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by Stockwatch Business Reporter

West Texas Intermediate crude for December delivery lost 76 cents to $77.18 on the New York Merc (all figures in this para U.S.). Brent for December dipped to $79.82, its first time below $80 in four years, before settling down $1.29 to $80.38, after Saudi Arabia's oil minister said the kingdom will not engage in a price war. "Talk of a price war is a sign of misunderstanding -- deliberate or otherwise -- and has no basis in reality," he said at a gas conference in Mexico. His comments suggested to economists and, evidently, traders that Saudi Arabia will not decide to cut its production (thereby shoring up prices) at OPEC's meeting on Nov. 27. Western Canadian Select traded at a discount of $15.50 to WTI ($61.68), up from a discount of $16.15. Natural gas for December lost 6.2 cents to $4.18. The TSX energy index added 2.61 points to close at 263.66.

Don Gray's Gear Energy Ltd. (GXE) lost 36 cents to $3.84 on 523,900 shares, failing to please investors with its third quarter results and 2015 budget. Production during the quarter averaged 6,712 barrels of oil equivalent a day, below analysts' predictions of around 7,200 barrels a day. Cash flow of 31 cents a share was below predictions of 35 cents a share. The results suffered from weather-related delays in core Alberta-Saskatchewan heavy oil areas. Gear says it has moved past these problems and expects fourth quarter production of 7,100 to 7,300 barrels a day. Although the company did not mention this, these numbers indicate that it will not meet its full-year guidance of 6,200 to 6,400 barrels a day. (Production from the first through third quarters averaged 5,860 barrels a day. Even if the fourth quarter is at 7,300 barrels a day, the full-year average will still be just 6,085.) For 2015, Gear has set a full-year production target of 7,300 to 7,700 barrels a day, based on a $95-million to $105-million capital budget and 61 gross wells. Compared with 2014, with its $85-million budget and 79 gross wells, 2015 will see fewer wells but more money. To be fair, this is not necessarily bad. Twenty-six of the 2015 wells will be multilateral horizontals, meaning stems with branches to tap multiple targets. Gear drilled its first two multilaterals in September and says they showed double the production with just a 40-per-cent increase in costs. That means Gear could spend more money drilling fewer wells (for example, one expensive dual lateral instead of two cheaper single laterals) while still increasing production. Of course, the budget could also reflect higher costs. Operating, interest, and general and administrative costs this year have all been higher than Gear originally estimated.

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