Stockwatch Energy today
Energy Summary for April 21, 2021
2021-04-21 20:54 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for June delivery lost $1.32 to $61.35 on the New York Merc, while Brent for June lost $1.25 to $65.32 (all figures in this para U.S.). Western Canadian Select traded at a discount of $11.70 to WTI, down from a discount of $10.35. Natural gas for May lost four cents to $2.69. The TSX energy index added a fraction to close at 113.67.
Oil prices dipped as India, the world's third largest oil importer, set another daily record for new COVID-19 cases, as well as COVID-19 deaths. "India is a major crude oil consumer. So rising virus cases, and thereby restrictions to limit the spread, will dampen the demand outlook," Ravndra Rao of Kotak Securities opined to Reuters. Also dampening the outlook was a new report from Rystad Energy, Norway's biggest independent energy consultancy, which is now predicting that global oil demand will peak in 2026 -- just five years away -- at 101.6 million barrels a day. This is more bearish than its prior forecast of a peak in 2028 at 102.2 million barrels a day. (It is also a bearish forecast in general. By contrast, OPEC does not see global oil demand peaking until 2040.)
Here in Canada, David Wilson's Alberta Montney-focused Kelt Exploration Ltd. (KEL) added eight cents to $2.48 on 787,300 shares. It is having a quiet spring breakup. Although the stock jumped up to $3.17 from $2.90 on March 11, the day that Kelt released its year-end financials and laid out an ambitious new budget for 2021 (boosting the old $90-million budget to $120-million), the stock has since given back those gains and then some.
Kelt's president and chief executive officer, Mr. Wilson, is taking the dip as a buying opportunity. New SEDI filings show that he bought an impressive 501,000 shares yesterday, which at $2.40 per share cost him a total of $1.2-million. These were on top of the 470,200 shares that he bought in late March at prices ranging from $2.64 to $2.76. All told, Mr. Wilson has splashed out for $2.46-million worth of Kelt shares over the last month. He now controls 24.9 million of the company's 188 million shares.
Mr. Wilson is presumably looking forward to the start of this year's drill program. In a presentation published last week on its website, Kelt noted that it will run the drill program from May through December. The program will comprise seven Montney wells. Kelt also has several wells awaiting tie-in from last year's program, including two wells that are not in the Montney but are in a new and increasingly eye-catching play, the Charlie Lake. (This play was last discussed in the Energy Summary for April 12, after Tamarack Valley Energy Ltd. (TVE: $2.37) agreed to buy a private Charlie Lake producer called Anegada Oil for $494-million. Tamarack jubilantly declared the Charlie Lake to be "one of the most economic plays in North America.") Kelt's overall program is expected to boost its 2021 production to 19,000 barrels a day, up from the 2020 level (adjusted for asset sales) of 15,900 barrels a day. Investors should get an output update when Kelt releases its first quarter financials on May 6.
Elsewhere in Alberta, George Fink's Pine Cliff Energy Ltd. (PNE) added two cents to 27 cents on 76,400 shares, after extending a loan and expanding its board. The loan was described as a $4-million "insider loan facility." Pine Cliff did not identify the insider in this press release, but it is the above-mentioned Mr. Fink, its long-time chairman and major shareholder. Mr. Fink owns 25 million of Pine Cliff's 335 million shares. Understandably keen not to see the company flounder, he set up the loan facility last August, when Pine Cliff was facing what it called "short-term pressure on liquidity" as a result of the COVID-19 downturn. The facility was meant to be short term and was due to expire on March 31, 2021. Now Pine Cliff and Mr. Fink have extended it all the way to Dec. 31, 2024.
(On a separate note, owning 25 million shares is not enough to bump Mr. Fink to the status of top shareholder. That title goes to Vancouver broker Robert Disbrow, who owns 44.7 million shares. He has also been a supportive buyer lately. Since the start of February, Mr. Disbrow has bought 1.7 million shares of Pine Cliff -- including 300,000 this month -- for a total of $438,000.)
Pine Cliff also announced that it is bringing in a new director, Robert Fryk. Mr. Fryk is the former president and CEO of Gain Energy, which Pine Cliff described simply as "a private oil and gas company that sold all of its assets in 2020." It did not mention that Gain was struggling with debt at the time and sold the assets to repay its senior creditor. The opportunistic buyer was i3 Energy PLC (ITE: $0.175), which paid just $80-million for the 9,400-barrel-a-day assets last September. (For context, the above-mentioned Anegada Energy, now being acquired by Tamarack Valley, has only slightly higher production -- 11,800 barrels a day -- yet its price tag is $494-million.) Gain sent its remaining creditors a bankruptcy proposal last month and is planning a wind-up. Mr. Fryk left shortly after the proposal. Now he is popping up as a new director of Pine Cliff, taking over the seat of Randy Jarock, who is stepping down from the board after nine years.
Lastly, Don Gray's Alberta- and Saskatchewan-focused Gear Energy Ltd. (GXE) edged up one cent to 51 cents on 2.54 million shares. The stock has seen heavier-than-usual volume over the last few days -- with a record 8.36 million shares being traded on Monday -- as investors awaited the pricing details of a proposed shares-for-debt swap. The company announced on March 16 that it would redeem $12.7-million worth of convertible debentures on April 26. First it sought voluntary conversions, which led to $9.7-million of the debentures becoming 29.2 million shares (at a conversion price of 32 cents a share) on March 23. Now Gear is clearing out the remaining debentures at a redemption price of 49 cents a share.
Gear would rather have the dilution than the interest costs. Although the debentures were not actually due for 2-1/2 more years, Gear calculated that if it redeemed them early, it would enjoy annual interest savings of $900,000. President and CEO Ingram Gillmore hinted that he has big plans for the money. He told investors last month that the redemption would "further enhance Gear's exceptional balance sheet, providing strategic optionality to consider future acquisitions or development capital expansions."
© 2021 Canjex Publishing Ltd. All rights reserved.