Market offers muted reaction to Alberta royalties

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Market offers muted reaction to Alberta royalties
Grant Surridge, Financial Post
% {- P9 I3 K% T- h; m8 b5 B6 UPublished: Friday, October 26, 2007
  W3 P' ^1 P+ w" ]; s; sShares and units of Canada's major energy producers shook off worries about a sector sell-off on Friday following speculation as to how they would respond to Thursday's announcement by the Alberta government that it will dramatically increase its take of oil and gas royalties.


As of 9:45 a.m. ET, the TSX/S&P composite index was at 14,208, up 83.1 points.

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& f, R. g) c' ~! y1 A. ^The muted reaction was expected.  In a note to clients on Friday before markets opened, Citigroup analyst Doug Leggate said that at a long-term oil price estimate of US$60 per barrel, the royalty regime changes would have little impact on sector valuations.

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"The after-market reaction to the royalty announcement looks overdone. We would take advantage of any significant weakness to revisit our preferred names in the sector," Mr. Leggate wrote.


6 J1 {" U- y1 I; h View Larger Image
Alberta premier Ed Stelmach releases the government's policy on resource royalties Thursday during a press conference at the McDougall Centre in Calgary.
' {  [) C$ m/ W% d# X$ w$ zJenelle Schneider / Calgary Herald

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/ o1 n% z0 u' o% P) j$ @Font:****"Although  fundamentally we believe that the royalty impact is modest, we would not  be surprised to see stocks sell off slightly as the market digests the impact of these changes. We would view such weakness as a buying opportunity," said an early morning commentary from UBS.