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by Stockwatch Business Reporter

West Texas Intermediate crude for September delivery added 99 cents to $45.73 on the New York Merc, while Brent for October added $1.14 to $48.34 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14.55 to WTI ($31.18), down from a discount of $14.35. Natural gas for September was unchanged at $2.59. The TSX energy index added 2.35 points to close at 201.24.

Zargon Oil & Gas Ltd. (ZAR) touched an intraday high of $1.01, its first time at the $1 level since January, before settling at 84 cents, up 17 cents, on 412,300 shares. It has now added 25 cents since releasing its second quarter financials last Wednesday evening. The financials were better than analysts had predicted. Production averaged 4,010 barrels of oil equivalent a day, in line with analysts' predictions, but cash flow of 12 cents a share was significantly better than predictions of just seven cents a share, thanks to operating cost improvements. Even so, these results do not seem quite good enough to explain a 42-per-cent increase in the share price. Investors may be anticipating more news on Zargon's year-old "strategic alternatives" process. This process, a euphemism that companies like to use when putting themselves up for sale, got a boost on July 25, when Zargon agreed to sell all of its 1,200-barrel-a-day Saskatchewan assets for $89.5-million to an unidentified buyer that looks to be TORC Oil & Gas Ltd. (TOG: $7.96). The sale is expected to close early next month. As a result, Zargon's production will drop to an average of 2,750 barrels a day for the second half of 2016, but the company can eliminate its roughly $65-million bank debt and have over $20-million left over. It will still have another debt obligation hanging over its head, however, namely its $57.5-million in convertible debentures due next June. The leftover money from the Saskatchewan sale should help with that, as should Zargon's credit facility, whatever that may be. It is currently $70-million but will go down after the sale because of the resulting drop in Zargon's oil and gas reserves. The review date, according to SEDAR, has been scheduled for Sept. 22.

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