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Energy Summary for Dec. 2, 2014

2014-12-02 19:29 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for January delivery lost $2.12 to $66.88 on the New York Merc, while Brent for January lost $2.00 to $70.54 (all figures in this para U.S.). Western Canadian Select traded at a discount of $16.85 to WTI ($50.03), up from a discount of $17. Natural gas for January lost 13.3 cents to $3.87. The TSX energy index added a fraction to close at 227.88.

Bellatrix Exploration Ltd. (BXE) added four cents to $4.54 on 5.37 million shares. It has agreed to sell part of its planned gas plant in the Alder Flats area of west-central Alberta. This plant was mentioned in yesterday's Energy Summary, after Bellatrix expanded in the Alder Flats area by buying assets from an unnamed senior producer. (A spokesman for ConocoPhillips told the Calgary Herald that its Canadian branch was the seller.) Also yesterday, Bellatrix reduced its 2015 budget to $400-million from $450-million because of weak commodity prices, the same reason analysts gave when they downgraded the stock in response to the announcement. BMO's Jim Byrne cut his price target to $5.25 from $7.50, TD Securities' Juan Jarrah cut his to $5.50 from $6, and National Bank Financial's Dan Payne, although he kept his target at $5.50, wrote that he views Bellatrix as a "mid-2015 story." Mid-2015 is when Bellatrix expects to start operations at the 110-million-cubic-foot-a-day first phase of its 220-million-cubic-foot-a-day Alder Flats gas plant. Bellatrix has been under pressure from activist shareholder Orange Capital to sell a minority interest in this plant. Today, it did just that, arranging to sell 35- and 5-per-cent interests respectively to Keyera and O'Chiese Gas Plant (an Indian general partnership). The two new co-owners will pay their proportionate share of the $230-million cost to build the two phases. This includes their share of the $65-million spent to Dec. 31, 2014, meaning Bellatrix will receive $26-million. Some investors hoped that Bellatrix would get a premium over its costs. It has arranged something else instead: immediate extra capacity of 19 million cubic feet a day at Keyera's nearby Strachan plant. So far this year, Bellatrix has had to reduce its production guidance four times because of limited third party processing capacity. The Keyera deal will help ease those constraints.

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