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by Stockwatch Business Reporter

West Texas Intermediate crude for June delivery lost $1.14 to $44.78 on the New York Merc, while Brent for July lost $2.30 to $45.83 (all figures in this para U.S.). Western Canadian Select traded at a discount of $13.55 to WTI ($31.23), down from a discount of $13.40. Natural gas for June lost 13.6 cents to $2.042. The TSX energy index lost 5.56 points to close at 181.58.

Alberta oil sands producer MEG Energy Corp. (MEG) lost 27 cents to $6.38 on 4.28 million shares, despite some boosterish attention from an analyst who sees it as an attractive target for many companies. (It is almost always "many companies" with analysts. The more they list, the greater their odds of getting a prediction right.) Veritas Investment Research's Nima Billou says MEG would be a perfect fit for Cenovus Energy Inc. (CVE), down 61 cents to $19.28 on 2.91 million shares. He says MEG would bring the production potential and Cenovus would bring the financial resources to achieve that potential. This is not the first time that Mr. Billou has aired theories about both companies. During a Feb. 4 conference call with the management of Suncor Energy Inc. (SU: $35.58), Mr. Billou suggested that Suncor buy either MEG or Cenovus or possibly both, calling them "ideal targets for Suncor." He seems to have changed his mind about that. Promoting his new MEG-Cenovus theory this morning on BNN, he said he does not see Suncor as a likely suitor for MEG anymore; now the more likely candidate is Imperial Oil Ltd. (IMO: $40.49) or Exxon Canada. He also speculated that Exxon might also take over Cenovus. (Whether that would be before, after or instead of MEG was not clear.) Investors seem to be placing little credence in Mr. Billou's theories. MEG, for its part, has other things to focus on. Late last week, after releasing mixed first quarter financials, its management said it is looking at reducing this year's $170-million budget to reflect "efficiency gains." It does not expect to have to reduce its production guidance of 80,000 to 83,000 barrels a day. As well, MEG is looking to sell its 50-per-cent interest in the Access pipeline, and management said during the call that it is "in discussion with counterparties regarding possible transactions." Analysts have previously valued the interest at up to $2.1-billion. On Friday, Scotia Capital analyst Jason Bouvier suggested that a more likely figure is around $1.5-billion, depending on toll arrangements.

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