| West Texas Intermediate crude for September delivery lost $1.72 to $94.98 on the New York Merc, while Brent for September lost 75 cents to $104.40 (all figures in this para U.S.). Western Canadian Select traded at a discount of $21.00 to WTI, up from a discount of $21.50. Natural gas for August added 27 cents to $8.99. The TSX energy index added 6.50 points to close at 226.67. The Canadian resource sector is saying goodbye to a long-time heavyweight. Nearly a dozen companies announced this morning that Lukas Lundin, the Swedish-Canadian billionaire who had been active in the mining and energy sectors for 40 years, has died in Geneva after a two-year battle with brain cancer. He was 64. Lukas Lundin began his career in the 1980s, working alongside his father, the late Adolf Lundin, who founded the Lundin Group of Companies over five decades ago. It was during the 1980s that the group gained a reputation for entering emerging, often politically unstable jurisdictions, becoming early investors in countries such as Argentina, Russia and the Democratic Republic of the Congo. When Adolf died in 2006, Lukas and his brother, Ian, took charge of the Lundin Group and continued to develop its stable of companies. The group these days is led by Lukas's four sons -- Adam, Jack, William and Harry -- and comprises 11 public companies, which are active in over 20 countries and have a combined market cap of over $14-billion. All of these companies issued press releases to pay their respects this morning. On the oil and gas side, the companies included International Petroleum Corp. (IPCO: $14.97) (active in Canada, Malaysia and France), Africa Oil Corp. (AOI: $2.36) (in Nigeria and Kenya), Africa Energy Corp. (AFE: $0.325) (South Africa and Namibia) and Shamaran Petroleum Corp. (SNM: $0.075) (Kurdistan). Lukas Lundin had a hand in founding all four companies, and in International Petroleum's case served as chairman from 2017 to 2020. Now his sons are closely involved. International Petroleum has William Lundin as its chief operating officer, and both William and Harry Lundin on its board of directors. William is also the chairman of Africa Energy and a director of Shamaran. Within the Canadian oil patch, Craig Bryksa's Saskatchewan and Alberta producer, Crescent Point Energy Corp. (CPG), added 15 cents to $9.57 on 10.2 million shares. Today it opened the floodgates of producers' quarterly financials (with at least two dozen other producers scheduled to report in just the next two weeks). Investors seemed satisfied if generally unsurprised by Crescent Point's numbers. Production for the second quarter averaged 129,200 barrels a day, slightly ahead of analysts' predictions of 127,200 barrels a day. Cash flow of $1.04 a share also surpassed analysts' predictions of 97 cents a share. On a year-over-year basis, Crescent Point's second quarter earnings fell to $331.5-million from $2.14-billion. Last year's results included a massive impairment reversal (hence the importance of cash flow to energy investors as a less swing-prone number). Crescent Point made sure to include its estimate of adjusted earnings, which it said more than doubled year over year to $272.1-million from $117.6-million. It left its full-year guidance and its dividend unchanged. (The quarterly dividend was previously hiked to eight cents from 6.5 cents earlier this month, for a yield of 3.3 per cent.) A conference call this morning saw management in a fine mood. Mr. Bryksa, president and chief executive officer, toasted the "fantastic" results, while chief financial officer Ken Lamont dropped hints about future special dividends in addition to the regular payout Elsewhere in Alberta, Stephen Loukas's Cardium-focused Obsidian Energy Ltd. (OBE) added 55 cents to $9.89 on 400,000 shares. It has closed a long-hyped debt refinancing. As announced July 19, Obsidian decided to sell $125-million in five-year notes and secure up to $225-million in new credit facilities. This would accomplish a goal that management had been talking about all year, namely refinancing the existing debt, with an emphasis on extending due dates. (Obsidian had over $368-million in near-term debt as of March 31.) Now Obsidian has sold $127.6-million in notes and closed $205-million in new facilities -- a lower amount than initially announced, but perfectly adequate for Obsidian's needs, claimed management. "We're pleased to complete our refinancing," cheered Mr. Loukas, interim president and CEO (still "interim" nearly three years after taking the job). He likely would have been more pleased if the refinancing were completed months earlier, when interest rates were much friendlier. Obsidian had to stick a coupon of 11.95 per cent on its notes. (The average coupon on junk-rated energy debt last year was about 7 per cent, according to Bloomberg.) Mr. Loukas downplayed that and emphasized that the notes come with a semi-annual buyback feature, whereby Obsidian will use free cash flow to chip away at the debt over time. He said this is a very useful feature that will let Obsidian "better manage overall interest costs ... [while] noteholders potentially benefit by having a known buyer." Another Alberta Cardium producer, Doug Bartole's InPlay Oil Corp. (IPO), added 18 cents to $3.08 on 817,400 shares. It lost seven cents yesterday after releasing a mixed operational update, but investors seemed to like it better on second glance. The company boasted that its production in the second quarter averaged 9,200 barrels a day. This was up sharply from 8,200 barrels a day in the first quarter (thanks to one of the busiest tie-in periods for new wells in the company's history) and exceeded analysts' predictions of 9,100 barrels a day. Less happily, a spate of bad weather delayed drilling in the third quarter. Management hastened to add that drilling has now begun and current production is 9,600 barrels a day. Management also cheered the renewal of InPlay's $79-million credit facility. Its total borrowing capacity, including a $25-million loan received from Business Development Bank of Canada in late 2020, remains $104-million. Past SEDAR filings show that InPlay reduced its overall bank debt to $71-million as of March 31 from $79-million as of Dec. 31. Investors will get their next update on the balance sheet when InPlay releases its second quarter financials on Aug. 11. For now, management was content to describe the financial position as "excellent." All of this won plenty of applause from a reliable cheerleader. ATB Capital analyst Patrick O'Rourke hyped the "strong" update (at one point using this adjective three times in two sentences), while expressing eagerness for the "catalyst" of the financials next month. Investors will recall the name of Mr. O'Rourke's employer, ATB, popping in past news releases from InPlay; ATB most recently co-led InPlay's $11.5-million bought deal at $1.20 last October. The stock closed today at $3.08. Mr. O'Rourke, who has an "outperform" rating, sees it more than doubling to his price target of $5.50. |