Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Canadian Pacific Railway Limited    CP   CA13645T1003

CANADIAN PACIFIC RAILWAY LIMITED

(CP)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsPress ReleasesOfficial PublicationsSector newsMarketScreener StrategiesAnalyst Recommendations

Once Canada's oil relief valve, rail shipping grinds to near halt

share with twitter share with LinkedIn share with facebook
07/28/2020 | 11:34am EDT
FILE PHOTO: Irving Oil workers inspect rail cars carrying crude oil at the Irving Oil rail yard terminal in Saint John, New Brunswick

WINNIPEG, Manitoba (Reuters) - After moving record-large Canadian oil volumes by rail just five months ago, shippers have hit the brakes, idling thousands of cars and tens of millions of dollars' worth of infrastructure.

Rail was Canada's oil lifeline in recent years when cheaper pipelines ran full and crude had no other exit from landlocked Alberta. But oil production cuts this year opened pipeline space and eliminated demand for trains, leaving producers like Cenovus Energy Inc with high fixed expenses and monthly payments still owing to railways.

Cenovus said last week it was spending as much as C$20 million (11.57 million pounds) per month for its suspended rail program, one-quarter of the costs when it is fully active, but now generating no revenue to offset expenses.

Prospects of a longer-term rail recovery also look dim as long-planned pipeline expansions enter service in each of the next two years.

Canadian crude by rail volumes in May fell to 58,048 barrels per day (bpd), the lowest in four years, the Canada Energy Regulator said. In February, they had peaked at nearly 412,000 bpd.


Graphic:https://tmsnrt.rs/3hyqYuW

Cenovus has idled several thousand tank cars, said Chief Executive Alex Pourbaix. He said they will stay parked pending several shifts - rebounding Canadian oil production, pipelines filling again, and a wider gap between Canadian and U.S. crude prices to justify rail shipments' higher cost than pipelines.

It looks doubtful that will happen soon.

"I wouldn't be surprised to see (price) differentials widen. (But) I don't know if they're going to widen enough in the second half to incent rail," Pourbaix said in an interview.

Canadian heavy crude in Alberta traded this week for around $10 per barrel below the U.S. benchmark for September delivery, according to NE2 Group, well below the $15-$20 industry estimate for economic rail shipments. Trades for later delivery show the differential widening to just $13 in the fourth quarter.

Even so, Pourbaix expects Canadian oil production to grow to fill expanded pipelines in coming years, reviving the need for rail.

Greater availability of pipeline space has helped keep differentials narrow.

Demand exceeded supply by 7% on two Enbridge Inc heavy oil lines in August, a fraction of the 53% rationing in February that prompted shippers to move a record-large number of barrels by rail.

Investment bank Tudor Pickering Holt & Co forecasts "next to no rail requirements" in Canada into 2021, said analyst Matt Murphy, adding that oil production looks slow to return.

All of that could change suddenly, depending on how quickly pandemic restrictions lift and fuel demand returns, or if there is a significant pipeline outage.

Some are more optimistic.

Suncor Energy Inc Chief Executive Mark Little said last week he expects several operators to ramp up rail shipments this year.

Consultancy Wood Mackenzie also sees rail volumes rising in the second half as production returns.

But large western terminals, owned by Cenovus as well as partnerships between Imperial Oil and Pembina Pipeline Corp, and USD Group and Gibson Energy, have mostly or completely idled, said John Zahary, chief executive of Altex Energy, which loads crude at four Western Canada terminals.

Altex has slowed loadings but not shut any terminals as its shipments remain economic for shippers because they do not require blending with costly lighter oil, he said.

Imperial and Gibson, which report quarterly results soon, declined to comment. Pembina did not respond.

Railways and independent terminals are better insulated from economic damage than oil shippers, as some continue collecting payments, whether they have crude to move or not.

Such payments contracts allow USD to maintain operating capability as markets fluctuate, said Jim Albertson, senior vice president for USD's Canadian unit.

Canadian National Railway also continues to collect payments, Chief Executive Jean-Jacques Ruest said on a July call.

By Rod Nickel


Stocks mentioned in the article
ChangeLast1st jan.
CANADIAN NATIONAL RAILWAY COMPANY 0.05% 134.81 Delayed Quote.14.67%
CANADIAN PACIFIC RAILWAY LIMITED -0.53% 404.32 Delayed Quote.24.91%
CENOVUS ENERGY INC. 7.38% 4.84 Delayed Quote.-66.14%
ENBRIDGE INC. -0.49% 37.43 Delayed Quote.-27.14%
GIBSON ENERGY INC. 0.47% 21.24 Delayed Quote.-20.50%
IMPERIAL OIL LIMITED -0.81% 17.17 Delayed Quote.-49.67%
LONDON BRENT OIL 1.63% 41.18 Delayed Quote.-37.71%
MARVELL TECHNOLOGY GROUP LTD. 1.37% 41.49 Delayed Quote.53.95%
PEMBINA PIPELINE CORPORATION -0.50% 28.1 Delayed Quote.-41.28%
SUNCOR ENERGY INC. -0.49% 16.17 Delayed Quote.-61.89%
WTI 1.96% 39.41 Delayed Quote.-36.11%
share with twitter share with LinkedIn share with facebook
All news about CANADIAN PACIFIC RAILWAY LIMITED
10/22CANADIAN PACIFIC RAILWAY : CP awards 2019-2020 Elevator of the Year in Canada an..
AQ
10/21CANADIAN PACIFIC RAILWAY LTD/CN : Other Events, Financial Statements and Exhibit..
AQ
10/21North American Rail Traffic Rose 2.6% in Week Ended Oct. 17
DJ
10/20Canadian National quarterly profit misses estimates
RE
10/20CANADIAN PACIFIC RAILWAY LIMITED : declares dividend
AQ
10/20CANADIAN PACIFIC RAILWAY LT : CN MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCI..
AQ
10/20CANADIAN PACIFIC RAILWAY : Sees 2020 Adjusted. EPS Growth At Least Mid Single Di..
DJ
10/20CANADIAN PACIFIC RAILWAY : 3Q Adjusted. EPS Misses Analysts Expectations
DJ
10/20CANADIAN PACIFIC RAILWAY : reports Q3 revenue and profit down from year ago
AQ
10/20CANADIAN PACIFIC : 3Q Earnings Snapshot
AQ
More news
Financials
Sales 2020 7 831 M 5 938 M 5 938 M
Net income 2020 2 306 M 1 749 M 1 749 M
Net Debt 2020 9 235 M 7 003 M 7 003 M
P/E ratio 2020 24,0x
Yield 2020 0,86%
Capitalization 54 682 M 41 379 M 41 465 M
EV / Sales 2020 8,16x
EV / Sales 2021 7,58x
Nbr of Employees 12 166
Free-Float 100,0%
Chart CANADIAN PACIFIC RAILWAY LIMITED
Duration : Period :
Canadian Pacific Railway Limited Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends CANADIAN PACIFIC RAILWAY LIMITED
Short TermMid-TermLong Term
TrendsNeutralBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 30
Average target price 435,53 CAD
Last Close Price 406,56 CAD
Spread / Highest target 22,2%
Spread / Average Target 7,12%
Spread / Lowest Target -21,3%
EPS Revisions
Managers
NameTitle
Keith Edward Creel President, Chief Executive Officer & Director
Isabelle Courville Chairman
Mark Redd Executive Vice President-Operations
Nadeem S. Velani Chief Financial Officer & Executive Vice President
Michael John Redeker Chief Information Officer & Vice President
Sector and Competitors
1st jan.Capitalization (M$)
CANADIAN PACIFIC RAILWAY LIMITED24.91%42 085
UNION PACIFIC2.16%124 464
CANADIAN NATIONAL RAILWAY COMPANY14.67%74 154
NORFOLK SOUTHERN CORPORATION8.51%53 741
KANSAS CITY SOUTHERN17.39%16 829
C.H. ROBINSON WORLDWIDE, INC.27.35%13 427