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Gear Energy Ltd T.GXE

Alternate Symbol(s):  GENGF

Gear Energy Ltd. is an oil-focused exploration and production company. The Company carries on the business of acquiring, developing and holding interests in petroleum and natural gas properties and assets. Its operations are located in three core areas: Lloydminster Heavy Oil, Central Alberta Light/Medium Oil and Southeast Saskatchewan. The Company is also engaged in focused on improving oil recoveries through the application of water flood technology. The key properties in the Central Alberta Light asset include Wilson Creek, Ferrier, Killam, Drayton Valley, and Chigwell.


TSX:GXE - Post by User

Comment by 2021Gambleon Jan 07, 2023 6:03pm
138 Views
Post# 35209140

RE:RE:RE:RE:RE:RE:For those who care...

RE:RE:RE:RE:RE:RE:For those who care...Real good explanation right here @zack50

So...to continue the question to the next logical question.

The SPR release was designed to increase US supply to balance demand, and it appears it did that based on year end inventories being flat yoy...

Now that the SPR is done, does the weekly deficit of 4 mb (220/52) and rounded down now come from Canada, which of course will greatly reduce the WCS differential to norms??

zack50 wrote:
MRG_WPG wrote: I guess I find the WCS/WCI thing confusing... Do stocks like TVE and WCP move based on WCS or WTI ?  

Thanks

The WTI light sweet crude oil futures price is a primary benchmark oil price, while WCS is a lower quality sulfur-containing crude oil. The price indicator between the two products is the indicator for whether or not the US refinery chooses to increase crude imports from Canada.

The WCS price usually follows the WTI trend but as a rule the oil price discount exists and remains lower due to quality differences (sulfur content) and limited pipeline capacity to ship WCS to the US market which accounts for ~95% of Canada's crude oil exports. There is of course a lack of access to international markets other than the US and therin lies the problem. Without access to other markets, Canada really has no choice but to sell most of its oil at whatever price buyers in the US are willing to pay.

As of Jan 5/23, the price differential between WTI and WCS was US$21.67The spread between WTI and WCS narrows if/when imports increase and usually changes on a daily basis. Btw, if you were to take the Jan 5/23 differential price and use it as a yearly average, the simple math tells us that Canada is losing billions of $nbsp;annually.

TVE, WCP and other Canadian producers are all affected by the differential... the lower it goes, the greater the effect on Canadian producers economic viability of their operations.


You may well remember a couple of years ago when oil was selling for less than a cup of coffee... that could hardly be considered to be economically feasible, under any circumstances. Now, I don't envision that happening again any time soon, if ever, and because of diminishing supply and forecasted increase demand I think it's safe to assume that oil companies are going to be raking in barrels of cash for years to come... but who knows!

Hopefully that sheds a little light on the subject.




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