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by Stockwatch Business Reporter
U.S. markets were closed for Martin Luther King Jr. Day. West Texas Intermediate crude for February delivery added 10 cents to $53.90 in electronic trading on the New York Merc, while Brent for March added eight cents to $62.78 (all figures in this para U.S.). Western Canadian Select traded at a discount of $11.20 to WTI, unchanged. Natural gas for February lost 24 cents to $3.24. The TSX energy index added a fraction to close at 153.35.
Alberta gas producer Peyto Exploration & Development Corp. (PEY) edged up two cents to $7.02 on 761,800 shares. It is trying hard to recover from last Thursday's fall to $7.08 from $7.93, following its announcement of reductions to both its budget and its dividend. The company now plans to spend $150-million to $200-million (down from $250-million to $300-million) and pay a monthly dividend of two cents (down from six cents), for a yield of 3.4 per cent. President and chief executive officer Darren Gee took to BNN on Friday to defend the cuts. He blamed them on persistently low prices for natural gas. "There is a serious crisis going on," he said. The crisis stems from a lack of capacity on TransCanada's NGTL gas system in Alberta and northeastern British Columbia. As a result, Alberta producers like Peyto faced average realized gas prices of about $1.43 a unit in 2018, whereas producers in Saskatchewan reaped $2.75 a unit. Given that the cost of getting gas out of Alberta last year was about $1.48 a unit, many gas producers were effectively losing money, lamented Mr. Gee. This prompted Peyto to take steps to protect its balance sheet, hence the budget and dividend cuts.
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