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by Stockwatch Business Reporter

West Texas Intermediate crude for September delivery lost $2.10 to $98.17 on the New York Merc, while Brent for September lost 49 cents to $106.02 (all figures in this para U.S.). Western Canadian Select traded at a discount of $21.60 to WTI ($76.57), up from a discount of $22.25. Natural gas for September added 5.5 cents to $3.84. The TSX energy index lost 5.65 points to close at 317.54.

Surge Energy Inc. (SGY) lost six cents to $8.50 on 9.91 million shares, after releasing its second quarter results. It earned 20 cents a share, compared with a loss of 21 cents a share a year earlier, thanks to higher production and commodity prices. Production came to 16,395 barrels of oil equivalent a day. This was slightly lower than what analysts had predicted, 16,463 barrels a day, but still up from 9,373 barrels a day in the same period last year. Much of the gain came from acquisitions. Over the last year, Surge has bought properties in Alberta (Wainwright), Manitoba (Manson) and Saskatchewan (Macoun, Shaunavon and a group of assets in the southeast), as well as Longview Oil Corp. It also had a successful second quarter. In April, it made a new discovery at Shaunavon and mapped 125 million barrels of oil originally in place. Based on the results of the discovery well, which began production at 300 barrels of oil a day and is still at that rate, Surge now thinks the discovery probably contains more than 125 million barrels. It plans to test its theory by drilling two more wells in the third quarter and four in the fourth. (It licensed the first of those wells yesterday.) Given these and other results, Surge has tweaked its guidance for the year. Even though it recently reached a deal to sell about $52-million in assets, it is keeping its year-end production target at 21,350 barrels of oil equivalent a day. It is also boosting its budget, planning three more wells and forecasting a lower year-end net debt.

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