| West Texas Intermediate crude for October delivery added 15 cents to $42.76 on the New York Merc, while Brent for November added 30 cents to $45.58 (all figures in this para U.S.). Western Canadian Select traded at a discount of $9.78 to WTI, up from a discount of $10.60. Natural gas for October lost 10 cents to $2.53. The TSX energy index added a fraction to close at 80.39. George Fink's Alberta Cardium-focused Bonterra Energy Corp. (BNE) added three cents to $1.54 on 100,700 shares, after providing an update on its debt situation and -- almost as an afterthought -- acknowledging yesterday's audacious proposal from fellow Cardium producer Obsidian Energy Ltd. (OBE), up three cents to 61 cents on 154,600 shares. As discussed in yesterday's Energy Summary, Obsidian proposed a takeover of Bonterra that valued Bonterra's stock at just $1.06, a steep discount to its trading price. Obsidian boldly argued that the market is overvaluing Bonterra. "We do not believe that the Bonterra valuation premium will be sustained," warned Obsidian (a curious thing to say in any courtship). Obsidian went on to claim that if Bonterra accepts its "competitive and highly compelling" offer, the result will be a "Cardium Champion." On its own, however, Bonterra is descending into what Obsidian deems a "vastly inferior outcome." The letter from Obsidian arrived yesterday morning and produced not a flicker of response from Bonterra at the time. Last night, however, brought an obligatory disclosure about Bonterra's credit facility, which is overdue for a review. The review was supposed to occur in April but was repeatedly postponed so Bonterra could seek federal liquidity support through the Business Development Bank of Canada (BDC). (The BDC's program involves working with a company's existing banks, which is why extensions are being granted so freely.) The most recent review deadline was Aug. 31, or yesterday, meaning an update was imminent. A further extension was also practically guaranteed: Bonterra announced two weeks ago that it had finally entered an agreement with the BDC for a $45-million term facility, but as this was a non-binding agreement, details still need finalizing. It is thus no surprise that the bankers have pushed out the Aug. 31 deadline to Sept. 30. While the headline of the press release noted the extension and nothing else, Bonterra relented at the end of the release and ceased to blithely ignore Obsidian's overtures. "Bonterra confirms that the company remains aware of Obsidian's interest in a potential transaction," was its impassive acknowledgment. It said nothing about the proposed terms or even whether it shares Obsidian's interest. All it would say is that its board of directors reviews every expression of interest, and will issue no further press releases until it has some actual news. Obsidian is unlikely to follow suit in keeping its head down and quietly hammering out a deal. To hear its side of the story, Obsidian has been doing exactly that for over a year and a half, pursuing a "potential friendly business combination" since January, 2019. Now things are decidedly less friendly and Obsidian has told Bonterra to provide "expeditious engagement" by Friday or it will "pursue all options to consummate [its proposal]." Turning to a properly friendly deal, Grant Fagerheim's Alberta- and Saskatchewan-focused Whitecap Resources Inc. (WCP) added 17 cents to $2.74 on 6.24 million shares, on top of the four cents it added yesterday after announcing a "strategic combination" with the private NAL Resources. The larger jump in the share price today may reflect the widespread (if predictable) applause that the deal garnered from analysts. With the addition of NAL, there is "increasingly lots to like with Whitecap going forward," wrote Raymond James analyst Jeremy McCrea this morning. He hiked his price target to $4 from $3.50. Haywood Securities analyst Christopher Jones also increased his price target to $4 (from $3.25) as he shared his "high opinion of the acquisition." Canaccord Genuity analyst Anthony Petrucci, though he left his price target at a relatively low $3, cheered the acquisition as "attractive." Elsewhere in Saskatchewan, Crescent Point Energy Corp. (CPG) edged up two cents to $2.13 on 7.11 million shares, after boosting its 2020 guidance to account for newly restored production. Back in April, the company shut in 25,000 barrels of oil equivalent a day to cope with the downturn. This forced it to reduce its full-year guidance to 110,000 to 114,000 barrels a day (down from 130,000 to 134,000). In July, Crescent Point began to talk about "finalizing its reactivation plans to restore certain shut-in volumes," hinting that a guidance increase could be on the way. Now it has arrived. Today, Crescent Point announced that it has restored all of its previously shut-in production and hiked its production guidance to a range of 119,000 to 121,000 barrels a day. It said it can do so while spending just $665-million, which would put it at the low end of its budget $650-million to $750-million. Next year's budget will be even lower, at $500-million to $550-million, promised Crescent Point. It did not set a specific 2021 production target but said it would aim for a number that "is in line with or exceeds" the second-half 2020 guidance. Of course, given that the second-half 2020 guidance is only 110,000 barrels a day -- well below the full-year average, reflecting the high production in the first quarter of the year and the lingering effects of the summer shut-ins -- investors may have been disappointed that the 2021 forecast was not a little more ambitious. Stifel FirstEnergy analyst Cody Kwang said not to worry. "Increased volumes have a knock-on effect, suggesting a further improved 2021 estimated outlook," he wrote. ATB Capital Markets analyst Patrick O'Rourke echoed this praise and further applauded Crescent Point's "strategy that focuses on free cash flow generation and debt reduction." Crescent Point reduced its net debt by $450-million during the first half of 2020 and promised today to reduce it by a further $150-million by year-end. Of course, that still implies a year-end debt load of around $2.2-billion, well above the current market cap of $1.2-billion. Further afield, Australian oil and gas explorer TAG Oil Ltd. (TAO) added half a cent to 14.5 cents on 217,100 shares, after adding four new faces to its board and management. The most familiar faces belong to Abby Badwi, TAG's new executive chairman, and Suneel Gupta, its new vice-president and chief operating officer. Both Mr. Badwi and Mr. Gupta were senior officers at a once-TSX-listed Albanian oil producer called Bankers Petroleum. Mr. Badwi came to Bankers in 2007, fresh after selling an Egyptian oil producer called Rally Energy; he was hired as Bankers' president and CEO to repeat that success. During his tenure, he succeeded in tripling Bankers' production to around 15,000 barrels a day, but did not manage to sell it before his retirement in 2013. He stayed on as vice-chairman until Bankers was finally sold to a Chinese company in 2016. More recently, in 2019, Mr. Badwi sold Kuwait Energy to United Energy Group. As for Mr. Gupta, he was at Bankers from the very beginning in 2004, taking on various roles including executive vice-president and COO. In 2017, after Bankers was taken over, he became its CEO. He left one year later -- apparently not on very good terms. A May, 2020, article in the Albanian news outlet Exit News reported that Bankers is suing Mr. Gupta and some other former executives for allegedly breaching confidentiality and conflict-of-interest clauses. The current status of this case is not quite clear. In any event, it does not seem to have hampered Mr. Gupta's career, as he embarks on a new job as COO of TAG. The appointments come as TAG is struggling to find its footing. In late 2018, it agreed to sell virtually all of its producing assets, located in New Zealand, to Tamarind Resources for $30-million (U.S.). The deal went through several delays but finally closed in September of last year. TAG sat on the cash for months, pondering "opportunities that are in the best interests of our shareholders," before deciding to simply give a good chunk of the cash to shareholders through a return of capital in April of this year. Beyond that, however, little has changed since the asset was announced nearly two years ago. TAG continues to own three relatively quiet assets in Australia, with no luck yet in attracting farmees, and has about $14.5-million in remaining cash. The cash pile is about to go up: Mr. Gupta and Mr. Badwi, along with two other newcomers -- professional portfolio manager Shawn Reynolds and lawyer Thomas Hickey, both joining TAG's board -- have agreed to participate in a $1-million private placement of 16-cent units. The idea is to encourage them to, as CEO Toby Pierce put it, "develop our next strategic business plan and lead our company on its exciting new chapter." At least TAG finally has a plot in mind: It wants to pour its cash into new acquisitions, specifically in the Middle East and North Africa. |