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September 2009

Ally

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Alberta articles September 2009.
 

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CHINA IN OIL SANDS DEAL

Major move for stake in two projects for $1.9B

China, using its significant financialfirepower, snapped up majority stakes in two oil sands projects yesterday in a way experts say illustrates the energy-hungry country`s strategy to convince Canada it can be a palatable and necessary partner in the huge crude reserves buried in northern Alberta.

PetroChina International Investment Co. has struck a deal to buy a 60% interest in Athabasca Oil Sands Corp.`s MacKay River and Dover projects for $1.9-billion, and will take part in other financing arrangements.

This marks a significant move for China in the enormous reserves, and gives the country -- of which many in the oil patch are still wary -- the chance to prove it can be a non-threatening partner.

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PetroChina takes $1.9-billion stake in oil sands

CALGARY -- China, using its significant financial firepower, snapped up majority stakes in two oil sands projects Monday in a way experts say illustrates the energy-hungry country`s strategy to convince Canada it can be a palatable and necessary partner in the huge crude reserves buried in northern Alberta.

PetroChina International Investment Co. Ltd. has struck a deal to buy a 60% interest in Athabasca Oil Sands Corp.`s MacKay River and Dover projects for $1.9-billion, as well as other financing arrangements.

This marks a significant move for China in the enormous reserves, and gives the country -- of which many in the oilpatch are still wary -- the chance to prove it can be a non-threatening partner.

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`Worst` of housing prices decline behind us, say economists

OTTAWA — The worst is over for North America`s beleaguered housing markets, with a steady stream of data out of Canada and the U.S. indicating the recovery is at hand, economists say.

"A similar pattern in both countries is unmistakenly suggesting we`ve not only bottomed in housing, but we`re on the way back up," said TD Bank chief economist Don Drummond.

Canada`s already brightening picture was helped along Wednesday by a report showing housing prices in major markets across the country jumped 1.5 per cent in June, building on May`s two per cent advance.

The rebound in prices was evident even in most of Canada`s hardest hit urban markets, like Toronto and Vancouver, the Teranet-National Bank report showed.

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New Oilers arena `underway`
Team president confirms project not just speculation

The Katz Group has agreements to purchase two parcels of land for a possible downtown twin arena and entertainment complex, Edmonton Oilers president Patrick LaForge confirmed Monday.

In his first public update on the proposal, La-Forge said the facility could include a performing arts theatre, a casino, homes, offices, shops and space for educational development.

"It`s a project now more than speculation, and it`s underway," he told a news conference at Rexall Place.

"It leads to a vibrant downtown, a place that is the heart and soul and the centre of what I like to think is the greatest northern city."

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Merger expands shale-gas potential

The $5.5-billion-US merger of global oilfield service firms Baker Hughes and BJ Services is unlikely to have an impact on operations in Alberta.

"In the big picture this will allow Baker Hughes to offer more services and compete with Schlumberger and Halliburton. I don`t see there will be much, if any, change in Canada because we didn`t compete against them with anything here," said Blair Albers, vice-president of BJ`s Canadian operations.

BJ offers pumping services, defined as cementing services, hydraulic fracing and acidization, as well as coil tubing across Western Canada from Estevan, Sask. to northern B.C. --and the big tight natural gas plays that offer so much promise.

"I got the call about the merger about five this morning, like most people. It`s a merger, but Baker Hughes is leading it," said Albers.

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Billion-dollar makeover for core
Oilers owner`s arena project could revitalize downtown, sources say

Edmonton Oilers owner Daryl Katz may be media shy, but the billionaire boss of the Rexall drugstore chain clearly knows how to make a splash.

When Katz Group`s real estate arm finally lifts the lid on its long-proposed downtown arena project in a few weeks` time, many are likely to be stunned by the scale of the ambitious$ 1-billion-plus redevelopment scheme.

If it proceeds as planned, the multiuse project would utterly transform the northern quadrant of the city`s gritty downtown core, and help kick-start a stalled adjacent condo project that could one day house 3,000 residents.

"Everything is still fluid, and nothing is set in stone yet, but this is very much about revitalizing a district, not building a stand-alone arena," said a source familiar with the project.

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Calgary businesses cheer economy`s return to growth
Consumers Spur Recovery; GDP gains for first time in 11 months

Calgary`s Stampede Pontiac Buick GMC reaped record sales in June, the same month a new Statistics Canada report says the nation`s real gross domestic product grew for the first time in nearly a year.

Canada`s GDP edged up 0.1 per cent in June, the first sign of positive growth in 11 months, to cap a second quarter that saw recession-weary consumers splash out for new vehicles and residential housing resales rebound.

June`s positive signal comes as second-quarter GDP as a whole fell 0.9 per cent, Statistics Canada said Monday.

Glen Bridarolli, Stampede Pontiac`s general manager, said the dealership is a prime example of the sort of activity identified by the Statistics Canada data.

"June was great," he said. "We had our best month of the year in new, and our best month of the year in used."

June`s sales results were especially gratifying, Bridarolli said, as they came amid what he called one of the toughest and most turbulent times in the automotive industry: in May, the dealership received notice it had been axed by GeneralMotors of Canada Ltd. as part of a 40 per cent reduction of dealerships countrywide by 2010.

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One certainty: Gas will go up
It`s time to buy



Natural gas prices have hit rock bottom. You heard it here first. Or they haven`t. But it`s definitely one or the other and that`s a fact.

It doesn`t matter, because natural gas is a buy. It`s not going lower. Unless it is. But again, it doesn`t matter because ultimately it has to go up.

There`s no way that gas can trade so cheaply compared with oil on a long-term basis. In the oil patch they use a six-to-one ratio to calculate equivalent barrels of oil. Gas is measured in mcf - thousands of cubic feet. Six thousand cubic feet of gas is treated as a barrel of oil when describing production and reserves.

Why 6,000? Because that`s roughly the energy equivalent of a barrel of crude oil. To an energy user, then, they are roughly equivalent, so why should one be so cheap compared with the other? Natural gas is about $3/mcf while a barrel of oil is more than $70 (U.S.). Let me give you an analogy as to why this has to change. Take a Canadian stock that`s traded in both New York and Toronto. Assume the U.S. dollar is worth twice the Canadian dollar. The stock should trade for half in New York - i.e. in U.S. dollars - what it changes hands for in Toronto, right?


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Calgary Housing Market in full Recovery Mode

CALGARY - Calgary`s residential real estate market has turned around dramatically from the doldrums it experienced at the beginning of the year.

In January, sales in both the single-family home and the condominium market had plunged to levels about 50 per cent below the previous year.

But MLS data released Tuesday by the Calgary Real Estate Board on August`s market paints a different picture. For the fourth consecutive month, sales have increased compared with last year and the average sale price for a single-family home rose in August, the first year-over-year increase since February 2008.

Calgary realtor Laura Schewchenko, with Re/ Max Real Estate (Central), has seen interest pick up in the local real estate market. A listing she has in the prestigious Mount Royal neighbourhood for nearly $3.5 million is an example.

"Every weekend, I`ve done an open house and it`s been a packed house. There`s people coming in," said Schewchenko, adding potential homebuyers in the luxury price range are looking again at the market.

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China Welcomed to Oilsands

The decision by China`s government-controlled PetroChina to spend $1.9 billion on two undeveloped oilsands projects owned by Athabasca Oil Sands Corp. is being lauded as a vote of confidence in a global resource.

"This is very positive, basically a green light for the oilsands. They are a very strategic company, and a lot of other companies around the world watch what they do," said Neil Shelly, executive director of Alberta`s Industrial Heartland, an association of municipalities in the Fort Saskatchewan area.

PetroChina`s decision, announced Monday, represents the first large Chinese investment in the oilsands.

"During the land rush out here, when it seemed everyone was getting into the bitumen upgrader game, the Chinese companies stayed on the sidelines. Obviously, they have taken a hard look at this resource and see this as a strategic play," he added.

While there is no hint of a bitumen upgrader in PetroChina`s plans, Shelly thinks the first priority for the industry is to restart stalled extraction projects that will produce the raw material for new Alberta upgraders --which he believes are competitive with similar plants in the U.S.

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BP in `Giant` New Oil Discovery

BP is currently the largest producer of oil and gas in that area, with net production equivalent to more than 400,000 barrels of oil a day.

The company said it had drilled the well, dubbed Tiber, to a total depth of about 35,055ft (10,685m), making it one of the deepest wells drilled to date.

BP shares rose 4.3% to £5.41, making it the biggest gainer in the FTSE 100.

Potentially huge


Tiber represents BP`s second material discovery in the Lower Tertiary area of the Gulf of Mexico, after Kaskida.

BP said the discovery, amounting to more than three billion barrels, would "support the continuing growth of our deepwater Gulf of Mexico business into the second half of the next decade".

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Stability Returns to Resales

Home resales in the Edmonton region slowed in August from a record-breaking pace in June and July, but realtors are still smiling at what they call a "steady and stable" market.

"Although sales numbers cooled a bit after record sales in June and July, we are still experiencing the strength of the market in Edmonton," said Charlie Ponde, president of the Realtors Association of Edmonton.

Multiple Listing Service figures released by the realtors group Wednesday show residential sales fell to 1,673 sales in August from 2,277 in July.

But compared to a year earlier, sales were up 8.6 per cent -- the fourth straight month of year-over-year sales increases.

Edmonton realtor and real estate blogger Sheldon Johnston said the market has a balanced, steady feel-- unlike the boom of two years ago.

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Conference Board Confident on Oil Sands Outlook

OTTAWA -- Output from Canada`s oil sands will double and profits in the oil business will triple by 2013 as rising crude prices kick-start megaprojects delayed by the economic downturn, the Conference Board of Canada said Wednesday.

The board`s summer outlook for the Canadian oil-extraction business forecasts that crude prices driven south by the economic downturn will slash pre-tax profits for Canadian producers by 24% from the record $15.3-billion in 2008 to $11.6-billion in 2009.

But as the U.S. economy recovers, rising oil demand will lift prices to the point that Canada`s expensive and controversial oil sands projects become profitable again, said board economist Todd Crawford.

"The Canadian oil industry has long been a boom or bust industry, and that has been the case over the past year . . . but stimulus packages around the world will lead to improved performance starting in 2010," he said.

"Accordingly, oil prices will resume their long-term upward trend, eventually reaching US$103 by 2013. Surging revenue growth related to higher prices will result in profits topping $32-billion by the end of the forecast."

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Oil Sands Output to Double by 2013: Report

Output from Canada`s oil sands will double and profits in the oil business will triple by 2013 as rising crude prices kick-start mega-projects delayed by the economic downturn, the Conference Board of Canada said yesterday.

The board`s summer outlook for the Canadian oil-extraction business forecasts that crude prices driven south by the economic downturn will slash pre-tax profits for Canadian producers by 24% from the record $15.3-billion in 2008 to $11.6-billion in 2009.

But as the U.S. economy recovers, rising oil demand will lift prices to the point that Canada`s expensive and controversial oil sands projects become profitable again, said board economist Todd Crawford.

"The Canadian oil industry has long been a boom or bust industry, and that has been the case over the past year ... but stimulus packages around the world will lead to improved performance starting in 2010.

"Accordingly, oil prices will resume their long-term upward trend, eventually reaching US$103 by 2013. Surging revenue growth related to higher prices will result in profits topping US$32-billion by the end of the forecast," he added.

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Investors Advised to Temper Joy over BP Find

CALGARY -- BP PLC shares jumped to their highest point since September after the company announced a massive oil discovery in the Gulf of Mexico Wednesday, but experts played down the news and said investors would be wise to temper their excitement.

The London-based company - Europe`s second-largest energy outfit - said its Tiber Prospect is similar to its Kaskida find also in the Gulf, which BP has said contains more than three billion barrels of oil. The company called its new discovery "giant" - larger than Kaskida.

But the pool of oil comes with caveats. Should the field contain about three billion barrels of oil, only 20% to 30% - between 300 million and 900 million barrels - of that can be recovered, according to James DiGeorgia, who publishes goldandenergyadvisor.com, a Florida-based newsletter.

"Gigantic is relative," he said. "It sounds better than it is."

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Fort McMurray surpasses Calgary, Edmonton as most expensive Housing Market

CALGARY - Fort McMurray is Alberta`s most expensive residential real estate market, surpassing both Calgary and Edmonton, says a report released today by Coldwell Banker.

The 2009 Coldwell Banker Home Price Comparison Index of most expensive and most affordable North American markets evaluated average home values for select 2,200 square foot single-family dwellings with four bedrooms, two-and-one-half baths in 345 markets across Canada and the United States.

In Alberta, the average price in Fort McMurray was $638,000, eclipsing Calgary at $525,525 and Edmonton at $432,250.

"While Canadian home prices have been on the rise again following a brief market downturn, today`s historically low interest rates have kept the dream of homeownership within reach for most of today`s homebuyers," said John Geha, president of Coldwell Banker Canada. "It is particularly interesting to compare the affordability levels now seen across North America and other global centre. Compared to many major markets throughout the world, Canadian real estate looks like a bargain."

The study`s four-bedroom, two-and-a-half bath home is what would typically be sought for middle-management corporate transferees, said the report. "It`s what we call the `aspirational home` and is usually purchased by move up buyers experiencing lifestyle changes," said Geha. "Despite record-breaking prices in many of Canada`s major markets, these homes are selling, as buyers take advantage of today`s historically low interest rates. These move-up buyers have been a critical component in our resurgent real estate market, and will continue to play a major role in Canada`s recovering economy."

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Forecast calls for Calgary to Rebound after Worst-Ever Performance

CALGARY - Calgary`s economy will post its worst performance on record this year with real GDP growth falling by 2.1 per cent.

But the Conference Board of Canada, in its autumn Metropolitan Outlook, says the city can expect to rebound beginning in 2010 and average 4.1 per cent growth over the next four years - among the highest upswings in the country behind Toronto`s average 4.2 per cent growth during that period.

"Provincially we have a pretty strong rebound, mostly an energy-driven rebound, and of course we see Calgary getting its fair share of that," Greg Sutherland, economist with the conference board, told the Herald.

"A bounce back in the main sector will give Calgarians more confidence. You`re not going to see retail spending tank like it did at least in the first part of this year. So if that stabilizes then you`ll see a healthy rise that way."

Sutherland said the initial stages of an economic recovery are already taking place with house prices rebounding, new housing starts rising, and consumer confidence on the mend.

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Calgary Housing Activity Forecast to Accelerate

CALGARY - After a tough year in the housing market, activity is expected to pick up in Calgary and in the province in 2010, says Canada Mortgage and Housing Corp.

In releasing its third quarter outlook Thursday, the national housing agency said new home construction starts, sales of existing homes and the average MLS sale price will all rise in 2010 after decreasing this year compared with 2008 levels.

Generally, in 2008 going into this year, there were buyer`s market conditions right across the province, said Lai Sing Louie, regional economist for the CMHC in Calgary.

"This year we saw some transition in moving from buyer`s market conditions to balanced market conditions," he said. "That`s obviously a good sign for the real estate market. That means there`s some price pressure. Demand is back. Markets are no longer oversupplied as they were earlier in the year and in the previous year."

He said that in 2010, these balanced market conditions will coincide with economic growth, which will be a key driver in the upswing in the residential real estate market.

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Calgary Housing Market in full Recovery Mode

CALGARY - Calgary`s residential real estate market has turned around dramatically from the doldrums it experienced at the beginning of the year.

In January, sales in both the single-family home and the condominium market had plunged to levels about 50 per cent below the previous year.

But MLS data released Tuesday by the Calgary Real Estate Board on August`s market paints a different picture. For the fourth consecutive month, sales have increased compared with last year and the average sale price for a single-family home rose in August, the first year-over-year increase since February 2008.

Calgary realtor Laura Schewchenko, with Re/ Max Real Estate (Central), has seen interest pick up in the local real estate market. A listing she has in the prestigious Mount Royal neighbourhood for nearly $3.5 million is an example.

"Every weekend, I`ve done an open house and it`s been a packed house. There`s people coming in," said Schewchenko, adding potential homebuyers in the luxury price range are looking again at the market.

Read the full article here.
 
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