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Layoffs begin in beleaguered oilpatch as companies brace for spending cuts

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Canada’s oilfield services sector — a bellwether for the state of the oilpatch — is beginning to see job losses as the impact of steep discounts on Alberta oil ripple through the sector.

Trican Well Service, according to the Financial Post, laid off 70 of its 2,200 employees this week, pointing to an anticipated slowdown in activity next year due to lower energy prices and discounts on Canadian crude.

The news comes amid warnings of job losses across the sector if the oil glut that’s been dragging down Canadian crude prices does not improve soon.

The oilfield services sector is on the front lines of energy development, hired to do the drilling, producing and maintenance of oil and gas wells. They’re also involved in the manufacturing of oilpatch equipment and supplies, such as steel piping. The business and its workers thrive when the oilpatch is busiest.

But with the price of Canadian crude lagging far behind the American standard, spending plans in the industry are now under scrutiny — and those in the oilfield services sector are preparing for bad news.

Pro-pipeline protesters gather and chant slogans outside a venue where Federal Finance Minister Bill Morneau was speaking in Calgary on Tuesday. (Jeff McIntosh/Canadian Press)

Murray Mullen, chairman of the Mullen Group, which has about 1,800 staff in its oilfield division, says customers are cancelling projects “left, right and centre.”

Meanwhile, it seems banks and investors are getting anxious about where the industry is headed, he said.

“So all of us that are in executive positions are going, ‘Well, we’ve got no choice but to be defensive, which usually means, you know, I’m going to have to lay off people,” Mullen said.

“We’re trying to not panic, but I can tell you my senses are very, very heightened.” 

When oil prices collapsed in 2014, oilfield services companies were hit hard as activity slowed in the oilpatch and thousands of jobs were shed. 

There have been no reports of similarly deep cuts recently, though the province says it has received notice of seven layoffs of 50 or more people in the energy sector since April 1.

With Canadian oil selling at steep discounts due to a supply glut and production companies re-examining their spending, there’s again worry about what the future holds.

Economist Peter Tertzakian recently warned that if the oil glut isn’t rectified in “the next few weeks,” workers could be slapped with layoffs and the winter drilling season could be lost.

Alberta’s United Conservative Party Leader Jason Kenney told CBC’s Calgary Eyeopener on Thursday that industry leaders describe the situation as a “five-alarm fire.”

“Companies right now are slashing their capital budgets for the upcoming winter, including their drilling budgets,” Kenney said, “which would massively damage the service sector that exists all throughout Alberta — all these little companies and thousands of employees. We’re looking at a potential wave of layoffs.

Earlier this month, the Petroleum Services Association of Canada (PSAC) predicted a total of 6,600 wells will be drilled in Canada in 2019, down about five per cent from this year. The association said that translates to a year-over-year decrease of up to $1.8 billion in capital spending by exploration and production companies.

Jason Kenney, leader of the United Conservative Party, says he’s been told the industry is facing a “five-alarm fire.” (Darren Calabrese/Canadian Press )

PSAC chairman Duncan Au said in an interview this week that the sector is “extremely concerned” by activity levels in the oilpatch and the discounts on Canadian crude.

Like others across the energy sector, Au says the problem is a lack of takeaway capacity — both pipelines and rail — for Canadian oil. This has added to the oil glut, which is weighing heavily on prices.

The situation means some oil and gas companies are not experiencing their normal cash flows and may also be challenged to raise money from investors.

“What that translates to is that our activity levels on the services side is slowing down and we saw that significantly here in November,” Au said.

If firms haven’t already trimmed staff, many would be in the planning process, he said.

Au is also the president of CWC Energy Services, a large service rig company based in Calgary. He said his company has grown over the past four years to a peak of 770 employees earlier this year.

Now, it has under 700 staff.

“You can’t say it was just cut overnight,” Au said. “But that is the number of employees … based on the level of activity that we currently are seeing in our basin.”

Au is going to Ottawa next week to seek government support for a new strategy, led by PSAC, that aims to bolster support for Canada’s energy sector. They want to create a brand that promotes all Canadian energy.

“And that brand for Canadian energy will go beyond oil and natural gas,” Au said. “It’ll go into solar, wind, hydro, nuclear — all of the things that make Canada great in terms of energy.”

Premier Rachel Notley announced Wednesday her government will buy two new unit trains that can transport an additional 120,000 barrels a day. (Matthew Brown/AP Photo)

For weeks, the price of Western Canadian Select (WCS) has been tracking roughly $40 US a barrel less than West Texas Intermediate (WTI). In better times, it might track around $15 below.

Analysts are uncertain exactly how long the situation will last, though some think the price differential will improve in the coming months and normalize by around this time next year.

Premier Rachel Notley announced Wednesday her government will buy two new unit trains that can transport an additional 120,000 barrels a day, increasing the amount of oil being moved by rail in Canada by a third. 

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Real Estate

Couple from Toronto buys dream home in Mushaboom

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MUSHABOOM – A couple who lived and raised a family in downtown Toronto developed a five-year plan in 2015 to purchase their dream home.

In September they moved into the home – located on Malagash Island in Mushaboom on Nova Scotia’s stunning Eastern Shore – that met and exceeded their best dreams for their retirement.

The Camerons, Bruce and Tanya, decided in 2019 they would explore the Maritimes to see what real estate was available to become their potential retirement home. In the spring of 2020, during a global pandemic, the real estate boom hit their city, and they were hearing the same for Nova Scotia. Our province was their first-choice for attaining their desire for an entirely different lifestyle – away from the busyness of the city.

“We had $300,000 to $350,000 as a home value in mind to buy. Our semi-detached located off Danforth in Toronto was priced at $850,000. We wanted to come out ahead, so we would be secure in retirement,” Tanya said.

Their century-old home had prime location near the subway and GO Transit Line for a great 13-minute commute downtown.

“We enjoyed our community,” explains Bruce “… we had great neighbours, young children around and street parties – lots of social activity.”

Bruce says, “Our agent suggested a starting quote of $899,000. We did not do any renovations and only some staging. Fifty couples went through and we received four significant offers. Six days later we sold – with zero conditions – and a price of over a million dollars. We just requested a closing of September 2020 to get the kids off to school – which we got.”

The couple got more than they had anticipated.

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Real Estate

Rabobank Announces Leadership Changes in U.S., Canadian Offices

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NEW YORK, Dec. 16, 2020 /PRNewswire/ — Rabobank, the leading global food and agribusiness bank, has appointed two of its top executives, Tamira Treffers-Herrera and Robert Sinescu, to become Co-Heads of North American Client Coverage, positioning the Bank for future growth in the region.

Treffers-Herrera has also assumed the role of Vice Chairperson and Head of the Atlanta office, where she additionally oversees Rabobank Mexico, which is led by Eduardo Palacios. Sinescu is the Head of the Chicago office, and also oversees Rabobank Canada, led by Marc Drouin, who was recently appointed as Canada’s General Manager.

Treffers-Herrera and Sinescu report to David Bassett, Head of Wholesale Banking North America, the Bank’s corporate and investment banking business for the region based in New York.

“Both Tamira and Robert have a demonstrated history of strong leadership, operational excellence and passion for our clients,” Bassett said. “Their broad experience and deep sector expertise will be invaluable in delivering dynamic results for clients while accelerating our growth trajectory in North America.”

Each office will have an even greater focus on key Food & Agribusiness sectors and clients: The Chicago office will drive growth in sectors including Dairy, Farm Inputs and Grains & Oilseeds, which are also key areas of focus for the Canada office. The Atlanta office will focus heavily on sectors such as Animal Protein, Beverages, Sugar, and Supply Chains, which are important sectors in Mexico as well.

“Rabobank is fully committed to our clients throughout North America, and we believe our new sector-focused coverage will improve our ability to provide knowledge-based, value-added solutions that benefit our clients,” Bassett said.

Treffers-Herrera was most recently based in London as CEO of Rabobank’s European Region from 2016-2020, where she took the organization through Brexit. Prior to that, she worked in the Atlanta office from 2002-2016. During her tenure in Atlanta, Treffers-Herrera served as Global Sector Head – Consumer Food & Beverages, and prior to that she was a senior banker for a portfolio of large beverage and consumer foods clients. She holds a Bachelor of Arts degree from the University of Kentucky, a Master of Arts from the Patterson School of Diplomacy and International Commerce and has studied at The University of Chicago Booth School of Business and Harvard Business School.

Sinescu has been with Rabobank for over 21 years and was previously General Manager of Rabobank Canada, where he oversaw all operations, business development, commercial strategy and relationships with regulators. In addition, he continues to serve as CEO of Rabo Securities Canada Inc. Prior to Canada, he was a senior banker, Head of Corporate Banking, European Sector Head for Sugar, and a member of the Management Team for Rabobank France. He holds a Bachelor of Science in Business from the Bucharest School of Business, a Master of Business Administration & Management and a Master of Science in Banking and Corporate Finance from Sorbonne University in Paris, and has studied at Brown University.

Drouin has worked with Rabobank’s Canadian team for more than nine years and most recently served as a senior banker, Head of Rabobank Canada’s AgVendor Program and a member of Rabobank Canada’s Management Team. He brings extensive wholesale banking experience within the Dairy, G&O, CPG and Supply Chain sectors. Drouin holds a Bachelor of Arts degree from McGill University and a Master of Business Administration in International Finance, Marketing and Management from the Schulich School of Business at York University.

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Real Estate

Greybrook Realty Partners & Marlin Spring Brand Jointly Owned Asset Manager – Greyspring Apartments

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TORONTO, Dec. 14, 2020 (GLOBE NEWSWIRE) — Greybrook Realty Partners and Marlin Spring are pleased to announce the new branding of their jointly owned investment and asset management firm, Greyspring Apartments. With a portfolio of more than 2,000 units and CAD$375 million in assets under management, Greyspring Apartments is focused on the acquisition and repositioning of multi-family assets throughout Canada.

The new name and branding is an important step in Greyspring’s evolution as an independent operating business. Formed in 2018 by long standing-partners Marlin Spring and Greybrook Realty Partners, Greyspring Apartments was established with the goal of building a leading asset management firm with a robust portfolio of residential rental real estate assets in primary and secondary markets across Canada.

Greyspring’s talented team of real estate, asset management and finance professionals is overseen and guided by the Management Board, whose members include Benjamin Bakst, CEO, Marlin Spring; Elliot Kazarnovksy, CFO, Marlin Spring; Sasha Cucuz, CEO, Greybrook Securities Inc.; Peter Politis, CEO, Greybrook Realty Partners; Chris Salapoutis, President & COO, Greybrook Realty Partners; Ashi Mathur, President, Marlin Spring; and Karl Brady. In addition to his role on the Management Board, Karl Brady leads Greyspring Apartments as its President. 

“We are pleased to announce the official name and branding of a business we formed with our partners at Marlin Spring a few years ago,” said Peter Politis, CEO, Greybrook Realty Partners. “Greyspring has been diligently focused on the execution of strategic value-add programs across its portfolio that are improving the quality of housing for tenants and overall asset values. For Greybrook investors, expanding from our core business in real estate development to the value-add space through Greyspring, has allowed us to provide our clients with investment opportunities that diversify their real estate investment portfolios.”

“Marlin Spring and Greybrook have partnered on many residential real estate projects in recent years,” said Benjamin Bakst, CEO and Cofounder, Marlin Spring. “To a great extent, Greyspring illustrates our approach to partnerships. We believe in, and strive for, responsible growth through deepening our relationships with our trusted partners. With Greyspring, we’ve formalized our focus on providing better and more affordable living experiences for Canadians. This vision aligns with our mission to deliver exceptional real estate value to all our stakeholders with an uncompromising adherence to our core values.”

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