The Globe and Mail - 11.09.2019

Welcomes

TheHonourable

JohnManleyP.C.,O.C.

as Senior Advisor

to the firm

BennettJonesLLP

John Manley is one of the most highly respected business leaders

in Canada. He is Canada’s former Deputy Prime Minister, Minister

of Foreign Affairs, Finance Minister and Industry Minister. From

2010 to 2018, he was President and Chief Executive Officer of the

Business Council of Canada, representing the CEOs of leading

Canadian corporations.

John is Chair of the Boards of Directors of CIBC and CAE Inc., and

is a member of the Board of Directors of TELUS. He is an Officer

of the Order of Canada and is active in the not-for-profit sector.

He is Chair of the Advisory Council of the Canadian Global Affairs

Institute and past-Chair of the Canadian branch of the Trilateral

Commission. He brings his years of experience in government and

business to support Bennett Jones’ clients and lawyers, and joins

the firm’s exceptional Governmental Affairs & Public Policy Group.

Bennett Jones is one of Canada’s premier business law firms and

home to 400 lawyers and business advisors. With deep experience

in complex transactions and litigation matters, the firm is well

equipped to advise businesses and investors with Canadian

ventures, and connect Canadian businesses and investors with

opportunities around the world.

BUSINESSCLASSIFIED

TOPLACEANADCALL: 1 -866- 999 - 9237
EMAIL:[email protected]

MEETING NOTICES

NoticeofMeeting

Notice is hereby given that the following meeting of shareholders has beendeclared.

Issuer Type RecordDate MeetingDate Location

eQube Gaming AEG September 18, 2019 October 18, 2019 Las Vegas, NV

Limited

B 6 O THEGLOBEANDMAIL | WEDNESDAY,SEPTEMBER11,

Instead, Apple is increasingly fo-

cusing on cutting prices, promot-

ing health-care technology and

shifting into services to make up

for slowing iPhone revenues.

The annual hardware event at

Apple’s Cupertino, Calif., head-

quarters Tuesday featured few

major announcements, with

chief executive Tim Cook show-

ing off iPhones with better cam-

eras, faster processors and longer

battery life – along with a high-

end smartphone, rebranded the

iPhone Pro, that will cost $1,519 in

Canada.

Other products are getting only

minor updates, such as an iPad

with a larger screen. A new Apple

Watch 5 comes with an always-on

display and the ability to sign up

for several new clinical health re-

search studies. Apple also failed

to announce several products and

features that had been widely re-

ported ahead of the event, such as

two-way wireless charging for its

phones.

Executives instead spent near-

ly as much time Tuesday talking

about products as they did tout-

ing free trial subscriptions for Ap-

ple’s new streaming services, pro-

moting its new lineup of video

games and TV shows, and trade-

in programs that allow customers

to swap existing phones for dis-

counts on new models.

The cheaper iPhone pricing is

also a significant departure for

the company, whose revenues re-

ly heavily on the flagship phone.

Apple has traditionally raised

prices on its latest smartphone

models every year as it seeks to re-

main a luxury technology brand.

But Apple has struggled amid a

global slowdown in smartphone

sales, particularly in China, and

complaints that its phones were

often missing the most advanced

camera features of rivals such as

Alphabet’s Google, Samsung and

Huawei.

Earlier in the week some ob-

servers had predicted Apple

could get a significant bump in

sales this year from its slate of

new iPhones, given that many of

the company’s roughly 900 mil-

lion existing iPhone users are

primed for an upgrade, with

phones that are, on average, five

years old.

However, on Tuesday, analysts

were less sure, with some predict-

ing that consumers will hold off

on upgrading their phones until

next year, when Apple is expected

to unveil a 5G iPhone that can run

on faster fifth-generation wireless

networks.

“In a lot of ways, the Apple

event didn’t have many surpris-

es,” said eMarketer principal ana-

lyst Yoram Wurmser, adding that

the new iPhones come with only

“incremental advances” over pre-

vious models.

APPLE(AAPL)

CLOSE:US$216.70,UPUS$2.

Apple:CheaperiPhonepricingbuckstrend

FROMB 1

Utilities, consumer stocks and RE-

ITs are relatively immune to shifts

in the economic cycle, given that

consumers rely on electricity,

food and shelter through good

times and bad. Gold producers,

which reside within the materials

sector, have surged 33.2 per cent

this year as the price of gold (seen

as a haven by some investors) hit

a fresh six-year high last week.

What’s more, many of the com-

panies within these leading sec-

tors pay big dividends, which look

particularly attractive when bond

yields are falling. On average, util-

ities yield 4.2 per cent and REITs

yield 4.4 per cent.

Compare these payouts to the

yield on the five-year Govern-

ment of Canada bond, which fell

below 1.14 per cent last week –

down from a seven-year high of

nearly 2.5 per cent in October,

2018. Yields fall as bond prices rise.
      Similarly, the yield on the 10-
      year U.S. Treasury bond slipped
      below 1.5 per cent in late August
      and early September, down from

over 3.2 per cent in November.

Clearly, financial markets ex-

pect that central banks will be cut-

ting their key interest rates to bol-

ster economic growth. And the

fact that U.S. short-term bonds

have been yielding more than

long-term bonds recently – a rare

reversal known as an inverted

yield curve – suggests to many ob-

servers a recession is brewing.

“Market expectations have de-

teriorated. Signs of a potential re-

cession have increased with the

yield curve inversion, increased

stock market volatility, weaker

PMIs [purchasing managers’ in-

dexes, which are key economic in-

dicators] and deteriorating confi-

dence surveys,” DBRS, the credit-

rating agency, said in a report re-

leased on Tuesday.

DBRS added that the Federal

Reserve Bank of New York in late

August put the probability of a

U.S. recession within the next 12

months at 38 per cent – the high-

est probability since 2007, prior to

the financial crisis.

But the Canadian stock market

index can’t thrive on gloom alone,

given its heavy exposure to eco-

nomically sensitive financials, en-

ergy stocks and industrials. Per-

haps it doesn’t have to, given its

reaction to rising bond yields over

the past week.

The yield on the 10-year U.S.

Treasury bond touched a one-

month high of 1.44 per cent after

rising for five consecutive ses-

sions, including Tuesday. Yields

on Government of Canada bonds

have also risen over this period,

suggesting either that a recession

is not a done deal amid hopes that

trade tensions between the Unit-

ed States and China are easing, or

that financial markets are already

looking beyond the next reces-

sion.

Whatever the case, Canadian

REITs and utilities have retreated

over the past two days, reinforc-

ing their sensitivity to bond

yields. And financials and energy

stocks have rallied over the past

five days – raising the question of

whether the next record high for

the S&P/TSX will be a triumph for

optimistic bullish investors or a

victory for the bears.

Berman:TSXcan’tthriveongloomalone

FROMB 1

While much of the late 2014 dip
can be attributed to slumping en-
ergy prices, it also came as the
company announced it had un-
dertaken an internal review into
accounting irregularities.
In 2017, the U.S. Securities and
Exchange Commission charged
the company and three of its for-
mer employees for their roles in
an alleged accounting fraud,
causing the company’s shares to
drop more than 10 per cent. Ob-
sidian paid US$8.5-million in
2017 to settle the charges.
The strategic review comes af-
ter Obsidian had to terminate a
deal last month to sell its 55-per-
cent stake in the Peace River Oil
Partnership, a heavy oil project
in Northern Alberta, to High-
wood Oil Co. Ltd. The deal re-
quired the consent of Obsidian
partner China Investment Corp.,
a sovereign wealth fund created
by the Chinesegovernment in
2007, but it wasn’t obtained.
Obsidian reported net debt of

said Mr. Kwong, referring to light-

oil wells that the company owns

in central Alberta’s Cardium for-

mation. But, he added, it’s un-

clear whether selling those assets

will be enough to cover liabilities

such as the company’s debt load

and the costs of cleaning up

abandoned wells.

Obsidian didn’t respond to a

request for comment.

Earlier this year, the Supreme

Court of Canada ruled that envi-

ronmental obligations trump

paying back creditors in the case

of an energy company’s insol-

vency or bankruptcy.

Many of Obsidian’s wells are

from the 1980s, when environ-

mental laws were looser, which

means clean-up costs may be

higher than anticipated, accord-

ing to Mr. McCrea.

“Anybody who’s looking to

buy this company may just say,

‘I’m not willing to take on all that

liability,’ ” he said.

OBSIDIANENERGY (OBE)

CLOSE: $1.40, UP 5¢

$478-million as of June 30, and

had negative cash flow from

operations in the first half of

2019.

Cody Kwong, an analyst at

GMP FirstEnergy, said would-be

buyers are likely to be more in-

terested in snapping up certain

assets rather than the entire

company.

“I think the Cardium will cer-

tainly be the belle of the ball,”

ManyofObsidianEnergy’soilwells–suchasthispumpjacknearBrooks,Alta.–datebacktothe1980swhen
environmentalrulesweremorerelaxed.RaymondJamesanalystJeremyMcCreasaysthatmeansclean-up
costsatsuchsitesmaybehigherthanexpected.LARRYMacDOUGAL/THECANADIANPRESS

Obsidian:Oilandgasproducerreported

netdebtof$478-millionasofJune

FROMB 1

He’ll gather records and conduct interviews inside and out-

side Alberta – wherever the trail of foreign funding leads him.

Within the province, he can compel testimony.

The message, championed by British Columbia-based

blogger Vivian Krause, has become gospel for Alberta conser-

vatives – that activism funded by puppet-masters outside

Canada was villainous in blocking the oil patch from flour-

ishing. Ms. Krause, studying tax documents, has detailed mil-

lions of dollars of such contributions to Canadian environ-

mental groups over a 10-year period. She has suggested con-

tributions equate to control.

Some of green groups, including the Pembina Institute

and David Suzuki Foundation, have released their own num-

bers showing such contributions were relatively small an-

nually in comparison to the rest of their funding. The pro-oil

crowd dismisses them out of hand.

Mr. Kenney has asked the commissioner to use his conclu-

sions to recommend what should be considered for charities

to get provincial grants and even assist Ottawa in determin-

ing if groups can keep their charitable status.

The anger of energy companies and their lobby groups is

understandable. The oil-patch downturn began five years

ago as oil prices tumbled and it

has dragged on as the industry’s

efforts to build pipelines to access

new markets have been frustrat-

ed time and again – even as drill-

ing has boomed in the United

States.

It’s especially galling to many

executives and employees as nu-

merous companies have spent

meaningful sums to improve

their environmental perform-

ance: from undertaking research and development to cut

carbon emissions to teaming up to clean up spent well sites in

specific regions. Yet, jobs are still being cut and livelihoods

are suffering as the industry remains out of favour.

But it wasn’t environmental campaigns that were key in

reversing approvals for two pipelines to the West Coast. Both

Northern Gateway and the Trans Mountain Expansion were

halted by the courts after two differentfederalgovernments

failed in their duty to consult effectively with Indigenous

communities.

It’s absurd to think environmentalists wouldn’t raise is-

sues of fossil fuels’ impact on climate change if not for foreign

funding. It’s what they do, and even if the government dis-

agrees with them, it’s legal. Some of their assertions are well

founded. Others, regarding Alberta’s relative impact on a

global scale, may be alarmist or even wrong. The tough part is

determining what environmental opposition, and even

more specifically, the foreign-funded portion, has accom-

plished, given myriad factors acting against infrastructure

getting built. Such arguments aside, the Kenney government,

in its quest to get its foes to be transparent, made sure the

probe is not subject to the same. Mr. Allan won’t be conduct-

ing media interviews during the process. Also, the investiga-

tion has been protected against any nosiness from the media

or others who would seek to glean details through access-to-

information legislation.

A publicly funded investigation, driven bya government

that has said what it believes the conclusions are, conducted

without public scrutiny – that’s not just anti-democratic. It’s

anti-Albertan.

Jones:Theangerofenergy

companies,lobbygroups

isunderstandable

FROMB 1

Itwasn’t

environmental

campaignsthatwere

keyinreversing

approvalsfortwo

pipelinestotheWest

Coast.

| REPORTONBUSINESS