Third Quarter Accounting & Tax Update - KPMG

Oct 3, 2016 - 2016 YTD. Energy Service and Midstream - No. of M&A Transactions ... 50,000. Aggregate Market Cap - Top 20 Energy Service Company ...
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Third Quarter Accounting & Tax Update Calgary, AB — October 3rd, 2016

Welcome Rick Whitley Regional Managing Partner

New partner announcement

Catherine Buhmiller Partner, Tax

Marcello D’Egidio Partner, Tax

Susanne DiCocco Partner, Advisory

Kimberly Payne Partner, Audit

Narmin Vasanji Partner, Advisory

David Yung Partner, Audit

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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Agenda • • • • • • •

Market activity overview – Chris Chan Regulatory update and impairment – Shane Doig Accounting updates – Reinier Deurwaarder Alberta carbon levy – Jeff Smith Tax dispute resolution update – Michel Bourque Cyber security – The Digital Privacy Act – Jeff Thomas Questions

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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Market activity overview

Chris Chan Partner, Advisory

Current environment and challenges • Low price environment with continuing risk of global oversupply of oil

• Continuing decline in drilling activity due to limited capital availability • Limited transactions in energy services sector with greater proportion of transactions in the midstream sector • E&P producers’ focus on capital efficiency and cost reduction

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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Comparison of utilization Rig Utilization

Rig Utilization %

Oct-16

Jul-16

Apr-16

Jan-16

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Average

Source: Canadian Association of Oilwell Drilling Contractors and Daily Oil Bulletin, JuneWarren-Nickle's Energy Group

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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Capital cost Average Drilling and Completion Costs 4,000

300

3,500

250

3,000

200

2,500

150

2,000

100

1,500

50

1,000

0 2012

2013

Total D&C Costs

2014

2015

2016

Average Cost per Stage Source: Canadian Discovery Frac Database

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KP