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Energy Summary for May 27, 2015

2015-05-27 20:01 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for July delivery lost 52 cents to $57.51 on the New York Merc, while Brent for July lost $1.66 to $62.06 (all figures in this para U.S.). Western Canadian Select traded at a discount of $9 to WTI ($49.51), up from a discount of $9.75. Natural gas for June lost 0.7 cent to $2.81. The TSX energy index lost 1.60 points to close at 218.94.

Trent Yanko's Legacy Oil + Gas Inc. (LEG) dropped 25 cents to $2.67 on 39.9 million shares, after accepting an all-share takeover offer from Crescent Point Energy Corp. (CPG), down $1.63 to $28.19 on 13.4 million shares. Normally only the suitor's shares fall after a takeover bid, but in Legacy's case, this is not a glorious end. Its shareholders will receive 0.095 of a Crescent Point share for each Legacy share. This values their shares at $2.85, says Legacy, using Crescent Point's May 25 closing price of $30. Crescent Point does the math slightly differently, using its five-day weighted average price of $29.55, a figure that values Legacy's shares at just under $2.81. Each company then looks at Legacy's weighted price over various periods to determine the premium, which ranges from 4.6 per cent to 36 per cent, depending on how far back the companies go. Crescent Point goes over a month back and picks the 10-day period ended April 17. There is some logic to this: April 17 was when FrontFour Capital, a Connecticut-based hedge run by Zachary George (son of Rick George, the former CEO of Suncor Energy Inc. (SU: $36.32)), announced that it wanted to shake up Legacy's board. This helped fuel the rumours that were already swirling; Legacy's shares spent April doubling to $3 from $1.50. They have remained fairly strong in May. Thus, the most recent investors will see little or no gain from the takeover offer, and may even lose money. Legacy's weighted average price over the last five trading days -- which neither company mentions -- is $2.91. This is below the takeover price and significantly below Legacy's 52-week high of $10.03.

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