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- Mar 24, 2009
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Edmonton / When the going gets tough, the rich get going.
Translation: smart, patient, well-capitalized companies don`t fold up their tent and go home when recessions hit. On the contrary. They exploit downturns by putting their bucks to work when others can`t. Or won`t.
By hoarding their dough and minding their balance sheets in good times, strong firms are able to take advantage of lower labour, material and transportation costs in bad times, while positioning themselves for the next up cycle.
Case in point: Monday`s announcement by cash-rich Imperial Oil and its obscenely cash-rich corporate parent, Exxon Mobil, that they`ll proceed with their long-proposed, $8-billion Kearl oilsands megaproject in northern Alberta.
While the news is no surprise -- Imperial telegraphed its decision well in advance -- it is, nonetheless, a welcome shot in the arm for an industry, and a province, that are desperate for some sunshine after a long, bleak winter.
Kearl is the first big-ticket oilsands project to get the green light since the global economy tanked last year, forcing many other oilsands producers to shelve or defer nearly $100 billion worth of capital investments.
With oil prices plunging to a low of $34 US a barrel earlier this year, before rebounding to the current $61 level -- still 60 per cent below last year`s peak of $147 -- many observers openly wondered whether the oilsands were already yesterday`s news.
Well, wonder no more. Imperial just put its money where its mouth is.
Clearly, it sees a bright, long-term future for Alberta`s bitumen belt, where it already owns a 25-per-cent chunk of Syncrude, as well as its massive in-situ operations at Cold Lake.
Read the full article here.
Translation: smart, patient, well-capitalized companies don`t fold up their tent and go home when recessions hit. On the contrary. They exploit downturns by putting their bucks to work when others can`t. Or won`t.
By hoarding their dough and minding their balance sheets in good times, strong firms are able to take advantage of lower labour, material and transportation costs in bad times, while positioning themselves for the next up cycle.
Case in point: Monday`s announcement by cash-rich Imperial Oil and its obscenely cash-rich corporate parent, Exxon Mobil, that they`ll proceed with their long-proposed, $8-billion Kearl oilsands megaproject in northern Alberta.
While the news is no surprise -- Imperial telegraphed its decision well in advance -- it is, nonetheless, a welcome shot in the arm for an industry, and a province, that are desperate for some sunshine after a long, bleak winter.
Kearl is the first big-ticket oilsands project to get the green light since the global economy tanked last year, forcing many other oilsands producers to shelve or defer nearly $100 billion worth of capital investments.
With oil prices plunging to a low of $34 US a barrel earlier this year, before rebounding to the current $61 level -- still 60 per cent below last year`s peak of $147 -- many observers openly wondered whether the oilsands were already yesterday`s news.
Well, wonder no more. Imperial just put its money where its mouth is.
Clearly, it sees a bright, long-term future for Alberta`s bitumen belt, where it already owns a 25-per-cent chunk of Syncrude, as well as its massive in-situ operations at Cold Lake.
Read the full article here.