Online extras: naturalresourcesmagazine.com NR9

NEWFOUNDLAND & LABRADOR

NOVA SCOTIA NEW BRUNSWICK

2015-2016 fiscal year

$572.34 million2016-2017 fiscal year

(estimated)

$484.9 million

2015-2016 fiscal year

$19.4 million2016-2017 fiscal year

(estimated)

$10.5 million

2015-2016 fiscal year

$450,0002016-2017 fiscal year

(estimated)

$550,000

ANACONDA MINING INC.’S Pine Cove gold mine has enough reserves to produce for another 2.5 years. Yet Anaconda CEO Dustin Angelo doesn’t seem worried that the Toronto-based junior miner’s lone producing asset doesn’t have long to live.

“We’re optimistic about extending the life of the project,” Angelo says.

The project Angelo is talking about is called Point Rousse and it includes more than the Pine Cove open pit mine the company is currently exploiting (Pine Cove produced over 11,800 ounces of gold in nine months in 2016). Thanks to acquisitions the company has made since 2012, the project encompasses 6,300 hectares and Anaconda controls several gold deposits close to the Pine Cove mine and processing mill. That’s why Angelo sounds so confident the company will be producing gold in northcentral Newfoundland for a while. “The mill and the entire infrastructure in the area is an asset that can be used for a long period of time,” Angelo says.

In fact, Anaconda’s goal is to produce gold from Point Rousse for 10 years. It

also closed a deal in 2016 that shows it is looking beyond Point Rousse. In February Anaconda acquired the Viking and Kramer gold properties from Spruce Ridge Resources Ltd. They are located 180 kilometres by road and 100 kilometres by barge from the Pine Cove site.

Angelo says the two properties are the first it’s acquired beyond the cozy confines of the Point Rousse project area. The company is producing approximately 15,000 ounces of gold annually there, but is looking to grow production, and it needs many promising deposits to make that happen. Its initial goal is to produce 30,000 ounces annually.

As Atlantic Canada’s only gold producer as this magazine went to

press, Anaconda benefits from a steady stream of cash. That gives the company an advantage over many juniors who don’t have a mine or mines in production and must issue more shares or look for investors to fund their work – not an easy sell as capital for exploration-focused juniors

has all but dried up in the equity markets.

Angelo says the cash from Pine Cove gives Anaconda an opportunity to be aggressive during a time when most junior miners are struggling to keep their doors open. “We continue to look at growth opportunities and look at the market and see if we can add projects we can bring under the tent of Anaconda Mining,” Angelo says.

IT’S A CASE of diminishing returns for Atlantic Canada’s petroleum producing provinces when it comes to oil and gas royalties.

The budgets released this spring by the governments of Newfoundland and Labrador and Nova Scotia show each province is expecting to reap fewer financial rewards from the extraction of fossil fuels than they have in recent years. And while New Brunswick is projecting

a modest increase in petroleum royalties for the 2016-2017 fiscal year compared to what it took in during 2015-2016, that is an estimate and nothing more.

What’s to blame for the declining royalties? Well, the low price of oil is the culprit in Newfoundland and Labrador’s case; and declining natural gas production in Nova Scotia’s case. Here is a tally of petroleum royalty revenues each province expects to rake in.

Anaconda eyes opportunitiesJunior miner has one producing asset in Newfoundland, but it’s not stopping there

NosedivePetroleum royalties aren’t what they used to be in Atlantic Canada

Developments

“ We continue to look at growth opportunities and look at the market and see if we can add projects we can bring under the tent of Anaconda Mining.”

Dustin Angelo, CEO, Anaconda Mining Inc.

Source: Governments of Newfoundland and Labrador, Nova Scotia and New Brunswick budget main estimates

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Natural Resources Magazine / Vol. 18 No. 3 2016NR10

IT’S SAFE TO SAY Blair MacDougall has never been involved in a project quite like this.

This spring MacDougall’s Waterford Energy Services Inc., a St. John’s-based energy services firm specializing in offshore oil work, teamed up with Bedford, Nova Scotia’s AeroVision Canada Inc. to provide disaster relief to earthquake ravaged Ecuador.

On April 16, a 7.8 magnitude earthquake hit the northern coast of the South American country, killing more than 600 people and leaving thousands in need of assistance. MacDougall, who is the senior consultant for Waterford Energy Services, says when the earthquake happened, AeroVision Canada CEO Trevor Bergmann got in contact with the Ecuador embassy and GlobalMedic out of Toronto to see how he could help with the relief effort.

Bergmann was told there was a need for unmanned drones that

could take high resolution photos of the damaged area, which is what AeroVision specializes in. There was also a need for engineers, and Waterford had one (Braydon Berggren) who was willing to go to Ecuador. “There was a liquefied natural gas facility they were really worried about and they wanted someone to take a look at it,” MacDougall says. “We’ve collaborated before with AeroVision

to do equipment support in the oil and gas industry. So we followed their lead and made things happen.”

The Waterford engineer and two AeroVision drone pilots were in Ecuador for 10 days. MacDougall says much of that work involved piloting the drones into regions of the country that were hit by the earthquake as well as visiting areas and checking for structural damage its infrastructure may have sustained. He says the trio regularly worked 12-hour days while they were there.

While disaster relief isn’t work Waterford commonly does, MacDougall says he doesn’t think it will be the last such project for the company. He added that after working in countries all over the world helping extract hydrocarbons out of the ground, it was satisfying to help a country and its people in a time of need.

“You want to do things for the right reasons and the right reasons are not always about dollars and cents,” MacDougall says. “We’ve worked in countries like this all over the world. It’s good to put something in instead of taking something out.”

Developments

Pitching inEnergy services company helps with Ecuador earthquake relief effort

Q1 2014

Q1 2015

Q1 2016

253mmcf/d

182mmcf/d

67mmcf/d

Deep Panuke’s freefallProduction at Encana’s Nova Scotia offshore natural gas field keeps going in the wrong direction

DURING A CONFERENCE CALL announcing its 2016 first quarter results, Encana COO Mike McAllister announced that its “well productivity is strong across the board.”

But that statement doesn’t hold true for the Calgary-based company’s lone producing asset in Nova Scotia – the Deep Panuke offshore natural gas field. The field began producing in 2013. However, almost three years later the project already appears to be on its last legs. In February of 2015 the company cut its reserves for the field by 200 billion cubic feet or 50 per cent. Encana also said at the time it was expecting to produce a mere 80 billion bcf more from the field.

The company has also turned Deep

Panuke into a seasonal operation, producing only during the December to March period when natural gas fetches the highest prices in the Atlantic Canada and northeastern U.S. markets where the field’s gas is sent via the Maritimes & Northeast Pipeline.

How much longer Deep Panuke will even be producing seasonally is an open question. In information filed to disclose its first quarter results, natural gas produced from Deep Panuke was down 37 per cent year over year. There has also been speculation that Encana will shut down Deep Panuke permanently

given how low production has sunk (the company didn’t mention the field during the conference call).

Mike McAllister, COO, Encana

Source: Encana annual reportsmmcf/d = million cubic feet per day

Unhappy New YearFirst quarter natural gas production at Deep Panuke has gone down considerably in a short period.

Photo courtesy Braydon Berggren

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Online extras: naturalresourcesmagazine.com NR11

Pay DirtStatoil strikes oil in Newfoundland’s Flemish Pass once again

STATOIL CANADA LTD. has made two new discoveries in Newfoundland and Labrador’s Flemish Pass Basin.

The Norwegian-based company announced the finds in early June as it completed a 19-month drill-ing program in the Flemish Pass, which is located 500 kilometres east of St. John’s. Statoil drilled a total of six exploration wells and three ap-praisal wells during the program, which began in November of 2014. Four exploration wells were drilled in “close vicinity” of its 2013 Bay du Nord discovery in the Flemish Pass, three appraisal wells were drilled on the discovery, as well as two explora-tion wells in areas outside the Bay du Nord discovery.

That drilling led to the latest dis-coveries by Statoil in the Bay du Nord area, which it has named the Bay de Verde and Baccalieu prospects. But the company didn’t say how much oil it thinks it’s discovered. What’s clear is the two discoveries haven’t increased the amount of oil the company found in and around Bay du Nord. When the company an-nounced the Bay du Nord discovery in 2013 it said it contained between 300-600 million barrels of recover-able oil. Statoil says the drilling done during this program has confirmed the oil is within that 300-600 million barrel volume range, but potentially towards the lower end of that range.

The question industry observers are likely asking now is if Statoil will develop the discoveries. Ørjan Birke-land, Statoil Canada’s vice-president of exploration, says the price of oil is just one of the factors it will consider in making that decision. “That’s an important factor, but it’s a complex picture,” Birkeland says. Birkeland says the costs of developing the discoveries, including what kind of concept would be used to produce the oil, the fiscal terms required to develop them, and other factors will also be considered as Statoil decides what to do with its Flemish Pass oil finds. |nrm

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One of our own.For Mark de Jonge, it’s all about engineered precisions. Share your Atlantic pride with your Halifax neighbor as he kayaks for gold in Rio this summer.

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Natural Resources Magazine / Vol. 18 No. 3 2016NR12

Saint John City Council will move ahead with attempting to repeal the 11-year-old CANAPORT LNG tax deal. Under the terms of the 2005 deal, property taxes on the LNG export terminal that’s jointly owned by Repsol Canada and Irving Oil Ltd.

are fixed at $500,000 annually until 2031. The City argues that’s too sweet a deal for the partners and under normal circumstances the $299-million property would generate approximately $8 million annually for the municipality. A possible repeal could take time, however. City manager Jeff Trail advised council that if Irving Oil appeals the assessment it could take years to resolve. “This is a distinct possibility given the uniqueness and complexity of the property in question,” Trail said.

More exploration property is up for grabs in offshore Newfoundland. THE CANADA-NEWFOUNDLAND AND LABRADOR OFFSHORE PETROLEUM BOARD announced two calls for bids this spring. One has 13 parcels and a

total of 2,949,252 hectares on the block, located in the Eastern Newfoundland region where the Flemish Pass and Orphan Basin are located. The other has three parcels located in the Jeanne d’Arc Basin and consists of 354,552 hectares. Companies have until noon (Newfound-land and Labrador time) on Nov. 6 to submit bids. If these two calls for bids net anywhere near the $1.2 billion the oil and gas industry committed to snap up seven offshore parcels in 2015, the C-NLOPB will likely be pleased.

St. John’s-based ALTIUS MINERALS CORPORATION was wheeling and dealing again in May, closing a copper purchase agreement related to Brazil’s Chapada copper-gold mine. Altius paid US$60 million for the privilege of acquiring 3.7 per cent of the payable copper produced at the mine at 30 per cent of the market price. The deal gives the company royalty interests in a host of commodi-ties – coal, potash, copper, zinc, nickel, gold, silver and cobalt – and president and CEO Brian Dalton is happy about that. “Completion of the Chapada copper purchase agree-ment provides Altius with a long-life revenue source while improving its commodity diversity balance,” Dalton said in a May press release. |nrm

Index

The oil and gas industry depends upon exploration and production – and McInnes Cooper’s Energy and Natural Rescources Group is helping make that happen.

We represent companies at all levels of offshore work, from operators to contractors, and have experience with every component of upstream development – interest ownership, regulatory exploration, project development and operations.

For legal advice in offshore oil and gas, contact McInnes Cooper.

We work for the best: our clients.mcinnescooper.com

CANADA’S OFFSHOREENERGY LAW FIRM.

Second thoughtsSaint John city council sours on Canaport LNG property tax deal

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