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Energy Summary for March 19, 2015

2015-03-19 19:58 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for April delivery lost 70 cents to $43.96 on the New York Merc, while Brent for May lost $1.50 to $54.41 (all figures in this para U.S.). Western Canadian Select traded at a discount of $13.35 to WTI ($30.61), unchanged. Natural gas for April lost 10.7 cents to $2.81. The TSX energy index lost 5.91 points to close at 209.79.

Grant Fagerheim's Whitecap Resources Inc. (WCP) lost three cents to $13.90 on 9.14 million shares, giving back a bit of the 57 cents it added yesterday. Yesterday's gain followed the release of the company's year-end financials. Today, the big news is a $587.5-million deal to buy a private Saskatchewan Viking producer called Beaumont Energy. First things first: In the fourth quarter, Whitecap produced 37,661 barrels of oil equivalent a day (as announced in January) and cash flow per share came to 54 cents, exceeding analysts' predictions of 51 cents. The company maintained its 6.25-cent monthly dividend, which yields 5.4 per cent, as well as its 2015 outlook, under which it will spend $200-million and produce 36,000 barrels a day. That outlook changed yesterday evening after Whitecap announced its takeover of Beaumont. Beaumont focuses on the Kerrobert Viking, immediately north of Whitecap. It began operations at the end of 2012 with production of about 680 barrels a day. Less than two years later, in November, 2014, production was 5,200 barrels a day, thanks to horizontal wells and waterfloods. Beaumont told a FirstEnergy conference in November that it expected to end 2014 producing 6,000 to 6,200 barrels a day. It likely did not accomplish this because its current production is 5,100 barrels a day. Still, its performance is impressive. Based on its initial financing, it estimates that it generated a return to shareholders of 180 per cent over its 25 months in business. President and CEO Bob Chaisson and the rest of management can pat themselves on the back for adding Beaumont to the list of companies they have sold together over the years, from Amber Energy in late 1998 (acquired by the Alberta Energy Company for $771-million) to Cutpick Energy in mid-2012 (acquired by Crescent Point Energy Corp. (CPG: $28.21) for $425-million).

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