Energy Summary for Sept. 20, 2021
2021-09-20 20:58 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for October delivery lost $1.68 to $70.29 on the New York Merc, while Brent for November lost $1.42 to $73.92 (all figures in this para U.S.). Western Canadian Select traded at a discount of $11.45 to WTI, up from a discount of $11.90. Natural gas for October lost 12 cents to $4.99. The TSX energy index lost 3.70 points to close at 126.51.
It was a quiet day in the Canadian oil patch, with attention mostly focused on today's federal election. The Canadian Association of Petroleum Producers (CAPP) has been urging Canadians all month to "Vote Energy!" As usual, it avoided endorsing any candidates or parties, instead providing a general wish list of what the industry would like to see from any future government. It did the same thing for the 2019 election. Presumably tomorrow, just like 2019, will see a carefully bland statement from CAPP, congratulating the winner -- whoever it is -- and restating a commitment to working with Ottawa for the future of all Canadians.
For some in the oil patch, today was also a sombre day. Oil sands giant Suncor Energy Inc. (SU), down 71 cents to $23.96 on 12.7 million shares, released a statement today on Twitter about the death of its longest-serving director, Mel Benson. Mr. Benson -- also known as Wapunatew; he was from Beaver Lake Cree Nation -- had been on Suncor's board for 21 years prior to retiring last May. This also made him one of the longest-serving directors of any company on the TSX. Before joining Suncor in 2000, Mr. Benson worked for Exxon and its affiliates in West Africa, Asia, Australia and the former Soviet Union. He then returned to Canada and served at the head of at least seven oil and gas companies, as well as starting his own management consulting firm. He died last Thursday at 72. An obituary released by his family did not mention a cause.
Another oil sands company, Imperial Oil Ltd. (IMO), lost 58 cents to $34.01 on 2.37 million shares. It got a rather mixed review this morning from Citi analyst Prashant Rao. "[Imperial's] strong balance sheet and ample liquidity should allow the company to maintain its dividends during this downturn," wrote Mr. Rao -- a compliment, surely, but a belated one, as Imperial not only maintained its 22-cent quarterly dividend throughout 2020 but then hiked it to 27 cents in 2021. The yield as of today is 3.2 per cent. Mr. Rao then made note of the "significant pullback" in Imperial's share price (which has fallen to $34 from $41 over the last three months), opining that the "risk/rewards appear to be balanced." He left his rating at "neutral"and lowered his price target to $38 from $44.
Further afield, the Lundin family's Africa Oil Corp. (AOI) lost seven cents to $1.57 on 397,300 shares, as it trumpeted the hiring of two new executives. The first is petroleum engineer Craig Knight, who is joining the company as vice-president of production. Also joining is Amy Bowe as the new vice-president of ESG (environmental, social and governance).
Mr. Knight was most recently the production director of Spirit Energy. Spirit is a North Sea producer that made headlines in 2020 after one of its exploration wells was ranked among the largest finds on the Norwegian Continental Shelf (though unfortunately, the other three wells in the four-well program were duds). Prior to joining Spirit in 2018, Mr. Knight spent seven years at Denmark's Maersk. Maersk just so happened to be a joint venturer of Africa Oil in Kenya, until France's Total bought Maersk and added itself to the joint venture in 2017. As discussed in the Energy Summary for Sept. 15, Africa Oil and the joint venturers have only just revived their Kenyan promotion. Mr. Knight, to be clear, seems to have had little involvement with the Kenyan assets while at Maersk -- he focused on offshore Danish assets -- but Africa Oil's president and chief executive officer, Keith Hill, said he is "very pleased" to welcome the newcomer. Apparently Mr. Knight is to focus on Africa Oil's Nigerian assets and any "new accretive acquisition opportunities."
As for Ms. Bowe, Mr. Hill said she will be "very valuable." Ms. Bowe previously spent nine years at Wood Mackenzie, mostly recently as its head of carbon research. She is also a former environmental affairs adviser at Hess. Her arrival as Africa Oil's vice-president of ESG comes mere months after the company released its inaugural ESG report in March (to much horn tooting about its "vision [and] sustainability goals"). It also comes as the above-noted joint venturers in Kenya are awaiting regulatory approval for their project's ESIA (environmental and social impact assessment). This will be crucial to a long-delayed final investment decision.
Back in Canada, Leonard Van Betuw's Petro Viking Energy Inc. (VIK) took another step toward its planned acquisition of another Van Betuw promotion, the private Avila Energy. Petro Viking's stock has been halted at 32 cents since Sept. 9 so that the exchange can receive and review documents for the acquisition. As announced in June, Petro Viking wants to issue $50.6-million worth of shares to buy Avila, in a deal that is effectively serving as Avila's go-public transaction and is considered a "fundamental change" (hence the exchange's review). Today, Petro Viking filed a notice of meeting and an information circular for the parts of the deal that require shareholder approval. Shareholders will be asked to give that approval at a special meeting on Friday, Oct. 15.
Primarily, Petro Viking wants shareholders to approve a name change to Avila Energy and to elect the board of directors, including Mr. Van Betuw, who is also to be the CEO of the resulting company. He is currently the original Avila's CEO and became Petro Viking's CEO just last month. The companies have had close ties for far longer than that, having worked together in west-central Alberta for at least two years. Avila scooped up some of the distressed assets of Quattro Exploration -- yet another Van Betuw promotion -- after Quattro went bankrupt in 2017. Petro Viking popped up as a joint venturer in 2019. In March, 2021, Petro Viking listed on the CSE, returning to public life after having been booted off the TSX-V in 2016 for failure to pay its fees. Apparently this was just stage one of the fresh start. The transaction with Avila was announced just three months later.
If all goes according to Mr. Van Betuw's plan, the companies will complete their combination by the end of next month. The resulting issuer will then be producing about 2,000 barrels of oil equivalent a day and will aim to reach 3,000 by the end of the year. It will also be "fully embracing" a plan to become simultaneously a "carbon-neutral energy producer" and an "economic dynamo." Investors do not seem quite as excited as all that. The stock, after getting as high as 42 cents in the wake of the June announcement, has since meandered down to its currently halted level of 32 cents.
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