Energy Summary for April 12, 2022
2022-04-12 20:33 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for May delivery added $6.31 to $100.60 on the New York Merc, while Brent for June added $6.16 to $104.64 (all figures in this para U.S.). Western Canadian Select traded at a discount of $12.64 to WTI down from a discount of $12.59. Natural gas for May added four cents to $6.68. The TSX energy index added 5.45 points to close at 231.52.
Oil prices headed higher, with WTI re-entering the triple digits, after Russian President Vladimir Putin said peace talks with Ukraine are at a "dead end." The European Union is continuing to mull further sanctions on Russia over its invasion of Ukraine, including potential sanctions on Russian energy. OPEC has claimed that such a scenario could lead to one of the worst oil supply shocks in history. It warned the EU yesterday that it would be "nearly impossible" to replace Russia's energy supplies if sanctions take them off the market.
Closer to home, energy stocks rose with oil prices. U.S. Bakken producer Enerplus Corp. (ERF) added 47 cents to $16.49 on 2.37 million shares, as it strove to impress investors at today's "Bakken Update," a live presentation and webcast focusing on its favourite play. It started promoting the event nearly a month ago. The event today included 90 minutes of speeches, including a question-and-answer session, as well as a 48-page document chock full of charts, graphs and smiling photos of management.
President and chief executive officer Ian Dundas was in a particularly good mood. "Enerplus today is as well positioned as we have ever seen," he declared, praising its "deep, highly economic inventory," its "strong operational track record" and its "impressive financial profile." He noted that Enerplus expanded its Bakken assets significantly in 2021 through acquisitions. Now (as subsequently discussed by senior vice-president and chief operating officer Wade Hutchings) it has over a decade of "core" and "extended-core" drilling opportunities. The core is the Fort Berthold area; the extended core includes areas known as Little Knife and Murphy Creek, which so far have seen limited but "strong" drill results. Enerplus plans to drill roughly 100 wells at its Bakken assets (mostly Fort Berthold) in the next two years alone.
Over the next five years -- and here management was largely reiterating broader plans that it already laid out in February -- Enerplus is pursuing a plan that it reckons will generate over $2-billion in cumulative free cash flow. Chief financial officer Jodi Jenson Labrie said the company will use this money in part for debt reduction, share buybacks and eventually higher dividends. (The current quarterly dividend is 3.3 U.S. cents, for a yield of 1 per cent.) Mr. Dundas noted that Enerplus will keep an eye out for acquisitions, but does not really need them, so "the bar is higher." He is quite content with the "very clear plan [that is] in front of us right now."
All in all, the presentation went over well with investors, even if it was not especially different from what Enerplus has been saying for months. Investors who liked it can expect another taste when the company releases its first quarter financials and holds a conference call on May 6.
Here in Canada, a different company rhapsodized about its assets by way of a press release. Stephen Loukas's Obsidian Energy Ltd. (OBE) added 18 cents to $10.57 on 698,000 shares, after providing operational updates from the Peace River area and the Cardium play.
Both updates were mixed. In the Peace River area, Obsidian has bought more land, has launched its first drill program in years, and says the recent wells are looking so good that it has increased its full-year production guidance. Yet there was a notable exception to the good-looking wells. That would be Obsidian's first operated well in the up-and-coming Clearwater play, which failed to produce commercial levels of hydrocarbons. Management shook off the failure and said the Clearwater "remains highly prospective." As for the Cardium, Obsidian trumpeted a "broad commercial transaction" in the Pembina area with Whitecap Resources Inc. (WCP: $10.47), but then left investors without a single financial detail of what the transaction will involve.
Investors also remain largely in the dark about how Obsidian plans to refinance its debt, something its interim president and CEO, Mr. Loukas, has been vowing to do for months. All he said today is that the company is "continuing discussions with lenders and market participants." The goal remains to get something done by midyear.
Over in the B.C. Montney, Dale Shwed's Crew Energy Inc. (CR) lost three cents to $5.12 on 1.56 million shares. It has appointed John Hooks to its board of directors. The 64-year-old Mr. Hooks has been in the energy services industry for over 30 years, mostly at PHX Energy Services Corp. (PHX: $6.71) and its predecessors, where he has served as chairman and CEO since 1995. He is also a director of CES Energy Solutions Corp. (CES: $2.28). Crew predicted that his "extensive experience and knowledge" will add "tremendous value."
This was not the only board change of note. Crescent Point Energy Corp. (CPG), up 15 cents to $9.01 on 8.53 million shares, is adding Mindy Wight as a director (replacing Laura Cillis, who plans to step down at the company's annual meeting next month). The 40-year-old Ms. Wight was most recently a partner and tax specialist at MNP LLP. As well, she has worked for the Chartered Accounting School of Business and the Canada Revenue Agency.
Crescent Point was seemingly not just interested in her financial credentials. It also made sure to mention that she is a "leader in advancing economic growth for indigenous communities." She is the CFO and board treasurer of the Nch'kay Development Corp., as well as being a member of the Squamish Nation. Her title at MNP was "national leader of indigenous tax services." A Corporate Knights article in late 2021 noted that she has been helping a professor at the University of Victoria update and "indigenize" a third-year tax course. The new course will include material on how first nation governments operate their own revenue, as well as information on how federal and provincial government tax rules apply when an indigenous business owner operates a business on or off reserve.
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