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One in 4 Alberta CEOs say they don’t know if their business can survive this crisis


CALGARY — One in four chief executives in Alberta are concerned their businesses might not survive the economic collapse triggered by COVID-19, according to a new survey.

Alberta is the country’s largest oil and gas producing province and is widely expected to record the sharpest economic contraction and drop in employment this year, following the dual-threat of the coronavirus pandemic-induced business closures and the concurrent collapse in oil prices.

The Business Council of Alberta published a survey of its members Monday that showed 26 per cent of respondents didn’t know if their “organization will survive this crisis until a vaccine is widely available or we otherwise reach herd immunity.”

“It’s a lot and it’s surprising,” said Mike Holden, the Business Council’s chief economist, noting that survey doesn’t mean those companies will file for bankruptcy — just that they consider it to be a real risk. “This is businesses who think there is some risk.”

He noted that 64 per cent of respondents had delayed spending, 61 per cent had laid off employees and 54 per cent had implemented pay cuts to survive the crisis.

So far, only a handful of companies have announced widespread layoffs during the current recession, but Holden said there might be more announcements if temporary layoffs become permanent.

It’s a lot and it’s surprising

Mike Holden

The survey of leaders at 61 companies conducted by Viewpoint Research between May 13 to May 30 also showed that 61 per cent of businesses expect a slow economic recovery.

“Generally speaking, they’re not expecting it to be quick,” Holden said, adding the uncertainty about the depth and duration of the recession has led to a drop in business confidence.

If Business Council of Alberta’s fears are realized and a quarter of businesses don’t survive the current pandemic, it would mark a dramatic uptick in insolvencies and the business exit rate, which is tracked by the federal government.

In 2017, the last year for which data is available, roughly 15 per cent of Alberta businesses exited the private sector, said Charles St-Arnaud, chief economist with Alberta Central, which provides banking services to credit unions in the province.

Signs outside a business in Calgary, on April 30, 2020.

Signs outside a business in Calgary, on April 30, 2020.

Brendan Miller/Postmedia files

By comparison, the data shows the rate of business exits across Canada is about 11 per cent.

“Alberta has kind of a higher entrance and exit rate than other provinces. There is more business creation than average and also more business failures,” St-Arnaud said.

Still, St-Arnaud said he’s expecting to see an increase in insolvencies and business failures as a result of the COVID-19-induced recession. The business closures and insolvencies will likely accelerate in September or October, once federal support programs wrap up, he said.

“The insolvency data for October will have a better look at how bad it gets,” St-Arnaud said.

Large and small companies in the province are struggling to stay afloat. Even as businesses re-open, Alberta’s largest industry is struggling with the dramatic collapse in oil prices and the resultant fall in oilfield activity.

Calfrac Well Services Ltd., one of the largest fracking companies in the Canadian oilpatch, announced Monday that it would defer payment and make use of a 30-day grace period to make an interest payment that was due June 15.

Shares in the Calgary-based company fell close to 9 per cent to 26 cents per share following the news, which warned that a failure to make the interest payment would trigger a default in Calfrac’s credit facilities. The company has drawn $170 million against a $375-million line of credit.

If the company does default, Calfrac would become the first large energy services firm to become insolvent in the current crisis.

The Business Council’s survey noted that the three largest barriers to an economic recovery in the province were low oil prices, a lack of consumer confidence and the global economic downturn causing a lack of demand for exports.

Financial Post

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Cenovus joins Big Oil’s push into Big Data with Amazon and IBM deals


CALGARY — Big Oil is continuing its push into Big Data as Cenovus Energy Inc. has struck deals with tech giants Amazon Web Services and International Business Machines Corp. in an attempt to harness the power of cloud computing and lower its costs.

I don’t want this to be our grandfather’s industry

Ian Enright, Cenovus vice-president and chief information officer

“I don’t want to run our grandfather’s IT shop. I don’t want this to be our grandfather’s industry,” Ian Enright, Cenovus vice-president and chief information officer, said of the Calgary-based company’s plans to move its data out of two local data centres and into Amazon Web Services’ cloud following a deal struck over the summer.

The oil and gas producer is also planning to use Amazon’s cloud computing power to process and analyze its data and run other software programs in a move the company says will lower costs and allow it to better understand the “millions of data points” produced by its steam-based oilsands plants.

“Running machine learning and analytics against these things, as other industries have found, we really feel we’ll be able to enhance our operations and our efficiency,” Enright said.

“Right now, we’re just scratching the surface of the value of that,” he said.

Cenovus did not announce the deal with Amazon when it was struck, but described a broader push at the company to adopt new digital technologies and cut costs. In an interview Enright said the company ran a “bake-off” between cloud computing providers in late 2018 and picked Amazon this year for its big move to cloud computing.

In fact, a series of recent announcements indicate that more Calgary-based oil and gas companies are turning to cloud computing and big data in an attempt to modernize their businesses as the energy industry is trying to shed its reputation of being laggards when it comes to adopting digital technologies.

This month, oilsands rival Suncor Energy Inc. announced a similar partnership with Microsoft Corp. to migrate its data, computing power and processes to the Redmond, Wash.-based company’s cloud services and overhaul many aspects of its business.

While oil and gas companies have been pilloried for being digital laggards, large Calgary-based oil and gas companies have been quietly integrating new digital technologies in a bid to cut costs as they’ve been pressured by low oil prices, a lack of export pipelines.

In 2017, Calgary-based pipeline giant TC Energy Corp. began migrating its data and computer processing onto Amazon’s cloud services and that move to cloud computing is now 90 per cent complete, said Eric Gales, Amazon Web Services country manager for Canada.

TC Energy did not respond to a request for comment.

As we enter the next chapter of digital reinvention, the oil and gas industry is primed for transformation

Ross Manning, IBM’s vice-president, Canadian energy industry

Gales said he’s seen a major change in large companies’ attitudes towards digital technologies in the past four years and said the pace of adoption has increased dramatically.

“Four years ago, I was still having conversations with customers about ‘why?’ Now, it’s about ‘Where do I start?’” Gales said.

Now he said, many of the major companies in the Canadian oilpatch have a “cloud strategy” because “the case for the cloud has been made.”

At Cenovus, Enright said he believes the move to Amazon’s cloud computing service will allow it to run multiple data analyses concurrently — something it wasn’t able to do previously — and also cut down the amount of time it takes to analyze that data.

“When you go to the cloud to look at reservoir simulations or modelling our greenhouse gas improvements, things like that, we can model many things simultaneously,” Enright said.

For example, when Cenovus struck its $17.7-billion deal to buy ConocoPhillips Co.’s Canadian assets in 2017, it took the company nearly four months to acquire the computer servers it needed to process the data for the deal.

As the company integrates more of its processes into Amazon’s cloud, Enright said he’s confident the company could process the same volume and complexity of data in under three weeks.

On Monday, Cenovus also announced a deal with IBM in which the Armonk, New York-based tech giant will implement a suite of new software programs at the oilsands producer.

Enright said the technology will run in the cloud and is part of the broader push to cloud computing and faster decision making aided by digital technologies.

“As we enter the next chapter of digital reinvention, the oil and gas industry is primed for transformation, with companies turning to new platforms that will maximize the value of their assets, lower operating costs and continue to improve on their sustainable operations,” IBM’s vice-president, Canadian energy industry Ross Manning said in a release.

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