcellus and Utica natural gas formations. “If you can keep the risk down, keep leverage up,
And yet, while the deal was the largest in then your cost of money is going to be less and your
Canada’s energy sector since commodity prices cost of transport is going to be less.”
began their descent, the company has plenty of In many ways, maintaining control of risk
other projects planned under its ambitious capital is the mantra that most consumes Girling’s
program. Today TransCanada, led by its CEO approach to expansion. Perhaps the largest
Russ Girling, is targeting no less than $24 billion risk his company faces today is the exposure of
in near-term projects, as well as an additional shippers to low commodity prices, a reality that
$45-billion worth of longer-term developments. Girling says comes down to the location of their
Through a series of transactions spanning from assets. “I believe that fundamentally as long as
Mexico to the B.C. coast to the U.S. Midwest, we’re in front of the right basins, there will be gas
TransCanada became the midstream company to that needs to move,” he says.
watch in 2015. “And if those particular producers aren’t the
Many of the company’s growth plans companies that produce it, somebody else will
involve natural gas developments, which make come in and produce that gas—as long as it’s the
up seven of the 12 near-term projects it has lowest-cost supply.”
WHY WE
scheduled, including its NGTL and Canadian As if Girling’s hands weren’t already full
CHOSE THEM
Mainline expansions. “Gas is providing the most enough, the company also continues to juggle At a time when TransCanada
is facing resistance to its
opportunities right now,” Girling says. The company high-profile applications for its Energy East and
major liquids pipelines, it
derived about 47 percent of its revenues from its Keystone XL pipelines, which have faced intense made a bold (and big) move in
natural gas pipelines division in 2015, accounting public scrutiny. In January, it filed a lawsuit the gas market
for $5.4 billion over the year. against the U.S. government under the North
A successful closure of the Columbia deal American Free Trade Agreement for damages it
would certainly tip the company even more suffered over the rejection of Keystone XL.
BY THE
toward gas. But the sheer size of the acquisition, “We thought long and hard about it,” he says.
NUMBERS
which included $2.8 billion in debt, is no small “When the final decision on Keystone XL came 7 on The 200
expenditure—particularly considering the company out, it became pretty clear to us that the rationale $13 billion
plans to raise funds without increasing its debt was not rooted in the seven years of study and Total cost of Columbia
ratio, and will instead turn solely to equity and the 30,000-page [State Department] report. If acquisition (U.S.)
asset sales. It is selling a minority stake in some of [perception] is all you cared about, you could have 57%
its Mexican pipeline assets as well as numerous told us $2.5 billion ago. I think any reasonable TransCanada’s revenues from
power stations to pay for the purchase. person looking at it would say the company hasn’t its natural gas pipelines
Although some analysts have expressed been treated fairly.” division in 2015

PHOTOGRAPH ADRIEN VECZAN JUNE 2016 33


Top Gas Producer
PAINTED PONY PETROLEUM

UNBRIDLED GROWTH
Painted Pony Petroleum played the market perfectly in its shift toward becoming a
pure play natural gas producer—and it didn’t disappoint under its new identity

A NYONE WHO SOLD OFF THE


entirety of their oil assets in the middle
of 2014 could rightly be accused of possessing
by the end of 2015. “We spent a lot of time testing
different zones in the Montney and were more
comprehensive than many of our competitors,”
a functional crystal ball. And if they didn’t Ward says. “So the recognition of that is shown in
have one then, they could probably afford one our phenomenal reserve growth.”
today with the proceeds. But that’s exactly what Unlike many of its peers, Painted Pony’s
Painted Pony Petroleum CEO Patrick Ward 2015 growth was achieved primarily through
did when he offloaded $100 million worth of the drill bit rather than in the boardroom. It
Saskatchewan oil assets in July 2014 as part of remained focused on lowering its capital costs
a strategic pivot toward becoming a pure play and boosting its per-well efficiency, Ward says,
natural gas producer. In hindsight, the deal and the company cut its operating costs from
was about as close to the peak of the market as $3.56 per mcfe to $1.03 per mcfe over the year.
you can get, as Painted Pony turned away from “On how we drill and frack our wells, we’ve really
Saskatchewan right when international oil driven down our costs,” he says. “For every day we
markets went running off a cliff. save on fracking, we save about $400,000; and for
The company spent the proceeds wisely, every day of drilling, it’s about $100,000.”
putting substantial capital toward paying down The company also diversified its downstream
its debts while also acquiring 14.5 net sections options since entering the Montney. In 2014,
of land in the northern half of the Montney Painted Pony signed an agreement with AltaGas
WHY WE
Formation. “We were able to come into the for the rights to up to 150 mmcf/d of firm
CHOSE THEM
year with no debt,” Ward says. “And we’re now capacity at the Townsend processing facility,
Rather than blow the
basically 100 percent focused on our Montney located near its asset base in British Columbia. In
proceeds of its successful
assets in B.C.” Indeed, Painted Pony’s shift toward the first half of 2015, it also signed an agreement Saskatchewan sale, Painted
natural gas came so swiftly that management with Spectra Energy for 220 mmcf/d of definitive Pony put its money to work by
sometimes jokes that the company is long takeaway capacity on the company’s T-North making strategic plays
overdue for a name change (Alberta Oil’s pick for pipeline that is scheduled to be completed
top gas producer somewhat confusingly has the around the end of 2016. The company now boasts
BY THE
word “petroleum” in its name). two nearby trading hubs to sell its product,
NUMBERS
Following the sale, Painted Pony had the with easy access to both AECO and Station 2.
luxury of heading into the year with a fully Moreover, even as natural gas prices continue 122 on The 200
funded capital spending program of $106 million, to sputter, Painted Pony can expect more than $3.30
of which $78 million went toward drilling and adequate cash flows from its well-hedged future Painted Pony’s average hedged
completions. It boosted natural gas production production. Ward says its AECO hedges are locked AECO price through 2017
to 88 mmcf/d from 70 mmcf/d in 2014, pumping in at an average $3.30 per mcf while its Station $100 million
out a total 15,000 boe/d over the year. It also grew 2 hedges are at $2.09 per mcf through 2017. “So Value of Painted Pony’s
its year-over-year proven reserves by 175 percent, that will be the average price for this year and Saskatchewan oil asset sale
reaching 2tcf, or approximately 337 million boe, most of next year, as well.” in 2015

34 ALBERTAOILMAGAZINE.COM PHOTOGRAPH ADRIEN VECZAN


“WE WERE ABLE
TO COME INTO
THE YEAR WITH
NO DEBT, AND
WE’RE NOW
BASICALLY
100 PERCENT
FOCUSED ON
OUR MONTNEY
ASSETS IN B.C.”
-Painted Pony CEO Patrick Ward

JUNE 2016 35
“TRUE INNOVATION
IS MORE LIKELY TO
COME FROM SMALLER
FOCUSED FIRMS THESE
DAYS THAN FROM THE
LARGE MULTINATIONAL
SERVICE COMPANIES.
IT’S HARD TO BE GOOD
AT EVERYTHING, BUT
PACKERS PLUS HAS A
PROVEN TRACK RECORD
OF BEING GREAT AT
WHAT WE DO.”
- Packers Plus CEO Dan Themig

36 ALBERTAOILMAGAZINE.COM
Top Service Company
PACKERS PLUS

SUITE OF SUCCESS
Packers Plus is as much a technology firm as it is a service company, and the
company proved that in spades in 2015

W HEN HE CO-FOUNDED PACKERS


Plus in 2000, Dan Themig probably didn’t
predict that the company would eventually help
With a regional office in Dubai, the area’s logisti-
cal hub, the company focused on improving the
efficiency of its well completions when compared
revolutionize North American shale gas produc- to conventional plug-and-perf methods in several
tion. But, as Themig knows as well as anyone, nearby oil-rich areas, such as Abu Dhabi, Turkey
energy innovation can be as unpredictable as the and Oman. “Dubai tends to be the business hub
oil and gas industry itself. The company’s success for much of the region, although completions
lies in its technology, which is driving its expan- work takes place throughout most of the Middle
sion of product lines and service offerings, despite East countries,” Themig says.
North America’s contracting market. “Innovation In addition to its expanded market base,
is key, regardless of the business climate,” says Packers Plus’s innovative efforts in 2015 earned
Themig. “And Packers Plus will continue to invest the firm a handful of awards. The company’s
to stay an industry leader.” Inferno system—an extreme high tempera-
It’s a mantra that contrasts sharply with the ture completion system that operates as hot as
company’s peers. While North American energy 600F—was the 2015 recipient of the E&P Special
investment was in full retreat in 2015, Packers Meritorious Award for Engineering Innovation.
Plus went against the flow. It started by cutting The ePLUS Retina well-monitoring system, which
costs across its operations, including the consol- verifies downhole system operations, won Best Vi-
idation of its Houston, Texas, offices into a single sualization & Collaboration at the 2015 World Oil
campus on the outskirts of the city. It then went Awards. The company’s success is partly a result WHY WE
on to establish its global technology and training of its nimbleness, Themig says. “True innovation CHOSE THEM
center in Denver, Colorado, which the company is more likely to come from smaller focused firms
As one of the grandfathers
says will serve as a world-leading facility to these days than from the large multinational of tight oil and gas fracking
research new energy technologies while provid- service companies,” he says. “It’s hard to be good technology, Packers Plus
ing technical and corporate training to its clients at everything, but Packers Plus has a proven track continues to invest in
on everything from tool theory to installation record of being great at what we do.” innovation*
procedures. The center even includes a dedicated Themig says the company is constantly
team of scientists focused solely on solving com- trying to respond to industry’s need for tech- BY THE
plex reservoir challenges. nologies that both cut costs and have reduced NUMBERS
While Packers Plus has been around long environmental impacts as oil and gas producers
67 on The 200
enough to become a household name to many are focused on solutions that will save on time,
in the oil patch, it has continued to progress its expenses and water usage, without sacrificing 600 Fahrenheit
capabilities. Indeed, to look at the wide suite of production. Perhaps the most intriguing addi- Temperature Packers Plus’s
technologies the company now employs, one tion to the technological arsenal of Packers Plus, Inferno System can withstand
might be inclined to think it’s more of a tech- which pioneered open-hole multistage fracturing 50
nology company than a service firm. But it’s also completions with its StackFRAC ball-drop tech- Highest number of stages in a
managed to shake up its corporate structure nology, is a suite of technologies for cemented well frack that Packers Plus has
through entering new markets. liner completions. The company’s new Quick- accomplished
Packers Plus expanded its presence in South PORT IV sleeves are specifically designed to bring
America in 2015, opening a service center in ball-drop efficiency to cemented wellbores and *Packers Plus is privately owned
and provided Alberta Oil with
Argentina and a sales office in Brazil. It also replace inefficient methods such as plug-and-perf. financial information on condition
deepened its ties in the Middle Eastern market. It might be the start of a whole new revolution. of confidentiality

PHOTOGRAPH ADRIEN VECZAN JUNE 2016 37


Top Oil Producer
SEVEN GENERATIONS ENERGY

CONFIDENCE BOOST
Fresh off its IPO, Seven Generations cranked up its liquids-rich production in 2015—
and kept the spigots wide open

F OR MOST ENERGY COMPANIES,


2015 was anything but a year of new begin-
nings. But, at least judging by the breadth of its
out to 2019, a move that gave the company
dependable access to the Chicago market. It was
a move that paid off in hindsight, as SevenGen
drilling campaign in 2015, Seven Generations enjoyed prices that were a shelf above many of its
Energy is not most energy companies. It was the competitors through much of 2015 and early 2016.
firm’s first full year as a public company, after it Even as prices continued to languish, the company
successfully completed a $932-million IPO at the took advantage of low prices to increase drilling
end of 2014—a debut that came just as commodity while reducing costs—a feat that is particularly
markets were beginning their precipitous slide. difficult in the Montney, which is notoriously
“We did it in a market that was heading down, expensive to drill.
and if anybody’s investment performed poorly, The company also set aside capital to begin
of course I regret that,” says SevenGen’s CEO Pat expanding its processing capacity. In October,
Carlson. “But we’ve continued to do well in the it completed its Lator 2 gas processing plant in
market. We’re back over our IPO price right now, northwestern Alberta ahead of schedule and
and we’re pleased that, for those that came in at under budget, bringing the company’s liquids-
the IPO and are still holding on now, we think rich natural gas-processing capacity to 250
we’re serving them the way we want to.” mmcf/d. It also started another significant build
Despite the inopportune timing of the IPO, at its nearby Cutbank plant that was completed
the company was particularly judicious about how this spring, and is expected to bring on stream
it spent the proceeds. It cut its 2015 spending to an additional 250 mmcf/d of capacity, further
$1.31 billion from its initial $1.6-billion guidance, boosting its 2016 production outlook. “Our
while still managing to ramp up production by 50 production in 2016 will be about 75 to 80 percent
percent year over year, from a total 31,130 boe/d higher than in 2015, and our intent is to invest WHY WE
in 2014 to 60,400 boe/d in 2015. The production about 30 percent less capital,” says president and CHOSE THEM
boost provided a cushion for the nascent company, chief operating officer Marty Proctor. In its year- A commendable corporate
translating into cash flows from operations of end petroleum reserves assessment, consulting culture and a rapid production
$380 million in 2015, and a 10 percent rise in gross firm McDaniel and Associates estimates gain in 2015 made Seven
Generations one of the top
revenues compared to the year before. And the SevenGen possessed 73 million boe of proven
performing liquids-weighted
company didn’t stop there. By the time SevenGen developed producing reserves, more than double producers
reported its first-quarter 2016 results, it was its 34 million boe at the end of 2014.
producing 100,000 boe/d compared to just 6,000 And the company is showing little sign of
BY THE
boe/d in 2013, and 31,000 in 2014—a staggering slowing as Carlson eyes innovative new markets
NUMBERS
increase within such a brief timeframe. where he can sell his product. “We’re looking to
Carlson partly attributes SevenGen’s success expand into petrochemicals and we’re looking at 47 on The 200
to the favorable location of its two main assets LNG to the West Coast,” says Carlson, emphasizing 60,400 boe/d
in the highly liquids-rich southern tip of the that any success the company has enjoyed so far Average 2015 production for
Montney Formation (it is 58% weighted toward has been a team effort. “Now we’re looking at Seven Generations
condensates and natural gas liquids). The company different markets in electrical power generation 94%
bolstered that position by locking in 500 mmcf/d and at creating whole new markets for natural gas Seven Generations’ production
in shipping commitments on the Alliance Pipeline and liquid products.” gain from 2014 to 2015

38 ALBERTAOILMAGAZINE.COM PHOTOGRAPH ADRIEN VECZAN


“OUR PRODUCTION IN
2016 WILL BE ABOUT
75 TO 80 PERCENT
HIGHER THAN IN
2015, AND OUR
INTENT IS TO INVEST
ABOUT 30 PERCENT
LESS CAPITAL.”
-Seven Generations CEO Pat Carlson

JUNE 2016 39
REVENUE NET INCOME

TOP 200 ENERGY Stock 2015 2014 Revenue 2015 2014 Earnings
RANK COMPANIES BY REVENUE Symbol Revenue ($) Revenue ($) Growth % Net Income ($) Net Income ($) Per Share

1 Enbridge ENB 33,794,000,000 37,641,000,000 -10.2 -37,000,000 1,154,000,000 -0.04


2 Suncor Energy SU 29,680,000,000 40,490,000,000 -26.7 -1,995,000,000 2,699,000,000 -1.38
3 Imperial Oil* IMO 26,756,000,000 36,231,000,000 -26.2 1,122,000,000 3,785,000,000 1.32
4 Husky Energy HSE 16,369,000,000 24,092,000,000 -32.1 -3,850,000,000 1,258,000,000 -3.95
5 Cenovus Energy CVE 13,064,000,000 19,642,000,000 -33.5 618,000,000 744,000,000 0.75
6 Canadian Natural Resources CNQ 12,363,000,000 18,863,000,000 -34.5 -637,000,000 3,929,000,000 -0.58
7 TransCanada TRP 11,300,000,000 10,185,000,000 10.9 -1,140,000,000 1,993,000,000 -1.75
8 Fortis FTS 6,727,000,000 5,401,000,000 24.6 1,063,000,000 451,000,000 2.61
9 Hydro One H 6,538,000,000 6,548,000,000 -0.2 1,194,000,000 1,215,000,000 1.39
10 Parkland Fuel PKI 6,299,571,000 7,527,638,000 -16.3 39,498,000 49,875,000 0.45
11 Gibson Energy GEI 5,591,982,000 8,573,529,000 -34.8 -280,656,000 91,941,000 -2.23
12 Syncrude 5,583,000,000 10,046,000,000 -44.4
13 Ontario Power Generation OPG 5,476,000,000 4,963,000,000 10.3 417,000,000 811,000,000 1.57
14 Pembina Pipeline PPL 4,635,000,000 6,069,000,000 -23.6 429,000,000 371,000,000 1.02
15 Encana* ECA 4,422,000,000 8,019,000,000 -44.9 -5,165,000,000 3,392,000,000 -6.28
16 Westcoast Energy W-H 3,531,000,000 4,018,000,000 -12.1 288,000,000 477,000,000 0.00
17 Superior Plus SPB 3,314,000,000 3,975,000,000 -16.6 114,500,000 88,100,000 0.20
18 Pacific Exploration & Production* PRE 2,824,546,000 4,950,022,000 -42.9 -5,949,485,000 -1,334,835,000 -17.34
19 Tervita 2,800,000,000 5,800,000,000 -51.7
20 Crescent Point Energy CPG 2,800,000,000 4,210,000,000 -33.5 -540,000,000 658,000,000 -1.82
21 Clean Harbors CLH 2,744,272,000 2,639,796,000 4.0 44,102,000 -28,328,000 0.76
22 Keyera KEY 2,521,080,000 3,623,701,000 -30.4 201,920,000 229,989,000 1.19
23 Transalta RNW 2,267,000,000 2,623,000,000 -13.6 116,000,000 232,000,000 -0.09
24 AltaGas ALA 2,192,000,000 2,405,000,000 -8.9 59,000,000 138,000,000 0.07
25 Canadian Oil Sands COS 2,065,000,000 3,691,000,000 -44.1
26 MEG Energy MEG 1,925,916,000 2,829,964,000 -31.9 -1,147,313,000 -95,206,000 -5.21
27 Inter Pipeline IPL 1,676,300,000 1,556,300,000 7.7 463,000,000 349,500,000 1.28
28 Enerflex EFX 1,629,032,000 1,696,200,000 -4.0 48,045,000 71,218,000 0.62
29 Precision Drilling PD 1,555,624,000 2,350,538,000 -33.8 -363,436,000 33,152,000 -1.24
30 Calfrac Well Services CFW 1,495,205,000 2,496,931,000 -40.1 -227,426,000 67,502,000 -2.31
31 ARC Resources ARX 1,428,400,000 1,985,900,000 -28.1 -342,700,000 380,800,000 -1.01
32 Nova Scotia Power NSI 1,417,300,000 1,348,200,000 5.1 162,000,000 152,500,000 0.00
33 Ensign Energy Services ESN 1,390,978,000 2,321,765,000 -40.1 -104,049,000 71,120,000 -0.68
34 Secure Energy Services SES 1,346,425,000 2,271,651,000 -40.7 -138,096,000 40,856,000 -1.20
35 Tourmaline Oil TOU 1,279,452,000 1,295,067,000 -1.2 78,512,000 501,001,000 0.37
36 Penn West Petroleum PWT 1,265,000,000 2,121,000,000 -40.4 -2,646,000,000 -1,733,000,000 -5.27
37 Capital Power CP 1,251,000,000 1,228,000,000 1.9 152,000,000 169,000,000 0.70
38 Mullen Group MTL 1,214,372,000 1,427,851,000 -15.0 13,366,000 94,633,000 0.15
39 Trican Well Service TCW 1,188,068,000 2,406,758,000 -50.6 -737,454,000 -34,304,000 -5.51
40 Enerplus ERF 1,027,116,000 1,760,567,000 -41.7 -1,523,403,000 299,076,000 -7.39
41 Pengrowth Energy PGF 1,017,700,000 1,633,300,000 -37.7 -1,093,100,000 -578,800,000 -2.02
42 Nexen-CNOOC 986,128,000 2,090,000,000 -52.8
43 Baytex Energy BTE 888,447,000 1,529,897,000 -41.9 -627,844,000 80,726,000 -5.72
44 Vermilion Energy VET 873,666,000 1,311,628,000 -33.4 -109,377,000 227,906,000 -1.98
45 Canadian Energy Services & Tech CEU 749,614,000 972,705,000 -22.9 -92,276,000 68,055,000 -0.42
46 Peyto Exploration & Development PEY 690,817,000 782,473,000 -11.7 137,561,000 261,778,000 0.87
47 Seven Generations Energy VII 676,709,000 639,432,000 5.8 -187,296,000 144,200,000 -0.75
48 Bonavista Energy BNP 621,581,000 1,094,328,000 -43.2 -751,545,000 4,847,000 -3.45
49 Canexus CUS 562,301,000 538,914,000 4.3 -217,312,000 -249,448,000 -1.17
50 Trinidad Drilling TDG 551,899,000 941,083,000 -41.4 -76,219,000 64,662,000 -1.30

40 WWW.ALBERTAOILMAGAZINE.COM
ASSETS PRODUCTION
2015 Total 2014 Total Full-time
2015 2014 Production Production Employees
Assets ($) Assets ($) (BOE/D) (BOE/D) 2015 Senior Executive LEGEND
84,515,000,000 72,741,000,000 2,175 Al Monaco OIL-WEIGHTED PRODUCERS
77,527,000,000 79,671,000,000 577,800 534,900 13,190 Steve Williams GAS-WEIGHTED PRODUCERS
43,170,000,000 40,830,000,000 365,667 310,000 5,700 Rich Kruger SERVICE COMPANIES
33,056,000,000 38,848,000,000 345,700 340,100 5,552 Asim Ghosh MIDSTREAM COMPANIES
25,791,000,000 24,695,000,000 280,447 284,826 3,005 Brian Ferguson POWER COMPANIES
59,275,000,000 60,200,000,000 851,901 790,410 7,568 Steve Laut
64,483,000,000 58,525,000,000 5,512 Russ Girling
28,804,000,000 26,233,000,000 Barry Perry
Rank
24,328,000,000 22,550,000,000 5516 Mayo Schmidt SUNCOR ENERGY
1,818,662,000
3,282,986,000
1,531,791,000
3,573,029,000
1,800 Robert Espey
Stew Hanlon
2 This is the first time Suncor hasn’t been in the #1
spot on our list of 200 largest energy companies.
Despite Suncor’s relatively good results in 2015
Mark Ward compared to many of its peers, low commodity
Jeffrey Lyash prices put a dent in its gross revenues, pulling
12,936,000,000 11,262,000,000 1,274 Mick Dilger nearly $10 billion off its balance sheet compared
to 2014. Next year, after the completion of its
15,644,000,000 24,531,000,000 405,900 478,500 2,726 Doug Suttles majority stake in Syncrude, as well as a (fingers
15,698,000,000 15,446,000,000 3654 Mark Fidorek crossed) higher price of oil, Suncor is likely to
2,142,000,000 2,114,000,000 2,106 Luc Desjardins once again capture top spot. Its augmented
stake in Syncrude, coupled with a series of other
3,986,121,000 10,161,908,000 308,659 307,062 2525 Ronald Pantin
production units set to come online, could boost
Chris Synek its revenue next year significantly.
17,616,000,000 16,467,000,000 163,631 140,803 491 Scott Saxberg
3,431,428,000 3,689,423,000 Alan McKim
AVERAGE 2015 PRODUCTION POTENTIAL PRODUCTION IN 2016
4,296,569,000 3,850,826,000 985 David Smith
577,800 boe/d ~800,000 boe/d*
10,947,000,000 9,833,000,000 2380 Dawn Farrell
10,099,000,000 8,395,000,000 David Harris *Including Suncor’s Canadian Oil Sands acquisition for
Ryan Kubik about $6.8 billion (including debt)
9,400,269,000 9,930,108,000 80,025 71,186,000 617 Bill McCaffrey
9,029,400,000 8,647,200,000 978 Christian Bayle
2,209,264,000 2,144,988,000 2,300 Blair Goertzen
Rank
4,878,690,000 5,308,996,000 4,337 Kevin Neveu TRICAN WELL SERVICE
1,825,823,000
5,932,200,000
2,157,367,000
6,325,500,000 114,167
3,100
560
Fernando Aguilar
Myron Stadnyk 39 Trican saw its revenues chopped by more than half
in 2015, from $2.41 billion in 2014 to $1.18 billion
4,641,600,000 4,318,100,000 1700 Bob Hanf last year. In August, the company managed to sell
off its Russian assets to state-backed Rosneft for
3,598,140,000 3,723,445,000 4,404 Robert Geddes
$182 million—a steep discount to what the com-
1,315,420,000 1,496,117,000 1,250 Rene Amirault pany was likely hoping for. But the sale provided
7,640,671,000 6,622,303,000 154,403 112,929 224 Michael Rose limited cushion to the company’s balance sheet,
as weeks after the news of the deal broke, Trican’s
5,924,000,000 9,852,000,000 86,357 103,989 718 David Roberts
share price plummeted by a record 32 percent,
5,393,000,000 5,420,000,000 698 Brian Vaasjo down to a close of $1.35 on August 14.
1,817,035,000 1,862,137,000 3,407 Murray Mullen
1,311,882,000 2,536,864,000 2,454 Dale Dusterhoft FROM RUSSIA WITH LOVE
2,581,234,000 4,031,492,000 106,524 103,130 Ian Dundas
4,550,700,000 6,169,800,000 71,409 73,288 449 Derek Evans
58,115 67,770 Fang Zhi 35% – Portion of Trican’s Russian pressure
pumping equipment that was parked following
5,488,498,000 6,230,596,000 81,110 92,271 270 James Bowzer its second-quarter results in 2015
4,209,220,000 4,386,091,000 54,922 49,573 516 Anthony Marino
931,537,000 1,088,080,000 1,417 Thomas Simons
3,357,514,000 3,127,065,000 85,674 76,372 51 Darren Gee 40% – Headcount reduction in Russia following
3,758,982,000 3,114,797,000 60,403 31,136 104 Patrick Carlson its second-quarter results
3,523,716,000 4,429,402,000 79,288 77,211 296 Jason Skehar 8.7 – Trican’s net debt compared to EBITDA in the
710,593,000 1,020,103,000 405 Doug Wonnacott middle of August
2,236,200,000 1,941,621,000 1,790 Lyle Whitmarsh
*RESULTS IN AMERICAN DOLLARS
**NINE MONTHS ENDED DECEMBER 31 (US$)

JUNE 2016 41
REVENUE NET INCOME

TOP 200 ENERGY Stock 2015 2014 Revenue 2015 2014 Earnings
RANK COMPANIES BY REVENUE Symbol Revenue ($) Revenue ($) Growth % Net Income ($) Net Income ($) Per Share

51 Northern Blizzard Resources NBZ 492,383,000 683,507,000 -28.0 -124,171,000 -2,347,000 -1.15
52 Parex Resources* PXT 490,021,000 669,188,000 -26.8 -44,621,000 -108,733,000 -0.30
53 Whitecap Resources WCP 481,588,000 1,039,904,000 -53.7 -500,713,000 453,141,000 -1.76
54 Alliance Pipeline 465,098,000 482,157,000 -3.5 128,803,000 118,162,000 0.00
55 Oando Energy Resources OER 454,965,000 421,422,000 8.0 16,119,000 -320,041,000 0.02
56 Lightstream Resources LTS 449,061,000 1,019,658,000 -56.0 -946,015,000 -446,072,000 -4.79
57 Savanna Energy Services SVY 446,100,000 791,890,000 -43.7 -180,101,000 -252,025,000 -1.90
58 Badger Daylighting BAD 404,620,000 422,219,000 -4.2 38,488,000 53,102,000 1.04
59 Canyon Services Group FRC 403,998,000 591,022,000 -31.6 -62,063,000 49,094,000 0.90
60 Horizon North Logistics HNL 369,889,000 476,060,000 -22.3 -832,000 23,646,000 -0.01
61 Paramount Resources POU 366,411,000 332,453,000 10.2 -901,301,000 -71,714,000 -8.52
62 Harvest Operations 364,600,000 891,600,000 -59.1 -1,167,900,000 -188,800,000 0.00
63 Sherritt International S 335,900,000 455,600,000 -26.3 -1,497,700,000 -29,700,000 -7.07
64 Newalta NAL 327,584,000 495,331,000 -33.9 -183,056,000 -142,673,000 -3.25
65 Long Run Exploration LRE 327,493,000 616,195,000 -46.9 -645,032,000 -190,395,000 -3.33
66 Bellatrix Exploration BXE 319,989,000 468,586,000 -31.7 -444,208,000 163,123,000 -2.31
67 Packers Plus Energy Services*
68 Birchcliff Energy BIR 305,756,000 436,376,000 -29.9 12,160,000 114,304,000 -0.11
69 Major Drilling Group MDI 305,718,000 354,946,000 -13.9 -49,565,000 -55,310,000 -0.62
70 Enbridge Income Fund ENF 298,000,000 416,000,000 -28.4 44,000,000 132,000,000 0.00
71 Trilogy Energy 295,697,000 555,639,000 -46.8 -177,002,000 44,258,000 -1.09
72 PHX Energy Services 286,780,151 521,466,624 -45.0 -42,488,845 21,994,897 -1.10
73 Pason Systems 285,148,000 499,272,000 -42.9 -14,612,000 112,104,000 -0.17
74 Bankers Petroleum* 283,392,000 583,120,000 -51.4 -3,614,000 128,833,000 -0.01
75 Total Energy Services TOT 283,193,000 428,149,000 -33.9 8,655,000 53,305,000 0.28
76 Black Diamond Group BDI 282,186,000 386,567,000 -27.0 8,400,000 35,038,000 0.20
77 North American Energy Partners NOA 281,282,000 471,777,000 -40.4 -7,470,000 -1,169,000 -0.23
78 Gran Tierra Energy GTE 276,011,000 559,398,000 -50.7 -268,000,000 -189,238,000 -0.94
79 NuVista Energy NVA 240,268,000 282,157,000 -14.8 -172,925,000 -58,881,000 -1.16
80 Raging River Exploration RRX 232,284,000 310,946,000 -25.3 28,919,000 110,170,000 0.15
81 Western Energy Services WRG 227,524,000 507,832,000 -55.2 -129,139,000 36,450,000 -1.74
82 Connacher Oil and Gas CKK 224,276,000 437,477,000 -48.7 -42,295,000 -211,786,000 -2.27
83 Xtreme Drilling and Coil Services XDC 221,359,000 267,441,000 -17.2 -68,344,000 589,000 -0.83
84 TORC Oil & Gas TOG 216,137,000 292,447,000 -26.1 172,655 6,258,000 -1.27
85 Twin Butte Energy TBE 215,712,000 454,565,000 -52.5 -336,932,000 -57,340,000 -0.95
86 PrairieSky Royalty PSK 215,000,000 198,700,000 8.2 215,000,000 198,700,000 0.40
87 High Arctic Energy Services HWO 209,900,000 171,800,000 22.2 27,100,000 28,200,000 0.00
88 Ithaca Energy* IAE 206,975,000 418,143,248 -50.5 -25,753,000 -25,318,000 -0.35
89 Surge Energy SGY 193,702,000 443,512,000 -56.3 -213,891,000 -33,177,000 -0.97
90 Cardinal Energy CJ 192,739,000 220,635,000 -12.6 -95,898,000 53,806,000 -1.63
91 Foremost Income Fund 192,207,000 236,024,000 -18.6 9,904,000 -11,301,000 0.53
92 Veresen VSN 187,000,000 302,100,000 -38.1 84,000,000 68,000,000 0.25
93 Petrowest PRW 186,351,000 269,334,000 -30.8 -20,668,000 -5,148,000 -0.12
94 ZCL Composites 185,675,000 170,835,000 8.7 12,999,000 16,316,000 0.43
95 Essential Energy Services ESN 184,713,000 351,472,000 -47.4 -22,485,000 -22,822,000 -0.18
96 Bonterra Energy BNE 184,206,000 303,695,000 -39.3 -11,303,000 38,824,000 -0.28
97 Kelt Exploration KEL 179,326,000 214,691,000 -16.5 -140,175,000 10,628,000 -0.91
98 Gemini GKX 166,557,000 143,953,000 15.7 -17,183,000 2,968,000 -0.22
99 Entrec ENT 165,545,000 232,235,000 -28.7 -13,953,000 76,409,000 -0.14
100 Spartan Energy 154,686,000 173,872,000 -11.0 -77,802,000 24,335,000 -0.29

42 WWW.ALBERTAOILMAGAZINE.COM
ASSETS PRODUCTION
2015 Total 2014 Total Full-time
2015 2014 Production Production Employees
Assets ($) Assets ($) (BOE/D) (BOE/D) 2015 Senior Executive
Rank
1,703,630,000 1,887,720,000 20,884 20,724 254 John Rooney BELLATRIX EXPLORATION
957,966,000
4,183,085,000
1,034,415,000
3,869,293,000
27,434
40,953
22,526
32,458
279
99
Wayne Foo
Grant Fagerheim 66 Through much of 2015, Bellatrix Exploration was
involved in a standstill agreement with Orange
1,304,157,000 1,426,232,000 Tarrance Kutryk Capital, a New York-based hedge fund that had
3,141,596,000 3,242,791,000 54,520 24,945 Olapade Durotoye been rapidly buying up shares in the company
(by the end of 2014, Orange had bought up 14.3
2,558,872,000 3,793,212,000 31,392 40,420 349 John Wright percent of the company’s float). And, with
879,176,000 1,183,925,000 1,433 Christopher Strong Orange Capital manager Daniel Lewis increas-
446,685,000 444,299,000 1,554 Tor Wilson ingly unsatisfied with the company’s results,
Bellatrix began to find itself increasingly under
510,088 ,000 638,770,00 990 Brad Fedora pressure to make changes. However, in February
469,504,000 539,978,000 1,402 Rod Graham of 2016, Orange folded, causing the company to
2,781,035,000 3,199,429,000 44,130 24,524 298 James Riddell sell off its stake in Bellatrix. The company can’t
be impressed with its 2015 results—for that
3,928,100,000 5,091,600,000 41,735 45,825 413 Piljong Sung matter, probably no one is—but it at least has
4,090,000,000 5,283,200,000 11,158 19,456 6,372 David Pathe some breathing room headed into the second
859,483,000 1,365,085,000 John Barkhouse half of 2016.
1,198,623,000 1,939,706,000 32,386 31,168 198 Bill Andrew
1,703,212,000 2,213,485,000 41,441 38,065 188 Raymond Smith
Dan Themig $894 $183
2,025,373,000 1,918,680,000 38,950 38,950 Jeffery Tonken million million 6.8%
Carl Orange
542,704,000 591,724,000 2,307 Francis McGuire Icahn’s Capital’s
2,635,000,000 4,081,000,000 Perry Schuldhaus stake in stake in
Talisman Bellatrix FrontFour Capital’s stake
1,266,492,000 1,618,953,000 27,775 35,104 220 Jim Riddell Energy Exploration in Legacy Oil + Gas
91,829,177 162,219,028 656 John Hooks
ACTIVIST POSITIONS
529,625,000 570,066,000 128 Marcel Kessler
1,261,390,000 1,284,846,000 20,690 19,385 578 David French
532,379,000 595,906,000 Daniel Halyk
647,488,000 702,534,000 271 Trevor Haynes Rank
360,694,000 456,581,000 152 Martin Ferron
PRAIRIESKY ROYALTY
1,146,118
981,637,000
1,714,050
1,024,080,000
23401
22,408
25182
18,391 75
Gary Guidry
Jonathan Wright
86 There was very little good news coming out of
2015 in the oil patch (indeed, only 29 of our Top
200 companies posted positive revenue growth).
1,029,034,000 765,332,000 16,112 10,755 35 Neil Roszell But PrairieSky was one of those rare companies
876,608,000 1,057,118,000 632 Alex MacAusland this year, posting a moderate 8.4 percent growth
in 2015. During the lowest periods of the com-
872,083,000 1,252,781,000 14,547 14,139 124 Merle Johnson modity cycle, the inherently low operating costs
512,226,000 547,958,000 269 Thomas Wood of royalty lands proved to be a boon to those
1,894,082,000 1,326,891,000 15,588 11,264 80 Brett Herman who had them—and to those who wanted to sell
them off. Both Canadian Natural Resources and
563,332,000 1,043,249,000 17,351 21,109 95 Rob Wollman Cenovus took a hard look at their royalty lands as a
2,938,200,000 1,119,000,000 17,651 17,225 66 Andrew Phillips way to shore up their balance sheets. PrairieSky,
244,100,000 188,700,000 497 Tim Braun meanwhile, bulked up its assets from a total $1.11
billion in 2014 to $2.94 billion in 2015.
2,062,881,000 2,358,775,000 12,066 10,947 36 Les Thomas
1,145,289,000 1,985,359,000 16,462 18,069 65 Paul Colborne
964,333,000 913,253,000 11,838 7,815 111 Scott Ratushny A ROYALTY SELL-OFF
171,633,000 196,508,000 274 Bevan May $1.8 billion
4,571,000,000 4,737,000,000 259 Don Althoff Value of royalty sell off from CNRL to PrairieSky in
161,373,000 192,291,000 534 Rick Quigley November 2015 (81 percent of its royalty lands)
177,544,000 156,654,000 Ron Bachmeier
$3.3 billion
317,224,000 397,351,000 Garnet Amundson
Value of royalty sell off from Cenovus Energy to OTPP
1,183,593,000 1,042,938,000 12,656 13,194 38 George Fink (15 percent of CVE’s cash flow)
1,279,475,000 908,709,000 18,577 12,756 David Wilson
44,773,000 65,342,000 Peter Sametz
284,479,000 324,938,000 550 John Stevens
825,596,000 901,955,000 8866 5899 51 Rick McHardy *Packers Plus is privately owned and provided Alberta Oil
with financial information on condition of confidentiality
*RESULTS IN AMERICAN DOLLARS
**NINE MONTHS ENDED DECEMBER 31 (US$)

JUNE 2016 43
REVENUE NET INCOME

TOP 200 ENERGY Stock 2015 2014 Revenue 2015 2014 Earnings
RANK COMPANIES BY REVENUE Symbol Revenue ($) Revenue ($) Growth % Net Income ($) Net Income ($) Per Share

101 Canacol Energy* CNE 149,047,000 229,493,760 -35.1 -106,022,000 10,975,083 -0.96
102 Crew Energy 148,663,000 372,947,000 -60.1 -55,355 -349,714,000 -0.40
103 Perpetual Energy PMT 142,437,000 262,790,000 -45.8 -89,274,000 3,366,000 -0.59
104 Cathedral Energy Services CET 136,079,000 275,435,000 -50.6 -35,342,000 10,283,000 -0.98
105 Freehold Royalties 135,664,000 199,850,000 -32.1 -4,080,000 66,447,000 -0.05
106 Advantage Oil & Gas AAV 132,311,000 215,653,000 -38.6 21,378,000 15,703,000 0.12
107 Journey Energy JOY 119,907,000 209,509,000 -42.8 -111,337,000 -90,221,000 -2.55
108 Tamarack Valley Energy TVE 117,048,484 118,861,163 -1.5 -17,328,368 -25,167,361 -0.19
109 STEP Energy Services 115,500,000 131,900,000 -12.4 0.00
110 Macro Enterprises 114,836,000 200,076,000 -42.6 9,171,000 7,736,000 0.29
111 Akita Drilling 112,448,000 165,274,000 -32.0 -33,965,000 21,079,000 -1.89
112 Strad Energy Services SDY 111,548,000 219,784,000 -49.2 -13,158,000 30,795,000 -0.82
113 Black Pearl Resources PXX 106,128,000 206,973,000 -48.7 -46,793,000 26,825,000 -0.14
114 RMP Energy RMP 103,743,000 222,028,000 -53.3 -84,795,000 47,846,000 -0.69
115 Aveda AVE 101,315,000 155,900,000 -35.0 -26,541,000 2,468,000 -1.38
116 Athabasca Oil ATH 97,022,000 126,586,000 -23.4 -696,771,000 -227,168,000 -1.73
117 Bri-Chem BRY 96,822,080 184,707,721 -47.6 14,357,367 11,301,427 -0.12
118 TransGlobe Energy* TGL 92,895,000 284,165,000 -67.3 -105,600,000 11,482,000 -1.44
119 Boulder Energy BXO 91,398,000 151,432,000 -39.6 -37,611,000 47,016,000 -0.82
120 Madalena Energy MVN 83,648,000 65,873,000 27.0 18,718,000 42,281,000 -0.03
121 McCoy Global MCB 81,776,000 120,619,000 -32.2 -10,977,000 18,007,000 -0.40
122 Painted Pony Petroleum PPY 81,600,000 160,500,000 -49.2 5,200,000 15,600,000 -0.05
123 CWC Energy Services CWC 81,260,000 143,666,000 -43.4 -29,106,000 -13,451,000 -0.10
124 Granite Oil GXO 81,031,000 234,735,000 -65.5 150,216,000 76,233,000 4.99
125 Gear Energy GXE 80,374,000 164,116,000 -51.0 -96,519,000 -13,080,000 -0.34
126 Delphi Energy DEE 80,275,000 163,870,000 -51.0 -42,525,000 -7,263,000 -0.27
127 Logan International* LII 77,695,000 147,187,000 -47.2 33,349,000 211,000 1.00
128 Sterling Resources SLG 76,578,000 80,296,000 -4.6 -206,909,000 111,010,000 -0.51
129 Pine Cliff Energy PNE 74,167,000 71,084,000 4.3 -24,257,000 -1,942,000 -0.10
130 Niko Resources** NKO 73,796,000 92,641,000 -20.3
131 Cequence Energy CQE 73,450,000 134,008,000 -45.2 -250,072,000 79,368,000 -1.19
132 Storm Resources SRX 67,736,000 95,480,000 -29.1 -6,977,000 4,965,000 -0.06
133 Zargon Oil & Gas ZAR 67,354,000 145,888,000 -53.8 66,672,000 132,898,000 -3.50
134 Eagle Energy EGL 63,312,000 92,413,000 -31.5 -69,925,000 -29,634,000 -2.18
135 Enterprise Group E 60,623,196 79,629,450 -23.9 -20,307,151 5,731,399 -0.40
136 Manitok Energy MEI 56,210,000 107,822,000 -47.9 -27,195,000 -3,587,000 -0.36
137 Marquee Energy MQL 55,137,000 89,645,000 -38.5 -53,419,000 -12,810,000 -0.44
138 Arsenal Energy AEI 55,082,000 117,114,000 -53.0 -38,126,000 28,021,000 -2.37
139 Chinook Energy CKE 51,206,000 137,445,000 -62.7 -83,606,000 -38,400,000 -0.39
140 Lonestar West LSI 50,304,204 47,252,647 6.5 -4,667,735 1,803,083 -0.22
141 Northern Frontier FFF 48,254,000 63,321,000 -23.8 -23,061,000 -27,430,000 -0.91
142 Ikkuma Resources IKM 43,157,000 24,194,000 78.4 -28,770,000 -8,936,000 -0.36
143 Questfire Energy Q 40,717,011 71,619,004 -43.1 -10,386,781 24,795,298 -0.60
144 Strategic Oil and Gas V.SOG 36,496,000 82,466,000 -55.7 -110,115,000 -129,490,000 -0.20
145 Touchstone Exploration TXP 36,364,000 42,570,000 -14.6 52,807,000 13,584,000 -0.27
146 Striker Exploration SKX 32,203,000 7,403,000 335.0 -28,471,000 -1,639,000 -0.98
147 Virginia Hills Oil PRY 30,339,000 52,264,000 -42.0 -18,412,000 -175,725,000 -1.28
148 Dundee Energy DEN 29,581,000 46,230,000 -36.0 -8,686,000 981,000 -0.04
149 Toscana Energy Income TEI 26,717,507 47,444,347 -43.7 -15,475,093 -1,406,459 -2.16
150 Serinus Energy* SEN 25,975,000 45,002,000 -42.3 -47,798,000 -23,961,000 -0.66

44 WWW.ALBERTAOILMAGAZINE.COM
ASSETS PRODUCTION
2015 Total 2014 Total Full-time
2015 2014 Production Production Employees
Assets ($) Assets ($) (BOE/D) (BOE/D) 2015 Senior Executive
Rank
669,742,000 835,624,920 32,733 10,577 240 Charle Gamba ADVANTAGE OIL & GAS
1,244,283,000
603,450,000
1,225,065,000
750,602,000
17,813
78,859
25,329
20,554
79
179
Dale Shwed
Susan Rose 106 Advantage Oil & Gas is symbolic of firms that
have successfully invested in the liquids-rich gas
155,610,000 230,534,000 356 Scott MacFarlane fields that straddle B.C. and northwest Alberta. It
939,394,000 653,277,000 10945 9180 0 Thomas Mullane not only made a profit for two years running but
increased it to $21.4 million this year from $15.7
1,517,443,000 1,454,767,000 140,851 131,581 26 Andy Mah million last year, although its revenue dropped
452,116,000 563,588,000 10309 10346 70 Alex Verge 38.6 percent to $132.3 million. Advantage
549,067,714 497,578,437 8,448 5,717 20 Brian Schmidt boosted operating efficiencies as it advanced
its Glacier Montney development, reducing
237,600,000 146,100,000 434 Regan Davis total cash costs by eight percent to $0.82/mcfe,
115,728,000 126,330,000 Frank Miles while lifting production seven percent to 141
254,516,000 340,926,000 48 Karl Ruud mmcfe/d. It also expanded its Glacier gas plant
processing capacity to 250 mcf/d to accommo-
169,206,000 237,459,000 24 Andy Pernal date expansion through 2017. Confident of future
808,344,000 837,773,000 8,330 9,287 35 John Festival growth, Advantage plans to expand the plant’s
452,767,000 542,955,000 12,026 11,782 13 John Ferguson processing capacity in the second half of 2017 to
350 mmcf/d.
138,010,000 147,614,000 Dominique Conseil
3,462,442,000 4,297,803,000 7560 6120 Rob Broen GROW BABY GROW
7,420,477 131,778,586 74 Don Caron
455,500,000 654,058,000 14,511 16,103 90 Ross Clarkson
421,664,000 460,445,000 92,418 24 Martin Cheyne 16% 70 14
mmcf/d
163,917,000 169,521,000 3,577 2,883 88 Steven Sharpe
110,567,000 131,941,000 220 James Rakievich Production Additional Uncompleted
781,600,000 737,800,000 15604 13192 Patrick Ward increase capacity wells in
to 25,886 added to inventory of
222,428,000 275,353,000 366 Duncan Au boe/d in Q4 the Glacier 37 will allow
2015 from gas plant future growth
298,698,000 743,202,000 26,326 12 Michael Kabanuk Q4 2014 expansion
225,734,000 374,718,000 5670 6020 31 Ingram Gillmore in 2015
360,842,000 481,749,000 9469 10549 37 David Reid
221,265,000 271,763,000 361 David MacNeill
453,440,000 684,817,000 5,252 4,125 Jacob Ulrich
Rank
640,775,000 410,697,000 12,854 7,899 26 Phil Hodge STRIKER EXPLORATION
409,559,000 678,831,000 8213 9720 32
Kevin Clarke
Todd Brown 146 Striker Exploration, in percentage terms,
symbolizes the low-price environment’s threat
440,658,000 418,568,000 9,956 6,980 27 Brian Lavergne and opportunity. Through the drill bit and
acquisition it boosted its output 91 percent
263,664,000 282,706,000 4564 6120 Craig Hansen
from Q4 2014 to Q4 2015 to 2,778 boe/d, and its
208,572,000 257,172,000 3,358 2,782 40 Richard Clark revenue soared an eye-watering 335 percent to
119,217,868 165,101,322 230 Leonard Jaroszuk $32.2 million. Yet, it made a loss of $28.5 million.
204,705,000 211,284,000 4,480 4,502 27 Massimo Geremia It completed 11 gross wells and equipped/tied-in
and brought on production 8 gross wells. Stiker
227,941,000 281,976,000 5,068 4,858 Richard Thompson also raised output by 320 boe/d and bought
164,133,000 236,424,000 3,707 4,500 18 Tony van Winkoop 98 net sections of undeveloped land through
321,564,000 434,318,000 5,637 7,937 Walter Vrataric acquisitions. Striker maintained its balance
sheet strength with net debt of $8.2 million,
75,794,081 74,889,430 James Horvath representing debt to trailing annualized funds
63,527,000 82,871,000 Chris Yellowega flow of 0.64.
219,430,000 214,845,000 6,925 2,766 20 Tim de Freitas
115,610,438 133,863,233 4,877 5,103 23 Richard Dahl
130,593,000 239,601,000 2,509 3,462 55 Gurpreet Sawhney $5.6 20:1
100,619,000 140,333,000 1,756 1,550 136 Paul Baay
million
What it got The basis Striker
134,772,000 165,750,000 2767 15 Doug Bailey for selling consolidated
non-core its outstanding
100,330,000 121,101,000 1,515 1,976 Colin Witwer assets shares on
173,199,000 184,599,000 2,506 2,348 33 Bruce Sherley
122,250,976 115,465,094 2,259 2,484 Joseph Durante
185,187,000 259,467,000 4105 5219 Regan Davis
*RESULTS IN AMERICAN DOLLARS
**NINE MONTHS ENDED DECEMBER 31 (US$)

JUNE 2016 45
REVENUE NET INCOME

TOP 200 ENERGY Stock 2015 2014 Revenue 2015 2014 Earnings
RANK COMPANIES BY REVENUE Symbol Revenue ($) Revenue ($) Growth % Net Income ($) Net Income ($) Per Share

151 Americas Petrogas BOE 24,733,000 30,999,000 -20.2 -40,458,000 -52,938,000 -0.17
152 Pulse Seismic PSD 24,434,000 35,743,000 -31.6 5,308,000 3,478,000 -0.09
153 Yangarra Resources YGR 23,948,626 51,929,481 -53.9 -4,781,170 24,371,606 -0.07
154 Epsilon Energy EPS 23,830,421 52,936,176 -55.0 -25,523,657 6,615,952 -0.54
155 Anderson Energy AXL 23,339,000 47,271,000 -50.6 -17,924,000 -56,520,000 -0.10
156 Hyduke Energy Services HYD 23,201,169 45,547,496 -49.1 -6,395,826 -8,834,273 -0.17
157 Petroshale PSH 22,965,000 9,264,000 147.9 -6,500,000 -4,327,000 -0.26
158 Cordy Oilfield Services CKK 20,777,000 75,192,000 -72.4 -8,120,000 -31,497,000 -0.09
159 Questerre Energy QEC 20,769,000 26,298,000 -21.0 -73,453,000 -40,869,000 -0.28
160 Oryx Petroleum OXC 20,467,000 19,616,000 4.3 -422,939,000 -22,585,000 -3.43
161 Valeura Energy VLE 19,461,000 22,049,000 -11.7 -3,488,000 1,273,000 -0.01
162 DivestCo DVT 18,314,000 36,120,000 -49.3 -5,729,000 2,507,000 -0.09
163 WesternZagros Resources* WZR 17,932,000 236,145,000 25,391,000 0.30
164 NXT Energy Solutions SFD 17,422,151 3,913,367 345.2 10,540,228 -1,563,361 0.22
165 Clearview Resources 17,089,067 16,760,801 2.0 -1,300,821 3,640,240 -0.42
166 Yoho Resources YO 15,932,000 22,599,000 -29.5 -62,563,000 43,154,230 -1.13
167 Bengal Energy BNG 15,669,000 19,822,000 -21.0 -3,172,000 150,000 -0.05
168 Corridor Resources CDH 15,505,000 21,819,000 -28.9 -31,879,000 -17,706,000 -0.36
169 Traverse Energy TVL 12,882,314 19,716,684 -34.7 2,761,507 4,570,065 -0.04
170 Crown Point Energy* CWV 12,516,425 11,579,567 8.1 -16,083,343 -15,855,122 -0.10
171 SDX Energy* SDX 11,372,000 24,533,000 -53.6 9,400,000 7,936,000 0.20
172 Leucrotta Exploration LXE 10,859,000 29,322,000 -63.0 11,412,000 3,090,000 0.07
173 Tuscany Energy TUS 10,113,000 17,609,000 -42.6 -6,574,000 -5,087,000 -0.13
174 Horizon Oil Field Solutions 9,499,599 8,259,021 15.0 0.00
175 Hemisphere Energy HME 8,974,579 13,626,902 -34.1 -8,310,831 -1,667,807 -0.11
176 Jura Energy* JEC 8,626,569 2,295,180 275.9 -15,968,754 -3,451,661 -0.23
177 Ceiba Energy Services CEB 7,608,000 6,668,000 14.1 2,313,000 12,812,000 -0.02
178 Forent Energy 7,358,180 4,464,729 64.8 -5,030,934 -773,714 -0.41
179 DXI Energy DXI 7,096,000 7,561,000 -6.1 -4,611,000 -6,096,000 -0.19
180 Divergent Energy Services* DVG 5,768,000 6,133,000 -6.0 -6,010,000 -5,937,000 -0.06
181 Altura Energy ATU.VN 5,394,785 5,920,237 -8.9 -3,810,021 3,576,393 -0.06
182 Intercept Energy Services IES 4,686,307 5,751,999 -18.5 -2,164,205 -1,423,305 -0.02
183 Matrrix Energy Technologies MXX 4,381,000 34,844,000 -87.4 -9,047,000 1,812,000 -0.29
184 Cub Energy* KUB 4,210,000 6,992,000 -39.8 -9,696,000 -59,440,000 -0.01
185 GeoRox Resources GXR 2,415,664 4,619,571 -47.7 -1,914,980 -571,000 -0.07
186 Ironhorse Oil & Gas IOC 2,085,000 1,203,000 73.3 -5,719,000 -221,000 -0.21
187 Vital Energy VUX 1,994,584 1,559,065 27.9 -6,410,644 -5,854,452 -0.12
188 Blue Spark Energy 1,500,000 2,000,000 -25.0 -3,000,000 -3,000,000
189 Caza Oil & Gas CAZ 1,007,221 2,294,597 -56.1 -5,121,188 -7,064,478 -0.01
190 Tribute Resources TRB 925,168 849,529 8.9 -3,576,195 -1,448,244 -0.05
191 Pan Orient Energy POE 921,000 22,703,000 -95.9 28,913,000 -2,544,000 0.52
192 Jericho Oil JCO 678,711 766,031 -11.4 398,817 -1,724,739 -0.02
193 Rockbridge Resources RBE 647,108 753,668 -14.1 -173,785 -280,349 -0.01
194 Petrox Resources PTC 573,345 574,710 -0.2 -1,147,910 -555,702 -0.02
195 Alvopetro Energy ALV 535,000 1,106,000 -51.6 -27,562,000 39,658,000 -0.15
196 Strikewell Energy SSK 378,790 151,475 150.1 -2,057,179 -1,469,507 -0.24
197 Marksmen Energy MAH 353,593 509,680 -30.6 -1,897,787 -939,297 -0.02
198 Raimount Energy RMT 265,053 512,258 -48.3 -2,327,555 -145,271 -0.53
199 Petro Vista Energy PTV 216,000 2,573,000 -91.6 3,262,000 1,628,000 0.08
200 Petromin Resources PTR 213,832 903,986 -76.3 2,243,513 1,578,456 0.03

46 WWW.ALBERTAOILMAGAZINE.COM
ASSETS PRODUCTION
2015 Total 2014 Total Full-time
2015 2014 Production Production Employees
Assets ($) Assets ($) (BOE/D) (BOE/D) 2015 Senior Executive

131,433,000 159,486,000 710 968 Abdel Badwi Rank


WESTERNZAGROS RESOURCES
54,618,000
266,545,156
75,482,000
250,491,053 2,392 2,870
18
19
Neal Coleman
Jim Evaskevich 163 The low loonie is now making Canadian oil firms
look overseas, but Calgary-based WesternZagros
122,467,263 166,538,078 4,557 5,474 6 Michael Raleigh was formed to do just that. Plunging into Iraq soon
82,908,000 130,047,000 2,290 3,141 19 Brian Dau after the fall of Saddam Hussein, it was the fourth
international exploration firm to enter Iraq’s semi-
27,595,538 38,313,781 121 Patrick Ross autonomous Kurdish region. The high geopolitical-
128,552,000 78,435,000 1,336 309 11 Bruce Chernoff risk gamble resulted in commercial production
22,298,000 33,863,000 David Mullen starting up in February 2015, netting the firm
US$27.5 million revenue from an average 5,100
161,894,000 232,770,000 1,582 1,076 13 Michael Binnion b/d, and making it a new entrant to “The 200”
779,661,000 1,138,216,000 2,500 2,700 169 Vance Querio list. WesternZagros holds a 40 percent working
101,212,000 99,165,000 966 1,143 13 Jim McFarland interest in two production sharing contracts with
the Kurdistan Regional Government. Yet despite
31,462,000 50,868,000 Stephen Popadynetz producing high-quality light crude and having one
376,007,000 704,331,000 147 Simon Hatfield of the best production sharing contract terms in
39,079,903 6,049,103 George Liszicasz Kurdistan, low prices caused a net loss last year
of US$236.1 million.
45,717,145 48,482,451 843 787 Gregory Baum
112,180,973 164,812,494 1,470 1,479 9 Brian McLachlan KURDISH GAMBIT
65,679,000 62,425,000 480 468 Chayan Chakrabarty IRAQI KURDISTAN
133,066,000 166,267,000 Steve Moran
38,786,116 44,038,371 1,011 975 Laurie Smith SYRIA

47,197,795 57,569,312 1,452 1,343 18 Murray McCartney IRAN


Baghdad
60,016,000 49,092,000 1519 2373 21 Paul Welch
JORDAN
253,038,000 242,784,000 1,335 2,168 17 Robert Zakresky
IRAQ
27,281,000 33,503,000 789 751 Robert Lamond
45 Josh Curlett SAUDI ARABIA
KUWAIT
40,811,044 48,951,632 776 683 Don Simmons
51,218,800 58,577,647 45 Shahid Hameed
37,596,000 35,729,000 27 Ian Simister
21,344,169 23,738,247 221 251 Robyn Lore Rank
NXT ENERGY SOLUTIONS
27,686,000
5,907,000
23,274,000
10,088,000
663 449 10 Robert Hodgkinson
Ken Berg 164 Hydrocarbon surveyors NXT Energy Solutions
rocketed out of the red and into the black in
2015, turning 2014’s $1.6-million loss into a
40,946,771 19,812,538 361 255 David Burghardt $10.5-million gain last year. That staggering
2,502,682 3,398,666 Randy Haywar growth was built largely on the back of the
14 company’s aggressive pursuit of international
18,461,000 31,701,000 Richard Ryan markets, completing work in Bolivia and
23,057,000 33,214,000 1,433 1,995 6 Mikhail Afendikov Pakistan. Canadian technology and capabilities
8,529,723 10,855,785 Burkhard Franz have a global reputation and low oil prices
driving the Canadian dollar down make these
15,206,000 21,409,000 196 62 Larry Parks services highly competitive on the world market.
16,304,753 19,423,772 146 62 Nick Zhang
1,000,000 700,000 Todd Parker Annual revenue growth: 345%
32
77,759,343 96,965,742 706 932 16 Michael Ford Q4 net income Per share earnings
4,745,525 7,419,416 99 64 Jane Lowrie $11.3 million $0.22
310,296,000 289,670,000 324 656 Jeff Chisholm
19,793,963 11,004,660 Allen Wilson
864,205 868,631 Steve Mathiesen
METHODOLOGY
3,996,139 5,140,710 Edwin Tam
All figures are drawn from voluntary submissions and
84,284,000 40,920,000 42 Corey Ruttan publicly available financial documentation.
1,068,757 198,818 David Hislop Oil and gas revenues are net of royalties as well as realized
3,984,231 3,209,460 Archibald J. Nesbitt and unrealized risk management gains.
7,752,168 9,737,612 Gregory Vavra Per share calculations are based on the weighted average
number of common shares (basic) outstanding.
3,050,000 6,143,000 Keith Hill
Operating netbacks are as before hedging.
Ross Gorrell
Employee figures are as of December 31, 2015.
*RESULTS IN AMERICAN DOLLARS
**NINE MONTHS ENDED DECEMBER 31 (US$)

JUNE 2016 47
THE DEPARTED
The deepest oil rout in recent memory left behind a raft of casualties in 2015.
Although merger and acquisition activity was below some expectations, there
was still no shortage of insolvencies, acquisitions, and restructurings over the
year—not to mention some heated exchanges that were uncharacteristic of the
otherwise chummy Canadian oil patch.
The ramifications of such a sudden crash in oil prices will leave its mark.
Although most Canadian energy companies on “The 200” survived the crash,
for many firms the impossible debt obligations and loss of human capital will be
hard to climb out of. To many industry observers, the sector has fundamentally
changed from what it was just two years ago. Below, we take a look at some of
the companies that didn’t stay above the current in 2015.

October 5, 2015 Suncor’s original 60-day bid was January 6, 2016


A WAR OF Suncor announces its intention to to expire on December 4, but the Two days before the bid is set to
WORDS acquire all outstanding shares in Alberta Securities Commission close, Canadian Oil Sands releases a
Suncor Energy Canadian Oil Sands (COS). The initial allowed COS shareholders until Jan. video in which CEO Ryan Kubik urges
bid amounts to 0.25 Suncor shares 4 to tender their shares in favor of the shareholders to reject Suncor’s “low-
acquires Canadian ball bid.”
for every COS share, amounting to a Suncor offer.
Oil Sands total of $4.3 billion at current prices “The pressure is clearly “Soon, Suncor’s
(the deal included an additional $2.3 on COS’s board and substantially
billion in debt). The announcement management to prove undervalued
came after Suncor had twice floated they are acting in offer will lapse,
deal with COS in private discussion. someone’s interest and when it does
other than their own.” they say they’ll
-Steve Williams walk away. For
October 7, 2015 all of us as Canadian Oil Sands
In response to the deal, COS adopts shareholders, that leaves a
a shareholder rights plan, also January 5, 2016 more compelling and valuable
known as a “poison pill” tactic, to buy Seymour Schulich, who has a alternative: Independence.”
the company time. Under the plan, roughly 5 percent stake in COS, -Ryan Kubik
COS shareholders have a 120-day buys prominent newspaper ads to
extension to consider the deal, which persuade other shareholders to reject
was initially scheduled to terminate the offer. January 18, 2016
on December 4. The company leaves “The fact is Suncor Suncor agrees to raise its bid from
open the possibility for an extension needs Canadian 0.25 to 0.28 per share for a total
of the deal. Oil Sands more of $6.6 billion as oil prices remain
than we need in a prolonged slump. COS board
them.” members agree to the deal, giving
December 3, 2015 Suncor a 49 percent stake in
-Seymour Schulich
Suncor extends the initial deadline for its Syncrude.
bid from December 4 to January 8.

48 ALBERTAOILMAGAZINE.COM
April, 2015 May, 2015 July, 2015
ONE AND FrontFour Capital, a Connecticut- Crescent Point announces its Legacy agrees to the sale of
DONE based hedge fund managed by acquisition of Legacy worth $563 its assets, with 90 percent of
Crescent Point Zachary George, reveals a 6.8 million in stock. The deal works out shareholders voting in favor of
Energy buys percent stake in Legacy Oil + Gas. to just over $2 per share of Crescent the sale. Legacy CEO Trent Yanko
Point, or below five percent of its says the company was “lulled
Legacy Oil + 30-day weighted average price. The into a sense of
Gas April, 2015 deal includes the assumption of $967 complacency” amid
News surfaces of a proposed million in debt, for a total $1.53 billion. high commodity
acquisition of Legacy by Crescent prices, which
Point, which FrontFour vehemently gradually led to an
opposes, saying it was left out of June, 2015 overleveraging of
the negotiating process. In a letter to As Legacy shareholders begin voting the company.
shareholders, FrontFour’s Zachary on the acquisition, news surfaces
George calls the deal a that Crescent Point is likely to
“highly accretive, emerge the winner.
phenomenal deal for
Crescent Point and
(CEO) Scott Saxberg.”

THIRD TIME’S THE AN OFFER YOU all of its outstanding shares A MATTER OF A COMPANY DIVIDED
CHARM CAN’T REFUSE from shareholders for a total ACCOUNTABILITY
of $60 million, giving investors
the option to stick it out with
the company or get out before Sanjel, the privately held oilfield
Despite some of the heated Unlike most acquired companies it went private. Calvalley’s When Spyglass Resources filed services company previously
takeovers in 2015, perhaps in the oil patch in 2015, Kicking production in past years has for bankruptcy in November owned by a wealthy Calgary
the most emotionally charged Horse was still, well, kicking been hampered by ongoing of 2015, purportedly the first family, was split up and sold to
was the sale of Talisman when it was bought up by strife in Yemen, where its conventional producer to do various entities at the beginning
Energy to Spanish company Polish company PKN Orlen assets are based. so since commodity prices fell of 2016. The total value of
Repsol, which was finalized in October 2015. According to beginning mid-2014, it very much the deal was not disclosed,
in February 2015 for a total most analysts, Orlen paid a A LACK OF TRUST resembled the handful of other but Step Energy Services,
US$8.3 billion. Talisman was premium on the $356 million insolvencies that had plagued another private services
for years one of Canada’s most deal, which included just the industry over the year. company, bought its
ambitious international energy $63 million in debt. Judging Argent Energy Trust’s filing But the insolvency also raised coiled tubing and fracking
companies, and one of the by Kicking Horse CEO Steve for creditor protection in early questions about who incurs the divisions as part of the deal
few oil patch giants that (for a Harding’s response to the 2016, marked the end of the costs of liability once a company (this followed Step’s purchase
while, at least) enjoyed success deal—and, for that matter, international income trust goes under. In filings, Spyglass of Gasfrac Energy Services
outside of Canada’s borders. shareholders’ response—it was model in the Canadian estimated it had $357-million in 2014 that first gave the
But after severe operational the kind of deal that couldn’t oil patch. In early 2016, the worth of wells and facilities company access to the fracking
challenges, particularly at rightly be refused. Kicking company received approval for that needed to be shut in market). A U.S. company bought
its North Sea assets, began Horse was one of the youngest the US$110-million sale of its over time, raising the question the American assets that
to drag the company down, companies on The 200 after assets based in the U.S., but a of who would cover the costs. were held within the business.
it wasn’t long before the going public in 2014. sudden fall in commodity prices In the case of Spyglass, the The fall of Sanjel, which
company was targeted by larger meant the company could no dispute eventually went to was one of Canada’s largest
players. Madrid-based Repsol PRIVATE EXIT longer pay its credit facility, Alberta’s Court of Queen’s Bench pressure pumping companies,
approached the company forcing it to file for insolvency. to resolve the matter. In broader underscored the troubles facing
twice in 2014 to make an terms, it’s a question that the services companies in 2015. AO
acquisition, but backed off on province and companies are
both occasions due to deemed Calvalley Petroleum didn’t still answering—and it poses
risk. When it finally did close disappear so much as it quietly yet another unsolved question
the deal, it marked the end of faded away. In April, the following Alberta’s economic
an era. company offered to buy back downturn.

JUNE 2016 49
THANK YOU
On behalf of Alberta Oil, our sponsors
ATB Corporate Financial Services and
Harris Corporation, thank you to everyone
who attended The 200 Luncheon!
Alberta Oil would also like to thank its
sponsors for their generous support.
Your contributions make it possible for
us to recognize and celebrate Canada’s
top energy performers.
Hats off to our Builders’ Circle donors
and the Foreman’s Club members who
pitched in to help rebuild Fort McMurray.

FOR EXCLUSIVE WEB COVERAGE VISIT


AlbertaOilMagazine.com/The200Luncheon
GO WITH I TPROPORTIONS,
HAS BEEN A CORRECTION OF MONUMENTAL
AND IT’S REORGANIZED THE
entire industry and our expectations of it. That’s the state of

THE FLOW
the Canadian oil patch just 18 months after the November 27,
2014 OPEC meeting that precipitated this devastating collapse
in the price of oil.
Calgary’s ARC Financial publishes a weekly macroecon-
Energy service firms closest to the cash omic view of the Canadian E&P sector, the industry’s main
flows of producers will survive. Those source of revenue. In 2014, the value of all the oil and gas
counting on capex budgets will not produced in Canada was a record $149 billion. ARC’s estimate
By David Yager for 2016 is only $75 billion, a 50-percent reduction and the
lowest number since 2003.
The next most important number is after-tax cash flow
from production, or what remains after all the bills are paid.
This is what pays for replacing oil and gas production, which
E&P companies require to stay in business. It’s also the life-
blood of the oilfield service (OFS) industry. In 2014, total cash
flow was $72 billion. The estimate for 2016 is only $19 billion,
or 74 percent less. In the 15 years of data ARC tracks back to
2002, this is the lowest cash flow ever by a wide margin.

JUNE 2016 51
Even in 2009, the bottom of what became known as the prices. The oil sands will likely yield steady production for
great recession, production revenue was $89 billion and after-tax decades, but have higher operating costs. Fortunately, once
cash flow was $37 billion, double ARC’s estimate for this year. the major capital investments are sunk, operating costs are
This has had a commensurate impact on capital surprisingly competitive and can and will be reduced further.
expenditures. In April, the Canadian Association of Petroleum Necessity remains the mother of invention.
Producers (CAPP) revised its 2016 capex estimate down to $31 The great leveler is debt. How much money any company
billion, only 38 percent of the $81 billion invested in 2014. can borrow is a factor of free cash flow. With cash flow
This has caused drilling to fall to the lowest level in decades. reduced by 74 percent since 2014, the E&P sector as a whole
In late April, the Petroleum Services Association of Canada can only afford to carry about 25 percent of the debt in 2016
(PSAC) revised its estimate of wells drilled in 2016 down to only that it could two years ago. Obviously, paying down debt with
3,315. This is less than a third of the drilling activity in 2014. reduced cash flow becomes nearly impossible. Out of necessity,
According to the CAPP database, if correct, this will be the lenders have become more patient and flexible in trying to
lowest number of new wells drilled since 1971. work through troubled loan portfolios than either banks or
What’s not obvious is that there is a bright spot in the oil borrowers would previously have imagined possible.
sands. Numerous projects that began before oil prices collapsed OFS is much more complicated because of the enormity and
are being completed with the exception of the mothballed diversity of the supply chain—everything from drilling rigs and
Shell Carmon Creek development. CAPP estimates oil sands construction equipment to camps and catering to valves and
capex this year at $17 billion, half of what it was in 2014, but electronics. The best way to determine which companies have
greater than conventional oil and gas capex for the first time the brightest futures is through looking at the industry sectors
ever. But there are no “greenfield” oilsands projects on the they serve. OFS operators that help to keep existing production on
books. This will leave a large and possibly permanent hole in stream—those closest to the cash flow—will actually see opportu-
investment and employment. nities grow as oil sands output increases. Conversely, companies
that enjoyed years of steady growth because of expanding oil
sands capex will see business continue to decline. There will be
TECHNICAL OBSOLESCENCE HAS BECOME
sustaining capex but it will only be a fraction of previous levels.
A PROBLEM. MANY CONVENTIONAL
As for conventional oil and gas, activity will come back as
OILFIELD ASSETS THAT PAID THE RENT FOR A
the price does. However, as the method of well construction
GENERATION ARE NOW OBSOLETE AND MAY
and completion has changed in the past few years, technical
NEVER WORK AGAIN.
obsolescence has become a problem. Many conventional oilfield
assets that paid the rent for a generation are now obsolete and
Regardless, oil sands production is expected to continue to may never work again.
grow through to 2018, rising from 2.2 million barrels per day And for OFS, debt remains a huge problem. As the old
(b/d) in 2014 to as much as 3 million b/d in two years. This will saying goes, when E&P gets a cold, OFS gets pneumonia. While
increase operating costs providing steady opportunities for producers for the most part have at least some cash flow from
years because oil sands projects have very low-to-zero decline production, without increased spending, many OFS outfits have
rates. ARC estimates Canada will produce 6.8 million barrels no cash flow whatsoever. The ability to survive until business
of oil equivalent per day in 2016, the fifth-largest hydrocarbon improves is a matter of balance sheet strength and/or the
producing jurisdiction in the world. Keeping this production willingness of the owners to inject working capital to be there
on stream will provide stable employment and sustainable when market conditions improve.
investment. Even without continued expansion, the oilpatch There is a growing consensus that the worst is over for oil
remains Canada’s largest resource industry by any measure. prices. Since hitting a multi-year low in February, WTI rose
However, because of the massive contraction, not nearly 75 percent by the end of April. Natural gas prices at multi-
everybody is going to make it. For producers, survival is a year lows only exacerbate the challenges too. But things can’t get
factor of geology, operating costs and debt. Not all oil and better until they quit getting worse. It will be a slow and painful
gas reservoirs are the same. Some, like the giant Montney recovery but the oilpatch will come back; it always does. AO
play in northwest Alberta and northeast B.C., are world-class
resources, which are competitive and profitable at current David Yager is a Calgary-based oilfield service management consultant,
oil and gas writer and energy policy analyst
prices. Many more are marginal without higher oil and gas

52 ALBERTAOILMAGAZINE.COM
2016

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Junior Highs
These five junior energy companies are ready to
take off with the next commodity upswing
By Jody Chudley

It’s hard to win when you don’t know The inventory “glut” was created in OECD commercial stocks, mboe
the rules of the game. I had thought the first six months of 2015 when there CHANGE
that if oil prices were to suddenly collapse, truly was a significant daily oversupply. Jan 16/
Dec 15 Jan 16 Feb 16 Feb 16
Saudi Arabia and their Gulf compatriots The second half of 2015 through April
would be willing to step in and remove 2016 has been pretty much balanced Crude oil 1,512 1,524 1,536 12.0
enough production to support prices. Obvi- and by this summer inventories around Products 1,501 1,509 1,489 -19.9
TOTAL 3,013 3,034 3,026 -7.9
ously I was wrong, but I think the second the globe should start falling as there is
Days of 65.0 65.6 66.4 0.8
half of 2016 will finally bring a significant a daily supply shortfall. When those in- forward
oil price recovery. ventory levels start falling I think it will cover
My belief is that while there is un- really start pushing oil higher.
questionably a huge amount of oil sitting Below are four oil-related equities
in inventory globally, that “glut” has not that I think will do very well as oil This OECD inventory detail from OPEC’s
been growing much over the past six recovers without taking on too much April 2016 Monthly Oil Market Report shows
inventories remained flat from December 31,
months. I believe that daily global supply risk, and one natural gas stock that 2015 through the end of February 2016, despite
and demand haven’t been that far out of even North American natural gas bears the fact that they would normally increase
balance for quite a few months now. would like. over this period for seasonal factors.

JUNE 2016 55
$737

Long-Term Debt $536


Maturity Schedule With the incredible amount of success service sector. Not only has demand for
($ Millions) that shale gas producers in North Amer- services dried up but the producers have
$300 ica have had, that has been just about squeezed the service sector relentlessly
impossible to do. Elsewhere in the world for price concessions as well. The share
though, things are very different. Take prices of these service companies reflect
$9
Turkey for example. In Turkey, natural gas these facts. As a gradual recovery
2016 2017 2018 2019 2020 2021 2022 2023 2024
prices have recently been nearly $10 per transpires, one of the service companies
mcf, which is five times what producers that I’d be interested in owning is
The Leveraged Oil Producer: receive in North America. Canadian Energy Services. What I like
Baytex Energy (TSX:BTE) But the price of natural gas doesn’t about this particular company is that it
do justice to the pickle that Turkey is has built up a business diversified across
Baytex Energy shares, which traded for in. The country imports 99 percent most of the North American resource
more than $40 in the years leading up to of the natural gas it consumes. Worse plays. Activity levels in these plays are
the oil crash, hit a low of just $1.57 earlier still, Turkey is on very bad terms with way down, but that is going to get better
this year. While Baytex has a considerable the largest supplier of natural gas in over time.
amount of debt ($1.9 billion) relative to the the region, Russia. My point is that the I’ve seen repeated statements from
cash flow it can generate at current oil pric- country is very motivated to treat its companies like Chevron, Marathon Oil
es, the debt is structured in a manner that domestic producers exceedingly well. and ConocoPhillips that indicate that
provides Baytex a long runway to manage Little Valeura Energy is a rare bright they will be moving away from multi-
through low oil prices. There are no near- spot for Turkish natural gas production. year mega projects and towards shale.
term worries, even if the oil rebound takes The company has 308,317 net acres of After being reminded that this is a very
longer than expected. The company has land with potential for reserve growth in volatile business the short-cycle nature of
plenty of liquidity and no debt maturities both conventional and unconventional shale production now looks much more
of any significance prior to 2021. natural gas. Of particular interest is the appealing than spending billions and
Baytex also has some very good oil potential for a major shale gas play on its years in pre-production on a deepwater
assets both in Canada and the United States. Banarli Licence in the Thrace Basin. or oil sands development.
The U.S. assets are focused on the Eagle Ford The company is debt free, has a This trend will be very good for
shale in Texas and by all indications are in proven management team and trades Canadian Energy Services. I’m very
the better part of the play. The Canadian at a miniscule price relative to its cash- comfortable with Canadian Energy
assets are heavy oil assets, which by their generating ability and appraised reserve Services’ balance sheet which has 1:1
nature have higher operating costs and base. The stock is quite volatile though net debt to 2015 EBITDA and nothing
therefore require higher oil prices. Those and my advice would be to wait for a drawn on a revolving credit facility.
heavy oil assets don’t work well at current selloff to take advantage of that volatility. I also like that management owns 15
prices but generate a lot of cash flow at $60 percent of the shares.
or $70 oil. Because of the fixed nature of Royalty model offers a material
these operating costs, few companies are cost advantage over E&P’s
going to get a bigger cash flow increase than
Baytex when oil moves higher.

TRANSACTION LEASES & GROSS VALEURA


LICENCES AREA NET AREA
(#) (ACRES) (AREA)
Freehold
Thrace Basin
Banarli Licence 5104 Award 14 293,673 117,469 Basins $5 $10 $15 $20 $25 $30 $35 $40 $45
Otto – Edirne 2 133,840 133,840 Gas Plays Cash Costs
Subtotal 19 477,396 268,768 Oil/Liquid Plays
Anatolian Basin
TBNG JV – Gaziantep
Total
2
21
152,111
629,507
39,549
308,317
The Oil-Weighted
The North American Royalty Company:
Services Company: Freehold Royalties (TSX:FRU)
The Natural Gas Producer: Canadian Energy Services (TSX:CES)
Valeura Energy (TSX:VLE) The shale boom caused a great surge in
If you have seen a recent rig-count both oil and gas production. What it didn’t
I’ve been looking for a chance to get chart for North America you know that do is create a surge in free cash flow for
bullish on natural gas prices since 2009. this oil crash has been brutal for the producers. Collectively this industry was

56 ALBERTAOILMAGAZINE.COM
Conventional vs. Unconventional Reservoirs
vastly outspending the cash flows that it Surge targets reservoirs on the conventional over the past four years. There are other
generated even at very high oil prices. end of the permeability spectrum things to like about the company, includ-
That is what attracts me to Freehold ing the fact that it is focused solely on
Capital expenditures decrease,

Ultimate Oil
Recovery
Royalties. It actually generates a significant while recovery factors and “conventional” oil and gas assets.

ROR
rates of return increase,
amount of free cash flow while still pro- as reservoir quality Conventional reservoirs are better
improves
viding exposure to rising production and than shale or tight oil. The conventional
commodity prices. Freehold owns mineral SURGE reservoirs have lower decline rates (Surge
rights on land that oil and gas is produced Unconventional Conventional has a corporate decline of 20 percent),
Reservoirs Reservoirs
from. The oil and gas producers have to which means less drilling (and spending) is
pay Freehold a percentage of the revenue Extremely Very Tight Low Moderate High required to maintain production.
Tight Tight
that they generate from production. These reservoirs also respond better
While oil and gas producers have to 0.0001 0.001 0.01 0.1 1 10 100 to secondary recovery like waterflooding,
Permeability (mD)
spend huge dollars to drill and frack wells which is where extremely high returns on
and lay pipelines, Freehold doesn’t have to every dollar spent can be earned.
do anything. The company just sits back The Insider Buyer: Surge has done a good job
and deposits checks into the bank. This is Surge Energy (TSX:SGY) maintaining its balance sheet having
just like the relationship I have with the actually reduced debt from $590 million
Government of Canada. I do all the work, Insider buying guarantees nothing but at December 31, 2014 to only $117.4
and they cash the checks I send them. it certainly can’t be a bad sign. At Surge million currently. The company has a
Freehold was formed in the mid-90s as Energy, the amount of insider buying that significant amount of room on its balance
a spin-out of a half million acres from the has taken place in the open market over and pays only $1.19 per barrel of oil
Canadian National Railway pension fund. the past couple of years is head-turning. produced in interest. Surge is in much
Over time that acreage position has been CEO Paul Colborne has increased his better shape to withstand lower oil prices
built to more than 3 million acres through ownership stake through open market sticking around longer than expected
a steady stream of intelligent acquisitions. purchases by more than 3 million shares than most of its competitors. AO

STURGEON REFINERY
World’s first refinery designed from inception to
capture and utilize CO2 for Enhanced Oil Recovery.
Proving Alberta’s commitment to a low carbon future.

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Alberta’s Industrial Heartland is a rapidly growing hub of energy
and petrochemical infrastructure worth $30 billion. And, with
its renewed push for economic diversification, the provincial
government could end up adding billions more.
This is the second story in a three-part series analyzing the
realities and opportunities for business in Alberta’s hydrocarbon
manufacturing hub.

CHASING
THE PLASTIC
DRAGON
>O`[OLÄYZ[*HUHKPHUO`KYVJHYIVUZ[VYLHJO(ZPHTPNO[UV[ILVPSVY
gas, but plastic pellets
BY ABDELGHANI HENNI AND NICK WILSON // PHOTOGRAPHY PAUL SWANSON

ALBERTA’S PETROCHEMICAL firms to extract ethane to diversify


makers are riding the perfect wave of the economy. Neil Shelly, executive
low construction costs, government director of the Alberta Industrial
subsidies and bargain-basement Heartland Association, says “the
prices for natural gas liquids (NGLs). message was that you either take the
They are building out Alberta’s ethane out or we can do this all day—
Industrial Heartland, a sprawling so the crackers got built.”
cluster of pipelines, rail hubs, In addition to pipeline permit
chemical factories, gas processing arm-twisting, Getty also sweetened
plants and upgrading complexes the deal with royalty credits. The
northeast of Edmonton. More than 40 result is that four of Canada’s six
companies enjoy the logistics, supply ethane crackers were built in Alberta,
chains, labor force and feedstocks including the country’s largest, which
that make Heartland one of North is operated by Dow Chemical in
America’s main energy hubs. New the Heartland. The cost of Albertan
projects total almost $15 billion and ethylene has historically been at a
analysts say it has potential for a lower price than at the U.S. Gulf Coast
further $24 billion. and competitive with other world
Ironically, given today’s pipeline ethylene-producing regions. Nova
urgency, much of it started when a Chemicals’ three ethylene crackers
government official began to hide at Joffre, 130 kilometers to the south,
gas pipeline permit requests away in take ethane from the Heartland’s
a drawer instead of processing them. NGL hub to produce ethylene, some of
This was how Don Getty, energy which is then piped back to Heartland
minister under 1970s premier Peter petrochemical plants. Ethylene is also
Lougheed, persuaded reluctant gas processed at Joffre into polyethylene

58 ALBERTAOILMAGAZINE.COM
THE AGRIUM FERTILIZER PLANT
IN THE INDUSTRIAL HEARTLAND
CONVERTS METHANE INTO UREA
AND AMMONIA, ADDING VALUE
TO WHAT WOULD OTHERWISE
BE SURPLUS FEEDSTOCK IN A
GLUTTED NATURAL GAS MARKET

JUNE 2016 59
and linear aplha olefins by DOW There are ethylene plants located natural gas and propane and it has
chemical, NOVA chemicals and INEOS. at Joffre near Red Deer, which take been forever changed as a result of US
ethane from various facilities around shale gas production. The U.S. has now
FOLLOWING IN GETTY’S Alberta including from the heartland become a net exporter of propane and
footsteps four decades later—but natural gas liquids hub to produce is now shipping out over 700,000 b/d—
wielding carrots instead of sticks— ethylene. An ethylene pipeline system that’s a huge, huge amount. The U.S.
Alberta’s government is repeating the that extends to the Heartland region propane market is over-supplied and
success with propane and methane from Joffre completes the efficient we’re trying to jam our propane into it.
incentives via its Petrochemicals exchange of feedstocks and products. We’re swimming in this stuff.”
Diversification Program. It offers Shelly says, “Nova is even going so far as
$500 million in royalty credits that to purchase ethane from the shale plays ED GIBBONS, CHAIR OF
petrochemical firms can trade or sell in North Dakota via a new pipeline Alberta’s Industrial Heartland
to natural gas producers to reduce Vantage that sends ethane north.” Association says, “The current pricing
their royalty payments. “This program It’s part of a wave of U.S. gas and availability presents a huge
builds on the royalty review panel’s flooding Albertan gas producers’ opportunity to expand the market for
recommendation for a value-added traditional U.S. and Canadian propane here in Alberta by converting
natural gas strategy to support further stomping grounds. But one producer’s it to much higher value polypropylene
upgrading and production of higher- poison is another’s feedstock, and before exporting it.” Polypropylene is
value energy products in Alberta,” that discount feedstock will keep on worth six to eight times more than
said Alberta energy minister Marg growing. According to the Canadian propane. The race is on between
McCuaig-Boyd at its launch. “This is Energy Research Institute, Canadian American and Kuwaiti capital to build
another way to diversify our energy production of NGLs is expected to Canada’s first polypropylene plant.
economy and create good jobs in increase rapidly between 2016 and 2030. Oklahoma’s Williams Energy and
Alberta,” she said. The program tilts Alberta is currently flooded with Kuwait Oil’s petrochemical division,
the playing field in Alberta’s favor— cut-price propane—so cheap it is sold PIC, aim to build their plants—there’s
construction costs have plummeted for less than its energy value—due to market space and government money
since the slump started but are still 20 the fracking revolution. Dave Tulk, for both—in the Heartland.
percent to 40 percent higher than on a consultant with GPMi, who has Pembina Pipeline is partnering
the U.S. Gulf Coast. The government decades of experience in Alberta’s with the Kuwaitis on a six-month
says its program will lure up to $5 Nova Chemicals and who also advised feasibility study to set up an 800,000-
billion in new investment and it will the government on development of its ton-per-year polypropylene plant,
get its money back via higher corporate Petrochemical Diversification Program with a final investment decision (FID)
tax contributions. “Right now we says, “There has been a paradigm shift likely by mid-2017 for 2020 completion.
are an oasis in the desert of Alberta’s in Alberta’s market for propane. The Mohammed Abdullatif Al-Farhoud,
economy,” Shelly says. U.S. was a big customer for Canadian PIC’s CEO says, “Alberta represents a

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GAS FIELDS OIL SANDS
FEEDSTOCK CENTRAL
GAS FIELDS
Low-cost, local feedstocks Synthetic Crude Refineries
pour into Alberta’s HEARTLAND
Industrial Heartland, SHL
while globally competitive PLM PEM NGLs and BITUMEN NWR Refined Products
products flow out. The KEY PET GAS FRACTIONATION
industrial development
centers on a hub of Market
METHANE ETHANE PROPANE BUTANE CONDENSATE
pipelines, railways, storage (Diluent)
To gas
facilities, power plants network
CHI AGR Neat
and a highly skilled labor Propane
pool. The synergies of WIL PLANT LEGEND
Methanol Urea PLM - Plains Midsteam
petrochemical facilities, PEM
KEY - Keyera
POI KEY
refinery-upgraders Ammonia Propylene PEM - Pembina
and NGL fractionators Neat Ethane PET - PetroGas
GOR Butadiene DOW - Dow Chemical
have created one of DOW AGR - Agrium
KUW
North America’s biggest SHL
SHL - Shell Scotford
Ethylene NWR - North West Refinery
hydrocarbon processing Polypropylene Iso Octane
NVC - Nova Chemicals
areas. And, it’s booming Linear INE - Ineos
Ethylene Alpha
during the recession. Glycol Olefins PROPOSED/POSSIBLE
WIL - Williams
GOR - Goradia
Styrene Polyethylene
KUW - Kuwait Oil
PEM - Pembina
CHI - Chinese Investors
POI - Potential Investors
Co2/ Enhanced Oil Recovery Market Refineries
(From Heartland Carbon
Capture Projects) JOFFRE (Near Red Deer)
Ethylene
Polyethylene
NVC DOW
Ethylene Market
DOW INE Linear Alpha Olefins

CENTRAL AB.
OIL FIELDS Ethane (From United States)

Building Alberta’s PETROCHEMICAL Future

Canada’s largest hydrocarbon processing region

Alberta’s Industrial Heartland produces 43% of Canada’s


basic chemical manufacturing. With access to abundant
and cost advantage feedstock, the region has the potential
to attract over $20 billion in new investment to help
stimulate and diversify Alberta’s economy.

www.industrialheartland.com
very attractive market to develop large- Alberta Carbon Trunk Line (ACTL) to reliable source of hydrogen for these
scale petrochemical infrastructure, as central Alberta oilfields. industries. We are pleased to be
it is supported by long-term feedstock The region is home to the world’s increasing our relationship with Shell,
security, a supportive local government second-largest underground NGLs who we already supply at Scotford and
and complements the existing asset base storage facility, 120 million barrels other locations around the world,”
of related companies operating capacity in salt caverns, potentially says Wilbur Mok, VP North America
in Alberta.” growing to 200 million barrels in Tonnage Gases at Air Products. It
Williams has a shovel-ready four years. NGL fractionation trains will also provide Agrium’s fertilizer
project it expects to take an FID on this are definitely forging ahead. 150,000 complex and Sturgeon Refinery with
year. Its $900-million facility would b/d of stranded NGLs already gets hydrogen. As part of the industrial
remove hydrogen from propane to processed at three plants, Plains gas synergy that makes Heartland
produce propylene and send it next Midstream, Pembina and Keyera and attractive Praxair supplies gases to
door to a plastic-pellets plant operated they are all building more. Sherrit’s nickle smelter, Agrium’s
by Goradia, a U.S. chemical investor. Pembina is adding a 55,000 b/d fertilizer plant and Dow Chemical.
They will produce 525,000 metric tons propane-plus fractionator to its existing Shelly says, “With the mass of projects
per year of propylene and nearly as 73,000 b/d ethane-plus fractionator, in the region, the hydrogen pipeline
much plastic feedstock as Canadian consolidating its position as Western system allows hydrogen to be produced
manufacturers import each year to Canada’s largest owner of fractionation and sold among different companies.
Ontario and Quebec. capacity, and is looking at building a It also provides an opportunity for
The U.S. is also massively rail terminal so it can import diluent companies that produce hydrogen as a
expanding its petrochemical industry, and export propane. Keyera has by-product to find buyers. This synergy
investing US$100 billion in the next invested $500 million in expanding between companies is a key part of the
ten years, but is heavily focusing on its NGL fractionation capacity, more success of the Heartland region.”
ethylene. Canada’s primary propylene than doubling propane-plus capacity
market will be North America with to 65,000 b/d from 30,000 b/d, which is PETROCHEMICALS COMPRISE
a swing market to Southeast Asia being commissioned for June operation, Alberta’s leading manufacturing
via Vancouver, Tulk says. As to the Dean Setoguchi, a Keyera senior VP industry, employing 8,000 people
1,000-kilometer distance to the says. He says Keyera’s feedstock will directly. In March, industry and
nearest coastline, the Heartland come mainly from its gas processing labor leaders joined forces to create
already imports Cuban nickel ore for plants in central Alberta. The project a new organization, the Resource
mining firm Sherrit’s smelter and will also include new product receipt Diversification Council (RDC)
then ships the metal great distances facilities, operational storage, and of Alberta. The group aims to build
across Canada. pipeline interconnections. The project the value-added resource sector
Methane will also benefit from the was scheduled for completion in first- to provide stable jobs and a place
program. Agrium’s integrated fertilizer quarter 2016 completion. The $500 for Alberta’s future workforce to grow
plant—North America’s largest—already million Plains Midstream fractionation and prosper, says RDC chair Naushad
produces urea and ammonia from expansion will increase capacity from Jamani. “By further diversifying our
methane and nitrogen. Still others are 65,000 b/d to 85,000 b/d. energy industry, capturing greater
talking to Heartland about building Air Products Canada is also value for our resources and securing a
methanol plants. building a new hydrogen production larger share of world markets, we have
Crude oil as well as gas flows into plant adjacent to Shell Canada’s an opportunity to help Alberta get off
Heartland for processing. Heartland is Scotford facility, which consumes vast the roller coaster of commodity prices,
the home of the North West Redwater amounts of hydrogen for cracking and set the stage to be a major player
Partnership’s Sturgeon Refinery, the bitumen. It will connect to Air Products in refined products that can be shipped
first built in Noth America in three Canada’s existing Heartland hydrogen all over the world.” The industry is
decades. Each of its three phases, pipeline system. “Refineries, upgraders, sailing toward that global goal at full
with the first phase scheduled for and other customers in the Heartland speed—driven by a perfect wave. AO
completion in September 2017, will region have increasing demands for
upgrade and refine 50,000 b/d and hydrogen. This new facility, which is Visit AlbertaOilMagazine.com/AIHRefineries
capture 1.2 million tons of CO2 a year, connected to our established hydrogen for extra coverage from this story in our
sending it down the 240-kilometer pipeline system, will provide a very three-part series

62 ALBERTAOILMAGAZINE.COM
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World
The

According
Alison
to

Former premier Alison Redford


is returning to public life after her
highly publicized ousting just two
years ago. She opens up about
the pipeline debate, energy
security, the Harper government
and the very future of Canada’s
energy economy

BY TODD COYNE
PHOTOGRAPHS BRYCE MEYER

64 ALBERTAOILMAGAZINE.COM
JUNE 2016 65
I T’S A FEW DAYS AFTER HER FIFTY-FIRST
BIRTHDAY, AND ALISON REDFORD FINDS
HERSELF IN STRANGE COMPANY. The first female
premier of Alberta, and self-described “polarizing figure,”
still looms large over the province, its politics and its
prime industry. But whether that looming presence casts
a shadow or a light depends in part on the specific angle
of one’s politics. Today, as the newly minted director of the
Conference Board of Canada’s transitional energy group,
Redford insists that she’s put politics aside in order to help
build consensus between governments, industry, activists
and aboriginal groups on energy projects.
Redford’s credentials in energy run deep, but her
success has been varied. It was, after all, Redford’s
Progressive Conservative government that created
Greenpeace climate unit—a group that lobbied
hard against Redford’s successful 2012 election
bid—and one of the most vocal opponents of oil
sands development anywhere.

T
HE POTENTIAL FOR CONFLICT
isn’t lost on the former premier. “This
doesn’t always mean that, every step of
the way, every single thing that a person says is
going to be constructive,” Redford says. “From
my perspective, it’s important to have Tzeporah
Berman at the table. She has certainly had
a very opinionated perspective on what’s
happened in Alberta, and when I was Premier,
it wasn’t a perspective that was very helpful for
Alberta’s modern energy regulator. But it was also anything that we were trying to do. But I also
Redford’s independent oil sands monitoring agency that know that we are getting to the point—and I
was labeled a “failed experiment” and then disbanded think we are starting to see some success from
in a controversial move by the ruling NDP government it in Canada—where it’s much better to try to
this past April. It was Redford who kick-started Canada’s engage people than it is to simply let people
national energy strategy in 2012, including an Alberta-led continue to discuss without being part of the
effort to build oil pipelines to tidewater. But it was also same conversation.”
Redford’s government that failed to win approval for the Call it optimistic if you must, but Redford
Keystone XL pipeline in the U.S., and it was under Redford sees it as realism. “We are beyond the day
that Alberta soured its relationship with neighboring where there will be a winner and a loser in
British Columbia over the details of two more pipeline what these policy choices will be,” she says.
plans. Each of those issues remains as divisive today as Keeping in line with her reputation as a Red
when she left office more than two years ago. Tory, Redford’s political thinking perhaps
Now Redford is back, this time as chair of a new three- most closely resembles that of the new federal
member panel called the Canadian Transition Energy Liberal government, and its consultation push
Initiative (CTEI), a think-tank dedicated to encouraging on pipeline projects. Redford’s short time
debate about energy and building a roadmap for Canada’s in office was marked by an admittedly cozy
future. One of Alberta’s most divisive figures in recent relationship with Ottawa—and with then-
memory is now tasked with building bridges. Redford’s Conservative prime minister Stephen Harper.
thoughts on infrastructure expansion, and on the oil and However, today the former premier is critical
gas sector’s future more generally, shed light on the state of what she sees as the Harper government’s
of the debate around energy today—and what Canada go-it-alone policy on energy, and lauds the
needs to do to get beyond its differences. ostensibly more inclusive approach of Prime
While Redford’s new position is decidedly less public Minister Justin Trudeau.
than the premier’s chair, it will nonetheless require a deft For Redford, the Trudeau government has
hand in balancing some very different interests. To her made a welcome turn from the regulatory
right now sits the former national chief of the Assembly apathy of the Harper government, which
of First Nations and TransCanada pipeline promoter Phil bristled at the notion of engaging with the
Fontaine. To her left sits Tzeporah Berman, a name readers provinces and with non-government groups
will recognize as that of the former co-director of the on energy while she was in office. Had the

66 ALBERTAOILMAGAZINE.COM
“ I wouldn’t want people
to think that I’m sitting
previous government actually been “prepared
here saying, ‘Boy, we did
to join the discussion,” Redford says, “we everything absolutely right.’ ”
could have made more progress sooner” on -Former Alberta Premier Alison Redford
infrastructure. “But clearly,” she adds, “you can
go back and see that was not the view of the
federal government of the day.”
It’s an odd accusation to make against
what many see as the most outwardly oil-
friendly government in Canadian history.
But Redford isn’t alone in making it. Duane
Bratt, chair of policy studies at Mount Royal
University, says the Harper government
was successful in shutting down any debate
about energy policy, especially between the began to take a destructive hold, and meanwhile, all
provinces. That included Redford’s Canadian that Alberta and the industry were hearing from Ottawa
Energy Strategy, which was finally ratified, in was “the view that a lot of these projects were private-
part, by the premiers this past July. “Despite sector projects and so the government didn’t need to be
some of the statements that Harper and involved.”
[former natural resources minister] Joe Oliver Today, there is hope that political change in Ottawa
made about Keystone XL,” Bratt says, “they has altered the energy policy equation. Within a few
were very hands-off in domestic politics.” Put months of Trudeau’s arrival in Ottawa (and, indeed,
another way, for all the Harper government’s Alberta Premier Rachel Notley’s arrival in Edmonton)
gusto in trying to build pipelines to tidewater, Redford says that “we very quickly have seen a shift to
it focused too intently on winning over large a place where Canadians understand that government
foreign interests instead of the Canadian does have a role—that government needs to be involved—
public. As it did so, here at home Canadian whether it’s the federal or provincial government.” Indeed,
pipeline proposals were being read a death if that understanding was lacking before, the former
sentence in the court of public opinion. premier of Canada’s preeminent oil province must bear
Harper took this approach to its extreme when some of the blame. From his perspective as a longtime
he publicly told Washington he would not analyist of Alberta politics, Bratt characterizes Redford
“take no for an answer” on Keystone, which as “a strong advocate of the energy sector” while in office,
further soured relations between Canada and albeit “a bit of an ineffective one.” The former premier,
American government officials who opposed herself, admits she is a more effective leader outside of
the plan. elected office than in—an apolitical existence she now says
she “absolutely” prefers.

“T
HERE WERE A LOT OF ENERGY Today, Redford’s message to the conference
groups and environmental groups board—that Canada’s energy sector is progressive and
advocating, for different reasons, for benefits everyone—is very much in line with the official
an energy strategy, but the feds didn’t want to pronouncements coming out of Ottawa and, indeed, out
touch it with a 10-foot pole,” Bratt says. “There of the Alberta legislature. But that’s where the common
were great divisions within the provinces, and ground between Redford and Premier Notley ends. The
they were keeping their jurisdiction very close two have not been in contact aside from “one or two
to their vest.” very short social conversations,” Redford says, adding
Redford agrees. She says that in 2008 a that “when you leave public office, you need to leave
“real shift around the pipeline discussion” public life.” But when asked whether she has any advice

JUNE 2016 67
for Premier Notley, Redford volunteered the same advice she says despite plenty of historical precedent. It is, however,
she was given early on: Talk with as many people in the energy now the job of former premier Redford in her five-year
industry as possible. Conference Board of Canada appointment.
The two premiers have faced many of the same challenges in For the moment, though, politics is the furthest
office, from pipeline battles with neighboring provinces to combating thing from Alison Redford’s mind. “Maybe when
Alberta’s dirty-oil label. However, their approaches to meeting those you’re in politics you’re always going to be a polarizing
challenges could hardly be more different. “On their support for figure,” she says. The same could be said about when
pipelines, they’re pretty much the same, but the difference is how you’re in the still-fractious debate on energy, thanks
they’re going about it,” Bratt says. “Redford spent a lot more time in no small part to the governments, NGOs, and yes
lobbying—a good example of that was working with the Washington think-tanks, that until now have crowded out the
office of the Alberta government—and putting in place people she debate’s more moderate voices. Still, the former premier
thought could do the job. But in the case of Notley, the answer was is hopeful in her new role, and says that revisiting her
bringing in climate change policies to try to get social license.” legacy in Alberta brings her no sleepless nights. “I think
there’s always the idea that you could do more and
ITH ALL DUE CREDIT TO PREMIER NOTLEY,

W
could do it better, but I’m comfortable with where we
by 2015 the climate route to a pipeline was about the only ended up,” Redford says. “It’s never a story with an end.
road left untaken. And it’s a path that has been broadened I wouldn’t want people to think that I’m sitting here
with recent political support from Ottawa and much of the rest of saying, ‘Boy, we did everything absolutely right.’ But
the world. But political coalitions don’t necessarily lead to tangible there are some things that I am proud of that we did as
agreements, and Notley herself has admonished Trudeau’s new a government. And I hope that those will be the sorts
consultative Canada for “acting like a bunch of villages, as opposed of decisions that, in the long term, will continue to
to a nation,” when it comes to building pipelines. But divining the benefit the industry and the province.” On those points,
so-called ‘national interest’ isn’t the job of the Alberta premier, too, she’s likely to find plenty of agreement. AO

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Winners and Losers


Demand for equity financing is burning surprisingly bright, and an M&A trend is now poised to take off
ALBERTA’S ENERGY COMPANIES AND
their shareholders have endured a rough S&P TSX Capped Energy Index Fund (TSE:XEG)
patch due to collapsing commodity pric-
es. Oil and gas stocks have tracked this 40%
descent with the Capped Energy Index 20%
getting halved recently, while some of
0% XEG
the more levered producers have seen -27%
much steeper losses. Interestingly, some -20%
CCX
important themes have emerged in the

Source: Google Finance


-40% -62%
midst of this chaos that I think are worth -60%
keeping a close eye on, especially from an
-80%
investor’s standpoint.
2006 2008 2010 2012 2014 2016
The magnitude of the layoffs in the oil
patch is astounding, with large companies,
such as Encana, reducing their head counts Generations Energy has raised $300 to sell themselves thanks to entrenched
by over 50-percent. Unfortunately, the million, Spartan Energy has raised $96 management teams.
future isn’t rosy when looking at capital million, Whitecap Resources has raised Things are starting to change a bit,
investment either, which is expected to $110 million, Tamarack Valley Energy has though, with two larger deals to start
fall by US$50 billion from 2014 to 2017, a raised $44 million and Tourmaline Oil has in 2016. Suncor was able to turn its
more than 60-percent drop. Theses themes raised $281 million. $6.6-billion hostile bid for Canadian Oil
are also playing out south of the border Kelt also recently came to the market Sands into a friendly deal, and Bankers
with the number of people working in the with a $65-million convertible debenture Petroleum has agreed to be acquired by
U.S. oil and gas sector falling from 538,000 that I think will set a trend among other affiliates of China’s Geo-Jade Petroleum
to under 444,000, according to Reuters. companies looking to raise capital, given its for $575 million. We would expect this
This is important, as when the price of oil low interest rate and less dilutive structure trend to continue especially with the
and natural gas recovers—and it will—the than an outright equity issue. As a side recovery in oil and natural gas prices,
sector will find itself understaffed and ill- note, Enbridge also hit the market with a which makes it a more conducive envi-
equipped to react in a timely fashion. monster $2.3-billion deal that flew off the ronment to getting deals done.
There has been over $1 billion in shelves due to its attractive pricing. There are those that are past the
equity financing raised this year-to-date Perhaps it isn’t a coincidence that point of no return already, with creditor
by Canadian exploration and production only the highest-quality E&Ps came to the protection filings from Laricina Energy,
companies, which is astounding given market as they appear to be shoring up Parallel Energy Trust, Argent Energy Trust,
the state of the sector and the rapidly their balance sheets potentially to take and Spyglass Resources. There are clearly
shrinking energy fund market that has advantage of the current environment going to be winners and losers coming out
been the usual source of capital. I am by undertaking strategic land and/or of the ongoing downturn in the Canadian
equally surprised by the strong demand corporate acquisitions. energy sector. It’s therefore important to be
coming from retail investors We have not seen a lot of M&As in this cognizant of the main themes and position
and institutional generalists. downturn, with the level activity falling accordingly for the recovery. AO
In particular, Advantage Oil & Gas by roughly 70 percent in 2015 over the
has raised over $100 million, Raging River previous year. This isn’t unusual, as it is
Martin Pelletier is a portfolio manager at TriVest Wealth
Exploration has raised $108 million, RMP tough to get deals done in a weak market Counsel, a Calgary-based investment management firm with
Energy has raised $34.5 million, Seven with distressed companies often reluctant specialty offerings including an oil & gas hedge fund

70 ALBERTAOILMAGAZINE.COM
ESB
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RETURN ON
INVESTMENT

TO SURVIVE
THE SLUMP,
KIERAN QUIRKE,
HEAD OF CHIEF
CONTRACTORS,
HAS STEERED
THE COMPANY
TOWARDS BRINGING
RENEWABLE ENERGY
TO THE OILFIELD

Heading For The Green Light


How a steel fabrication company dodged the commodities downturn
and found renewal in renewable energy

IN 2013, CHIEF CONTRACTORS WAS A SMALL STEEL FABRICATION prices and the company was forced to make serious cuts to its
company working out of Nisku and primarily serving the oil staff and operations.
and gas industry. Before oil prices plummeted, minor projects For many companies, that might have spelled the end.
ranging from repairs to general maintenance were more than But Chief and its new parent company were ready to adapt.
enough to keep the company humming. Kieran Quirke joined “Everyone was nervous about what was happening in the
the company in 2014 as the general manager responsible industry,” says Quirke. “It was very difficult, but we had a lot of
for sales and business development. Under his leadership support from our suppliers and vendors.” Globotics brought on
the company grew. In July 2015, Quirke helped orchestrate some advisors to assist Quirke in a major company overhaul,
a takeover of the company by Swiss multinational Globotics the focus of which was diversification into new industries and
Industries. By then Chief had been hit hard by slumping oil markets. “We kept on with some fabrication, but we started

72 ALBERTAOILMAGAZINE.COM PHOTOGRAPH RYAN GIRARD


looking for opportunities in renewable
energy and in other industries like
Living Energy Project for the Leduc #1
Energy Discovery Centre, the world’s
APPLY
industrial construction, maintenance…
that kind of thing,” says Quirke.
first carbon-neutral oil museum. “I’ve
been interested in renewable energy and
TODAY
Today, Chief has opened a new sustainability for 15 years,” says Quirke, Application
renewable energy manufacturing “so this is a personal passion of mine.” Deadline:
division which focuses on the design, Chief is partnering with its oil August 17, 2016
fabrication and installation of renewable and gas clients to integrate renewables
and sustainable energy projects. And, into their operations, and it’s built in
ultimately, Quirke is working toward flexibility to serve energy industries as
making sure those innovations are the markets for each fluctuate.
affordable and will save customers money. “Oil and gas has slowed down,”
Solar energy manufacturing, in says Quirke. “We are still doing a little
particular, interests Quirke. It’s natural bit, but we’ve moved into industrial
then that Chief would be the first large- manufacturing—things like silos and
scale solar racking manufacturer and conveyors—as well as renewables.” Chief
installer in Alberta. (There are currently can rely on renewables for now, and
no manufacturers in Alberta capable of when oil prices climb back up it can turn
creating the actual solar panels, which its focus in that direction again.
are imported from overseas.) Quirke has Some may wonder at Chief’s change
visited companies from around the world of plans, but for Quirke it makes a whole
to learn what they are doing to harness lot of sense. “Industrial construction
the power of the sun. “Alberta doesn’t in Alberta tends to be a lot of welding,
really have a solid [solar] market yet. There iron, that kind of stuff. There is some
are some competitors and established aluminum and so on, but right now
companies, but no one that has the we have all of these guys out of work
manufacturing capacity that Chief does or and all these shops that are empty,” he
VISIT
the support that Chief does now with the says. “Building this kind of stuff for AlbertaVenture.com/BestWork2016
multinational owners,” he says. With coal renewables isn’t a giant switch.” Chief FOR DETAILS
on its way out in the province, solar power has hired a number of new employees
is almost certainly going to be in higher to start work in its renewable energy
CO-PRESENTED BY
demand in the coming years and Chief division and has formed, as of this April, a
will be poised to capitalize. partnership with GSM Prime Contractors,
Though Chief’s foray into renewables an aboriginal industrial company.
is new, several oil and gas firms looking Though the oil market is still weak,
to save costs on trucking in diesel for Quirke remains optimistic that it will
remote-site generators and to ‘green return. In the meantime, though, he’s
up’ their operations have asked for not taking any chances. “We are better
quotes. In the near future, Chief will positioned now for growth, even more
begin working on the $1.4-million than we were in the boom,” he says. AO SPONSORED BY
LAST WORD

Follow the Money


How the industry can find $30 billion in savings over the next five years
excellence program should certainly be on In the relentless pursuit of cost
every company’s agenda. It forces a com- savings, it will be critical to decrease the
pany to realize how changing principles, significant health, safety and environ-
processes, systems and culture can result mental risks that face the industry. In
in efficiencies and improved performance fact, operational excellence is a critical
metrics. So where do you start, especially in business driver and many organizations
a time of such uncertainty? will have to increase, not decrease, their
No one will argue the fact that, given spending on these functions.
the price of oil, it’s very difficult to find new Part of seeing the value of an
money to invest. But a portfolio approach operational excellence program is being
will help you find the balance between able to value and measure the cost of
the quick wins to prove the operational changes. While some results are hard
excellence strategy is working, and the to measure, there are indirect savings
more complex and cultural shifts that will at every level. According to the survey,
help save cash in the long term despite the common places to monitor savings on a
potentially large investments involved. balance sheet include:
THE CANADIAN OIL AND GAS SECTOR Some of the best places to look Improved health, safety and environ-
is facing a crisis that is battering even the for savings are in integrated business ment (HSE) metrics: Forty-three percent
strongest organizations, as companies are and activity planning, efficient of companies reported declines in work-
trying to drive down the cost per barrel cost management, and equipment place injuries and incidents.
and remain competitive in a global market. maintenance. Becoming a leader in Cost savings: Forty-three percent
Savings can be found in operations, back- operational excellence takes years, but reduced total operating costs.
office functions and capital projects, but taking steps toward it can happen very Improved asset uptime/availability:
knowing exactly where to make changes is quickly. All leaders need to be aligned Twenty-nine percent said their equip-
crucial to long-term sustainability. on the company vision, then enable and ment was available for use more often.
A recent survey of global oil and gas empower their employees to ensure they Increased oil/gas production: Asset
companies, called “Driving operational understand how their role impacts the uptime directly impacts production and
performance in oil and gas,” shows that performance of the organization. this can be an indicator of overall better
operating costs per barrel have experienced When it comes to improving operation- performance.
steady escalation over the past seven years. al excellence, technological advancements The bottom line is, when operational
When the sector is in a major structural need to be constantly monitored and imple- excellence is executed well, it becomes a
shift from resource scarcity to abundance, mented. Big data and analytics, digital oil- core competency within an organization.
significant changes are needed to reverse field, industrial Internet of Things, drones, It is an end goal that builds long-term
or slow that escalation. According to the robotics and secure cloud computing can sustainability to weather downturns and
report, focusing on operational excellence move the oilfield out of the past into an capitalize on upswings in a measured,
could save the industry a conservative $30 innovative and automated operation in profitable way. It’s time to drive true
billion over the next five years. the future. Now the industry needs to use transformation and bring stronger
Operational excellence programs are what’s accessible, learn from other indus- operational and financial performance to
rarely executed organization-wide or with tries and challenge the status quo to force the sector. AO
consistent results and outcomes. Now, with structural change. This structural shift to
the blunt reality of low oil prices firmly leveraging technology will help lead to the Lance Mortlock is the Canadian Strategy
entrenched, an intentional operational desired reductions in costs. Services leader for EY

74 ALBERTAOILMAGAZINE.COM
Doubling Down
for our Energy Clients.
When the going gets tough, the tough double down
and expand to meet your more complex needs.

From left to right: Bra


d McFadden, Peter
Yates, Melissa Cook,
Kathleen Shannon,
Katherine Rubin, Va
nce Langford, and Clif
ford Johnson, QC.

As a company in or servicing the energy sector, your needs have become more complex.
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