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Energy Summary for July 22, 2016

2016-07-22 20:23 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for September delivery lost $1.06 to $43.13 on the New York Merc, while Brent for September lost 97 cents to $44.72 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14.70 to WTI ($29.53), unchanged. Natural gas for August lost three cents to $2.747. The TSX energy index added 1.15 points to close at 194.31.

Li Ka-Shing's Husky Energy Inc. (HSE) added 47 cents to $15.89 on 2.95 million shares, as its pleasing results for the second quarter offset news of a sticky mess in a Saskatchewan river. Production and cash flow in the quarter came to 316,000 barrels of oil equivalent a day and 49 cents a share, respectively, meeting analysts' predictions. The production figure was considerably lower than the first quarter level of 341,000 barrels a day, but Husky had already warned the second quarter would be affected by maintenance, turnarounds and other factors. One major contributor to the drop was the Liwan joint venture project in the South China Sea. This project is owned 49 per cent by Husky and 51 per cent by China's CNOOC. Its gross gas sales were 161 million cubic feet a day in the second quarter, down from 207 million in the first quarter and 294 million in the fourth quarter of last year. Part of the decrease reflects a pipeline outage in the first quarter and a planned partial shutdown in the second quarter to install another pipeline. Another part, however, reflects "lower demand," which is apparently Husky's code for contractual violations on the part of CNOOC. Under take-or-pay contracts, CNOOC is supposed to pay Husky for specified amounts of gas, but a few months ago it simply stopped taking all of the specified amounts, complaining that the fixed price was too high. Husky growled about legal action, but it looks as though it will not come to that. Today, Husky said its talks with CNOOC have "progressed to a framework for resolution." It promised to provide more details once they are finalized.

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