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Energy Summary for Aug. 17, 2020

2020-08-17 20:25 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for September delivery added 88 cents to $42.89 on the New York Merc, while Brent for October added 57 cents to $45.37 (all figures in this para U.S.). Benchmarks edged higher as traders awaited Wednesday's meeting of the OPEC+ monitoring committee, which will review compliance with the group's production-cutting pact, as well as consider downside scenarios if COVID-19 conditions worsen. This week will also bring the U.S. Democratic National Convention, where presumptive Democratic presidential nominee Joe Biden will likely introduce his energy plan for the United States. Meanwhile, Western Canadian Select traded at a discount of $12.25 to WTI, unchanged. Natural gas for September lost two cents to $2.34. The TSX energy index added a fraction to close at 85.21.

The U.S. shale bankruptcy club gained another member as Chaparral Energy Inc. (U:CHAP) filed for Chapter 11 protection -- again. Chaparral, which focuses on the Anadarko basin of Oklahoma and produced 30,700 barrels of oil equivalent a day in the first quarter, had already signalled distress in May, when it announced that a "strategic alternatives" review (often a troubled company's euphemism for putting itself up for sale). It owed around $500-million (U.S.) at the time. Chief executive officer Chuck Duginski strove to keep up a brave face, claiming that despite "turbulent conditions," Chaparral was continuing to "execute operationally at a very high level ... [and] manage through the pricing and logistical challenges." Investors were skeptical, and with good reason: This was not Chaparral's first time on the insolvency carousel. In 2016 (under a different CEO), it filed for bankruptcy with about $1.2-billion (U.S.) in debt, re-emerging from a restructuring in 2017 with a share price of around $25 (U.S.). By the time of its "strategic alternatives" warning three months ago, it was worth around 50 U.S. cents. Today it was halted at 39 U.S. cents.

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