Archive for September 17, 2011
Canada represents a fascinating conundrum in North American oil production.
First off, its population of 34 million represents the largest foreign oil source for its giant southern neighbour, with a population nearly 10 times its size.
According to the U.S. Energy Administration, the United States total crude oil imports now average 9,033 thousand barrels per day (tbpd), with the top five exporting countries being Canada (2,666 tbpd), Mexico (1,319 tbpd).
Unlike many oil-exporting countries to the U.S., beyond its occasional irritation at losing the World Series, Canada harbors no significant anti-Americanism and better yet for investors from south of the border, has a stable, pro-business friendly investing environment.
Canada’s energy production runs the gamut from the current bete noire of environmentalists, oil production from tar sands, to such cutting-edge technologies as electrical production from wave power.
Despite its hydrocarbon riches, Canada is also forging forward on renewable energy, and it is here that savvy investors ought to watch developments.
Canada’s Brookfield Asset Management Inc. and Brookfield Renewable Power Fund have announced their intention to combine their power generating facilities into one of the world’s largest renewable power businesses.
The proposed arrangement is between two of Canada’s largest energy giants. Brookfield Renewable Power Fund is one of the largest power income funds in North America with more than 1,700 megawatts of power generating capacity, including 42 hydroelectric generating stations and wind farms in Quebec, Ontario, British Columbia and New England.
Brookfield Renewable Power Inc., which is responsible for most of the power operations of Brookfield Asset Management Inc., owns approximately 34 per cent of Brookfield Renewable Power Fund’s outstanding units on a fully exchanged basis.
Brookfield Renewable Power Inc., wholly owned by Brookfield Asset Management Inc., has a portfolio of more than 170 generating facilities with approximately 4,400 megawatts of capacity, with its mainly in North America and Brazil.
With some $13 billion of assets, the new company will swiftly enter the front ranks of potential game changes in the renewable power field.
The proposed arrangement will combine Brookfield Renewable Power Fund assets with Brookfield Asset’s wholly owned subsidiary, Brookfield Renewable Power Inc. to create a new entity, Brookfield Renewable Energy Partners L.P.
Brookfield Renewable Energy Partners L.P. will be a global, publicly traded partnership focused on renewable power generation, primarily hydroelectric, in Canada, the United States and Brazil.
In a statement certain to set Wall Street pulses racing, Brookfield Power Fund said that Brookfield Renewable Energy Partners L.P. and is expected to increase their annual distributable cash per unit on average by more than 10 per cent over the next five years.
In a statement embodying Canadian modesty Brookfield Power Fund chairman Andre Bureau said, “We are excited to present this transaction to the fund’s security holders as it increases the sustainability and amount of distributions and provides them with significantly greater growth prospects.”
Richard Legault, CEO of Brookfield’s power operations, added in what may well prove to be a massive understatement that Brookfield Renewable Energy Partners L.P. will “rank among the very best renewable businesses globally in terms of its quality of assets, scale of operating platform, geographic diversification, access to capital, and global reach. We intend to utilize this entity to grow in the renewable energy business globally.”
Under terms of the proposed arrangement, Brookfield Power Fund unitholders, who must approve the merger, would receive one limited partnership unit of Brookfield Renewable Energy Partners L.P. for every Brookfield Power Fund unit held.
An energy investment opportunity in a stable, business-friendly nation, with major assets both in the world’s largest energy market and the Western Hemisphere’s BRIC member – while nothing is certain in the world of high finance, Brookfield Renewable Energy Partners L.P. would certainly seem to be a more certain investment than Iraq, liberated by U.S. forces eight years ago, or waiting for the Libyan Transitional National Council to hammer out an Oil Law. Time is money, after all, and 10 percent annual earning doesn’t sound too shabby.