Stockwatch Energy for yesterdayLet' s see if another installment shows up later?
Energy Summary for Dec. 29, 2020
2020-12-29 21:30 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for February delivery added 12 cents to $48.12 on the New York Merc, while Brent for February added 23 cents to $51.09 (all figures in this para U.S.). Western Canadian Select traded at a discount of $15.15 to WTI, unchanged. Natural gas for January added 12 cents to $2.44. The TSX energy index added a fraction to close at 90.96.
It was a quiet news day in the oil patch, and a sombre day for one company in particular. Suncor Energy Inc. (SU), down 30 cents to $21.59 on 13.2 million shares, released an on-line bulletin disclosing a fatal incident yesterday evening at its Fort Hills oil sands project near Fort McMurray. A bulldozer collided with a truck and killed two employees of ClearStream Energy, a service provider. Suncor has halted operations at Fort Hills while the RCMP and Occupational Health and Safety (OHS) carry out an investigation. It is not clear when operations will resume.
Workplace injuries and deaths, while thankfully rare, are not unheard of in the oil patch. Suncor keeps track of its RIF (recordable injury frequency) rates in its annual ESG (environmental, social and governance) reports. These show that the company had one fatality in each of 2019 and 2017, none in 2015, 2016 or 2018, and an unfortunate three in 2014. One of the 2014 deaths resulted in a $15,000 fine for Suncor under the Occupational Health and Safety Act, plus a $285,000 levy in favour of an engineering school to conduct research on tailings management (the worker in question had drowned in a tailings pond). This fine was milder than it could have been: One year prior, in 2013, a record fine of $1.5-million was paid by China's Sinopec over two deaths in 2007 at the Horizons oil sands project. The project was being built by Canadian Natural Resources Ltd. (CNQ: $30.46), which had hired a subsidiary of Sinopec to do some of the work. Canadian Natural was itself fined $10,000 and received a $150,000 levy over its poor choice of contractor.
After the 2007 incident, the entire oil patch began overhauling safety standards and, according to a 2014 report by the Canadian Association of Petroleum Producers (CAPP), achieved an 11-per-cent improvement in the total RIF rate from 2008 to 2013. The trend was unfortunately reversed in 2013 and 2014, the most fatal years on record for Alberta workers -- possibly a result of the influx of new and inexperienced workers brought on by the oil sands boom. (New workers are the most likely to be injured or die on the job, with industry data showing that most fatalities happen in the first two weeks.) In general, since 2014, workplace safety in the oil patch has been improving again.
While a relatively quiet day in the Canadian oil patch, there was plenty of news to be had from international juniors. Down in Peru, Manolo Zuniga's Petrotal Corp. (TAL) added 1.5 cents to 23 cents on 2.56 million shares, after restarting oil deliveries into the state-owned Petroperu's ONP pipeline. For a stationary piece of infrastructure, the ONP has been remarkably slippery this year. It was previously shut down in May as a COVID-19 protective measure. (The government wanted to keep pipeline workers as far as possible from the remote, high-risk communities traversed by the ONP.) Petrotal thus had to suspend production at its sole producing oil field, Bretana, from May until July, when it was able to start sending shipments by barge. Within four weeks, Bretana was shut down again because of "civil unrest" -- Petrotal's euphemism for the deadly violence that erupted between police and protesters who wanted government assistance to cope with COVID-19. The conflict spilled over into Petroperu's ability to fully reopen the ONP. Negotiations between the protesters and the government went on until late September, when they found partial common ground and Petrotal was able to restart the field once again, although it restricted its output to 5,000 barrels a day in order to manage inventories.
That brings the story to today, with Petrotal announcing that the involved parties have successfully "reached resolution on the social concerns." Now it is Mother Nature who is getting in the way -- heavy rains and landslides have caused possible damage to part of the ONP -- but Petrotal is optimistic that the system will resume full operations by mid-January. The company then expects to double its production from Bretana to 10,000 barrels a day. In the aftermath of a difficult 2020, the company and its investors seem to have high hopes for a productive 2021.
Another South American junior, Serafino Iacono and Frank Giustra's Colombia-focused NG Energy International Corp. (GASX), lost two cents to 96 cents on 68,900 shares. It has completed a $3.46-million private placement of 85-cent units, each comprising a share and half a warrant. The main participant, at $2.94-million, is a company called Flamingo Oil. Shareholders have heard this name before, in the context of NG Energy's farm-out agreement for the exploration-stage SN-9 gas block (located next to Canacol Energy Ltd.'s (CNE: $3.88) productive Esperanza block). NG Energy last mentioned Flamingo in 2019 by noting that the latter would receive 2.8 million shares of the former for contributing $2.4-million (U.S.) toward the development of SN-9. Now NG Energy says Flamingo and a different party, Strata Consulting, provided a separate deposit of $2.5-million (U.S.) back in 2017, which must be returned. They have agreed to receive shares rather than taking the deposit back in cash, hence the private placement valued at $3.46-million. Flamingo declared itself "very pleased" to be investing in NG Energy, with its "great potential ... to fulfill potential demand for natural gas in Colombia." NG Energy seemed pleased to avoid parting with $2.5-million (U.S.) in cash. Shareholders seemed mostly unmoved either way.
Lastly, across the ocean in Australia, Philip O'Quigley's Falcon Oil & Gas Ltd. (FO) edged down 1.5 cents to 14.5 cents on 989,000 shares. On Christmas Eve, also the eve of a four-day long weekend, Falcon issued a terse update on its Kyalla-117 well in the Beetaloo basin, a joint venture with Origin. The update merely said that "in the next few days," the joint venturers will begin re-entering the well with special equipment "to assist with achieving and sustaining gas breakthrough." If this works, they will be able to begin extended production testing. Put another way, this is a second chance for the well, which previously showed only "minor gas breakthroughs" during preliminary tests in early November -- an announcement that immediately sent Falcon tumbling to 14 cents from 17 cents on heavier-than-usual volume. Falcon and Origin speculated that the well has a pressure problem, which the above operations are intended to solve. Investors should find out over the coming days. In the meantime, Falcon's stock is taking its cue from the hummingbird, the champion hoverer of the bird kingdom.
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