The principal reason for the earnings shortfall is the often reported wet weather conditions extending through September which have hampered Canadian oilfield activity during the third quarter. The province of Alberta has received approximately 23% more rainfall this year than last year. Also contributing to reduced earnings is the close to 6% strengthening of the Canadian dollar versus the US dollar during the third quarter. This serves to reduce the Canadian dollar equivalent of the income earned by our foreign operations and also to generate foreign exchange losses on certain US dollar denominated assets.
The above items were offset somewhat by a $2.5 million gain on sale of equity investments.
Demand for the Corporation's services in the Canadian market is very strong and this is reflected in improved pricing in the fourth quarter. The supply and demand fundamentals of the oilfield services business, which hinge on commodity prices, appear to be very sound with all indications pointing to a strong fourth quarter and a busy 2005.
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