Canadian Natural Resources Ltd has softened its hawkishness toward the new Alberta government's plans to change energy policies, but the big oil and gas producer remains wary of any increase in costs.
Canadian Natural executives, including president Steve Laut and chairman Murray Edwards, had talks in recent weeks with NDP Premier Rachel Notley, Energy Minister Marg McCuaig-Boyd and Environment Minister Shannon Phillips. Mr. Laut said they came away encouraged that the left-leaning government will not rush to impose onerous new costs on an industry hobbled by the collapse in crude prices.
Mr. Laut was one of the first energy executives to publicly lament uncertainty that followed Ms. Notley's electoral victory last month, saying the company's spending plans were in limbo. The NDP government has pledged to review the industry's royalties, raise corporate taxes by 20 per cent and strengthen environmental regulations, including the province's carbon levy.
"The conversations that we've had with the government to date, as well as what they've said publicly, have led us to believe that the government will be pragmatic when they address these issues," Mr. Laut said. "They made it clear that they want a strong and viable oil and gas industry, and that it's important to all Albertans and Canadians."
He said he believes the rookie ministers understand jobs are at stake, and do not want to trigger more layoffs in a sector that has already jettisoned thousands of workers.
Ms. McCuaig-Boyd expressed similar optimism, adding that she saw no reason the budding relationship between the NDP government and the energy industry could not work.
"It was a good chat with him," she said of the meeting with Mr. Laut. "It was excellent and positive. We all agreed to continue to work together. They're pleased that we're reaching out for their assistance and advice."
Mr. Laut and other senior executives spoke after a conference call to update investors on Canadian Natural's operations. The call was in lieu of the annual investor open house, which the company cancelled last month because it said it could not plan spending amid the uncertainty of provincial policies.
Other oil and gas producers have also said they fear the prospect of higher costs as the NDP seeks to fund an ambitious social and environmental agenda amid dwindling energy revenues due to the slowdown. The sector was comfortable with the Progressive Conservative government, which after nearly 44 years in power provided a friendly ear to its aims.
Now, Canadian Natural anticipates the government will consult closely with the oil and gas industry as it proceeds with its policy changes, Mr. Laut said.
Canadian Natural, one of the world's largest independent exploration and production companies, remains careful. Mr. Laut has warned against hikes to royalty rates since the short-lived increase in Alberta under premier Ed Stelmach and higher rates in the U.K. North Sea in 2011.
"Both of those caused considerable harm to the industry, and actually resulted in less revenue to the government and significant job losses, so it makes us hesitant to declare that there will be no issues this time around," he said.
In the coming weeks, the NDP plans to raise the corporate tax rate in the province by 2 percentage points to 12 per cent.
The increase will raise the company's cash tax bill by only $30-million annually. However, the deferred tax liability on its balance sheet will increase by more than $500-million, said Corey Bieber, chief financial officer.
Editor's note: Alberta's increase in the corporate tax rate will increase Canadian Natural Resources' cash tax bill by about $30-million annually. An earlier version of this article incorrectly suggested the amount of the tax bill increase is attributable to tax breaks available to oil and gas companies.