August 06, 2015

Canadian Oil Sands loses $128M in 90 days - $120M were Notley's new taxes

Ezra LevantRebel Commander

Canadian Oil Sands just issued its quarterly financials. They lost $128 million in the past 90 days, compared to the $176 million profit they made this time last year.

And $120 million of that recent loss -- all but $8 million -- is from the Alberta NDP's new tax increase.

I call it a "revenge tax." It's one of three new taxes Rachel Notley's NDP government has imposed on the energy industry in Alberta.

If you don't care about "fat cats" being taxed, think again.

Lots of ordinary people own energy and resource industry stocks in their RSPs. The NDPs war on the oil patch hurts every Canadian.

Yes, the global fall in oil prices have hurt the industry too. But the NDP's response to that crisis has only made the situation worse.

READ Ezra Levant's bestselling books debunking environmentalist propaganda against the energy industry:

Groundswell: The Case for Fracking
Ethical Oil: The Case for Canada's Oil Sands

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commented 2015-08-08 15:33:22 -0400
Peter Netterville and Warren Wade – You are Both 100% correct. Whether the taxes are a footnote or rubber stamped at the top of the page; the taxes are a debt to the corporations and will have to be paid. The oilsands corporations are losing monies daily due to the drop in oil prices. They have a responsibility to the shareholders and investors to maintain profitability. In order for them to do this in this current economy they will have to reduce overhead – this means layoff’s, lots of layoff’s. The very last thing oilsands corporations want to see is shareholders and investors withdrawing (cutting their losses so to speak). When a company or industry is in economical crisis, the last thing government’s need to do is increase or implement taxation! Whether taxes are paid today or deferred, they still remain as a deficit against bottom line and profit. Throw higher royalties against profit on top of that and you will definitely start seeing major shifts in that corporate sector. In addition to the oilsands rapid economic decline, manufacturer’s (small, medium and large) across Alberta and Canada will be hard hit as well. Let’s not forget the steel industry who supplies these manufacturer’s and transport. More layoffs to come. The NDP are banking on the entrenchment of oilsands corporations in Alberta. But if they are pushed too far, and can’t turn a profit here, they will pull up stakes and move elsewhere.
commented 2015-08-08 14:29:55 -0400
Excellent report Ezra…
Michael Campbell confirms about it on his national (Corusent 7 million network) ‘Moneytalks’ radio program every Saturday am.
These NDP taxes in Alberta are actually a tax on all of us in Canada, especially the lowest income earners and us seniors included as our pensions get whacked because pension funds are heavily invested in the energy industry.
Equalization payments to have not provinces will go down too as the market price of oil falls and Alberta goes heavily into deficit.
The NDP can’t seem to understand that when governments tax an industry the industry automatically passes that cost off to us overtaxed consumers.
So the price of fuel at the pumps goes up, transportation of goods people and service and of all by-products made from oil goes up.
But the backward Alberta NDP will still run a bigger bureaucracy, bigger deficit and always be behind as they continue to be a pox on the average Canadian people.
commented 2015-08-08 12:33:00 -0400
Canadian Oil Sands just issued its quarterly financials. They lost $128 million in the past 90 days, compared to the $176 million profit they made this time last year. I wonder if the price of oil had a say in that? What a bogus article.
And $120 million of that recent loss — all but $8 million — is from the Alberta NDP’s new tax increase. Yeah they announced it in advance and you still paid your shareholders almost 1 billion dollars majority who don’t have Canadian citizenship. Gave your ceo’s and pres and vice pres bonuses. Totaling almost the 120 million loss. Then you blame the government for not having a balanced budget??? If the PC did the same, and I hate to tell the “con trolls”out there the PC’s were going to raise the corporation tax rate behind close doors anyways to 11.5% Its funny to see how pathetic this article really is in reporting the facts.
commented 2015-08-07 13:17:05 -0400
Ok… Let’s put this in perspective. It’s not so much the financial losses, but it’s the new taxes imposed on the Oil Sands industry that is the big issue. It MAY be a footnote to some, but the fact remains that those taxes SHOULDN’T even be there! These we’re taxes imposed by anti-oil lobbyists and their supporters. These new taxes are just the tip of the iceberg. Take it from a province where our electric bill is going from 2-3 cents per kilowatt/hour to 70 cents per k/hr in a span of 20 years or less. Not sure about this, but we could be heading into the Dark Ages, part two.
commented 2015-08-07 08:47:52 -0400
Alberta has survived low oil prices before. We understand that the industry creates ups and downs and each time we have survived it without going massively into debt that we could not pull ourselves out of. But now with the NDP government upping the corporate tax, the carbon tax, and soon the royalty tax, Alberta will not be able to bounce back from the low oil prices. The NDP are declaring war on the oil industry (whether intentional or not), and they will take their businesses elsewhere, probably to Saskatchewan.
commented 2015-08-07 08:36:41 -0400
Warren Wade, your post is spot on.

Our new socialist NDP government, like in all the other provinces that had NDP governments, just do not understand how the economy works and that their socialist structure just does not work. There is more than just the failed economies of each province that had an NDP government that are examples, but every socialist country around the world. The only reason Norway (the only semi-successful socialist government) is able to do so well is because they are not anti-capitalist like our socialist parties. Norway is heavily into their oil profits. That is what pays for their socialist society.
commented 2015-08-07 08:29:33 -0400
Ben MacDonald said, “Taxes are a minimal footnote on the loss, if anything at all, since, as Ian pointed out, they haven’t been incurred in Q2 2015.”

Minimal or not, it is still an extra burden on the industry that will cost jobs and new expansion investment because the profit margin is what the investors in the oil companies look at. If the profit margin goes down, which it is when they have to pay more taxes, then they loose investors. If they loose investors, they have to pay out the money the investors invested, then the oil company has to lay off more jobs yet again because they have lost that revenue.

Raising the taxes, and doubling the carbon tax, and soon to be raising the royalty rate on the oil companies has a very negative sip off effect that the NDP just cannot seem to grasp.
commented 2015-08-07 04:47:18 -0400
Raising taxes on oil sands companies when oil prices are low… of course that is going to kill those companies, taking them from black to red ink overnight… nobody (not even the NDP) can be that stupid in 2015 to think it would not damage the economy… it has to be a calculated move by the NDP wrecking crew to destroy the oil sands companies and sabotage the Canadian economy so when the stats come out, they can claim the Harper government is blowing the economy, in order to give the federal NDP ammunition for the federal election this October. Clever… sabotage the economy in a crucial province and then when the stats show a slowdown in the Canadian economy, run federally on Stephen Harper’s supposed bad economic performance, actually caused by the malevolent actions of the Alberta NDP government. And then of course there’s the Ontario Liberals… is their mishandling of the Ontario economy the result of stupidity or malevolence? Hmmm…
commented 2015-08-07 03:44:57 -0400
To Karl. You are one pretty stupid person. It’s not a 2% hike. It’s a 20% hike. 10% of a 1,000 is 100 so do the math with a 2% hike. It’s actually 20%. But hey wouldn’t figure you would figure that out. Let me guess math isn’t your strong subject. You my friend are one truly stupid idiot. Keep the comments to us smart big boys. Not uneducated people like you. Maybe you should go back and do grade 6 math. Or better yet just shut up and don’t talk. See even NDP has stupid people like you brian washed. Haha just another stupid person in this country. Look at yourself in the mirror and tell yourself Hey Karl your stupid.
commented 2015-08-07 02:21:27 -0400
The price they can sell at is down to 66% of what it was last year, but they claim that more than 95% of the problem is the new tax, which is 2% higher? Yeah, bet that sort of story worked well on the conservatives…
commented 2015-08-07 01:29:11 -0400
Why Are people saying that because the $120,000,000 isn’t due today, that it lessens the actual number. Because they can invest it? They could invest that money whether the cash was being held for taxes or whether it wasn’t. Just as a simple example: if they had $10 Billion on the books (just as a nice round number) and $720,000,000 of that is due for taxes but they have yet to remit it to the government. Is that any different from having $10 Billion on the books and owing $600,000,000? No. They can still invest (theoretically of course) $10 Billion. It’s stupid to say that if its not due yet they can earn on it. They could do that if I wasn’t due also. If that’s the best argument you can come up with, I suggest stretching those brain muscles with some crosswords or grade school “mental math” that we used to do when I was 10.
commented 2015-08-06 23:50:18 -0400
Let’s see. NDP were elected, all development cancelled. Used to be people working in the oil patch from all over the world. Literally. Now locals in Alberta oil patch towns are unemployed. Yup socialism works alright. The capitalist in me says start a home Reno company to work on all the teachers/nurses/police/fire fighters/government employed Union folks homes because you know they’re going to have more money…until bankruptcy and austerity hits them at least.
With no new expansion investment the economy will stagnate and contract allowing existing infrastructure and operations to lose the competitive edge that comes with investment and hard work.
There are many examples of first world nations sanctioning poor acting governments causing infrastructure to crumble and economies to fail. Why would people chose to punish themselves by essentially self sanctioning their own economy? Lack of intelligence.
Alberta economy is collapsing and Albertans chose to collapse it themselves.
commented 2015-08-06 23:05:20 -0400
Hey Peter, did you read the Canadian Oil Sands Q2 report? “Cash flow from operations was $70 million compared with $240 million in the same quarter of 2014.” So they’re already out $170 million just from the lower price of oil ($74.47/barrel in Q2 2015 vs $112.04/barrel in Q2 2014; down about a third from the same time last year). Production was nearly consistent between Q2 2015 and Q2 2014 at ~77,000 barrels /day. They saved some money on operating costs (down $7/barrel in Q2 2015 vs Q2 2014), so that works out to a savings of ~$48.5 million for the quarter vs the same time last year. The difference between the cash flow and savings in operating costs is about -$121.5 million. Taxes are a minimal footnote on the loss, if anything at all, since, as Ian pointed out, they haven’t been incurred in Q2 2015.
commented 2015-08-06 22:22:15 -0400
Ian, I can’t believe what you are saying.

Have you no knowledge of accounting? The oil companies lost that amount of money over that period of time because they were taxed that amount over that period of time. They still have to pay it regardless of when they fork over that money.

Let me give you an example. If you use you credit card for three months and incur X amount of interest that you must pay, but then do not pay that interest for the next, say 3 months, do you not still have to pay that interest at some point? And was that interest still not incurred at that same time period?

My point is that even though they have not paid out the money, the taxes are still owed. The company is still out that amount of money regardless. It is called accounting.

I am really quite surprised that you cannot comprehend that.
commented 2015-08-06 21:29:51 -0400
Peter, it is relevant. Ezra made the claim that Canadian Oil Sands lost $120 million in 90 days and lost money last quarter due to the new taxes. They did not—they still have it and can still earn money on it—and it may be $120 million over a fiscal year, which is much less sexy than the sensational headline. Tax deferred is tax savings, the company still has use of the money.

The tax increase is from 10 to %12 percent, which means $120 million represents new taxes on $6 billion in earnings, which is about what they made in 2013. If a company can’t stay above water if they lose 2 of their revenue, they’ve got other problems. Canadian Oil Sands will come out fine. Their earnings are likely to be less than last year, and they may end up keeping much of the old and new taxes they deferred.
commented 2015-08-06 20:47:40 -0400
Ian, it is irrelevant if it is still only on the books because they still have to pay it. So they haven’t paid it yet, what difference does that make? Are the NDP going to say to the oil companies later “Oh, we were just kidding! You can keep the money. April fools!”

Your complaint is truly irrelevant.
commented 2015-08-06 20:42:56 -0400
Peter, I never claimed Ezra didn’t mention the drop in oil prices as a contributing factor to the loss. No, Ezra had that covered.

This loss, however, exists only in the books. Canadian Oil Sands still has that $120 million. They set it aside to pay anticipated taxes for the next fiscal quarter or next fiscal year. I don’t know which, and it would depend on their tax payment schedule. In the interim, Canadian Oil Sands have likely moved that money into an investment account where it will earn them more money until they have to pay the Alberta government. Point being, at least until its provincial taxes are paid, Canadian Oil Sands hasn’t really lost anything, and we won’t know how much the provincial taxes will be until we see them as a payment on their balance sheet.
commented 2015-08-06 18:12:56 -0400
Jimmy, nobody here has blown any holes through Ezra’s story.

Ezra did mention that the drop in oil prices has affected the oil companies, despite Ian’s and Mitchell’s claim that he had not. Ezra acknowledges this.

The one thing that all you critics did not address was that this new tax and the doubling of the carbon tax are adding an additional burdens the the already stressed oil companies. That was Ezra’s central point.

You critics like to point out that Ezra is leaving out information when in fact he did not leave out the information as you claim, but you did leave out the information that the new taxes are adding addition burden on an already over burdened industry.

There is no criticism of Ezra’s report posted here that stands up to the facts.

Sorry little children, try again.
commented 2015-08-06 17:51:07 -0400
Ezra pointed out that as well as low oil prices……… Notly also piled on MORE TAXES , give me a break, kick ya when you’re down typical backbiting bed wetting commie attitude
commented 2015-08-06 17:46:56 -0400

You didn’t like the holes that were shot through Ezra’s story by other people here?
commented 2015-08-06 17:34:04 -0400
Jimmy claims once more, “And yet another story where Ezra doesn’t actually use facts – but spins things per his agenda.”

Please, Jimmy, show us the error of Ezra’s ways. Expose his lies. Here. Now.
commented 2015-08-06 17:12:09 -0400
And yet another story where Ezra doesn’t actually use facts – but spins things per his agenda.
commented 2015-08-06 15:00:38 -0400
There are no surprises here. The surprise was the NDP getting elected. My mind is still boggled. The NDP will tax the shit out of companies. Spend recklessly on wasteful social programs. Companies will then have no choice but to close their operations. Tax revenues will disappear. NDP will post record deficits. Our debt will balloon. We will look a lot like Greece. And one example of their social programs; Costly subsidized windmills and sliced birds. Another example; Does anybody remember the solar panel company that Obama was heralding as the future. The US gave that company 500 million dollars in loans. That money is written off and the company is bankrupt.

This is not rocket science people. Alberta was the envy of all other provinces because of our Conservative values. If oil prices went down, we would tighten our belts. That is financial prudence. A Conservative policy.
commented 2015-08-06 13:03:22 -0400
“[Canadian Oil Sands] lost $128 million in the past 90 days, compared to the $176 million profit they made this time last year.”

Canadian Oil Sands also lost $314 million in the six months prior to June 30, and $186 million in the three months ending March 31. As Jason says, the drop in oil prices is hitting harder than taxes.

Ezra also fails to mention that a deferred tax expense is money placed aside for taxes that have not yet been paid. Canadian Oil Sands still has that money and can earn interest from it, and have chosen to set it aside to pay taxes in the next quarter or next year. We’ll know in three months to a year how much effect the tax will have, but it’s too early to make that call.
commented 2015-08-06 11:50:37 -0400
Yes, Richard Brinkman, LOVE will keep the government coffers full and the taxes low and the jobs count high and we will all hold hands around the campfire singing kumbaya while the reality of what the NDP is doing to our economy takes us into the poor house.
commented 2015-08-06 11:30:27 -0400
I have to agree. It is spurious logic to attribute that massive loss to taxes. I agree that the NDP and the new taxes are a disaster, but their effect will time to see, while the drop in the oil price is the story here.
commented 2015-08-06 11:14:51 -0400
Love the fact that it`s all the NDP and not at all related to the fact that a barrel of oil was worth $105 per barrel at this period last year and is only worth $44 per barrel this year."

That’s because Ezra does not know what love means
commented 2015-08-06 10:30:12 -0400
Love the fact that it`s all the NDP and not at all related to the fact that a barrel of oil was worth $105 per barrel at this period last year and is only worth $44 per barrel this year.
commented 2015-08-06 10:30:01 -0400
But it’s for the childrens.
commented 2015-08-06 10:21:34 -0400
Sorry, Richard Brinkman — very few, other than yourself, Jimmy, and Terry, LOVE the NDP. Notley got elected through a protest vote against the provincial Conservatives(as did Mulcair in Quebec, against the Bloc). Nearly everybody in Alberta is now regretting that vote, and Notley herself didn’t expect to win. She was caught flat-footed, without any plan, and thus the “hiring” of non-Albertan “advisors” who hate this province more than they hate their own.

LOVE has absolutely jack-squat to do with it.

Unless your entire comment is supposed to be ironic, sarcastic, and satirical…