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Energy Summary for May 19, 2016

2016-05-19 20:27 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for June delivery lost three cents to $48.16 on the New York Merc, while Brent for July lost 12 cents to $48.81 (all figures in this para U.S.). Western Canadian Select traded at a discount of $12.10 to WTI ($36.06), down from a discount of $11.70. Natural gas for June added 3.8 cents to $2.039. The TSX energy index lost a fraction to close at 182.74.

Spartan Energy Corp. (SPE) added 16 cents to $3.13 on 6.71 million shares, after agreeing to pay $77-million for Wyatt Oil + Gas, its neighbour in southeast Saskatchewan. Both companies have assets targeting the Midale and Frobisher light oil pools. Wyatt, which has been around since late 2010, once had production of over 3,000 barrels of oil equivalent a day, according to its website, but it slowed down as oil prices crashed and as it began secondary recovery (waterflood) programs. Spartan's announcement pegs Wyatt's current production about 1,330 barrels a day. Even so, that is more than enough to push Spartan's production, which was 9,683 barrels a day in the most recent quarter, over the 10,000 mark. The deal is expected to close by the end of June and requires Spartan to issue 11.4 million shares and assume Wyatt's $42-million net debt. The added debt should be no problem for Spartan. It raised $96.3-million through a $2.41-a-share bought deal in mid-March and put the proceeds toward its own net debt, which as a result was just $3.1-million on March 31. Spartan specifically said the financing would provide "financial flexibility ... to be opportunistic on potential acquisition opportunities that may arise in the coming year." By that point, Spartan had been talking about such opportunities for over a year, without actually closing on any. Its last significant acquisitions were in the summer of 2014. Now, going on two years later, Spartan is finally making a move. It does not even seem to want to pause for breath. After laying out what Wyatt will offer, the press release reminds readers that Spartan "continues to believe that the current commodity price environment will present attractive acquisition opportunities during the second half of 2016."

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