Canadian energy stocks end 1998 on high
note
05:12 p.m Dec 31, 1998 Eastern
By Jeffrey Jones
CALGARY, Dec 31 (Reuters) - Investors in
Canadian energy stocks on Thursday bid farewell to a
dreary 1998 on an upbeat note, pushing up share
values after upticks in both crude oil and natural gas
prices.
The Toronto Stock Exchange's oil and gas subindex
climbed nearly 145 points, or more than 3 percent, to
4,643 in thin pre-holiday trading, with the lion's share
of the 50 producer and oil service stocks listed on it
closing higher.
Big gainers included Suncor Energy Inc. (SU.TO), up
C$1.75 to C$46, Berkley Petroleum Corp.
(BKP.TO), up C$1.50 to C$11.60, Talisman Energy
Inc. (TLM.TO), up C$1.25 to C$26.95,
Renaissance Energy Ltd. (RES.TO), up C$0.70 to
C$17.45, and Gulf Canada Resources Ltd.
(GOU.TO), up C$0.33 to C$4.48.
Still, nearly all the stocks are well below their
52-week highs after this year's painful decline in oil
prices, which have stubbornly clung to
inflation-adjusted 25-year lows, sending cash flow,
earnings and capital spending tumbling.
The subindex is down more than 30 percent from a
year ago, when the world's oil glut was beginning to
balloon and industry conditions were in the early
stages of deterioration.
Analyst Craig Langpap of Calgary-based brokerage
Peters & Co. Ltd. attributed Thursday's jump to
higher commodity prices as well as an end last week
to year-end tax-loss selling, which drew some
investors back to the market.
''While (prices) aren't exactly robust, it's a big
improvement over where we were,'' Langpap said.
Benchmark West Texas Intermediate crude oil
climbed $0.30 in New York to close at $12.05 a
barrel. Since Monday, crude steadily rose from
$11.46 a barrel, although the upward movement
occurred on thin to moderate trading.
Natural gas futures, meanwhile, rose $0.06 on
Thursday to finish the year at $1.95 per million British
thermal units.
Gulf Canada led the oils on volume with more than
1.2 million shares changing hands.
In addition to the general firmness of the energy
sector, observers attributed the brisk action in
debt-heavy Gulf's stock to an upgraded rating from
an analyst.
John Clarke, analyst with Deutsche Bank Securities in
Toronto, on Wednesday raised his rating on Gulf
Canada to ''accumulate'' from ''hold,'' and made
similar moves with its majority-owned affiliate Gulf
Indonesia Resources Ltd. (GRL.N) as well as rival
Canadian Occidental Petroleum Ltd. (CXY.TO)
Clarke said he expected oil price weakness to
continue at least through the first half of 1999, and
that long-term investors would be wise to accumulate
oil-weighted stocks like Gulf Canada while their
prices remained well below their asset values.
''I think that the (first quarter) is likely to be still quite
nasty and I'm not expecting any kind of rebound in oil
prices until the second half of next year,'' he told
Reuters.
''I'm just preparing investors for that.''
Gulf Canada, with major oil operations in Canada and
Indonesia, hit a 52-week low of C$3.57 in Toronto
on December 22. The company set a goal to sell
C$1.38 billion of assets worldwide this year in an
effort to reduce its debt, which stood at C$2.5 billion
in September.
($1-$1.53 Canadian)
((Reuters Calgary Bureau (403) 531-1624))
Copyright 1998 Reuters Limited. All rights reserved.
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