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Energy Summary for July 26, 2016

2016-07-26 19:32 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for September delivery lost $1.00 to $41.92 on the New York Merc, while Brent for September lost $1.40 to $43.47 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14.65 to WTI ($27.99), unchanged. Natural gas for August lost four cents to $2.672. The TSX energy index added a fraction to close at 188.06.

Saskatchewan- and Alberta-focused TORC Oil & Gas Ltd. (TOG) lost 24 cents to $7.02 on 2.67 million shares, after agreeing to an $89.5-million acquisition in its core southeast Saskatchewan area, financed through two $7.05-a-share offerings for total proceeds of $100-million. The acquisition comes almost three years to the day after TORC first decided to enter Saskatchewan. In mid-July, 2013, TORC agreed to pay Pengrowth Energy Corp. (PGF: $1.99) $510-million for Saskatchewan assets producing 5,700 barrels of oil equivalent a day. TORC then narrowed its focus on Saskatchewan by buying 1,550 barrels a day from Midale Petroleums for $128-million in February, 2015, and then buying 4,750 barrels a day from Surge Energy Inc. (SGY: $2.34) for $430-million in June, 2015. The acquisition announced today will add another 1,120 barrels a day. Thanks in part to all these acquisitions, TORC's production, which was around 4,300 barrels a day three years ago, is expected to be 19,400 barrels a day by the end of this year. TORC plans to finance its latest acquisition by issuing 10.64 million shares at $7.04 through a bought deal, as well as 3.54 million shares at $7.05 to its main investor, the Canada Pension Plan Investment Board (CPPIB). The CPPIB got involved with TORC at the time of the first Saskatchewan acquisition in July, 2013, when it acquired about one-quarter of TORC's shares. It has kept its ownership at that level over the years by participating in many of TORC's financings. This coming financing is no exception, and after closing, the CPPIB will own about 46 million of the approximately 177 million shares that TORC will have outstanding. The CPPIB also receives shares of TORC every month through the company's stock dividend program. TORC's two-cent monthly dividend yields 3.4 per cent.

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