Source: Gov’t of SK
Cameco posts loss on weak sales, scrapped Tepco contract
SWETHA GOPINATH AND ROD NICKEL
Published Friday, Apr. 28, 2017 7:51AM EDT
Last updated Friday, Apr. 28, 2017 11:03AM EDT
Cameco Corp , the world’s second-biggest uranium producer, posted a bigger-than-expected quarterly loss, partly hurt by the termination of a key sales contract, driving shares to a nearly five-month low.
The stock fell more than 9 per cent in Toronto trading to $12.92, even though Cameco maintained its full-year guidance for deliveries and revenue.
Tokyo Electric Power (Tepco), the operator of Japan’s wrecked Fukushima nuclear plant, scrapped its uranium supply contract with Cameco, the company said in February.
The Canadian company said its loss was also related to weak uranium prices amid a prolonged glut, tracing back to the 2011 tsunami in Japan which shut all of that country’s nuclear reactors. A few have since restarted.
“We’re managing through the uncertainty, but even low-cost operations like ours, face pressure,” Chief Executive Tim Gitzel said in a statement.
Spot prices of uranium, used to fuel nuclear reactors, dipped to a 13-year low late last year and have rebounded modestly in 2017.
“While the market will view the earnings miss as a negative, we point out that Cameco maintained its guidance across the board,” said Rob Chang, analyst at Cantor Fitzgerald.
Its sales have historically been weighted to the last two quarters, when it is likely to get a higher price, he said.
The selloff looked like “nervous money” getting out of the stock, as the slumping uranium sector is slowly recovering, said Brian Madden, portfolio manager at Goodreid Investment Counsel, which owns the stock.
The industry continues to be oversupplied, but less so than previously, Madden said. The biggest global producer Kazatomprom said in January it would cut uranium output by 10 per cent.
Cameco said severance costs and a strengthening Canadian dollar also weighed on its first-quarter results.
The net loss was $18-million, or 5 cents per share, in the first quarter, compared with a profit of $78-million, or 20 cents per share, a year earlier.
Excluding items, the company lost 7 Canadian cents per share, bigger than the average analyst estimate of 1 Canadian cent, according to Thomson Reuters I/B/E/S.
Revenue at the Saskatoon, Saskatchewan-based company fell nearly 4 per cent to $393-million, with declines stemmed by high revenue from its Nukem unit, which is a nuclear fuel broker.
Analysts had expected revenue of $372.345-million.
‘We see the benefit now’: PotashCorp bounces back after bleak year spent cutting costs
ALEX MACPHERSON, SASKATOON STARPHOENIX
Published on: April 28, 2017 | Last Updated: April 28, 2017 6:00 AM CST
Potash Corp. of Saskatchewan Inc. says its cost-cutting measures appear to be working. GORD WALDNER / THE STARPHOENIX
After one of the bleakest years in its history, Saskatchewan’s largest mining company says its cost-cutting measures are starting to take effect and that it does not anticipate making additional “material” changes to its operations.
Potash Corp. of Saskatchewan Inc. has planned “some inventory maintenance shutdowns” but does not believe more drastic measures are needed, its chief executive told reporters and analysts on a Thursday conference call.
“Beyond that point, we haven’t really looked into anything and we don’t think it’s necessary,” Jochen Tilk said a few hours after the company reported a 99 per cent jump in first quarter earnings compared to the same period last year.
Saskatoon-based PotashCorp spent last year struggling to cut costs in the face of weak fertilizer prices, which a glut of potash on the market caused to fall to just over US$200 per tonne from a peak of US$900 per tonne in 2008.
In response, the company shuttered its Picadilly mine in New Brunswick and permanently scaled back production at its Cory operation west of Saskatoon while shifting its attention to its recently-expanded low-cost Rocanville mine near Yorkton.
Those changes are reflected in the company’s US$149 million first quarter profit — well below the US$370 million it made in the first quarter of 2015, but almost half of what it earned in the entirety of 2016.
Tilk attributed the spike to a reduction in the company’s production costs, which he said have fallen to US$90 per tonne from around US$138 per tonne in 2013, and are expected to drop another US$10 per tonne.
While PotashCorp’s revenues dipped in the first quarter — US$1.1 billion compared to $1.2 billion in the first three months of 2016 — Tilk said it expects “supportive” conditions to persist throughout the year.
“Significant steps that we took, no question about it, but we see the benefit now.”
PotashCorp “really had no choice” but to close one mine and slash production at a second, but its first quarter results suggest those cost-cutting measures are working, according to a professor at the University of Saskatchewan.
“There’s still a very big trough between supply and demand in the world market, and until that closes, you’re not going to see the price of potash … go up significantly,” said Brooke Dobni, who teaches at the Edwards School of Business.
“But this is going to position them well for when it does, because if they get their costs down — and keep them down — and the price starts going up, you’re going to start seeing (large) profits again.”
It’s unclear whether PotashCorp will issue a second quarter report as an independent firm. Its US$26 billion merger with Calgary-based Agrium Inc. — a response to “fierce” market conditions — is expected to close in mid-2017.
Tilk said the companies are making progress toward clearing regulator hurdles and expect to achieve their US$500 million “synergy target” two years after the deal closes.
‘Holy cow’: PSAC bumps up 2017 drilling forecast for second time
By Carter Haydu
April 27, 2017, 5:37 p.m.
PSAC CEO Mark Salkeld speaks to reporters following the organization’s drilling forecast update on April 27. Image: Carter Haydu/JWN
For the second time, the Petroleum Services Association of Canada (PSAC) has revised upward its forecasted number of wells drilled (rig released) across Canada in 2017, with the latest call out for 6,680 wells throughout the year.
“When the numbers started coming in with our analysis, we were pleasantly surprised,” Mark Salkeld, president and chief executive officer at PSAC, told reporters following Thursday’s forecast update.
“We had a bit of confidence coming out of 2016 with the activity in Q4, but because we had just come through 2.5 years of tough time, were cautiously optimistic. When we got the actuals back for Q1 2017, it was just like ‘holy cow.’”
Late last year, PSAC forecast a total of 4,175 wells to be drilled in Canada for this year. Higher prices led PSAC in January to bump up the numbers to 5,150 wells in 2017, up 23 per cent or 975 wells.
The new forecast suggests 60 percent more wells rig released this year than originally predicted, based on updated commodity price forecasts of C$3/mcf AECO natural gas, US$52.50/bbl WTI, and an exchange rate of 74 cents between the Canadian and U.S. dollars.
By comparison, PSAC’s previous price forecast for 2017 saw AECO at C$2.50/mcf, WTI at US$52/bbl, and the loonie averaging 76 cents against the greenback.
“It’s the nature of this sector and this industry—we can bounce back fast. It was a very pleasant surprise,” Salkeld told reporters. “There’s confidence that the trend will continue on the steady upward, and the bottlenecks will be people and equipment.”
‘Going to beat that case:’ Wall promises carbon tax court battle
April 28, 2017 – 12:26am
CHRIS VANDENBREEKEL/650 CKOM
Premier Brad Wall told a crowd of supporters the province would “beat” a federal carbon tax in court during a speech in Saskatoon on April 27, 2017.
Premier Brad Wall made his clearest indication yet he’ll challenge a federal carbon tax in court during a speech Thursday night.
Speaking at the premier’s dinner in Saskatoon, a fundraiser for the Saskatchewan Party, Wall rallied supporters around a carbon tax battle.
“We will be the only province in Canada without a carbon tax,” he told the Prairieland Park crowd. “Because we’re going to beat that case in court.”
Wall has hinted at legal action in the past, but had a clearer picture in his latest remarks.
Speaking to reporters afterwards, the SaskParty leader expressed confidence in the province’s case.
“On an initial analysis our justice lawyers believe there’s a reasonable chance for success,” he said.
He also pointed to the Manitoba government’s recent pledge to not sign on to a carbon tax system, questioning how the federal Liberals would move forward.
“How does a national government design a tax that will only affect two of the units of the federation?” he asked.
“We’re optimistic about winning in court, and we will take it to court.”
SEPARATE SCHOOL FUNDING
Wall also said more details are coming next week on the province’s response to a court decision affecting the province’s separate school systems.
The Court of Queen’s Bench ruling determined provincial funding for non-Catholic students attending a Catholic board school was in violation of the Charter of Rights and Freedoms.
“We’re pretty confident we can make sure this ruling doesn’t stand,” Wall told reporters.
He indicated the Christ the Teacher School Division (CTSD), who lost the 10-year court battle, was considering an appeal.
Wall also warned the decision could have an impact on student bases for Buddhist, Muslim and Lutheran schools across the province.
The premier mentioned Bill 63 as well, saying the reason it was being introduced was to prevent similar court battles.
“Every once in a while there might be cause for the government to intervene and say ‘no, we’re not sure if that’s in the interest of students,'” he said.
But he insisted the bill would still allow school boards to operate independently and make their own decisions.
“We’re going to provide them the latitude they need to do their work and represent their rate-payers and provide good education,” he said. “Because by-and-large that’s what they do.”
The premier took time during his speech to comment on the current trade relationship with the United States.
He suggested a trade war would hurt Americans more than Canadians, given several states have a trade surplus with provinces like Saskatchewan.
“We’re not China, we’re not Mexico when it comes to trade balance,” he said. “There is more to lose for them than there is for us.”
Wall also complimented Prime Minister Justin Trudeau for his handling of the softwood lumber and dairy products dispute.
“I think the prime minister’s approach so far has been on point,” he said, adding Saskatchewan would support his efforts.
“Whatever we can do to help Canada, Saskatchewan is there.”
Crescent Point continues new waterflood tech deployment in Williston, Shaunavon plays
By Deborah Jaremko
April 27, 2017, 7:13 a.m.
Image: Crescent Point
Crescent Point Energy increased deployment of its new waterflood injection control device (ICD) during the first quarter across operations in the Williston Basin and Shaunavon resource plays, the company said on Thursday.
Following the success of an initial pilot in late 2016, over 35 ICD systems have now been installed, with additional installations planned after break-up.
Crescent Point says the system has demonstrated encouraging results, with three times the amount of water injectivity compared to prior technology.
The company it expects increased water injectivity and enhanced distribution of injected water will help manage reservoir pressure and may further reduce decline rates and increase estimated ultimate recoveries.
Crescent Point achieved average production of 173,329 boe/d in the first quarter, ahead of guidance of 170,000 boe/d. This is an increase of eight percent compared to third quarter 2016, the company says, when its capital program was accelerated as a result of the success of new play development.
Crescent Point recorded net income of $119.4 for the first quarter of 2017, compared to an $87.5 million net loss for the first quarter of last year.
PotashCorp says expected sector recovery has already begun
April 27, 2017
One of the storage facilities at PotashCorp.’s Rocanville mine, one of Saskatchewan’s lowest-cost potash mines. (Image courtesy of Potash Corp.)
Canada’s Potash Corp. of Saskatchewan (TSX, NYSE:POT), the world’s largest producer of the fertilizer by capacity, reported Thursday a higher-than-expected quarterly profit thanks lower costs and increased sales volumes.
The Saskatoon, Saskatchewan-based company expects potash demand to remain strong this year, adding that its 2017 earnings outlook has improved since January on the back of recovering prices, which are finally helping producers turn around their fortunes.
PotashCorp had $149 million of net income in the first quarter, equal to 18 cents per share. That’s double the $75 million or nine cents per share in the same quarter last year.
“Potash market fundamentals continued to improve in the first quarter, creating a supportive earnings environment,” PotashCorp President and Chief Executive Officer, Jochen Tilk, said in the statement.
PotashCorp, which reports its results in US dollars, now expects between 45 and 65 cents per share of profit this year, or roughly 25% better than its previous estimate.
Despite the positive tone of today’s release, the fertilizer producer noted first quarter revenue was down 8% at $1.11 billion, but that was offset by higher margins for potash.
The firm kept its forecast for worldwide industry potash shipments of as much as 64 million tonnes for 2017, up from 60 million in 2016. But it increased expectations for the Latin American market and noted that China, the largest buyer, is now seen consuming as much as 15.5 million tonnes.
The company, which expected to complete its $12.8 billion merger with Agrium in mid-2017, was not that optimistic for its two types of crop nutrients as it said conditions remain difficult, with first-quarter sales volumes, prices and margins weaker for both nitrogen and phosphate fertilizers.
A global oversupply of the fertilizer has caused prices to tumble in the last decade, leading to layoffs, mine closures and reduced capacity across the sector as the downward trend became more dramatic in the past two years.
Investors reacted positively to the news, with the stock up 2.8% to Cdn$23.29 in Toronto at 9:37AM EDT, and trading 3% higher in New York to $17.15 at 9:50AM local time.
Thu Apr 27, 2017 | 9:33am EDT
Potash Corp raises outlook, notches higher profit as sales climb
By Swetha Gopinath and Rod Nickel
Canada’s Potash Corp of Saskatchewan reported a bigger-than-expected rise in quarterly profit on Thursday and raised its full-year outlook, citing lower costs and increased sales volumes.
Shares of the Saskatoon, Saskatchewan-based fertilizer producer rose 1.6 percent in early New York trading, touching a three-week high.
Revenue was lower in the first quarter due to weaker prices year over year, but it still exceeded Wall Street’s expectations.
Potash prices have rebounded modestly since last year but remain low due to bloated global capacity and weakening farm incomes. Even so, Potash Corp forecast global potash demand of 61 million to 64 million tonnes this year, exceeding last year’s 60 million tonnes.
Potash said it expected full-year earnings of 45 cents to 65 cents per share, up from its prior forecast of 35 cents to 55 cents.
The company raised the lower end of its estimate for 2017 potash sales to 8.9 million tonnes from 8.7 million tonnes, keeping the upper end at 9.4 million tonnes.
“We expect improved consumption trends and nutrient affordability in key markets to support potash demand and our results through the remainder of 2017,” Chief Executive Officer Jochen Tilk said in a statement.
Bernstein analyst Jonas Oxgaard said earnings benefited from a lower tax rate as well as stronger sales in China, India and North America.
“(It) suggests the potash price recovery is in strong force,” he said in a note.
But Citi analyst P.J. Juvekar said it was too early to envision a major recovery as rivals bring on new potash mines through next year.
Potash has nearly finished expanding its low-cost Rocanville, Saskatchewan, mine, which it says will help it weather weak crop nutrient prices.
In September, Potash and rival Agrium Inc announced plans to merge. The deal would combine Potash’s fertilizer capacity, the world’s largest, and Agrium’s farm retail network, North America’s biggest.
Tilk said the companies were working through the regulatory process and still expect the deal to close in mid-2017.
Net earnings nearly doubled to $149 million, or 18 cents per share, in the quarter, beating the analysts’ average estimate of 11 cents.
Revenue fell 8 percent to $1.11 billion, despite a 13 percent rise in potash sales volumes.
Analysts on average had expected $1.06 billion, according to Thomson Reuters I/B/E/S. (Reporting by Swetha Gopinath in Bangalore and Rod Nickel in Winnipeg, Manitoba; Editing by Sriraj Kalluvila and Lisa Von Ahn)
Potash Market Rebound in ‘Full Force’ as Global Demand Improves
April 27, 2017, 4:12 AM CST April 27, 2017, 7:36 AM CST
- Lower prices, inventories led to more buying, company says
- S. Corn Belt spot prices have gained 23% since July low
Potash prices are recovering after a decade of weakness, lifting the prospects of a turnaround in fortunes for fertilizer companies following a slump in farm spending.
Potash Corp. of Saskatchewan Inc., the world’s second-biggest producer, boosted its full-year earnings forecast on Thursday and said strong demand will continue for the rest of the year as North American farmers seek to replenish soil nutrients after record harvests. Chinese potash shipments are expected to increased in 2017, it added.
The Canadian company’s performance suggests the potash recovery is in “full force,” Sanford C. Bernstein & Co. analyst Jonas Oxgaard said in a note. Canpotex — the joint venture handling overseas sales for Potash Corp. and its two largest North American peers, Agrium Inc. and Mosaic Co. — has kept the market tight and driven up prices, while volumes have exceeded expectations in North America and export markets, a positive sign for the companies, he said.
“I think we’ve seen the turnaround already,” Oxgaard said by phone. “We expect continued price increases in potash.”
Potash Corp. maintained its forecast for worldwide industry potash shipments of as much as 64 million metric tons this year, up from 60 million in 2016. It raised its prediction for Latin American shipments. China, the largest market, is now seen consuming as much as 15.5 million tons.
Potash prices have been in a downward trend for a decade due to a combination of excess mining capacity coming on line and weak demand as lower crop prices undermined farmer spending power. While crop prices are still lackluster, Potash Corp. has been reducing its production capacity to help balance the market.
In the U.S. Corn Belt, potash spot prices have gained 23 percent since dropping to a nine-year low in July, according to Green Markets data. Producers are forecasting global demand will show mild growth this year, despite farm incomes remaining near multiyear lows, Bloomberg Intelligence analyst Jason Miner said in a March 16 report.
Saskatoon, Saskatchewan-based Potash Corp., which expected to complete its $12.8 billion merger with Agrium in mid-2017, forecast 2017 earnings of 45 cents to 65 cents a share, up from a January projection of 35 cents to 55 cents.
The shares climbed 2.2 percent to C$23.15 at 9:34 a.m. in Toronto. Agrium rose 1.8 percent to C$128.68.
For the first quarter, net income rose to 18 cents a share from 9 cents. Profit excluding one-time items was 18 cents a share, compared with the 11-cent average of 15 estimates compiled by Bloomberg. Sales were also better than expected, dropping 8 percent to $1.11 billion, compared with the $1 billion average estimate.
Bernstein’s Oxgaard said the main surprise in the report was the tax rate paid by Potash Corp. — about 8 percent, far less than consensus estimate of 20 percent. The company said it’s effective income tax rate is anticipated to fall to as little as 2 percent this year, due to changes in provincial taxation.
In China, demand will be driven by attractive crop prices and full year shipments will be in the range of 14.5 million to 15.5 million metric tons, above last year’s 14 million tons.
“We expect improved consumption trends and nutrient affordability in key markets to support potash demand and our results through the remainder of 2017,” Chief Executive Officer Jochen Tilk said in his company’s earnings statement.
In September, Potash Corp. and Agrium agreed to a all-share merger that will create the world’s largest crop-nutrient supplier. The Canadian companies expect to generate a cost savings of $500 million a year following the completion of the deal in mid-2017.
Sask. economic ‘bright spot’ hit with new tariff
April 25, 2017 – 4:51pmUpdated: April 26, 2017 – 6:45am
Forestry remains a key industry in northern Saskatchewan, where it is the second most important economic driver.
Quebec and B.C. will be hit the hardest by new duties imposed on the Canadian softwood lumber bound for the U.S. – but they won’t be the only ones.
On Tuesday, the Trump administration announced its first batch of duties on imported wood in the neighbourhood of 20 per cent.
Forestry remains an important industry in northern Saskatchewan, where it is a key economic driver.
“We export about $550-million worth of forest products, largely into the United States,” said Chris Dekker, president and CEO of Saskatchewan Trade Export Partnership.
“Any trade barrier to what we produce and export abroad is going to be concerning, not only to the economy, but to the industry itself.”
The new tariffs come during a positive period for the Saskatchewan forestry industry. Dekker called it a “bright spot,” noting an “upsurge of late” at a time when other parts of the provincial economy have faltered.
“There’s about 13,000 direct and indirect jobs across the industry and our sales, exports in that industry have been climbing, counter to other exports where commodity prices have been decreasing,” he said.
But Dekker also pointed out only a minority portion of Saskatchewan’s annual forest product exports to the U.S. are in softwood lumber.
“There’s a lot of pulp and a lot of oriented strand board. Only about $84 million of exports is in the softwood lumber area,” he said.
Over the short term, Dekker doesn’t expect these new tariffs to have a serious impact in this province. As for the long term, he’s waiting to see.
“They have announced that this new duty is as a result of an investigation that has been ongoing. Now, there is a second and parallel anti-dumping investigation that is also going on,” he said.
“That could come out this summer and the duty rate that could apply as a result of that investigation could be established in the fall.”
The Canadian government condemned Tuesday’s announcement. In a statement, the federal government called the move unfair, baseless, unfounded and it promised help for its industry.
Natural Resources Minister Jim Carr said the action hurts people in both countries — not only Canada’s lumber sector that employs hundreds of thousands, but also American home-buyers, who must now pay more for wood.
The buildup to this new lumber war began with the 2015 expiry of a decade-old agreement. It stems from a fundamental, long-standing dispute over whether Canadian companies’ access to public land constitutes a subsidy.
Duties will be collected retroactively, too — the U.S. says it will gather them for the previous 90 days. Industry analysts have been expecting the combined duties — Monday’s and the upcoming ones — to range between 30 and 40 per cent.
Carrier Forest Products, a medium-sized company operating in Saskatchewan, will be among those forced to pay retroactive duties.
According to the company, it will cost Carrier millions of dollars and could mean job losses.