Athabasca Oil CEO is fundamentally opposed to the proposed emissions cap
The CEO of Athabasca Oil says the federal government’s new cap-and-trade emissions regulations throw a wrench into the company’s plans as it expects to return capital to shareholders.
On Wednesday, the company announced it plans to allocate 100 per cent of its free cash flow back to shareholders through share buybacks in 2024. The move prompted Desjardins, TD Bank and RBC to each upgrade their outlooks for the company from “hold” to “buy.”
Given the federal government’s new emissions cap regulations, Robert Broen, president and CEO of Athabasca Oil, said the cash flow is better off in shareholders’ hands than reinvested.
“The uncertainty in terms of what the fiscal environment’s going to be like under these new regulations on the cap-and-trade, what the trade market’s even going to look like, creates uncertainty,” he told BNN Bloomberg in a television interview on Thursday.
“We could never allocate capital into such an uncertain fiscal environment at this point in time and our shareholders are looking for a return on their investment and so that’s what we’re choosing to do.”
On Thursday, the federal government announced the oil and gas industry would have to cut emissions by a third by 2030 or buy carbon offsets credits.
Broen said his company has plans to cut emissions by 30 per cent compared to 2015 levels by 2025 and is already “most of the way there,” but these regulations represent another step that would require substantial investment.
“To implement carbon capture on a single plant that we have, and not the entire plant – maybe a quarter to a third of one plant – would be in the order of $100 million,” he said.
“It’s not an insignificant investment and it’s something we would have to take seriously and would need absolute clarity on the fiscal environment to make such an investment.”