Calfrac, TransAlta, Pine Cliff Energy gets $100MM investment from Alberta government

[schurchill39]

Alberta has announced close to $100 million in investments as part of its stated goal to further diversify the provincial economy.

Economic Development Minister Deron Bilous says the money will be used to support job creation and innovation in the renewable energy and natural gas sectors.

He says almost $46 million will to go TransAlta Renewables to expand developments in clean energy.

Another $46 million will to Calfrac Well Services to further environmental innovation in the oil and gas industry.

Pine Cliff Energy is getting $6 million will go to to consolidate natural gas assets.

The investments are made through the Alberta Investment Management Corporation, better known as AIMCo. "In the short term, these investments are helping to protect and create jobs," said Bilous.

"They're also expected to provide a financial return to the fund that will contribute to the priority programs and services Albertans value."

A year ago, Premier Rachel Notley's government gave AIMCo a mandate to invest up to three per cent of the Heritage Fund, equivalent to about $540 million, into Alberta companies with growth potential.

I work in O&G and this investment does not make any sense to me. How is investing in an operator, a service company and a pipe line company helping to diversify the Albertan economy in any way shape or form? Especially under the guise of things like "further environmental innovation".

EDIT: TransAlta is not a pipeline company. We need a [strike] [/strike] feature!

[dirtsniffer]

They're dipping into the heritage fund for this shit?!

[nzwasp]

So they are giving companies money to spend on investments with no obligation to pay back.

[BandW]

Originally posted by schurchill39


I work in O&G and this investment does not make any sense to me. How is investing in an operator, a service company and a pipe line company helping to diversify the Albertan economy in any way shape or form? Especially under the guise of things like "further environmental innovation".

You've assessed these investments as "not making any sense" based on a sub-200 word news article. Has it ever occurred to you that an investment analysis worth caring about might require a little bit more effort than that?

Furthermore, I question how well you actually read and understood this sub-200 word news article.

"Economic Development Minister Deron Bilous says the money will be used to support job creation and innovation in the renewable energy and natural gas sectors."

So the person dishing out the funds stated some clear objectives.

"He says almost $46 million will to go TransAlta Renewables to expand developments in clean energy."

Interesting. This seems to be directly related to the goal of fostering innovation in renewable energy. Gee, I wonder if diversification of Alberta's economy involves renewables.

"Another $46 million will to Calfrac Well Services to further environmental innovation in the oil and gas industry.

Pine Cliff Energy is getting $6 million will go to to consolidate natural gas assets."

Wow, these points seem to link up with innovation and job creation in the natural gas sector. No fuckin way!

[rx7_turbo2]

Originally posted by BandW
You've assessed these investments as "not making any sense" based on a sub-200 word news article. Has it ever occurred to you that an investment analysis worth caring about might require a little bit more effort than that?

"Economic Development Minister Deron Bilous says the money will be used to support job creation and innovation in the renewable energy and natural gas sectors."

So the person dishing out the funds stated some clear objectives.

This plan is only as good as whomever put it together and made the decisions. Sorry I have zero faith in Mr. Bilous, I'm not convinced his Bachelor of Education degree and ZERO business or entrepreneurial experience makes him qualified for decisions like this. But that's pretty much this entire Gov't, so.........

[Sugarphreak]

...

[rx7_turbo2]

Originally posted by Sugarphreak
I was wondering how long it would take before they dipped into that for one of their "projects". They usually tank the economy when they get in, so they need money. The standard NDP play is to dip into these types of funds right away.

They did this with the forestry sustainability fund in BC as well. They burned through it in their first term by just falsely labeling everything they used it for.

It's part of the NDP script. This money will float off into the ether, Albertans will see little if any real benefit when it's all gone and those responsible will fade into obscurity.

[Neil4Speed]

I don't know if I'd look at it the same way others are. AIMCO are an investment bank no different than the rest and are looking to make a buck. They see value they buy, and then they sell at a profit. I.e purchased Precision Drilling ~$3 a share in 2009, sold at ~$9 a share in 2013.

[Sugarphreak]

...

[Type_S1]

Looks like transatla is hiring people in its environmental dI vision in both Houston and calGary.

[schurchill39]

Originally posted by BandW


You've assessed these investments as "not making any sense" based on a sub-200 word news article. Has it ever occurred to you that an investment analysis worth caring about might require a little bit more effort than that?

Furthermore, I question how well you actually read and understood this sub-200 word news article.

"Economic Development Minister Deron Bilous says the money will be used to support job creation and innovation in the renewable energy and natural gas sectors."

So the person dishing out the funds stated some clear objectives.

"He says almost $46 million will to go TransAlta Renewables to expand developments in clean energy."

Interesting. This seems to be directly related to the goal of fostering innovation in renewable energy. Gee, I wonder if diversification of Alberta's economy involves renewables.

"Another $46 million will to Calfrac Well Services to further environmental innovation in the oil and gas industry.

Pine Cliff Energy is getting $6 million will go to to consolidate natural gas assets."

Wow, these points seem to link up with innovation and job creation in the natural gas sector. No fuckin way!

Being intimately familiar with all three companies and their "projects", (admittedly more so with Pine Cliff and Calfrac than with TransAlta) there will be no new innovations and I think it would be a huge stretch to say any sustainable jobs will come out of it. A company like Calfrac will more than likely put it directly on their nearly billion dollar dept and continue on as per without a single person being hired.

If all it takes is to throw buzz words around to fit the bill of of the sub 50 word introductory description on the AB gov website of the heritage fund and you get $46MM I say we should all rally our employers to snuggle up to AIMCo and get our piece of the 540MM pie (540MM = 3% that needs to be invested from the 18 billion total trust fund).

I, like many of my colleagues and industry contacts have read much more into this than just the article. Its just this article that best summaries it. But thanks for coming out

[phreezee]

How did Trican miss this LNG gravy train? Fits in with the Liberal BC LNG project push.

[killramos]

wtf does anyone think Pine Cliff is going to do with 6 million dollars that anyone would consider innovative?

The closest thing to innovative they could do with that money is abandon some wells...

6 Million dollars is a fart in the tub to an oil company, even one of that size. It wouldn't even cover their annual G&A.

[Feruk]

Ok I get Transalta, but Calfrac I find sketchy... First of all, they've been teetering on the verge of bankruptcy for two years. Second of all, AIMCO gave Calfrac $200 million back in June!! Looks like they're just chasing a crap investment here.

Link: http://web.tmxmoney.com/article.php?...&qm_symbol=CFW

Originally posted by Sugarphreak
I was wondering how long it would take before they dipped into that for one of their "projects". They usually tank the economy when they get in, so they need money. The standard NDP play is to dip into these types of funds right away.

They invested in 3 private companies, not their "pet projects"... Let's take your BC bias out and read the article.

Originally posted by nzwasp
So they are giving companies money to spend on investments with no obligation to pay back.

No, they're investing to generate a return. Same thing you would do in an RRSP. The Heritage fund has to be invested in something, otherwise it just gets eaten away by inflation.

[lasimmon]

Originally posted by schurchill39


I work in O&G and this investment does not make any sense to me. How is investing in an operator, a service company and a pipe line company helping to diversify the Albertan economy in any way shape or form? Especially under the guise of things like "further environmental innovation".

Transalta is a pipeline company? News to me. I thought they were mainly power generation/coal mining looking to expand to renewables.

[schurchill39]

Originally posted by lasimmon


Transalta is a pipeline company? News to me. I thought they were mainly power generation/coal mining looking to expand to renewables.

I got them confused with another company . You are correct

[Marsh]

How does $46 MM to Transalta Renewables help anything? Renewable energy projects like wind and solar are in the hundreds of millions of dollars for development or acquisition. You might be able to buy some land for $46MM, thats about it.

[HiTempguy1]

Originally posted by killramos

6 Million dollars is a fart in the tub to an oil company, even one of that size. It wouldn't even cover their annual G&A.

No it isn't. Just because a company is large does not mean they don't watch down to the friggin' penny what they are spending even in the "hundreds of thousands or millions" range. Considering I deal directly with most oilsands research departments, $6 mil is nothing to sneeze at when it comes to research.

Of course, as I like to say, "whats a hundred grand here or there, when we start talking millions, NOW we're talkin" :p

We've developed products and technologies for much less than $6mil that create substantial savings multiple times over, especially when viewed in light of 50 years of plant operations.

Shit, I just came up with an idea that will lead to saving a couple hundred g's per year in maintenance and operating costs for the oilsands operators and it only took a whooping $50k in funding to run the whole project including creating a field prototype. It all adds up, its all a small piece of the puzzle. You're not magically going to make a plant 25% more efficient, but you can certainly add a 0.5% to 1% here or there. Considering the volumes we are talking about, it really starts to add up.

[Feruk]

Your example has nothing to do with Pine Cliff's business. Sounds to me like that money might be used to build a pipeline and shut in a compressor station? Just guessing based on the note that they were gonna use it to consolidate natural gas assets.

[killramos]

Originally posted by Feruk
Your example has nothing to do with Pine Cliff's business. Sounds to me like that money might be used to build a pipeline and shut in a compressor station? Just guessing based on the note that they were gonna use it to consolidate natural gas assets.

+1 or maybe buy some ( a very small amount for that figure) offsetting production? I still think abandonments are a good direction though.

I know exactly what 6 million dollars looks like to a small producers capital budget. Fart. In. The. Tub. Would give them something to do for a couple of weeks.

Also I wasn't calling pine cliff big, I was calling them small. 6 million dollars doesn't go very far in a high capital environment. Especially when you are talking about trying new things or being "innovative".

There is a difference between oil companies nickle and diming every dollar on a well. And the fact that a 6 million dollar injection will not make a material change to the company. This isn't free money from the government either, it's an investment from the heritage fund best I can understand. Personally, I wouldn't invest in Pine Cliff.