The new policy will not impair our decision to proceed with continuing evaluation of our oil sands acreage or with our Algar ("Pod Two") project, subject to regulatory approval and completion of satisfactory financing arrangements.
We do note that the Government of Alberta intends to retain the ring fence concept, details of which will be more clearly defined. Connacher heartily endorses this approach, as it will assist companies that have longer-term reinvestment intentions. We also note that there is a plan to establish a bitumen valuation methodology, which we also welcome and in which process we intend to participate, if only to ensure there is not a perverse application of royalty rates, emanating from the level of West Texas Intermediate ("WTI"), to bitumen production during periods of high differentials which can arise due to seasonal and cyclical factors in the marketplace. Our efforts will be to ensure this is not an application of improperly high royalties at a time of lower actual realizations for bitumen production. Connacher continues to believe reliance on market-driven forces is a more realistic basis for determining fair value, rather than relying upon values assigned by administrative fiat.
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