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Energy Summary for Jan. 7, 2015

2015-01-07 19:27 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for February delivery added 72 cents to $48.65 on the New York Merc, while Brent for February added five cents to $51.15 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14.35 to WTI ($34.20), up from a discount of $15.35. Natural gas for February lost 6.7 cents to $2.87. The TSX energy index lost 1.16 points to close at 204.39.

Dale Shwed's Crew Energy Inc. (CR) lost 33 cents to $5.01 on 1.79 million shares, extending its drop from yesterday, when it lost 56 cents after releasing its 2015 outlook. It set a budget of $185-million. This is nearly a 40-per-cent decrease from the 2014 budget of $305-million, and although some sort of decrease was expected amid lower oil prices, this was surprisingly steep given Crew's ambitious plans in the B.C. Montney. The company wants to achieve Montney production of 45,000 barrels of oil equivalent a day in 2018. By comparison, Montney production was around 14,000 barrels a day as of mid-November, based on Crew's statement at the time that its total production (including heavy oil assets in the Lloydminster area of Alberta-Saskatchewan) was 22,000 barrels a day. (The low-capex Lloydminster assets generally contribute 6,000 barrels a day, a rate that Crew likes to keep flat to provide steady cash flow for Montney development.) These ambitions suggested that Crew would spend around $300-million in 2015 and try to boost Montney production to 20,000 barrels a day. Instead, Crew has slashed spending in both its core areas. Lloydminster will see as little spending as possible (no new wells until prices improve), and even the Montney will be less active than expected. Previously, Crew said it would finish a 60-million-cubic-foot-a-day Montney gas plant in the third quarter of this year, and then fill it immediately. Now, it says it will not have enough wells to fill it right away (and it did not even mention its previous proposal to double the plant's capacity in late 2015). All told, Crew expects average production of 20,000 to 22,000 barrels a day over the year, with a little over three-quarters coming from the Montney. Investors seem dismayed at the sudden departure from the previous go-getter forecasts. Crew says it wants to protect its balance sheet and can always change its budget if prices improve.

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