Close X
Friday, November 29, 2024
ADVT 
National

Canadian Natural Posts $405-million Net Loss On Higher Alberta Tax Rate

The Canadian Press, 07 Aug, 2015 10:37 AM
    CALGARY — Canadian Natural Resources is warning that Alberta's corporate tax hike will hit employment, though both company executives and Premier Rachel Notley agree the steep drop in crude prices is a much bigger challenge.
     
    The Calgary-based oil and gas giant posted a net loss of $405 million during the second quarter, mostly because of a $579-million charge related to the higher tax rate.
     
    All things being equal, the higher tax tab means $579 million less will be invested over the lifespan of Canadian Natural's assets, chief financial officer Corey Bieber said in an interview.
     
    That translates into about 4,100 fewer person years of direct, indirect and induced employment in that time span, he said, citing a study by a third-party consultant.
     
    The study wasn't undertaken specifically to look into the impact of the tax changes, but is part of work the company routinely does as part of the regulatory process for its projects, said president Steve Laut.
     
    Unlike many of its peers, Canadian Natural (TSX:CNQ) has not announced staff layoffs since crude prices began their sharp decline from above US$100 a barrel a year ago to US$44.66 on Thursday. Rather, top brass are taking a pay cut and company-wide pay increases have been scrubbed.
     
    Speaking in Edmonton, Notley said Albertans accept that higher corporate taxes are going to hit the bottom lines of companies.
     
    "Albertans clearly considered that issue very thoroughly in the last election," she said. Given the province's fiscal challenges, Albertans realize it's necessary to "pull up our socks and tighten our belts" and "everybody needs to chip in."
     
    She said the tumbling price of crude is having a much bigger impact on employment than the tax increase to 12 per cent from 10 per cent, which came into effect on July 1.
     
    Bieber agrees with that assessment.
     
    Between the first six months of 2014 and the first six months of 2015, Bieber figures the price drop had around a $2.3-billion impact on cash flow.
     
    "The bottom line is, reduced cash flow leads to less ability to reinvest in the business and ultimately that's what drives growth of the economy," he said.
     
    Canadian Natural is one of a number of major Calgary oil companies to take a tax charge against second-quarter results because of the change in Alberta.
     
    Last week, Canadian Oil Sands (TSX:COS) said its deferred tax expense was $120 million during the quarter, while Imperial Oil (TSX:IMO) took a $320-million charge. A $315-million tax expense at Cenovus Energy (TSX:CVE) was mainly due to the Alberta tax hike as well.
     
    Without the tax expense and other items in the mix, Canadian Natural said its adjusted earnings from operations were $178 million, compared to $1.15 billion a year earlier.
     
    The Alberta government is setting up expert panels to look into the province's royalty rates and climate change policy. Notley said more details will be coming out next week.  
     
    Laut said until there's clarity on what kind of additional costs may arise from both reviews, it can't pin down 2016 spending plans.
     
    He sees work on the Horizon oilsands expansion continuing and more drilling off the shores of Cote d'Ivoire in West Africa.
     
    "But other than that we have to wait and see how the world shakes out."

    MORE National ARTICLES

    Atheist United Church Minister Fighting Review That Could Lead To Firing

    Atheist United Church Minister Fighting Review That Could Lead To Firing
    TORONTO — An ordained United Church of Canada minister who believes in neither God nor Bible said Wednesday she is prepared to fight an unprecedented attempt to boot her from the pulpit for her beliefs.

    Atheist United Church Minister Fighting Review That Could Lead To Firing

    12 Soldiers Killed In Pakistan Helicopter Crash

    12 Soldiers Killed In Pakistan Helicopter Crash
    At least 12 soldiers were killed on Thursday when an army chopper crashed in Pakistan, officials said.

    12 Soldiers Killed In Pakistan Helicopter Crash

    B.C. Mill Owners, Operator To Review Ruling After Workers' Deaths In Blast

    B.C. Mill Owners, Operator To Review Ruling After Workers' Deaths In Blast
    A WorkSafeBC investigation revealed an accumulation of wood dust was a major factor in the disaster that also injured 19 other workers and flattened the mill.

    B.C. Mill Owners, Operator To Review Ruling After Workers' Deaths In Blast

    Bail Decision Thursday For Montreal Cabbie Who Allegedly Hit Men With His Car

    MONTREAL — A Montreal cabbie who faces seven charges for allegedly striking two people on purpose with his vehicle will find out Thursday whether he'll get bail.

    Bail Decision Thursday For Montreal Cabbie Who Allegedly Hit Men With His Car

    Political Leaders Spend Time Away From Campaign Trail To Prepare For Debate

    Political Leaders Spend Time Away From Campaign Trail To Prepare For Debate
    OTTAWA — On the eve of the first federal leaders' debate, Canada's campaign trail grew quiet Wednesday as the rivals prepared for their live four-way faceoff.

    Political Leaders Spend Time Away From Campaign Trail To Prepare For Debate

    Alberta Needs To Strengthen Program To Deal With Dormant Oil Wells: Critics

    Alberta Needs To Strengthen Program To Deal With Dormant Oil Wells: Critics
     A program in Alberta to deal with thousands of dormant oil and gas wells that don't meet safety and monitoring standards needs to be strengthened, critics say as falling crude prices could see their numbers swell.

    Alberta Needs To Strengthen Program To Deal With Dormant Oil Wells: Critics