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Energy Summary for Aug. 21, 2014

2014-08-21 19:37 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for October delivery lost $2.11 to $93.96 on the New York Merc, while Brent for October added 35 cents to $102.63 (all figures in this para U.S.). Western Canadian Select traded at a discount of $18.50 to WTI ($75.46), unchanged. Natural gas for September added 6.6 cents to $3.88. The TSX energy index added 1.76 points to close at 319.49.

Paul Colborne's Surge Energy Inc. (SGY) added 24 cents to $8.55 on 3.12 million shares. Shareholders may have liked Mr. Colborne's presentation this morning at the EnerCom Oil & Gas Conference in Denver, Colo. He focused on the changes to Surge since he took over as president and chief executive officer 15 months ago. Over that time, the company has started paying a dividend; raised the dividend to five cents a month from 3.33 cents, while lowering the payout ratio to 89.9 per cent from 96 per cent; and made several acquisitions and new discoveries. Mr. Colborne focused on one particular acquisition and one particular discovery. The acquisition was of Longview Oil and closed in early June, and was "one of the best deals I'll ever do," said Mr. Colborne. (That is quite a claim. In 2003, he founded StarPoint Energy with an initial private placement of $6-million, then merged it with another company in 2005 in a deal worth $5-billion. He also co-founded Crescent Point Energy Corp. (CPG: $44.90) in 2001.) The Longview deal, said Mr. Colborne, was 20 per cent accretive, when normally Surge has to work hard to find deals that are 2 or 3 per cent accretive. Mr. Colborne then turned to a "juicy" discovery in the Upper Shaunavon play of Saskatchewan. Surge acquired its Shaunovan assets last year from Cenovus Energy Inc. (CVE: $33.65) because it wanted access to the Lower Shaunavon, which was thought to be much larger. (Surge initially figured the Lower Shaunavon assets contained over 230 million barrels of oil originally in place (OOIP), compared with 20 million to 30 million in the Upper Shaunavon.) In the first quarter of 2014, Surge's discovery well in the Upper Shaunavon flowed at 300 barrels a day, and is still flowing at that rate months later, said Mr. Colborne. The company now believes that the Upper Shaunavon contains over 150 million barrels of OOIP from just one of three sand intervals present.

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