Monday, February 23, 2009

Enterprise Oilfield Group Inc. (TSX: E): Alberta’s Growth in Population and Economy

Enterprise Oilfield Group Inc. is a pipeline construction and horizontal directional drilling company with a primary focus on Alberta, Canada’s oilfield and utility infrastructure markets. During 2002 – 2007, Alberta’s economy grew at an average of 4.7%, compared to an average growth rate of 2.7% in Canada. The consensus forecast is Alberta’s economy will continue to outperform the national average in 2008 and 2009, but not to the levels seen during 2004 –2006 associated with the energy boom.

The current population in Alberta is estimated around 3.5 million, representing 10% of the population in Canada. During 2006 – 2011, the population of the province is forecasted to grow at an average of 2.99% per annum (from 3.29 million in 2006 to 3.81 million in 2011), compared to average growth of 0.82% for Canada during the same period. This is growth is positive for Enterprise’s utility infrastructure & directional drilling business, which provides basic infrastructure services, installation of utilities and telecommunication equipment.

Infrastructure spending in Alberta will likely remain strong in the short term considering the large inventory for major construction projects. In the midterm, infrastructure spending growth in Alberta may slow down but remain above the national average. However, there is a positive outlook for the long run, since the vast oil sands reserves in Alberta may fuel the province’s future economic growth and drive spending in the province’s infrastructure sector.

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