Energy Summary for Dec. 14, 2022
2022-12-14 20:50 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for January delivery added $1.89 to $77.28 on the New York Merc, while Brent for February added $2.02 to $82.70 (all figures in this para U.S.). Western Canadian Select traded at a discount of $26.50 to WTI, up from a discount of $27.75. Natural gas for January lost 51 cents to $6.43. The TSX energy index lost a fraction of a point to close at 241.66.
Oil prices climbed for the third day in a row, rallying on bullish demand forecasts. In closely watched monthly reports, both OPEC and the International Energy Agency predicted increases in global oil demand in 2022 and 2023. This helped offset a more bearish report released by the U.S. Energy Information Administration, which noted that U.S. crude inventories swelled by 10.2 million barrels last week, defying analysts' predictions of a 3.6-million-barrel drop. The jump partly reflects last week's shutdown of TC Energy Corp.'s (TRP: $57.40) Keystone pipeline because of an oil spill in Kansas. TC Energy is hoping for a partial restart this week and a full restart next week.
Wolf Regener and David Neuhauser's Oklahoma-focused Kolibri Global Energy Inc. (KEI) added 26 cents to $3.95 on 208,000 shares, continuing to its dogged push to close above $4 close for the first time in four years. It has climbed from about $3 over the past three weeks on enthusiasm about its drill program in the Tishomingo field. Mr. Regener, president and chief executive officer, shovelled some more promotion on the fire yesterday with the latest "very strong" and "excellent" results. The final three wells in this year's five-well program are collectively producing 2,500 barrels a day, "some of the best early results we have had in this field," he boasted. He sees Kolibri "easily exceeding" its year-end production target and is feeling "extremely pleased."
Shareholders are likely feeling pleased as well -- the stock has sextupled from a 52-week low of 65 cents -- though with barely two weeks left in the year, some would appreciate seeing some specifics on future plans. Kolibiri has yet to release 2023 guidance. In a new presentation on its website, it suggested that it could spend about $42-million (U.S.) in 2023, drill six more wells and boost its full-year average production to a little over 3,000 barrels a day (compared with this year's target of 1,900 barrels a day on a budget of $28-million (U.S.)). It also dangled the possibility of dividends at some vague point in the future. Quickly, however, it added that such musings are "for illustrative purposes" and that the board has not approved any official guidance.
Further afield, Paul Baay's Trinidad-focused Touchstone Exploration Inc. (TXP) lost two cents to 92 cents on 271,900 shares, after closing $18-million in previously announced financings at 90 cents. President and CEO Mr. Baay has not held back on sharing his plans for this money. "The key component for [the financings] was to be able to start drilling again. We've been over a year now where we haven't been able to drill ... but we just need to get back in the field," he said in a recent interview with [paid promotional message]. (Proactive is a self-described media and IR firm. It discloses on its website that Touchstone is a "paid client" -- evidently its term for a paying customer -- but does not disclose the payment amounts.)
Mr. Baay hastened to add that Touchstone has not been sitting idle. It has been working on facilities to boost its production to over 15,000 barrels a day in 2023, a tenfold increase from 2022. "This company's going to go from being a microcap to, I think, being a mid-market-cap during 2023. It's going to look very different," he promised. Based on the stock's decline to around 90 cents from a 52-week high of nearly $2, the market does not seem to share his confidence, but Mr. Baay waved that aside, blaming it partly on bad weather. He insisted that the recent "horrific" rains in Trinidad have not hurt Touchstone's timeline or budget. The market will "feel a lot more comfortable" once more equipment starts to arrive after Christmas, he said. (A long-time promoter, Mr. Baay knows that a successful financing -- or financings, in this case -- is profitable for investors as soon as possible. Christmas makes a jolly milestone.)
To sweeten the pot, Mr. Baay made sure to mention Touchstone's exploration prospectus, which in his view are "really exciting." He dangled a new one that the company has taken to calling the Kraken, which lies below the previously drilled Royston exploration well. That well found oil but also quite a lot of water, making it a disappointment for investors, although Mr. Baay said Touchstone plans to revisit the well and target the oil more selectively. Eventually -- he did not say when -- it will get to the lower-lying Kraken. "Quite frankly, if [the Kraken] works, it makes everything that we've done look really small," he intoned. Naturally, the whole thing went over well with the ever-friendly Proactive interviewer, who wished Mr. Baay and Touchstone "the very best of luck."
Another international junior, Philip O'Quigley's Australia-focused Falcon Oil & Gas Ltd. (FO), flitted up half a cent to 11.5 cents on 269,900 shares. It has been enjoying a burst of insider buying. According to SEDI, directors Tom Layman and Gregory Smith bought a total of 1.47 million shares from Dec. 2 through yesterday, collectively spending $156,220.
Mr. Layman bought the bulk of the shares, at 1.12 million. These are the first shares that he has picked up in Falcon. He joined Falcon's board last May, with the company marvelling at his background in senior geoscience roles at Parsley Energy, Chesapeake Energy, Burlington Resources and Exxon. Mr. Smith, by contrast, is Falcon's longest-serving director, having joined the board in 2009. He is an accountant by training and has served as president of Oakridge Financial Management for the last 18 years. He has just bought 350,000 shares of Falcon and now owns 1.02 million. While perhaps psychologically pleasing to see two directors cross the one-million-share ownership threshold, neither director is making much of a dent in Falcon's overall share count, a bloated 1.04 billion.
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