Stockwatch Energy today
Energy Summary for Feb. 22, 2022
2022-02-22 20:13 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for March delivery added $1.29 to $92.35 on the New York Merc, while Brent for April added $1.45 to $96.84 (all figures in this para U.S.). Western Canadian Select traded at a discount of $13.69 to WTI, unchanged. Natural gas for March added seven cents to $4.50. The TSX energy index added a fraction to close at 197.75.
Global oil prices neared $100 (U.S.) a barrel, with Brent reaching an intraday high of $99.50 (U.S.), after Russia ordered troops into two separatist regions of eastern Ukraine. In response, Germany halted the approval process for the $11-billion (U.S.) Nord Stream 2 gas pipeline, while the United States and Britain announced sanctions targeting Russian banks. The sanctions do not involve energy supplies. If the crisis escalates, oil prices could rise by another $5 (U.S.) to $20 (U.S.) a barrel, predicted Bank of America this morning.
Amid the discord, there is (as of yet) no sign of a rift between Russia and OPEC. Russia is the largest non-OPEC member of the OPEC+ collective, where a fragile harmony continues to exist -- for now. "Anything is possible," an unidentified delegate told S&P Global when asked whether severe sanctions on Russia could lead to a breakup. Meanwhile, OPEC member Nigeria stuck to the party line that additional supply boosts are not necessary, even with oil prices nearing triple digits. "We don't have to do anything extraordinary ... because we are expecting a lot of production ... if a nuclear deal with Iran works out," said Nigeria's petroleum minister at a conference today in Qatar. (Iran is in talks over a nuclear deal that could let it boost its oil exports by more than one million barrels a day.)
Here in Canada, Alberta Montney producer Pipestone Energy Corp. (PIPE) added 11 cents to $4.53 on 1.59 million shares, as chief executive officer Paul Wanklyn trumpeted "strong" reserves and "record" production. The newly released reserve report showed 275 million barrels of proved and probable reserves as of Dec. 31, 2021, up from 227 million barrels a year earlier. Mr. Wanklyn also patted Pipestone on the back for its full-year production of 24,600 barrels a day, which was safely (if not overwhelmingly) within its guidance of 24,000 to 26,000 barrels a day. Production got up to 30,000 in November as Pipestone "successfully executed" on its fourth quarter drill program.
Mr. Wanklyn next turned his attention briefly to 2022, noting that Pipestone is already hard at work on new wells to "underpin its 2022 annual production growth." He previously released guidance for 2022 (in November) calling for production of 34,000 to 36,000 barrels a day on a budget of about $190-million. That is similar to last year's spending of $184-million.
Investors seemed pleased. They will have been hoping for a sturdy update from Pipestone, which has been under some selling pressure lately from major shareholders. From Jan. 7 to Feb. 1, Thomas Claugus's GMT Capital unloaded 428,900 shares in the open market, though this is just a fraction of its remaining position of 28 million shares. (Pipestone has 191 million shares outstanding.) Then on Feb. 8, Riverstone Holdings abruptly announced the sale of 11.7 million shares to an unidentified investor -- a rather larger fraction of its remaining position of 35 million shares. Riverstone is still Pipestone's largest shareholder. GMT is in third place, and between them (with 31 million shares) is Mubadala Investment Company, a state-owned UAE firm chaired by the Crown Prince of Abu Dhabi.
A smaller Alberta Montney producer -- with its heart in a different province altogether -- is Michael Binnion's Questerre Energy Corp. (QEC), down half a cent to 22.5 cents on 350,500 shares. Today Mr. Binnion issued a lengthy and blistering statement on the Quebec government's continuing effort to ban oil and gas development in the province. "The law proposed to revoke and cancel our licence agreements ... [and] also expropriates our property rights with no meaningful compensation," he fumed.
The law in question is Bill 21, officially called "An act mainly to end petroleum exploration and production and the public financing of those activities." The provincial energy minister tabled the bill on Feb. 2, following up on promises made by Premier Francois Legault last October. The bill bans oil and gas exploration and development in the province and revokes existing licences for the same. Compensation amounts are to be determined based on work done from 2015 to 2021, apparently in utter disregard of the fact that the vast majority of the work was done from 2006 to 2014. According to the government's website, there are to be "special consultations and public hearings" on the bill for a period of three days, starting today.
This presumably explains the timing of Mr. Binnion's miffed missive. He castigated Quebec for happily allowing Questerre and other companies to spend money on exploration, only to yank the rug out once they wanted to develop their finds commercially. The province is also unfairly hurting royalty-holding landowners, first nations (some of whom wanted to partner with Questerre) and its own gas-hungry populace, said Mr. Binnion. He pointed out that few if any of the "actual impacted parties" are included in the consultations. "The province has created legitimate expectations that investors would be treated fairly. It cannot simply fail to satisfy these expectations," claimed Mr. Binnion. Au contraire, it is evidently trying its best to do exactly that.
Mr. Binnion did not specify his next steps if the bill goes ahead. In an interview with the Natural Gas World website on Feb. 3 (the day after the bill was tabled), he mulled getting the courts involved. "This bill contemplates far less than even a refund of costs," he said. "... Our view is that the bill will not withstand legal challenge."
South of the border, Brett Herman's North Dakota Bakken-focused PetroShale Inc. (PSH) lost half a cent to 87.5 cents on 750,100 shares. It has added another new executive. The company overhauled its board and management just a month ago, welcoming the newcomers and their "successful record of creating shareholder value." (New CEO Mr. Herman and his people previously sold three companies over the last 13 years, including TORC Oil & Gas to Whitecap Resources Inc. (WCP: $9.13) last year for $565-million.) Now another newcomer is joining, namely Anthony Baldwin as vice-president of business development. Mr. Baldwin has spent most of his career at Crescent Point Energy Corp. (CPG: $8.18) and was until recently the president of its (shrinking) U.S. division.
According to social media, after leaving Crescent Point last year, Mr. Baldwin became the full-time principal of the Colorado-based Red Dice Investments. There is little information to be had on the young firm. According to Mr. Baldwin, however, Red Dice is "exploring transactions up to $20-million" -- and not just in oil and gas. The unusual bedfellows in its sights are "energy and cannabis science."
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