New Democratic Win in Alberta Sends Energy Shares Sliding
by Rebecca PentyRobert Tuttle
12:31 AM EDT
May 6, 2015
(Bloomberg) -- Canadian energy stocks from Suncor Energy Inc. to Enbridge Inc. tumbled after the New Democratic Party swept to power in Alberta, pledging to raise corporate taxes in an industry already buffeted by low oil prices and stalled pipelines.
The NDP, led by Rachel Notley, ended a 44-year Progressive Conservative dynasty by winning a majority of districts in elections Tuesday, according to Elections Alberta. The NDP promises to boost corporate taxes, review the government’s take of energy revenue, scale back advocacy for pipelines and phase out coal power more quickly.
“It’s completely devastating,” for energy companies and investors, Rafi Tahmazian, who helps manage C$1 billion ($831 million) in energy funds at Canoe Financial LP in Calgary, said on Tuesday. “The perception from the market based on their comments is they’re extremely dangerous.”
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The election results may stall investment in the oil patch, which is counting on more than C$500 billion in spending over the next three decades in the oil sands alone.
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“The NDP’s stance on pipelines is clearly to remove government support of pipelines and be less of a cheerleader,” John Stephenson, chief executive officer of Stephenson & Co. said in a phone interview from Toronto. His firm manages about C$50 million.
Energy producers in Alberta, the heart of the Canadian industry, are cutting jobs, reducing drilling and shelving billions of dollars of new investment because of the oil price collapse. While U.S. crude’s rise to around $60 a barrel from a six-year low in March has injected fresh optimism into the industry, executives are preparing for a slow recovery to levels that would make new projects profitable in the oil sands, the world’s third-largest reserves.
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http://www.bloomberg.com/news/articles/2015-05-06/alberta-election-result-latest-blow-to-oil-industry
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