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by Stockwatch Business Reporter

West Texas Intermediate crude for January delivery, the benchmark in North America, lost $2.79 to $63.05 on the New York Merc, while Brent for January, the international benchmark, lost $2.88 to $66.19 (all figures in this para U.S.). These are more than five-year lows for both benchmarks. Weak trade data from China, where exports rose by less than expected and imports actually fell, raised new concerns about oil demand. Western Canadian Select, Canada's heavy oil benchmark, traded at a discount of $16.70 to WTI ($46.35), down from a discount of $16.30. Natural gas for January, the international benchmark, lost 20.7 cents to $3.59. The TSX energy index plummeted 14.21 points to close at 204.89.

Trilogy Energy Corp. (TET) lost $1.09 to $7.89 on 6.05 million shares, after taking drastic steps to cope with lower oil prices. Investors have been expecting companies like Trilogy to have to choose between lowering their 2015 budgets and cutting their dividend. Trilogy has now given itself the dubious distinction of taking both actions. It is doing away entirely with its 3.5-cent monthly dividend, which as of Friday's close yielded 4.6 per cent. As well, it has set a 2015 capital budget of $250-million, down sharply from the 2014 budget of $430-million. It expects that this budget will support flat year-over-year production of 35,000 barrels of oil equivalent a day. Investors were not pleased. They may have expected a dividend cut -- analysts had put Trilogy on their short list of potential reducers -- but they likely expected at least some production growth. The target of 35,000 barrels a day was not even the original target for 2014; Trilogy lowered it from 36,000 last month. Trilogy says it needs to protect its finances amid lower prices. It has no production hedged in 2015, and the results from its two "key growth plays," being the Montney and the Duvernay in the Kaybob area of Alberta, have been weaker than expected. In the Montney, well productivity has gone down by about 50 per cent compared with last year, as Trilogy pushes the boundaries of the reservoir. As for the Duvernay, Trilogy's land is in the heart of what seems to be the most productive fairway, but a lot of work remains before the play can be considered commercial. This means a lot of upfront investment on wells that do not seem initially attractive. The period from drilling to tie-in can take Trilogy six months in the Duvernay compared with six weeks in the Montney, and the total cost of a Duvernay well (about $12-million) is three times as high as a Montney well.

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