P RESENTATION T O T HE C ALGARY S OCIETY O F P ETROLEUM E NGINEERS S TATE O WNED E NTERPRISES (SOE S ) IN THE C ANADIAN E NERGY I NDUSTRY M ARCH , 12 2013 P RESENTED B Y : L ESLIE K ENDE , P.E NG , MBA M ANAGING D IRECTOR , A CQUISITIONS & D IVESTITURES ALTACORP CAPITAL INC. | MARCH 2013 |
I NTRODUCTION � AltaCorp Capital Inc. (“AltaCorp”) appreciates the opportunity to present to the Calgary Society of Petroleum Engineers about State Owned Enterprises (SOEs) in the Canadian energy industry � This presentation will discuss the following: I. AltaCorp Capital Overview II. State Owned Enterprises (SOEs) in the Canadian Energy Industry III. Near / Medium / Longer Term Considerations IV. Australia’s Foreign Investment Policy V. Discussion and Summary State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 1
A LTA C ORP C APITAL O VERVIEW F ULL S PECTRUM , A LBERTA - BASED I NVESTMENT B ANK • • • AltaCorp provides full service financial and advisory AltaCorp has formed a strategic AltaCorp has formed a strategic • • services to corporations in any stage of the life cycle alliance with ATB Financial to provide alliance with ATB Financial to provide • focused on the key drivers of the Western Canadian corporate and institutional clients the corporate and institutional clients the economy and overlapping subsectors of Energy, full spectrum of advisory, equity full spectrum of advisory, equity Agri-Industry and Energy Infrastructure & capital markets and financial services capital markets and financial services Industrials Start-up ATB is Alberta’s single largest and ATB is Alberta’s single largest and • • Private Equity • AltaCorp has over 50 employees between oldest full-service financial institution oldest full-service financial institution Financing Calgary (head office) and Toronto with assets over $26.5 billion and with assets over $26.5 billion and Corporate Follow-on 5,000 Associates across the province 5,000 Associates across the province M&A / Private Acquisitions & Equity ATB has a 65 year history providing ATB has a 65 year history providing • • Divestitures Personal, Business and Agricultural Personal, Business and Agricultural Financial Services, Investor Services Financial Services, Investor Services Grey Market Trading and Corporate Financial Services to and Corporate Financial Services to Global ‘Private Liquidity’ more than 670,000 Albertans more than 670,000 Albertans Institutional Sales & Trading ATB owns 19.9% of AltaCorp; the ATB owns 19.9% of AltaCorp; the • • remaining 80.1% is owned by remaining 80.1% is owned by High Yield AltaCorp employees AltaCorp employees IPO / RTO Debt Institutional Equity Research State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 2
A LTA C ORP C APITAL O VERVIEW F IRM -W IDE E XPERTISE Investment Banking & A&D Equity Research George Gosbee Chairman & Chief Executive Officer Gurdeep Gill , CFA Leslie Kende , MBA, P.Eng. Dirk Lever , CA Jeremy McCrea , CFA Managing Director Managing Director Managing Director Director Paul Sarachman , CFA, FCSI E&P A&D E&P Analyst E&P Analyst President & Managing Director Capital Markets Lee Girardo , CFA Matt Colucci Don Rawson , MBA Chris Cox Managing Director Managing Director Managing Director E&P and Oil Sands Analyst E&P Oilfield Services E&P Analyst Jason Sawatzky Bill Murray , CFA, MBA Jim Lee , P.Geol. Dana Benner , CFA Director Managing Director Director, A&D Managing Director Oilfield Services Analyst Agri-Industry/Energy Oilfield Services Analyst Infrastructure & Industrials Patrick Stables Associates: Associate Ashley Connolly Cliff Johnson John Chu , CFA, MBA Tanya Finney Director, A&D Jesse Hardage Managing Director Bradley MacDonald Associate Agriculture Analyst Thomas Matthews, P. Eng. Greg Smiddy George Ulybyshev Senior Analyst Kelly Wylie Jennifer Wood Associate, A&D Brodie Woods Yi Huang Shereen Zahawi, MBA Analyst Jared Coulson Sales & Trading Debt Capital Markets Shauna Campbell, CA Chief Financial Officer Kerk Hilton Brent Norrey Jason Caldarelli, MBA Managing Director Managing Director Managing Director Govind Achyuthan , CFA Institutional Sales Institutional Trading Debt Capital Markets Chief Compliance Officer Brent Taylor , CFA Tate Pinder , MBA Rita Sivadas Managing Director Managing Director Operations Manager Institutional Sales Institutional Trading Adam Carlson , MBA Cheryl Polan Managing Director Managing Director Institutional Sales Institutional Trading over 50 professionals Jamie Riff , MBA, P. Eng. Jon Varley Director Director across offices in Institutional Sales Institutional Trading Calgary and Toronto State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 3
A LTA C ORP C APITAL O VERVIEW A&D P ROCESS - S ITUATION M AP State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 4
S TATE O WNED E NTERPRISES (SOE S ) IN THE C ANADIAN E NERGY I NDUSTRY SOE S I N C ANADA - T HE G ROUND R ULES � State Owned Enterprise takeovers will be reviewed at $330mm or greater � Private sector foreign bidders will be reviewed at $1,000mm or greater � SOEs are barred from further takeovers in Canada’s oilsands (Other than exceptional circumstances) � “Property on which only exploration activities are conducted is not treated as the acquisition of an interest in a “business”, and is not subject to either notification or review (1) � “Net benefits to assessed on: Where to export • Where to process • Participation of Canadians in its operations in Canada and elsewhere • Impact of the investment on the productivity and industrial efficiency in Canada • Support of on-going innovation and R&D in Canada • Appropriate level of capex to maintain the Canadian business in a globally • competitive position (1) (1) Source: http://www.ic.gc.ca/eic/site/ica-lic.nsf/eng/lk00064.html#state-owned State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 5
S TATE O WNED E NTERPRISES (SOE S ) IN THE C ANADIAN E NERGY I NDUSTRY C HINA ’ S O VERSEAS I NVESTMENT China’s Global Reach China’s Global Reach Source: www.heritage.org/research/projects/china-investment-tracker-interactive-map � China’s overseas direct investment has grown dramatically since 2005, now totalling over $600Bn � 2012 estimated at > $120Bn State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 6
S TATE O WNED E NTERPRISES (SOE S ) IN THE C ANADIAN E NERGY I NDUSTRY C HINA ’ S O VERSEAS I NVESTMENT (C ONT ’ D ) China’s Global Reach China’s Global Reach Source: www.heritage.org/research/projects/china-investment-tracker-interactive-map � Of China’s overseas direct investment nearly ½ is in energy � In this backdrop recent activity in Canada was inevitable � Proportionally, energy investment in Canada and Australia are of similar size State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 7
S TATE O WNED E NTERPRISES (SOE S ) IN THE C ANADIAN E NERGY I NDUSTRY F ORECASTED W ORLD E NERGY D EMANDS Source: ExxonMobil, 2012 The Outlook for Energy: A view to 2040 � OECD energy forecast demand is relatively flat � Non-OECD grows by > 100% � In particular, North American demand is totally flat State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 8
S TATE O WNED E NTERPRISES (SOE S ) IN THE C ANADIAN E NERGY I NDUSTRY G LOBAL E NERGY D EMAND BY E NERGY T YPE Source: ExxonMobil, 2012 The Outlook for Energy: A view to 2040 � Large projected growth in natural gas, investment is being positioned now State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 9
S TATE O WNED E NTERPRISES (SOE S ) IN THE C ANADIAN E NERGY I NDUSTRY P ROSPERITY AND P OPULATION E FFECTS Residential Energy Use / Residential Energy Use / Households By Region in 2040 Households By Region in 2040 Household Household Source: ExxonMobil, 2012 The Outlook for Energy: A view to 2040 � Growing population and prosperity is part of the forecast � Expected ongoing gains in energy efficiency temper future energy requirements State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 10
S TATE O WNED E NTERPRISES (SOE S ) IN THE C ANADIAN E NERGY I NDUSTRY I NDUSTRIAL F UEL G ROWTH This is the market! Source: ExxonMobil, 2012 The Outlook for Energy: A view to 2040 � Oil +25% driven by chemical feedstock � Gas +50% primarily on industrial demand State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 11
S TATE O WNED E NTERPRISES (SOE S ) IN THE C ANADIAN E NERGY I NDUSTRY G LOBAL O IL S UPPLY Global Oil Production by Discovery Date Global Oil Production by Discovery Date � Modest growth in the oil discovery, new production rates suggest that there will be few major surprises in oil resource discovery � Production growth should be a function of extraction cost vs. oil price (i.e. oilsands) State Owned Enterprises (SOEs) in the Canadian Energy Industry ALTACORP CAPITAL INC. | MARCH 2013| PG 12
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