Canadian Natural Resources blames NDP for financial loss
Alberta government hiked corporate taxes to 12% last month
A prominent Alberta oil and gas company is blaming the provincial NDP government for a loss this quarter, saying its tax hike is the reason why it was not able to post a profit.
On Thursday, Calgary-based Canadian Natural Resources reported a $405-million net loss in the second quarter. The company says it would have been profitable if not for an increase in Alberta's corporate tax rate, which rose from 10 per cent to 12 per cent as of July 1.
The company says the tax hike increased its deferred income tax liability by $579 million. A deferred income tax liability is an item on a balance sheet showing a tax that a company will owe on its income, but has not yet been assessed.
"This charge effectively translates into lower future cash flows and therefore, lowers reinvestment in the business," said company CFO Corey Bieber in a release.
Company president Steve Laut told analysts he could not make any projections about 2016 because of other potential changes by the provincial government, such as new royalty rates and climate change regulations.
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Similar to other companies in the oilpatch, the price of oil continues to hurt Canadian Natural Resources. Total revenue in the most recent quarter was $3.42 billion, down from $5.37 billion a year earlier.
"Yes, when you pay a higher corporate tax, it does mean you have a little less profit," said Alberta Premier Rachel Notley to reporters on Thursday as she responded to a question about the company's comments. "But at the end of the day, Albertans clearly considered that issue very thoroughly in the last election and determined that when it comes time for all of us to pull up our socks and tighten our belts because of the fiscal challenges we find ourselves with, that everybody needs to chip in."
This is not the first time Canadian Natural Resources has spoken out about the NDP, which won a majority government in the spring election. In May, the company cancelled its presentation of future spending plans because of the change in government and the NDP's policies. The move was described by some industry watchers as aggressive and made it seem like the company was going out of its way to attack the NDP.
"I think different corporate players in Alberta are going to engage in public discussion with Albertans in different ways," said Notley. "We feel quite confident that we are effectively working with most oil and gas leaders to move forward with both the climate change strategy as well as how we deal with the royalty regime as prices recover."
Canadian Natural Resources is not the only oilpatch player to speak up about the NDP. In fact, ever since the change of government, several oil and gas companies have spoken out about their concern and fear, as they are uncertain what changes will be made to Alberta's largest industry.
Last month, the head of Encana reminded the new government that investment dollars can always find a home in another jurisdiction.