11:21:42 EDT Fri 29 Mar 2024
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Energy Summary for Nov. 6, 2014

2014-11-06 18:42 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for December delivery lost 77 cents to $77.91 on the New York Merc, while Brent for December lost nine cents to $82.86 (all figures in this para U.S.). Western Canadian Select traded at a discount of $17.10 to WTI ($60.81), down from a discount of $16.90. Natural gas for December added 21 cents to $4.40, its highest level since July 3, after winter weather forecasts raised expectations for strong heating demand. MDA Weather Services is predicting a "polar outbreak" next week for two-thirds of the United States, including New York. The TSX energy index added 2.37 points to close at 255.79.

Paul Colborne's Surge Energy Inc. (SGY) added 26 cents to $6.14 on 6.68 million shares, after releasing its third quarter financials. It provided an operations update last week, so there were relatively few things to surprise the market today, but the results were still better than analysts predicted. The consensus was that Surge would earn eight cents a share. It actually earned 16 cents a share, compared with eight cents a share a year earlier, thanks in part to higher production of 20,327 barrels of oil equivalent a day, up from 12,008. Most of the production increase came from acquisitions. These helped raise operating costs to around $16 a barrel from around $13, but Surge had been expecting a much higher increase. For example, its biggest acquisition was Longview Oil Corp. in June, which added 5,600 barrels of oil equivalent a day. Surge assumed that this purchase would increase third quarter operating costs by at least $1.30 a barrel. Instead, Longview's assets fit much better than expected with Surge's existing assets, and operating costs rose by just 31 cents a barrel. Surge is further pleased that its third quarter production met its guidance despite unscheduled plant outages in Alberta, weather delays in Saskatchewan and Manitoba, and the sale of non-core assets producing 400 barrels a day. It attributes this to better-than-budgeted drilling and waterflood results. In fact, it says these results are so good that it expects to exceed its year-end production target of 21,350 barrels a day. It also says, with excitement, that it can increase its average 2015 production by 17 per cent over 2014 while maintaining an all-in payout ratio of "under 94 per cent!" The company's five-cent monthly dividend yields 9.7 per cent. Investors seem reassured, although Surge is still a long way from its August high of $8.82.

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