Infrastructure Quarterly

Issue Q2 2017

Russell Ketter

Russell Ketter

Senior Vice President
Western Region,
Wells Fargo Equipment Finance Canada

Western Canada Outlook

It is exciting to finally see some “green sprouts” taking place as the economy slowly begins to rebound. Clearly having oil prices above $50 has significantly increased exports and the profitability of the industry has begun to take shape. According to the Conference Board of Canada, the resurgence in energy-sector, non-residential investment in structures will grow by 11.9% in 2017 in Alberta, and real GDP is projected to advance by 2.8% in 2017.

Further, natural gas Henry Hub prices have risen nearly 40% since mid-November and reached 2.92 USD/MMBtu in February despite the unseasonably warm temperatures in the USA and Canada. The Petroleum Services Association of Canada (PSAC) has also revised its forecasted number of wells drilled (rig releases) across Canada for 2017 to 5,150 wells. This represents an increase of 975 wells, or 23% from PSAC’s original 2017 drilling forecast released in early November 2016.

In addition, employment is improving and since 2014, the industry worldwide has decreased employment from 382 million to 326 million people in early 2017. In March 2017, Alberta's seasonally adjusted unemployment rate was 8.4%, up from the 7.2% rate that was registered a year earlier and up slightly from last month's rate of 8.3%.

All of these industry indicators are very encouraging but it is obvious that we are not “out of the woods yet.” As the industry begins to slowly come back to life, we have already seen labor shortage issues. Former oil patch workers have been hesitant to return as activity picks up in the industry. It is almost like the former workers don’t “trust the industry” but most importantly, don’t want to uproot their families without a long-term commitment in place. I think it is fair to assume this will change in the future but it may take time along with the promise of higher wages.

The reality is that energy companies will need to be constantly adapting to the ever-changing business environment in 2017. The companies that can adapt will see further improvement in their bottom lines.

Wells Fargo Equipment Finance structures multiple financing solutions that fit this ever-changing energy environment. Our equipment financing team members are experienced in the industry, understand the industry, and can provide guidance on how best to structure your equipment financing needs.

As SVP of sales, Russell has led an asset based lending team in Western Canada for more than 16 years. He has been successful in driving year over year growth in new business volume and profitability within the region. Russell’s practical approach and smart business philosophy have given him the ability to lead business growth by simultaneously focusing on his customers and team.