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‘Get lined up’: Alberta gas producer’s demise leaves long list of creditors and costly messes

Maureen and Wendell Strong have two former Lexin Resources natural gas wells on their land near Nanton, Alta. The province's energy regulator shut down the struggling company back in February.

Maureen and Wendell Strong have two former Lexin Resources natural gas wells on their land near Nanton, Alta. The province’s energy regulator shut down the struggling company back in February. (Tracy Johnson/CBC)

Maureen and Wendell Strong started hearing the rumours early in 2016: Alberta landowners with Lexin Resources natural gas wells on their property weren’t getting paid.

The Strongs, who had two Lexin wells on their land south of High River, and decades of experience dealing with the energy industry, waited anxiously to see if they’d receive their money.

In Alberta, most landowners don’t own the mineral rights below their land and are required to allow access to energy companies that want to drill wells. Landowners like the Strongs are paid an annual lease rate that typically totals a few thousand dollars.

“We were on the alert, watching,” Maureen said, “and when the time went past, that’s when we got the name of the guy at Lexin and phoned him. Nice guy but he said, ‘Just get lined up, we’ve had 700 calls on this.'”

In March, Lexin Resources was forced into bankruptcy by the Alberta Energy Regulator (AER) — an order the company is fighting in court. Documents from the case show landowners like the Strongs have plenty of company on the list of creditors seeking payment from Lexin.

They range from a small scaffolding company to Baker Hughes, one of the largest oil services companies in the world. The Alberta government is also looking for unpaid royalties, rural municipalities are claiming unpaid taxes, and there are former workers who are looking for vacation pay and severance and are concerned about their pension plan.

…click on the above link to read the rest of the article…

Oil prices set to rise sharply, unless new projects are approved

Oil prices set to rise sharply, unless new projects are approved

Without new investments, oil prices will rise sharply in the next five years, energy conference told

The International Energy Agency says there will be supply problems in three years if a two-year trend in falling oil investments continues into 2017.

The International Energy Agency says there will be supply problems in three years if a two-year trend in falling oil investments continues into 2017. (Jeff McIntosh/Canadian Press)

Oil prices are set to rise sharply starting in 2020 if new energy investments are not made this year.

That was the message of the International Energy Agency as the CERAWeek energy conference kicked off in Houston. There’s a worldwide glut of oil now, and the IEA said that supply looks adequate for the next three years, thanks to rising production from U.S. shale producers and Canadian oilsands projects that were sanctioned before the oil price crunch began.

However, oil investments dropped sharply in both 2015 and 2016, and if that trend continues into 2017, there will be a problem in three years.

“We have seen two years in a row of huge declines in upstream investment. If this is the case in 2017, if we don’t see substantial rebound, we may well see that the market tightens around 2020 and the spare production capacity shrinks,” said Fatih Birol, the chairman of the IEA, at a news conference in Houston.

Oil investment globally was $450 billion US in 2016. The IEA is hoping to see that increase by 20 per cent, a further $90 billion US in 2017. In 2016, oil investment in Canada was estimated at $37 billion, and the Canadian Association of Petroleum Producers expects it to rise to $44 billion in 2017.

IHS CERAWeek 2016

Fatih Birol, executive director of the International Energy Agency, speaks about the state of the oil industry at the annual IHS CERAWeek global energy conference Monday in Houston. (Pat Sullivan/Associated Press)

Birol made reference to 2008, when prices spiked to more than $140 US per barrel, saying that without new investment, the oil market could be tighter in 2022 than it was in 2008.

…click on the above link to read the rest of the article…

Canadians conflicted about 3 Es: Environment, energy and the economy

Canadians conflicted about 3 Es: Environment, energy and the economy

EKOS-CBC poll suggests 56% more worried about the economy than the environment

Alberta produces the most greenhouse gases of any province in the country, and has for more than a decade.

Alberta produces the most greenhouse gases of any province in the country, and has for more than a decade. (CBC)

Justin and Leanne Mills are in a situation familiar to many Albertans these days.

Justin is still working as an oil well cementer in Lloydminster, but his income is down by 50 per cent and the family is dealing with a painful readjustment of their future.

“For the first time in three years, I actually didn’t pay a bill,” said Leanne. “We didn’t have the money to pay it, so I pay a little on this one and all of that one, and the next month, I’ll pay the rest of that one and just try to keep up.”

Media placeholderJustin and Leanne Mills are struggling to pay their bills as work dries up in Alberta’s oilpatch

‘We don’t have a big truck, or a big house, or fancy things and we’re still having trouble getting by.’– Justin Mills, oilwell cementer

Their struggles are one side of the conflict gripping Canadians right now as tension grows between the importance of the environment and the economy. A new CBC EKOS Research poll suggests the country is conflicted between the two priorities, especially when discussing the future of the oil and gas industry.

Leanne has been trying to get pregnant for four years and after a string of miscarriages, she began fertility treatments that cost $600 a month. But, with their drop in income, they can no longer afford the treatments.

EKOS poll Canadians worried about economic issues

“I turned 40 last November and when we spoke to our doctor last, I said that we might not be able to do this for a while,” Leanne said.

…click on the above link to read the rest of the article…

Jingle mail rears its ugly head in Alberta again

Jingle mail rears its ugly head in Alberta again

Federal government worried about Albertans making strategic defaults on their mortgages

This tiny hamlet south of Calgary has 27 homes for sale for more than $1 million.

This tiny hamlet south of Calgary has 27 homes for sale for more than $1 million. (Colin Hall/CBC)

One of the big bads from the 1980s is starting to emerge again in Alberta.

Jingle mail — the act of walking away from an underwater mortgage by mailing your keys back to the bank — is a peculiarity of the Alberta residential market and an act of desperation. However, a combination of high debt and lost jobs make it an option in a province going through a significant economic reckoning.

It’s enough of a concern that the federal government is watching the Alberta market closely. Jingle mail, or strategic defaults, weaken the housing market and increase loan losses among Canada’s banks.

‘People saying that we can’t make a go of it and mail the keys to the bank.’– Don Campbell, Real Estate Investment Network

“We’re slowly starting to see it in Grand Prairie and Fort Mac,” said Don Campbell, senior analyst with the Real Estate Investment Network.

“People saying that we can’t make a go of it and mail the keys to the bank. In the big cities, not so much because the average sale prices haven’t really dropped much, we haven’t seen the pain yet. But Calgary is getting pretty tight.”

Bruce Alger, an insolvency trustee at Grant Thornton in Calgary, said he is dealing with one such case and has heard of more.

“It’s when you see high-end home prices drop 20 per cent below the peak,” said Alger. “I think there are people considering walking away and I’ve talked to one or two myself.”

Why Alberta is different

Alberta is the only Canadian province to broadly offer non-recourse residential mortgages. Those loans with at least a 20 per cent down payment and thus are not insured by the Canada Mortgage and Housing Corporation (CMHC).

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Olduvai IV: Courage
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Olduvai II: Exodus
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