07:18:45 EDT Thu 28 Mar 2024
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Energy Summary for Jan. 21, 2016

2016-01-21 18:24 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for March delivery added $2.98 to $29.53 on the New York Merc, while Brent for March added $1.37 to $29.25, their largest one-day gains since October (all figures in this para U.S.). Traders generally attributed the rally to short covering. Western Canadian Select traded at a discount of $14.05 to WTI ($15.48), up from a discount of $14.60. Natural gas for February added two cents to $2.138. The TSX energy index added 6.97 points to close at 140.61.

One of the longest-serving members of the dividend club's old guard has finally fallen. Pengrowth Energy Corp. (PGF), down six cents to 75 cents on 3.93 million shares, suspended its dividend last night, after having kept a dividend alive in one form or another for nearly three decades. Pengrowth started up in 1988 as one of the first Canadian royalty trusts. Only one is older: the entity that is now Enerplus Corp. (ERF: $3.41), which went public in 1986 following a 1985 tax ruling from Ottawa that allowed cash to be paid directly to investors. After a different ruling from Ottawa in 2006 made life much harder for trusts, both Pengrowth and Enerplus converted to corporations at the beginning of 2011. Pengrowth also started heavily promoting its Lindbergh thermal project in Alberta around that time. After a bumpy ride that included delays and budget increases, Lindbergh at last started commercial production in April of last year. By then, Pengrowth's stock (which had traded at a high of over $27 in 2006) was less than $4, and its dividend (which was 25 cents a month in 2006) was two cents a month. As well, the balance sheet was (and is) in difficult shape, with a total debt load of around $2-billion. Pengrowth announced several efforts in 2015 to get itself back in shape. In June, it said it would sell $600-million worth of assets by the end of 2015, and in September, it lowered its dividend even further, making it a one-cent quarterly dividend that yielded 5 per cent as of yesterday's close.

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