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Energy Summary for Nov. 26, 2013

2013-11-26 20:08 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for January delivery lost 41 cents to $93.68 on the New York Merc, while Brent for January lost 12 cents to $110.88 (all figures in this para U.S.). Western Canadian Select traded at a discount of $30.75 to WTI ($62.93), unchanged. Natural gas for December added 2.9 cents to $3.81. The TSX energy index lost 2.07 points to close at 267.78.

David Reid's Delphi Energy Corp. (DEE) had a good day, adding 12 cents to $1.55 on a heavier-than-usual 928,700 shares. Its latest Montney well in the Bigstone area of Alberta's Deep basin has tested at 2,953 barrels of oil equivalent a day (53 per cent natural gas liquids), its best results to date. The new well should start production in December and become the company's eighth Bigstone Montney producer. Delphi first started producing from the Montney in May, 2012. By the first half of 2013, this play made up about a quarter of Delphi's production (then around 7,500 barrels a day), but by year-end 2014, the company wants to boost that to 60 per cent. Much of the remainder will come from the Hythe and Wapiti areas to the west of Bigstone. By 2017, Delphi hopes to be producing 20,000 barrels a day, with nearly all of that coming from the Montney. It says this plan is financed 90 per cent by cash flow. Delphi has not exactly been known for strong cash flow -- much of its capital has come from debt -- but it says this is because it used to focus on gas and thus suffered from low gas prices. The condensate-rich Montney production fetches a much higher price. Assuming all goes to plan, Delphi expects its ratio of total debt to funds from operations to reach 1.5 to 1 in 2015, compared with 3.1 to 1 as at Sept. 30. Analysts seem optimistic. This week, both Jennings Capital and Raymond James started covering the stock, setting price targets of $2.75 and $2.45, respectively.

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