Alberta wildfire singes companies beyond energy sector
By Euan Rocha and Allison Lampert
TORONTO/MONTREAL (Reuters) - The wildfire that has ravaged northern Alberta and cut Canadian crude output by 25 percent is set to crimp corporate earnings beyond the oil patch, especially hitting the rail and hospitality sectors.
The fire, which has caused an estimated $50 million a day in lost production for oil sands companies near the evacuated city of Fort McMurray, has also caused pain to large companies that serve the sector and smaller ones catering to thousands of industry workers.
Canadian National Railway Co (CNR.TO: Quote) has said it ran a freight train to Fort McMurray for the first time since May 3. It typically operates three trains a week to the city.
Separately, the Bank of Canada came out with a more hawkish statement on Wednesday on how the economy will be hurt by damage from the wildfires. The central bank said the wildfire disaster will shave 1.25 percentage points off economic growth in the second quarter.
"The wildfires in Alberta continue to delay oil production restarts, weighing on petroleum product shipments tied to the region," said Susquehanna rail analyst Bascome Majors.
The effect on Canadian National and Canadian Pacific Railway Ltd (CP.TO: Quote) results will be limited since crude-by-rail accounts for a relatively small part of their revenues, Majors said.
Canadian National said crude oil represented just over 1 percent of car loadings in the first quarter. Canadian Pacific's crude shipments have fallen 70 percent, 87 percent and 77 percent, respectively, over each of the last three weeks, according to company data.
With the combination of the wildfire and weak commodity prices challenging the railroads, Seaport Global Securities noted that the latest weekly data showed Canadian crude-related rail shipments fell 35 percent from last year and total Canadian rail volumes slid 18.6 percent. Continued...