Stockwatch Energy today
Energy Summary for Oct. 22, 2021
2021-10-22 20:05 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for December delivery added $1.26 to $83.76 on the New York Merc, while Brent for December added 92 cents to $85.53 (all figures in this para U.S.). Western Canadian Select traded at a discount of $15.70 to WTI, down from a discount of $14.45. Natural gas for November added 16 cents to $5.28. The TSX energy index added 2.05 points to close at 157.20.
The dispute over Enbridge Inc.'s (ENB: $52.96) Line 5 pipeline is now "directly and significantly" affecting foreign relations between Canada and the United States, according to new court filings from Enbridge. The company is continuing its push to have the federal court overturn a state's attempt to unilaterally shut Line 5 down. Line 5 is a crucial supply source to Michigan, Indiana and other Mideast states, as well as Ontario and Quebec.
As discussed in past summaries, Governor Gretchen Whitmer of Michigan previously ordered the line to be shut down in November, 2020, claiming that it is unsafe to operate in the Great Lakes (despite a seven-decade history of doing exactly that). Enbridge said it would keep the line running anyway because pipelines are a federal matter. A district court ordered mediation, which Michigan subsequently claimed to be pointless. Enbridge says it is still open to mediation, but believes that any court battle is better suited to the federal court rather than a district one.
This is all the more true now that Canada has invoked a federal pipeline treaty, claimed Enbridge in its new filings. It filed them in the district court as part of a motion to move the case to the federal level. The matter is now unequivocally federal, argued Enbridge, because earlier this month, Canada formally invoked a 1977 treaty providing for the unimpeded flow of cross-border pipelines. This step shows that Michigan's actions "have directly and significantly affected U.S. foreign relations with Canada," resulting in "formal diplomatic negotiations and potentially an international arbitration," noted Enbridge. The implication is that this is beyond the district court's scope.
Even further afield, Dr. Suresh Narine's CGX Energy Corp. (OYL) edged up six cents to $1.26 on 487,800 shares. It tried to impress investors today with an on-line presentation about its drill program in Guyana. The program is being conducted alongside joint venturer (and major shareholder) Frontera Energy Corp. (FEC: $8.78). The well that the two of them are drilling right now, known as the Kawa-1 exploration well on the Corentyne block, is their first well together.
For the most part, today's presentation was a rundown of geological models, hopes for the well's results and broader regional activity. CGX and Frontera spudded the well in August and have yet to reach their main targets. They continue to expect reaching total depth in December. Management emphasized that the well is in one "one of the hottest offshore exploration [regions] in the world" (located right next to the Stabroek block in Guyana, where Exxon has made nearly two dozen discoveries, and right across the border from block 58 in Suriname, where Apache and Total have made five discoveries). To CGX and Frontera, the Kawa-1 well is clearly "one of the most exciting exploration wells in the world and [a] potentially transformation value creation catalyst."
Despite the best efforts of CGX's management, it had minimal success at what may have been a side mission of the presentation: damage control. The stock spent the first half of this week plunging to $1.13 from $1.47, after a SEDI filing on Monday showed that CGX's chief financial officer recently sold nearly all of her shares. CFO Tralisa Maraj sold 85,000 shares at $1.50 last week and now has 5,718 shares left. She got a tidy profit of $100,300 out of the sale (having acquired the shares at 32 cents in 2019), but investors did not share in her enjoyment. Though insiders sell for all kinds of reasons, investors generally look askance at seeing such a senior executive sell most of her position in one go. Adding to the unease is the timing; not only is there a drill program in progress, but CGX is conducting a rights offering that does not expire until next Thursday, Oct. 28 (but apparently did not require an executive trading blackout). The expected dilution from the offering has also played a role in the stock's drop to $1.26 from $2.40 since mid-August.
Another international junior had an interesting trading day. The Turkey- and Kazakhstan-focused Condor Petroleum Inc. (CPI) winged up 15 cents to 57 cents on 361,800 shares, its heaviest volume in over two years. It got as high as 74 cents in intraday trading. There was no news to explain the excitement; in fact Condor has not published news since August. Yet investors may be expecting an imminent and long-awaited update out of Uzbekistan.
Condor has been trying to enter Uzbekistan since November, 2019, when it signed a preliminary agreement to buy five producing gas fields. It wanted a fresh new promotion, having spent most of 2018 and 2019 growing increasingly frustrated in Kazakhstan. (Turkey is only somewhat less frustrating and majorly less promotable; Condor's current production there is less than 100 barrels of oil equivalent a day. The company's current assets in Kazakhstan are non-producing.) President and chief executive officer Don Streu picked Uzbekistan and declared himself "excited" about its "significant economic, legal, tax and social" benefits. As noted above, Condor signed a preliminary Uzbek agreement -- so preliminary that it did not disclose a price tag or production details -- in November, 2019. Nearly two years later, the agreement is still not finalized.
Condor has not been idle over this period. It recently submitted what it called a "detailed feasibility study and economic analysis" to the Uzbek government, talking up all the wonderful things it can do for the economy, the people and the environment once it is the owner of the five gas fields. Condor's Mr. Streu also worked on his political clout. Two months ago, the Kazakh government appointed him honorary consul of the Republic of Kazakhstan for Alberta
Such efforts may finally be paying off. Today, the New Europe website (the self-described "leading EU affairs newspaper") mentioned Condor in an article about Uzbekistan, noting that the country is trying hard to attract more foreign investment. The article said Condor has made plans to spend $1-billion operating gas fields in Uzbekistan's Bukhara province from 2021 to 2024. While the status of the proposed acquisition was not disclosed, some news may be leaking, based on today's jump in the stock. Uzbekistan will hold a federal election this Sunday, Oct. 24. With any luck, news for Condor's investors will follow shortly.
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