RE:Pressure is building now....Hey TD12 belly up to the trough is how I'd put it? Lose 1 gain 2 am I just missing it completely probably too much Montney land to not be taken out by someone who? Let's see who actually reads this page not many I'm guessing you and me! Sneaking in the energy report to see can't believe the gas at 3.30 us on the July futures WTF it's June>
Energy Summary for June 11, 2021
2021-06-11 19:57 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for July delivery added 62 cents to $70.91 on the New York Merc, while Brent for August added 17 cents to $72.69 (all figures in this para U.S.). Western Canadian Select traded at a discount of $13.88 to WTI, down from a discount of $13.87. Natural gas for July added 15 cents to $3.30. The TSX energy index added 1.67 points to close at 141.29.
In political circles, the big energy headlines continued to revolve around TC Energy Corp.'s (TRP: $64.70) official termination of its Keystone XL pipeline, roughly six months after U.S. President Joe Biden cancelled the pipeline's permit. The Alberta government is not yet willing to concede the fight. Premier Jason Kenney told reporters that the cancellation "meets every evident threshold" for a NAFTA challenge that his government may consider launching as early as next month. "We will defend our interests. We've always been clear about that," he declared.
Less clear is a path to victory for a NAFTA claim. TC Energy briefly launched one in 2016, seeking $15-billion (U.S.) in damages, after former president Barack Obama vetoed the pipeline. "The U.S. [government] acknowledged the denial was not based on the merits of the project. Rather, it was a symbolic gesture based on speculation," argued TC Energy at the time. Regardless of the truth of this, legal experts pointed out that TC Energy would need to prove that it was treated differently due to being Canadian -- a difficult challenge, especially against a formidable opponent. The United States has never lost a NAFTA battle. In the end, this battle did not happen, because Mr. Obama's successor (Donald Trump) revived the pipeline and TC Energy dropped the claim. The question now is whether the company would revisit it. Management has not commented one way or the other. If TC Energy decides not to get involved, this would surely hurt any claim made by the Alberta government.
Within the energy sector, Canada's largest gas producer, Mike Rose's Tourmaline Oil Corp. (TOU), added $2.55 to $33.25 on 4.74 million shares. The company is buying David Maddison's Black Swan Energy for $1.1-billion. Citing "the magnitude of the sustainable free cash flow" from Black Swan's assets, Tourmaline is also hiking its quarterly dividend to 17 cents from 16 cents. The new yield is 2.0 per cent.
Black Swan is a private B.C. Montney producer founded in 2010 by Mr. Maddison and Marc Mereau (both former executives of Talisman Energy). In 2011, Black Swan received backing from Warburg Pincus, the Canada Pension Plan Investment Board and KERN Partners. There were rumours of a potential IPO in 2017, but Black Swan never pursued it, staying focused on boosting production. This has risen to around 50,000 barrels of oil equivalent a day as of mid-2021 from less than 5,000 barrels a day in 2014. In 2020, Black Swan finally started enjoying free cash flow, but it had racked up quite a bit of debt by then, with current net debt approaching $350-million. Now suitor Tourmaline will assume that debt and issue a total of 26 million shares to acquire Black Swan.
This is the largest deal yet in Tourmaline's year-and-a-half-long shopping spree. So far, it has taken over Chinook Energy, Polar Star, Modern Resources, Jupiter Resources and now Black Swan, nearly doubling its production to around 500,000 barrels a day from 290,000 since the start of 2020. Happy investors have sent the stock up past $33 from a 2020 low of just $6.73.
Mr. Rose, Tourmaline's chairman, president and chief executive officer, strove to keep the excitement going during a BNN interview this morning. "[We see] lots of room to grow for all the equities, including Tourmaline," he declared. His bullishness comes from strengthening AECO prices and a burgeoning B.C. LNG (liquefied natural gas) industry. AECO, the gas benchmark in Western Canada, spent years weakened by oversupply challenges, but is now in balance -- even a bit undersupplied -- and has "returned to its former glory as one of the best gas price hubs in North America," said Mr. Rose. He added that the LNG story is still in the early chapters but should start to get interesting in the second half of this decade.
Mr. Rose was not the only one hyping price rallies. Two companies, one focused on gas and the other on oil, spent this week courting investors and cheering on their respective commodities. In the gassy corner was Darren Gee's Peyto Exploration & Development Corp. (PEY), up 47 cents to $7.13 on 2.02 million shares. This is the stock's first time above $7 since April, 2019. In a research note earlier this week, Canaccord Genuity analyst Anthony Petrucci provided a recap of a two-day marketing event with Peyto's management. Mr. Petrucci predicted "a material jump in [Peyto's] cash flow in 2022," thanks to rising Alberta gas prices and the near-term expiry of Peyto's hedges. The analyst even predicted a dividend boost next year. (Peyto's one-cent quarterly dividend represents a yield of 0.6 per cent.) Calling Peyto "an excellent way for investors to gain exposure to an improving trend in natural gas prices," Mr. Petrucci kept his "buy" recommendation and hiked his price target to $9 from $8.
Meanwhile, management of Baytex Energy Corp. (BTE), up three cents to $2.18 on 5.57 million shares, made its pitch directly to investors at a virtual RBC Capital Markets conference on Tuesday. President and CEO Ed LaFehr talked up the improving state of Canadian heavy oil prices. These have him feeling "really excited" about Baytex's Canadian oil assets. In the second half of this year, Baytex is spending a total of $100-million drilling its assets in Saskatchewan and Alberta, while just $35-million is going to its formerly top-of-the-list assets in Texas. Mr. LaFehr emphasized that today's oil prices mean that the Canadian programs are showing "very strong economics [with] greater than 100-per-cent rates of return."
Mr. LaFehr also noted that Baytex released a five-year outlook in April, predicting $1-billion in free cash flow from 2021 through 2025, based on $55 (U.S.) WTI. Baytex recently reran the numbers. At $65 (U.S.) WTI (which is still $5 (U.S.) below current trading levels), the free cash flow forecast doubles to $2-billion, marvelled Mr. LaFehr. He expressed confidence that the extra cash will help with "accelerating our deleveraging plan." Baytex owed over $1.7-billion as of March 31 and wants to get down to around $1.2-billion by the end of 2022.
Given the remaining extra cash flow, RBC analyst Greg Pardy (a moderator at the conference) turned discussion toward share buybacks or a revival of Baytex's long-dead dividend (which was suspended in 2015). Mr. LaFehr said buybacks are "definitely something we're considering" if he sees the stock as undervalued. Those hoping for a dividend may have a longer wait. Mr. LaFehr said he would like a dividend one day, but that day is "down the road, long term, in the future."
© 2021 Canjex Publishing Ltd. All rights reserved.