A review of the UCP’s key energy and economic policies.

Patrick O’Rourke, CFA 403-539-8615

The United Conservatie Party (UCP) – A Pro-Oil/Development Platform, a Positive Step for Industry and Investors
While some questions remain about what the new government can and cannot do to help support the oil and gas industry in Alberta, and what the ultimate efficacy of its policies will be, what was clear throughout the Party's platform, debates and media commentary during the campaign cycle, was the UCP has consistently presented itself as a pro-energy, pro-development and pro-business party. This garnered strong support for the energy industry on regulatory and project approval issues, but it is also likely to heighten the level of acrimony in government relations between Edmonton and the current government in Ottawa.

Potential for Heightened Near-term Animosity with both the Federal and BC Governments
With the current Liberal federal government supporting both the carbon tax and Bill C-69 (and Bill C-48), Alberta premier-designate Jason Kenney’s aggressive and opposing stances on these issues are expected to increase Alberta’s near-term acrimony with Ottawa. Further, should Bill 12 (‘Turn off the Taps’ Legislation) be implemented, there is potential for a further deterioration in relations with British Columbia, which is already dealing with record high gas prices. Bill 12 will also require laser-like precision in its implementation to avoid putting further pressure on Alberta oil differentials. With the next Canadian federal election to take place in October, we are highlighting the potential for increased tensions until that time, with the potential for the UCP government to have an easier time achieving its platform if a more pro-development government is elected federally.

Investors will Now Turn their Attention to the Federal Election Cycle
With the change in government in Alberta being positive for the investment climate, we believe that investors will now shift focus to the upcoming Canadian federal election, scheduled to take place on or before October 21, 2019. Whether real or perceived, many investors believe that the current federal government and leadership has positioned climate change as its '[Parliament] hill to die on’ election issue, with both Bill C-69 and C-48 being viewed negatively by the oil and gas investment community. While we expect investors to cautiously begin to flow capital to the sector in the near-term, a change in tone to a more pro-development stance by the governing Canadian Liberal Party, precipitated by an elector focus on economic issues or a change in government to a more pro-development party, it is likely the signal that investors will need to see before fully re-committing themselves to the sector.