Energy Summary for March 24, 2015
2015-03-24 19:31 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for May delivery added six cents to $47.51 on the New York Merc, while Brent for May lost 81 cents to $55.11 (all figures in this para U.S.). Western Canadian Select traded at a discount of $13 to WTI ($34.51), unchanged. Natural gas for April added 5.3 cents to $2.78. The TSX energy index added 2.48 points to close at 216.25.
Scott Ratushny's Cardinal Energy Ltd. (CJ) added 69 cents to $15.10 on 1.15 million shares, after releasing its year-end financials. There were few surprises because it had already announced its fourth quarter production of around 10,800 barrels of oil equivalent a day, more than 10 times its production of 1,500 barrels a day just before its December, 2013, IPO at $10.50. The increase is mainly thanks to acquisitions in Alberta. Cardinal recently announced yet another acquisition. In mid-February, it said it would buy Pinecrest Energy Inc. (PRY: $0.005) after Pinecrest sells most of its assets to Virginia Hills Oil, which will then become a public issuer. By the time Cardinal gets involved, Pinecrest will have non-operated production of about 170 barrels a day, for which Cardinal will pay $23.5-million. The advantage to Cardinal is not Pinecrest's production but rather its $300-million in tax pools. The deal was originally supposed to close on March 20, but then Pinecrest announced a delay because it has yet to meet all the closing conditions. According to Cardinal's SEDAR filings, the parties are hoping to close the deal on April 1.
Jim Saunders's Twin Butte Energy Ltd. (TBE) was unchanged at 80 cents on 1.51 million shares, after releasing mixed year-end financial and reserve results. Production in the fourth quarter came to 20,430 barrels of oil equivalent a day. This is below the third quarter's production of 20,981 barrels a day, despite Twin Butte's prediction in November of "moderate growth." The miss was mainly because of uneconomic barrels being shut in. For the same reason, first quarter production is expected to be 19,200 barrels a day, Twin Butte's lowest output since before it acquired Black Shire Energy in November, 2013. Black Shire was producing about 7,000 barrels a day in the Provost medium oil area of Alberta. Before that, Twin Butte focused on heavy oil in the nearby Lloydminster area. Medium oil enjoys lower costs and higher netbacks, which allowed Twin Butte to offset the financial hit from lower production and achieve fourth quarter cash flow of 15 cents a share, above analysts' predictions of 14 cents. Twin Butte has shifted most of its focus to medium oil since the acquisition and plans to spend about $100-million of this year's $120-million budget at Provost. The change is taking a toll, however, on its reserves. Proven plus probable reserves fell to 61.2 million barrels at year-end 2014 from 68.2 million a year earlier, as reserve additions at Provost were more than offset by negative revisions at Lloydminster. Twin Butte says to focus on quality, not quantity. Meanwhile, it has appointed president Rob Wollmann to the CEO position as well, replacing Mr. Saunders, who will become executive chairman. All senior salaries and director fees have been cut by 10 per cent in an effort to save cash and protect the monthly dividend. Twin Butte previously lowered the dividend to one cent from 1.6 cents in December, but it still yields a generous 15 per cent. It will be reviewed prior to the AGM in May.
Striker Exploration Corp. (SKX) added five cents to $1.50 on 130,100 shares, after putting out its first news release since it rolled back 1 for 20 and changed its name from Elkwater Resources last month. Those were just two of many changes over the last nine months. Last summer, the company recapitalized, appointed Doug Bailey as president and CEO, and set up a board of directors that includes Neil Roszell (president and CEO of Raging River Exploration Inc. (RRX: $8.53)), John Ferguson (the same at RMP Energy Inc. (RMP: $2.99)) and Pat Ward (the same at Painted Pony Petroleum Ltd. (PPY: $6.01)). They and other new insiders bought tens of millions of 10-cent shares through various financings. In October, the company found a use for some of the cash, announcing two Alberta acquisitions that would boost production by about 2,500 barrels a day. It also proposed yet another financing. By the time the dust settled, the company had 536 million shares outstanding, up from 19 million before the recapitalization. It rolled back 1 for 20 and changed its name to Striker last month. Now it has released an update on reserves, operations and another acquisition. The reserves are not worth comparing with last year's figures because of all the big changes, but they set up a useful starting point for next year. Operationally, Striker talked up two Belly River oil wells, both of which are showing better-than-modelled production. They compare nicely with the wells of DeeThree Exploration Ltd. (DTX: $6.05), which was one of the first companies in the Belly River, gets over half of its production from there and has sometimes complained that it does not have enough neighbours to help with promotion. Striker no doubt hopes to do its part. It has just spent $1.75-million to acquire more Belly River assets that are producing 45 barrels a day.
Keith Hill's Africa Energy Corp. (AFE), a Lundin company, lost half a cent to 15 cents on 165,500 shares. About 10 minutes before the close, it announced a $4-million (U.S.) private placement of 38.4 million shares at 13 cents. This is less than one-third of what it originally wanted to raise. Two weeks ago, the company changed its name from Horn Petroleum and promised a shift in strategy, to be aided by a private placement for $15-million (U.S.). Horn had always focused on Somalia, but the new company will look for other East African opportunities. Mr. Hill, who is president and CEO of fellow Lundin company Africa Oil Corp. (AOI: $2.00), stayed on as chairman. Africa Oil focuses mainly on Kenya. Along with joint venturer Tullow Oil, it made Kenya's first major oil discovery in early 2012, sending the stock to over $11 from less than $2.50 in two months. It has since come crashing down because of low oil prices and a long string of unsuccessful wildcats, but the original discovery area is still being worked on and the joint venturers hope to submit a field development plan by year-end. Mr. Hill has frequently said he would like Horn to become "Africa Oil 2.0," and has been making noises about potential deals for around two years. Investors may have hoped that a deal was finally close if Horn/Africa Energy was planning a $15-million (U.S.) financing. Now, however, the financing has been bumped down to $4-million (U.S.). Africa Energy says it will "consider" raising the rest if markets improve.
Pipeline hysteria: Yesterday evening, opponents of TransCanada Corp.'s (TRP: $55.84) Keystone XL protested in Washington outside the award celebration for the Toner Prize for Excellence in Political Reporting, where Hillary Clinton was the keynote speaker. The Center for Biological Diversity put out a press release yesterday afternoon, saying participants would call on Ms. Clinton to "stand against Keystone XL and provide a detailed plan for getting our country off the fossil fuels that are killing our planet." Despite the stirring rhetoric, just 10 people showed up, counted the Washington Times. These included the green group's costumed mascot, Frostpaw the Polar Bear, who has shown up everywhere from Hawaii to San Francisco to the White House to frolic for the cameras. (He really does frolic. Mainly he dances.) The green group is always kind enough to let the media know when one of its protests will "feature" Frostpaw and to make him "available for photos, filming and media interviews." |
