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by Stockwatch Business Reporter

West Texas Intermediate crude for December delivery lost $1.08 to $81.12 on the New York Merc, while Brent for December lost 88 cents to $86.24 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14 to WTI ($67.12), unchanged. Natural gas for December added 9.9 cents to $3.82. The TSX energy index lost 3.39 points to close at 255.21.

Paul Colborne's Surge Energy Inc. (SGY) lost 13 cents to $6.14 on 3.92 million shares, more than giving back the seven cents it gained yesterday after providing an operations update and an outlook based on lower crude prices. It touted various well results from the third quarter, including better-than-modelled production from the Midale play in Saskatchewan, the Bakken/Torquay play in Manitoba, and the Sparky and Doig plays in Alberta. It highlighted its fourth Upper Shaunavon well in Saskatchewan. Like the previous three, this well came on production at around 300 barrels of oil equivalent a day. Surge has said that the Upper Shaunavon could support a doubling of its dividend. (Specifically, it said in August that if four wells produced 100 barrels a day, that would provide $120-million to $130-million in free cash flow. The dividend costs $130-million.) Surge also conducted a "stress test" of its 2015 program at lower commodity prices. At WTI pricing of $79.50 (U.S.), it says it can increase production by 17 per cent over 2014 and pay its five-cent monthly dividend (which yields 9.7 per cent), while maintaining an all-in payout ratio of under 94 per cent. Surge's management spends a lot of time discussing the safety of the dividend. Earlier this month, president and chief executive officer Colborne went on BNN and called the dividend "one of the most resilient in the country." Mr. Colborne has good reasons to oppose a cut. He does not take a salary at Surge; instead, he directly owns 2.82 million shares and indirectly owns another 241,946, including nearly 64,000 acquired this month. This provides over $153,000 a month in dividend income.

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