Province updates equity figures

Rob Antle
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N.L. projects profits from equity stakes to reach up to $2B

Newfoundland and Labrador is now forecasting nearly $2 billion in profits from its series of recent equity acquisitions in the offshore oilpatch.

Officials with Nalcor Energy provided the figure at a technical briefing for reporters on the Hibernia South deal this week.

Newfoundland and Labrador is now forecasting nearly $2 billion in profits from its series of recent equity acquisitions in the offshore oilpatch.

Officials with Nalcor Energy provided the figure at a technical briefing for reporters on the Hibernia South deal this week.

Since 2007, the province has announced plans to spend roughly $170 million to acquire pieces of three pending oil projects.

Those projects include:

a 4.9 per cent stake of Hebron for $110 million;

a five per cent piece of the White Rose expansion fields, including North Amethyst, for an estimated $30 million (subject to change based on updated reservoir information);

a 10 per cent interest in nearly all of Hibernia South for $30 million;

In addition to those buy-in costs, Newfoundland and Labrador - through Crown-owned Nalcor Energy - will pay its share of development expenses.

But even after all its expenses are accounted for, Nalcor expects to garner nearly $2 billion in profits from its equity stakes over the life of the projects.

Nalcor now owns roughly 50 million barrels of oil.

That $2 billion in projected equity profits are some of the drops in the overall bucket of expected revenues for the province.

Total cash inflows are targeted to be in the range of $39 billion for the three new projects.

The vast majority of that cash will flow to the provincial treasury through royalty payments.

Corporate taxes also make up a relatively small part of the mix.

All those revenue projections are based on revised forecasts by PIRA Energy Group.

PIRA now expects long-term oil prices in the US$80 to US$85 per barrel range.

Forecasts are currently more optimistic than they were even a year ago.

Three factors have since changed for the better - lower capital costs, a more favourable exchange rate and higher oil price expectations.

Last year, the province projected $10 billion in revenues from Hibernia South.

Now it expects the number to come in at $13 billion.

rantle@thetelegram.com

Organizations: Nalcor Energy, PIRA Energy Group

Geographic location: Hibernia South, Newfoundland and Labrador, Hebron White Rose

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