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Energy Summary for Nov. 5, 2015

2015-11-05 21:16 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for December delivery lost $1.12 to $45.20 on the New York Merc, while Brent for December lost 60 cents to $47.98 (all figures in this para U.S.). Western Canadian Select traded at a discount of $15.00 to WTI ($30.20), unchanged. Natural gas for December added 10.2 cents to $2.364. The TSX energy index lost a fraction to close at 187.14.

Clay Riddell's Paramount Resources Ltd. (POU) plunged $2.80 to $10.98 on 4.84 million shares, after releasing underwhelming third quarter financials and taking another hit to its battered full-year guidance. Sales volumes during the quarter came to 49,990 barrels of oil equivalent a day, below Paramount's guidance for the second half of the year of 56,000 barrels a day. The original guidance for the current period was even higher. From early 2014 to as recently as May, 2015, Paramount was touting plans to boost volumes to 70,000 barrels a day once it completed a mid-2015 facility expansion in its core area, the Deep basin of Alberta. By comparison, Paramount's sales volumes in mid-2014 were around 20,000 barrels a day, so the increase to 70,000 would have been dramatic. Yet the company was confident in its ability to pull it off, and the stock, which was around $40 at the beginning of 2014, climbed to an autumn 2014 high of $66 -- six times today's close of $10.98. The oil crash took a toll starting in late 2014, but the stock was still in the high $30s in April, 2015, as investors awaited the facility expansion and promised production boost. They were to be very disappointed. Though the facility was finished on schedule, the ramp-up was bumpier than expected, and Paramount announced in August that its second-half target was just 56,000 barrels a day. Not only was this well below 70,000, it also meant that Paramount would not be able to achieve its full-year guidance of 55,000 to 65,000 barrels a day, although Paramount did not officially lower the guidance at the time. It did that in today's update. The new full-year guidance is 45,000 barrels a day. That makes the new second-half target roughly 50,000 barrels a day.

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