| West Texas Intermediate crude for August delivery added $5.01 to $102.60 on the New York Merc, while Brent for September added $5.11 to $106.27 (all figures in this para U.S.). Western Canadian Select traded at a discount of $19.75 to WTI, up from a discount of $20.90. Natural gas for August added 46 cents to $7.48. The TSX energy index added 7.36 points to close at 213.51. Oil sands giant Suncor Energy Inc. (SU) added 42 cents to $39.74 on 18.9 million shares, after announcing a truce with (or capitulation to) activist shareholder Elliott Investment Management. The formal agreement announced this morning will see Suncor add three directors and launch a "strategic review" of its downstream retail (gas station) business. Two of the new directors will serve on the search committee for a new chief executive officer. Suncor's former CEO, Mark Little, resigned 10 days ago after the latest in a string of workplace fatalities. The "strategic review" is a euphemism for putting the retail business up for sale. The three new directors have high profiles in the energy and resource sectors. The two who will serve on Suncor's CEO search committee are Chris Seasons, a partner with ARC Financial and the former president of Devon Canada, and Jackie Sheppard, the chairman of Emera and a former executive vice-president of Talisman Energy (acquired by Spain's Repsol in 2015). The third new director is Ian Ashby, a former BHP Billiton executive. Their additions will temporarily bring Suncor's board to 13 members. Suncor noted that two will retire by year-end. It added that Elliott has the right to nominate an additional director "if certain performance criteria relative to peers are not met by Dec. 31, 2022." The agreement comes less than three months after Elliott, which owns a roughly 3.4-per-cent interest in Suncor, launched its activist campaign in late April. It published a scathing open letter about Suncor's decline "from first to worst." The once-mighty Suncor has seen its reputation (and its share price) pummeled by "missed production targets, delayed timelines and repeated safety failures," all of which Elliott blamed on a "slow-moving, overly bureaucratic corporate culture." It made several recommendations to "Restore Suncor" (also the name of a website it created). Among other things, Elliott urged Suncor to add five new directors, complete an "objective review" of management (seen as a warning to Mr. Little) and put its retail business up for sale. With Mr. Little gone, three directors added and the retail business heading to the auction block, Elliott is well on its way to leaving its mark on Suncor. "We appreciate the collaborative dialogue we have had with Suncor's board," said Elliott partner John Pike and portfolio manager Mike Tomkins in today's press release. Suncor, for its part, had interim CEO Kris Smith parrot Elliott's language about "restoring confidence." None of them estimated how long it may take to find a new CEO, but they did tell investors to expect an update on a potential sale of the retail business in the fourth quarter. Analysts are valuing the business at anywhere from $5-billion to $8-billion. As for investors, today's news was not enough to prompt much of a rally in the stock, which lately has fallen below $40 for the first time in months (down from $47 when Elliott took aim in April). National Bank analyst Travis Wood opined in a research note today that the path to a higher share price does not lie in a sale of gas stations. "Instead, we only see Suncor's once-premium multiple re-emerging after at least one year of superb oil sands execution, all else equal," wrote Mr. Wood. He lowered his price target on the stock to $64 from $73. Further afield, Tony Marino's would-be North African producer, Tenaz Energy Corp. (TNZ), added five cents to $2.05 on 60,300 shares. The rise came despite a potential roadblock to Tenaz's proposed acquisition of the AIM-listed SDX Energy. The deal requires 75-per-cent approval from SDX's shareholders. A large shareholder claiming to own a 25.7-per-cent interest in SDX -- enough to scuttle the deal -- is now threatening to vote no. By way of background, Tenaz made a $34.3-million all-share offer in May to acquire SDX and its roughly 3,500-barrel-a-day assets in Egypt and Morocco. Such a deal would expand Tenaz's assets beyond Alberta, keeping one of several promises that Mr. Marino and his people made when they recapitalized and took over Tenaz last year. (They have indirectly hinted that they are seeking a repeat of their former promotion, the international producer and dividend-payer Vermilion Energy Inc. (VET: $27.94).) In June, Tenaz tweaked its offer to allow for a cash component. The speculation was that it wanted to appeal to shareholders that did not necessarily want their payment in shares. The tweaking clearly failed to quell all of the shareholder opposition. While Tenaz's press release did not identify who is behind the 25.7-per-cent stumbling block, SDX was more forthcoming, claiming that it received the threatening letter from a group of shareholders led by the investment and energy trading firm Aleph Commodities Ltd. The letter stated that Aleph and the others will vote against the takeover at SDX's scheduled meeting on July 29. "Aleph welcomes the opportunity to engage with [SDX] ... to ensure the growth of the company and its production base, with minimal dilution," continued the letter. Neither SDX nor Tenaz has said whether they will agree to engage with Aleph. They are "evaluating all available options" and will provide an update "in due course." Another international operator, Gabriel de Alba and Dr. Suresh Narine's Guyana-focused CGX Energy Inc. (OYL), added four cents to 88 cents on 21,300 shares. It has hired a new chief financial officer. If that sentence sounds familiar, this is because CGX previously announced the hiring of a CFO just 13 days ago. It was very pleased on July 5 to announce that George Davis would be taking the job. Today, it was presumably not quite as pleased announce that Mr. Davis is leaving "to address his personal affairs." The next CFO will, with any luck, make it past the two-week mark. That would be Daniel Sanchez. He is hopping over to CGX from his current role as head of corporate consolidation and reporting at Frontera Energy Corp. (FEC: $12.17), CGX's joint venturer and majority shareholder. This is CGX's second sudden CFO departure in about eight months. Former CFO Tralisa Maraj abruptly stepped down last November, a few weeks after causing unfavourable on-line chatter by selling nearly all of her CGX shares, although CGX has stayed silent on whether these two events are connected. The incoming Mr. Sanchez -- assuming he does not continue the unhappy trend of an untimely exit -- will now focus on ensuring that CGX can pay for its share of a pending drill program in Guyana. The company and Frontera are aiming to drill their next exploration well before the end of this quarter. |