| West Texas Intermediate crude for July delivery added $2.70 to $122.11 on the New York Merc, while Brent for August added $3.01 to $123.58 (all figures in this para U.S.). Western Canadian Select traded at a discount of $18.87 to WTI, down from a discount of $18.81. Natural gas for July lost 59 cents to $8.70. The TSX energy index added 1.96 points to close at 285.21. Ukraine's new ambassador to Canada has joined the chorus calling for Canada to send oil and gas to Europe and reduce Europe's energy reliance on Russia. "Canadian [energy] companies, we do think, should take the opportunity to enter and expand in the EU market," said Yulia Kovaliv (who formally assumed ambassadorship yesterday) during a speech today at the Global Energy Show in Calgary. She added that Europe will particularly need Canada's help once the European Union's embargo on Russian oil takes effect at the end of the year. "That is a big move," she said. "It will be a significant challenge for the overall European continent." Canada currently does not export any oil or gas directly to Europe, as it lacks the infrastructure to do so (though Canadian barrels can travel through pipelines to the United States and then ship out from the Gulf of Mexico). Ottawa has been making noises for months about trying to help European allies with energy exports. In March, Natural Resources Minister Jonathan Wilkinson stated that Canada could increase exports by up to 300,000 barrels a day this year, "with the intention of displacing Russian oil and gas, while not increasing global emissions." Therein lies the crux of a problem of Ottawa's own making: In its grand quest to save the world, it now cannot decide whether this will require pumping more oil (as its allies seem to want) or pumping less (as has been its more or less explicit goal for years). The 300,000-barrel-a-day increase proposed by Mr. Wilkinson represents less than one-10th of what Europe actually needs to replace the oil it gets from Russia. While Canada would never be the sole replacement source, critics of the past several years of energy policy in Canada argue that the country would be in a better position to help if the government had not allowed one infrastructure project after another to suffocate in red tape and green angst. Mr. Wilkinson has attempted to resolve the dilemma by claiming that Canada can be more helpful to Europe by "speeding up the energy transition." Ms. Kovaliv's speech indicates otherwise. Within the sector, Baytex Energy Corp. (BTE) added 40 cents to $8.75 on a busier-than-usual 27.5 million shares. During intraday trading, it reached a high of $9.06, its first time above $9 since 2016. It has been working hard to woo investors at the two-day RBC Global Energy Power Conference that started yesterday in New York. President and chief executive officer Ed LaFehr, along with executive vice-president and chief financial officer Rod Gray, hyped the company's assets, production plans and updated debt targets. One play that got particular attention was the Alberta Clearwater, where Baytex started poking around last year. Baytex liked the results so much that it is dedicating no less than 10 per cent of this year's budget to the Clearwater. According to Mr. LaFehr and Mr. Gray, Baytex sees itself boosting its Clearwater production to 10,000 barrels a day within five years and ultimately to at least 80,000 barrels a day (a figure that would match its entire output in the first quarter of 2022, mostly from Texas and Saskatchewan). Baytex is aiming to do all this while continuing to hack away at its debt. It wants to reduce its net debt to $800-million by the end of the year (a revision from management's earlier forecast of 2023) and to around $450-million in 2023 (a new target). Speaking of debt reduction, down in Colombia, Gary Guidry's Gran Tierra Energy Inc. (GTE) added nine cents to $2.62 on 8.92 million shares, after trumpeting the full repayment of its credit facility. The balance went from $207-million (U.S.) to zero in just two years. President and CEO Mr. Guidry cheered this "major milestone" that has "significantly strengthened our balance sheet." His enthusiasm is understandable. At one point in 2020, the balance sheet was so overburdened with bank debt and term debt that Gran Tierra appeared on Fitch Ratings' list of "bonds of top concern," which was more or less a default prediction. The 2021 rally in oil prices turned things around. The term debt remains lofty, of course, with about $600-million (U.S.) in notes coming due from 2025 to 2027. Gran Tierra recently launched an exchange offer for these notes, effectively seeking to extend the due date to 2029 in exchange for a higher interest rate. Holders of a little over $130-million (U.S.) worth of the notes have accepted the offer as of today. The offer expires on June 22. Back in Canada, John Jeffrey's Saskatchewan-focused Saturn Oil & Gas Inc. (SOIL) added six cents to $2.87 on 599,400 shares. It has closed a $74.7-million bought deal of units (each comprising a share and half a warrant) at $2.75. Saturn was originally aiming to raise just $65-million; today's proceeds include the full exercise of the underwriters' overallotment option. Saturn will use the money to help pay for a $260-million Saskatchewan asset acquisition that it announced last week. The deal will add 4,000 barrels a day and boost the company's overall production to 11,400 barrels a day upon the expected closing in October. The deal will also continue a shopping spree that Saturn has been on for a little over a year, prior to which its production was barely 400 barrels a day. So far, including last week's announcement, Saturn has forked over $360-million to muscle into the ranks of bigger Saskatchewan producers. Investors seem to be tiring of the run of deals (and the debt and dilution that invariably accompany them). Over the last seven months, Saturn's stock has fallen from about $4.50 to today's level of $2.87. In other financing news, Dr. Art Halleran's Turkey-focused Trillion Energy International Inc. (TCF) edged up half a cent to 34 cents on 2.73 million shares, after hiking its previously announced $12-million equity financing to $20-million. It now plans to issue 64.5 million units (each comprising a share and half a warrant) at 31 cents. As discussed yesterday, this financing comes just a few months after Trillion already raised $17.9-million in March. Investors were initially dismayed by the extra dilution -- Trillion will now have more than 360 million shares outstanding, up from 185 million just a few months ago -- but they now seem to be coming round. As the March financing was done at 16.5 cents, participants have more than doubled their investment. CEO Dr. Halleran is no doubt optimistic that the new financing will also be a success. The proceeds will go toward a much-hyped gassy drill program in Turkey, with the goal of achieving production before the end of the year. |