Energy Summary for Oct. 20, 2022
2022-10-20 20:38 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for November delivery added 43 cents to $85.98 on the New York Merc, while Brent for December lost three cents to $92.38 (all figures in this para U.S.). Western Canadian Select traded at a discount of $25.75 to WTI, unchanged. Natural gas for November lost 10 cents to $5.36. The TSX energy index added 3.84 points to close at 247.23.
Oil prices had a rocky day, as traders eyed the latest COVID updates out of China. The country is reportedly considering a reduction to its 10-day quarantine period for inbound visitors, who may now have to isolate themselves for only seven days, according to Bloomberg. This would be the first time that China has relaxed its inbound quarantine restrictions since June. As the previous relaxation helped spur an increase in international flights to and from China, another reduction may support oil demand and prices. Yet this bullishness was offset by reports out of the country's capital, Beijing, where lockdowns are ramping up in response to a jump in reported cases.
Here in Canada, oil sands giant Imperial Oil Ltd. (IMO) lost 21 cents to $66.85 on 2.46 million shares, as it trumpeted its latest effort to "support Canada's emissions reduction goals." The company has entered a joint venture with FLO, a Quebec-based maker of electric vehicle charging stations. The two of them plan to develop charging services at Imperial's Esso and Mobil gas stations. Precise details of the agreement were scarce, with the companies largely content to pat each other's backs over how "thrilled" and "eager" they are to help with "transforming Canada's mobility future."
Investors yawned. They are largely waiting for the release of Imperial's third quarter financials next Friday, Oct. 28. The analysts at RBC Capital Markets helped stir up some hype recently by publishing a research note with their predictions for the financials, along with their speculation that Imperial is "in an enviable position" to boost its dividend or announce a special buyback program. Imperial then got another lovely mention today from BofA analyst Doug Leggate, who included the stock in a list of his "top oil and gas ideas," alongside Apache, Southwestern Energy, Chesapeake Energy, EOG Resources, ExxonMobil and Ovintiv Inc. (OVV: $69.13).
Lower down, Don Gray's Alberta- and Saskatchewan-focused Gear Energy Ltd. (GXE) lost two cents to $1.30 on 3.33 million shares. President and chief executive officer Ingram Gillmore has published his latest monthly missive to shareholders on Gear's website. The update included the usual estimate of Gear's monthly production, which in September averaged 5,700 barrels a day. Year-to-date production is the same number. This would have been below Gear's full-year guidance of 5,900 to 6,000 barrels a day, but in July, Mr. Gillmore nudged this down to a range of 5,700 to 5,900, blaming bad weather and equipment shortages. Based on September's production being more than 100 barrels a day lower than the August average, the company is still facing challenges.
Beyond the production, investors have apparently been looking askance at Gear's generous one-cent monthly dividend, representing a yield of 9.2 per cent. "Since initiating this return-of-capital program in the spring, Gear has received multiple inbounds from investors focused primarily on our thoughts about the long-term sustainability of the dividend," wrote Mr. Gillmore in his letter. He sprang to the dividend's defence. In summary: He is confident that Gear will uphold its long history of "efficient capital allocation."
Further afield, Dr. Art Halleran's Trillion Energy International Inc. (TCF) added one cent to 46.5 cents on 11.1 million shares, after cheering preliminary results from its first well at the SASB gas field in Turkey. The well has reached total depth and (according to early-stage logging data) has hit 32 metres of gas-bearing sands, Dr. Halleran, Trillion's long-time CEO and steadfast promoter, dubbed himself "very pleased" with the results so far, and with the fact that the well was drilled on time and on budget. He "eagerly" awaits the release of test results "soon."
Dr. Halleran was not finished there. A few hours later, he made use of the promotional opportunity afforded by The Market Herald, a self-described news firm that seems mainly to provide PR services. The first well has "proved up the geological model," he cheered, adding that the rest of the drill program should now be "a lot more straightforward." Also expected to be straightforward is the path to market. Thanks to existing infrastructure (the SASB field being a past producer, although 11 years past its peak), Dr. Halleran expects to make the initial gas deliveries "in a matter of about three or four weeks."
A disclaimer noted that the interview was "sponsored" -- paid for -- but did not disclose a price. Trillion can presumably afford it. Skyrocketing gas prices across Europe, while a cost-of-living crisis to residents, have been a boon to Trillion, helping it raise a total of $40.3-million this year to carry out its drill program. The prices ranged from 16.5 cents to 31 cents a share. Today the stock closed at 46.5 cents, with Dr. Halleran doing his best to push it higher as Trillion boosts gas sales just in time for winter.
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