Energy Summary for March 30, 2022
2022-03-30 20:15 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for May delivery added $3.58 to $107.82 on the New York Merc, while Brent for May added $3.22 to $113.45 (all figures in this para U.S.). Western Canadian Select traded at a discount of $10.80 to WTI, unchanged. Natural gas for May added 28 cents to $5.61. The TSX energy index added 1.22 points to close at 224.89.
Oil prices rose as markets braced for a potential disruption to Russian energy supplies. Earlier this month, Russian President Vladimir Putin set a deadline of March 31 -- tomorrow -- for the state-controlled Gazprom and the central bank to arrange to take payments for gas in rubles. The move is an attempt to support the ruble, which has collapsed against other currencies since Russia invaded Ukraine.
Indeed, the Kremlin hinted today that it might start pricing all of Russia's energy and commodity exports, including oil, metals and grains, in rubles. Most commodity transactions are currently done in U.S. dollars. It is not yet clear how the Kremlin would try to enforce the change. Even so, today's news forced the German government (which got over half of its gas from Russia in 2021) to declare an "early warning" that it might be heading for a supply emergency.
Here in Canada, speaking of emergencies, the safety record of Suncor Energy Inc. (SU: $41.27) suffered another blow today, as a fire at one of its refineries put a person in the hospital. Suncor said in a statement that the fire broke out this morning at its 140,000-barrel-a-day Edmonton refinery in Alberta. "One injury was reported and the individual was transported by ambulance to the hospital," said Suncor, declining to provide personal information "out of respect for the individual and their privacy." It said it extinguished the fire and will now investigate the cause.
Although shareholders showed little reaction -- the stock closed up 54 cents to $41.27 on 11.1 million shares -- the fire is another blotch on a far-from-spotless safety record. Suncor previously suffered a significant fire at its oil sands base plant in August, 2020. Then December, 2020, to January, 2022, brought a string of other incidents, which unfortunately included four deaths. President and chief executive officer Mark Little said in January that these incidents are "not acceptable" and that Suncor is "committed to implementing corrective actions." Last week, Suncor even touted its recruitment of a "champion of safety," Peter Zebedee, to serve as its executive vice-president of mining and upgrading, effective April 11. Apparently that date cannot come too soon.
Meanwhile, another oil sands producer, MEG Energy Corp. (MEG), added one cent to $17.71 on 3.16 million shares, as it too prepared to make some top-level changes. It has filed on SEDAR the circular for its annual shareholder meeting on May 3. Two directors will be stepping down and one new one is up for her first election.
The departures are William Klesse and Judy Fairburn, who have been on the board since 2016 and 2019, respectively. The 75-year-old Mr. Klesse was previously the CEO and chairman of Valero Energy. His career in the energy sector spans nearly five decades, starting with Diamond Shamrock, which later merged with Ultramar and was acquired by Valero in 2001. Meanwhile, the 58-year-old Ms. Fairburn has been in the industry for over three decades, including spending eight years in various senior positions at Cenovus Energy Inc. (CVE: $20.81). She also co-founded COSIA, or Canada's Oil Sands Innovation Alliance, a clean-tech-focused venture financing hub.
Taking one of their seats will be the 46-year-old Kim Lynch Proctor. Ms. Lynch Proctor is a lawyer and accountant who was previously the general counsel and chief financial officer of KERN Partners, an energy-focused private equity firm. She serves on various non-profit and municipal organizations, and lately has shown an interest in corporate boards. MEG's board will be the third she has joined within one year. Last May, she became a director of Paramount Resources Ltd. (POU: $31.48), and in October, she joined the board of trustees of the TSX-listed Alaris Equity Partners Income Trust.
Elsewhere in Alberta, Sue Riddell Rose's Rubellite Energy Inc. (RBY) lost nine cents to $3.76 on 133,300 shares, after closing $38.7-million in equity financings. It announced the financings three weeks ago and was originally hoping to raise just $25.5-million. All told, it has now issued 10.9 million shares at $3.55 each. It will use the proceeds for capital spending and catch-all general purposes in its core Clearwater play.
Several insiders participated in the financing. According to SEDI, seven directors and officers spent a total of $11.5-million subscribing for 3.24 million shares. The largest buyer was Rubellite's president and CEO, Ms. Riddell Rose. She bought 200,000 shares personally and another 2.7 million through her family's holding company, Dreamworks Investment, which is controlled by her and her brother, Jim Riddell. He is also an oil patch CEO and leads Paramount Resources Ltd. (POU: $31.48). Meanwhile, a person identified by SEDI as Ms. Riddell Rose's spouse subscribed for 100,000 shares. Her spouse is Mike Rose, who is yet another industry CEO and leads Tourmaline Oil Corp. (TOU: $56.37). All told, Ms. Riddell Rose and her various family members control 16.5 million of what will now be 54 million outstanding Rubellite shares.
In other financing news, Dr. Art Halleran's Turkish gas explorer, Trillion Energy International Inc. (TCF), stayed unchanged at 28 cents on 1.37 million shares, after completing an oversubscribed private placement for $17.9-million. It was originally hoping to raise just $10-million when it announced the financing two weeks ago. CEO Dr. Halleran boasted today about the "strong demand" leading to an "influx of funding." (Demand was surely helped by the steeply discounted offering price, which at 16.5 cents was nearly half the stock's trading value at the start of the month. Given today's close of 28 cents, participants are already sitting on 70-per-cent paper gains.)
Dr. Halleran plans to use the proceeds to kick off a long-awaited Turkish drill program. Trillion will be drilling its 45-per-cent-owned SASB gas project, a past producer that peaked at 30 million cubic feet a day in 2011, but has not seen any wells drilled in more than a decade. The company wanted to drill it last year but ran into problems closing a debt financing. This year, it opted for an equity financing instead, and hopes to get the drill rig turning in July.
The sooner, the better, according to Dr. Halleran. A long-time promoter of international energy assets -- his four-decade career spans Colombia, Brazil, Guyana, Egypt, Bulgaria and many more -- he has a promoter's take on Europe's wartime gas crisis. In his view, now is a wonderful time to develop Turkish gas projects such as SASB, as a way of mitigating uncertain supplies from Russia (and enjoying sky-high prices in the meantime). He declared today that the financing is a "giant step" toward restoring the field's production. With any luck, that could happen by the end of summer.
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