Wednesday, July 30, 2008
Talisman boosts drilling budget
Talisman boosts drilling budget TheStar.com -
Business - Talisman boosts drilling budget
`Very promising start' to its North American unconventional natural gas exploration program
July 30, 2008
CALGARY–Talisman Energy Inc.'s second-quarter profit fell 23 per cent from a year earlier due to higher charges on stock-based compensation and losses on derivative contracts, Canada's third-largest independent oil explorer said yesterday.
Talisman, which is restructuring its assets and selling up to $3 billion of oil and gas properties, earned $426 million, or 42 cents a share, in the quarter ended June 30.
That compares with $550 million, or 53 cents a share, a year earlier when results were boosted by gains.
Stripped of hedging and stock compensation costs, Talisman's earnings from continuing operations increased 167 per cent to $846 million, or 83 cents per share, from $317 million, or 30 cents per share, in 2007.
The operating result surpassed the average forecast of analysts for a profit of 73 cents a share, as the company's oil and gas production grew more than expected.
Talisman has embarked on a strategy to jettison assets in regions where long-term production increases are in question to concentrate on such prospects as unconventional natural gas in North America, where spending is being boosted by half to $1.5 billion this year – and exploration in southeast Asia.
The additional cash for its unconventional program, to boost Talisman's capital spending budget this year to $5.5 billion from its previous $5 billion target, follows what the firm called a "very promising start" to its North American unconventional natural gas program.
Talisman said $2.5 billion of the total has been earmarked for North America, with the bulk of the cash to be spent on unconventional plays.
"We're accelerating our activities in the unconventional business partly in response to actions others are taking and partly on our own accord," CEO John Manzoni said during a conference call yesterday. "The final outcome will depend on how much we accelerate our drilling."
Cash flow, a measure of an oil company's ability to finance its projects, was $1.69 billion, or $1.66 a share, up 43 per cent from $1.18 billion, or $1.13 a share. Revenue grew to $3.16 billion from $1.92 billion.
In the second quarter, the company produced 432,000 barrels of oil equivalent a day, down 4 per cent from the same period in 2007 due to the sale of non-core assets.
From the Star's wire services
Tuesday, July 29, 2008
Wednesday, July 23, 2008
Today's Markets
Gasoline cost pushes up prices
HEATHER SCOFFIELD
Wednesday, July 23, 2008
OTTAWA — Canada's consumer prices were up a huge 3.1 per cent in June compared to a year ago, pushed higher by expensive gasoline, Statistics Canada says.
June's increase was the largest since September, 2005. Excluding gasoline, total inflation was up 1.8 per cent in the past 12 months, Statscan said.
Core inflation, which excludes the most volatile prices, was far more subdued, rising just 1.5 per cent.
Economists had been expecting a big leap in total inflation in June, projection 2.9 per cent year over year, compared to a May rise of 2.2 per cent. For core inflation, economists had forecast 1.6 per cent in June, compared to 1.5 per cent in May.
From a month earlier, total inflation rose 0.7 per cent in May, and the core index rose just 0.1 per cent, mainly in line with economists' expectations.
Although the June numbers were slightly higher than projected, and the total inflation number may come across as quite high, economists played down the inflation report, and warned not to get too excited about the spike.
“While headline inflation pushed above 3 per cent for the first time since September, 2005, core inflation remained at 1.5 per cent for the third consecutive month, signalling once again that current inflation fears are overblown and that there is room for the Bank of Canada to reduce rates once again if needed,” economists at Bank of Nova Scotia said in a note to clients.
“While higher headline inflation will feed into core inflation with a lag, a weakening Canadian economy will continue to offset these pressures.”
For the year, the main reason total inflation soared is because gasoline prices were up 26.9 per cent between June, 2007, and June, 2008, Statscan said. That's the biggest surge since the 34.7 per cent leap recorded in September, 2005, after hurricanes Katrina and Rita.
Gasoline prices have risen substantially, but the inflation number seems particularly large because gas prices were falling in June, 2007.
Mortgage interest costs, bakery products and air transportation were also major drivers of the 3.1 per cent annual inflation rate, Statscan said.
Mortgage interest costs were up 9 per cent.
And food costs soared 3 per cent in June compared with a year earlier, led by a 12.3 per cent increase in bakery products. Food prices have been rising sharply around the world, except in Canada, where a strong Canadian dollar, intense competition, and local production kept prices low until now.
“While still relatively mild versus most of the rest of the world, that's a big acceleration from earlier this year when grocery prices were actually down on a year-over-year basis,” commented Douglas Porter, deputy chief economist at BMO Nesbitt Burns.
Air transportation prices rose 14.3 per cent, the largest increase since May, 2002, as carriers pass along higher fuel costs to their customers. Overseas flights saw the largest increases.
A few falling prices helped mitigate the overall rise in inflation. Vehicles fell 8.4 per cent year-over-year, and computer equipment dropped 13.2 per cent. Clothing and footwear prices fell 0.6 per cent – but that's not as big a drop as usual for June, Mr. Porter said.
But over all, goods prices rose 2.5 per cent – a much larger leap than usual for this category, which has seen little change whatsoever in prices lately. Services prices rose 3.7 per cent.
By province, Prince Edward Island and Alberta saw the biggest increases, with inflation well over 4 per cent in both provinces, driven by rising energy prices. Excluding energy, Saskatchewan saw the highest inflation rate among the provinces, at 2.6 per cent, mainly because of housing.
Copyright © 2002 Bell Globemedia Interactive.
Its Been A Busy Week IE-T Drops After Money Raised
The good old fashion pump up while raising the $88 Million
Now the volume is significantly down.
So now we wait for more news or a spike in Oil again.
10:25 EDT Tuesday, June 17, 2008
CALGARY, June 17 /PRNewswire-FirstCall/ - Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) announced today that it is increasing the private placement announced on June 6 to Cdn.$88 million due to significantly increased expressions of interest from institutional investors. The price for the offering has been set at Cdn.$3.00 per special warrant. Ivanhoe Energy announced on June 6 that it was intending to raise up to Cdn.$50 million.
CALGARY, June 17 /PRNewswire-FirstCall/ - Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) announced today that it is increasing the private placement announced on June 6 to Cdn.$88 million due to significantly increased expressions of interest from institutional investors. The price for the offering has been set at Cdn.$3.00 per special warrant. Ivanhoe Energy announced on June 6 that it was intending to raise up to Cdn.$50 million.
Ivanhoe Energy completes C$88 million private placement
07:30 EDT Wednesday, July 09, 2008
CALGARY, July 9 /CNW/ - Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) announced today that it has completed the C$88 million private placement that was announced on June 6, 2008.
The financing, consisting of C$3.00 special warrants, will be used to make the initial payment required under Ivanhoe Energy's agreement with Talisman Energy Canada to acquire Talisman's interests in certain leases in the Athabasca oilsands region in Alberta, Canada, as announced on May 29, 2008. The balance of the funds will be used for Ivanhoe Energy's planned development activities on the acquired oilsands leases and for general working capital purposes.
The financing, originally targeted at C$50 million, subsequently was increased to C$88 million due to significantly increased expressions of interest from institutional investors.
Subject to regulatory approval and satisfaction of all conditions precedent, the private placement is expected to close contemporaneously with the closing of the acquisition of the oilsands leases on July 11th, 2008.
07:30 EDT Wednesday, July 09, 2008
CALGARY, July 9 /CNW/ - Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) announced today that it has completed the C$88 million private placement that was announced on June 6, 2008.
The financing, consisting of C$3.00 special warrants, will be used to make the initial payment required under Ivanhoe Energy's agreement with Talisman Energy Canada to acquire Talisman's interests in certain leases in the Athabasca oilsands region in Alberta, Canada, as announced on May 29, 2008. The balance of the funds will be used for Ivanhoe Energy's planned development activities on the acquired oilsands leases and for general working capital purposes.
The financing, originally targeted at C$50 million, subsequently was increased to C$88 million due to significantly increased expressions of interest from institutional investors.
Subject to regulatory approval and satisfaction of all conditions precedent, the private placement is expected to close contemporaneously with the closing of the acquisition of the oilsands leases on July 11th, 2008.
Ivanhoe Energy completes acquisition of Athabasca oilsands assets from Talisman Energy
16:15 EDT Friday, July 11, 2008
Athabasca to be home for first integrated HTL (heavy-to-light) oil
project
CALGARY, July 11 /PRNewswire-FirstCall/ - Robert Friedland, Executive Chairman, President and Chief Executive Officer of Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN), announced today that the company has completed its previously announced acquisition of Talisman Energy Canada's 100% working interests in two leases (Leases 10 and 6) located in the heart of the Athabasca oilsands region in the Province of Alberta, Canada. Talisman Energy Canada is an affiliate of Talisman Energy Inc. (TSX:TLM; NYSE:TLM).
The total purchase price is C$90 million, of which an initial payment of C$22.5 million has been made from proceeds of an C$88 million private placement financing that closed on July 8th. The financing, consisting of C$3.00 special warrants and originally targeted at C$50 million, was increased to C$88 million due to significantly increased expressions of interest from institutional investors. The balance of the funds will be used for Ivanhoe Energy's planned development activities on the acquired oilsands leases and for general working capital purposes.
The acquisition of Lease 10 will provide the site for the first commercial application of Ivanhoe Energy's proprietary, HTL(TM) heavy-oil upgrading technology in a major, integrated heavy-oil project. Lease 10 has a relatively high level of delineation (four wells per section). It is believed to be a high-quality reservoir and an excellent candidate for thermal recovery production using the SAGD (steam-assisted gravity drainage) process. The Lease 10 reservoir characteristics are believed by Ivanhoe to be similar to those at Petro-Canada's 30,000-barrel-per-day MacKay River project, located nearby, across the Athabasca River. MacKay River is acknowledged to be one of the most successful and longest-producing SAGD projects in the Athabasca oil sands.
Lease 10 would be capable of producing between 30,000 and 50,000 barrels of oil per day, based on estimates by independent reservoir engineers Sproule Associates Limited. Based on the most recent evaluations conducted by Sproule, Lease 10 is estimated to contain, on a best-estimate basis, approximately 244 million barrels of contingent bitumen resources (with low and high estimates of approximately 188 million and 313 million barrels, respectively). The evaluation of Lease 10 has an effective date of August 31, 2007. Using Sproule's interpretation of net pay, Ivanhoe expects to encounter an average of 30 metres of continuous bitumen saturated sand within the initial development area.
Based on these contingent resource estimates, Ivanhoe Energy's acquisition price of C$90 million represents a price of approximately C$0.37 per barrel of contingent bitumen resource measured on a best-estimate basis, with a range of approximately C$0.29 per barrel on a high-estimate basis to approximately C$0.48 per barrel on a low-estimate basis.
Since Ivanhoe Energy's oilsands announcement on May 29th, the holder of the 25% working interest in Lease 50 has exercised its right of first refusal to acquire Talisman's 75% working interest in Lease 50 - a third lease that Ivanhoe was to acquire from Talisman. Lease 50 is a less-delineated asset located approximately 19 km southeast of Fort McMurray. Contingent bitumen resources attributable to Talisman's 75% working interest in Lease 50 were estimated by Sproule as of July 31, 2006, to be, on a best-estimate basis, approximately 50 million barrels. As a consequence, Ivanhoe Energy has proceeded to purchase Lease 10 and Lease 6 - and the total purchase price has decreased from C$105 million to C$90 million.
Lease 50 was considered by Ivanhoe to represent possible expansion potential. The reduced cost to Ivanhoe of acquiring its principal target, Lease 10, leaves Ivanhoe with additional cash resources to initiate the development of Lease 10 and also allows Ivanhoe to apply its resources to alternative expansion targets as appropriate.
Lease 6 is a small, undelineated, 680-acre block 1.6 km south of Lease 10.
Talisman's Rights
Talisman will retain back-in rights of up to 20% in the acquired leases for a period of three years. During this period, Talisman also will have the right of first offer to acquire any participation interests in heavy-oil projects in Alberta that Ivanhoe wishes to sell, excluding the acquired leases, on mutually agreeable terms. In addition, Ivanhoe and Talisman have entered into an HTL Data Monitoring Agreement to allow Talisman to effectively monitor the commercial effectiveness of Ivanhoe's HTL technology.
Lease 10 to be the site for Ivanhoe's first HTL integrated heavy-oil
--------------------------------------------------------------------
project
-------
Lease 10 is a 6,880-acre contiguous block located approximately 10 miles (16 km) northeast of Fort McMurray, immediately south of Suncor's operating Steepbank and Millennium projects. The block also adjoins leases held by ExxonMobil, Laricina Energy and E-T Energy.
The Lease 10 resource target is considered to be of high-quality McMurray sands, with clean and continuous average net pay of approximately 20 metres and no significant top- or bottom-water or top-gas issues. The average porosity is 34%, average bitumen saturation is 79% and permeabilities are between one and 10 Darcies, all of which are considered excellent reservoir characteristics. The high quality of the asset is expected to provide for favorable projected operating costs, including attractive steam-oil ratios (SOR) using SAGD development techniques.
Ivanhoe's HTL plant on Lease 10 is projected ultimately to be capable of operating at production rates of at least 30,000 barrels per day for approximately 25 years. Ivanhoe intends to integrate established SAGD thermal recovery techniques with its patented HTL upgrading process, producing and marketing a light, synthetic sour crude.
Ivanhoe plans to continue the Lease 10 delineation program in preparation for the submission of permits for an integrated HTL project. In general, thermal oilsands projects, including SAGD projects, require a period of initial development, including delineation, permitting and field development, which is followed by relatively stable operations for many years. Ivanhoe will provide guidance on expectations regarding development timelines, as appropriate, at a future date.
Benefits of HTL Integration
---------------------------
HTL is a field-located upgrading process that converts heavy oil to a transportable, partially upgraded synthetic crude oil and converts the upgrading by-products to onsite energy. The process frees the heavy-oil producer from the need to purchase diluent for transport, significantly eliminates the need to purchase natural gas to steam the reservoir, and allows the producer to capture the majority of the heavy-oil/light-oil value differential. The net result is enhanced rates of return and reduced earnings volatility. Furthermore, the HTL process is technically and economically scalable down to as low as 10,000-30,000 bopd, allowing for vertical integration of smaller, heavy-oil assets in Canada and internationally.
Purchase details
Ivanhoe has purchased all of Talisman's interests in Leases 10 and 6. The total purchase price for the two leases is C$90 million, allocated as follows:
1. C$22.5 million cash that has been paid.
2. A C$12.5 million note, with interest at prime plus 2%, is to be
repaid on or before December 31, 2008.
3. A C$40 million, three-year convertible note, with interest at prime
plus 2% with principal convertible at C$3.13, which represents a 25%
premium to Ivanhoe Energy's share price based on the volume-adjusted,
weighted-average closing price for the 10 business days prior to the
signing of the preliminary agreement on May 29th. If the note were
fully converted, 12,779,552 common shares of Ivanhoe Energy would be
issued to Talisman, representing approximately 4.44% of the issued
and outstanding shares of Ivanhoe Energy as of July 11th, after
giving effect to the conversion, as well as the C$88 million
financing that just closed.
4. C$15 million cash upon Ivanhoe Energy receiving requisite government
and other approvals to develop the northern border of Lease 10, which
is subject to a Mineral Surface Lease (MSL) held by Suncor.
Ivanhoe's obligations under the notes and the contingent payment are secured.
Ivanhoe intends to finance future payments with funds from a combination of strategic investors and/or traditional debt and equity markets, either at the Ivanhoe Energy Inc. level or project level.
Financial Advisor
Tristone Capital Inc. is acting as financial advisor to Ivanhoe for this transaction.
Ivanhoe Energy
--------------
Ivanhoe Energy is an independent, international, heavy-oil development and production company focused on pursuing long-term growth in its reserves and production using advanced technologies, including its proprietary, patented heavy-oil upgrading process (HTL). Core operations are in the United States and China, with business development opportunities worldwide. Ivanhoe Energy's shares trade on the NASDAQ Capital Market with the ticker symbol IVAN and on the Toronto Stock Exchange with the symbol IE.
Ivanhoe Energy has established a number of geographically focused entities. The parent company, Ivanhoe Energy Inc., will pursue HTL opportunities in the Athabasca oilsands of Western Canada and will hold and manage the core HTL technology. Two new subsidiaries have been established, one for Latin America and one for the Middle East & North Africa,
complementing Sunwing Energy Ltd., Ivanhoe Energy's existing, wholly-owned company for China. Dave Martin is leading the subsidiary for Latin America and Leon Daniel is leading the subsidiary for the Middle East & North Africa. Ivanhoe Energy Inc. owns 100% of each of these subsidiaries, although the percentages are expected to decline as they develop their respective businesses and raise capital independently.
This structure will allow the development and financing of multiple HTL projects around the world, while minimizing dilution of Ivanhoe Energy's existing shareholders. In addition, the alignment with principal energy-producing regions will facilitate financing from region-specific strategic investors, some of which already have been identified, and also will enhance flexibility in accessing global capital markets.
Building an execution team:
During recent months, Ivanhoe Energy has made significant progress in building its execution teams in preparation for this acquisition. The upstream team consists of a number of Calgary-based, experienced heavy-oil engineers and geologists hired from firms such as Petro-Canada and Synenco, complemented by a core team of petroleum engineers and geologists located in Ivanhoe's offices in Bakersfield, California, a number of whom are expected to move to Calgary, Alberta, in the summer of 2008. The Houston-based HTL technology team also has been strengthened. Ivanhoe expects to continue filling key positions as it moves into execution mode.
Monday, July 14, 2008
Assad: Attack Iran and Pay The Price
Assad: Iran war will cost US, Israel dearMon, 14 Jul 2008 14:48:22 Syria has cautioned that a military attack on Iran over its nuclear program would have serious repercussions for US, Israel and the world.
"It will cost the United States and the planet dear," Bashar al-Assad said in an interview with France Inter radio on Monday. "Israel will pay directly the price of this war. Iran has said so. The problem is not the action and reaction.
The problem is that when one starts such an action in the Middle East, one cannot manage the reactions that can spread out over years or even decades," he said. He criticized the US government, stressing an attack on Iran would be far from rational.
"This administration is an administration whose doctrine is a warmonger's doctrine. It does not reason with our logic, and that of most European countries, most countries in the world,"
Assad said in the interview.
Tel Aviv and its fervent supporter, Washington, accuse Tehran of trying to develop nuclear weapons but Iran stresses it pursues nuclear technology for peaceful purposes. Tehran has kept cooperating with UN nuclear watchdog over its nuclear program.
The latest report by Mohamed ElBaradei, the Chief of the International Atomic Energy Agency, certified Iran's non-diversion towards a nuclear bomb material. The US and Israel have said they might resort to a military option to stop Iran from developing nuclear technology.
However, Tehran says it will give a devastating response to invaders, making them regret their action should the country come under any attack.
© Press TV 2007. All Rights Reserved.
"It will cost the United States and the planet dear," Bashar al-Assad said in an interview with France Inter radio on Monday. "Israel will pay directly the price of this war. Iran has said so. The problem is not the action and reaction.
The problem is that when one starts such an action in the Middle East, one cannot manage the reactions that can spread out over years or even decades," he said. He criticized the US government, stressing an attack on Iran would be far from rational.
"This administration is an administration whose doctrine is a warmonger's doctrine. It does not reason with our logic, and that of most European countries, most countries in the world,"
Assad said in the interview.
Tel Aviv and its fervent supporter, Washington, accuse Tehran of trying to develop nuclear weapons but Iran stresses it pursues nuclear technology for peaceful purposes. Tehran has kept cooperating with UN nuclear watchdog over its nuclear program.
The latest report by Mohamed ElBaradei, the Chief of the International Atomic Energy Agency, certified Iran's non-diversion towards a nuclear bomb material. The US and Israel have said they might resort to a military option to stop Iran from developing nuclear technology.
However, Tehran says it will give a devastating response to invaders, making them regret their action should the country come under any attack.
© Press TV 2007. All Rights Reserved.
Chavez said Oil will go to $300 If...
"If they freeze us there will be no more oil for the UnitedStates, and the price will go to $300," Chavez said during atelevised meeting with Caribbean and Central American leadersas part of an energy cooperation scheme called Petrocaribe.
Source
Venezuela's Chavez says oil could reach $300
Mon Jul 14, 2008 12:57am BST
MARACAIBO, July 13 (Reuters) - Venezuelan President Hugo Chavez said on Sunday oil prices could hit $300 per barrel if U.S. oil company Exxon Mobil again freezes Venezuelan assets in a dispute over a nationalized oil project.
Exxon (XOM.N: Quote, Profile, Research) won court orders freezing $12 billion in assets held by Venezuelan state oil company PDVSA after the OPEC nation took over a multi-billion dollar oil project, heightening tensions with the United States and helping to raise oil prices.
A London court later overturned Exxon's temporary asset freeze, but Chavez said the company could seek further action against Venezuela.
"If they freeze us there will be no more oil for the United States, and the price will go to $300," Chavez said during a televised meeting with Caribbean and Central American leaders as part of an energy cooperation scheme called Petrocaribe.
Chavez also said oil prices were being influenced by a "speculative bubble", the collapse of which could send prices as low as $70 per barrel.
This contrasted with his Saturday statements that geopolitical tensions, particularly the threat of an invasion against Iran, could push oil prices to $200 per barrel.
"Years ago I said oil was going to go to $100 per barrel, now it looks like it is headed toward $200," he said. (Reporting by Manuel Hernandez, writing by Brian Ellsworth; Editing by Toni Reinhold)
Source
Venezuela's Chavez says oil could reach $300
Mon Jul 14, 2008 12:57am BST
MARACAIBO, July 13 (Reuters) - Venezuelan President Hugo Chavez said on Sunday oil prices could hit $300 per barrel if U.S. oil company Exxon Mobil again freezes Venezuelan assets in a dispute over a nationalized oil project.
Exxon (XOM.N: Quote, Profile, Research) won court orders freezing $12 billion in assets held by Venezuelan state oil company PDVSA after the OPEC nation took over a multi-billion dollar oil project, heightening tensions with the United States and helping to raise oil prices.
A London court later overturned Exxon's temporary asset freeze, but Chavez said the company could seek further action against Venezuela.
"If they freeze us there will be no more oil for the United States, and the price will go to $300," Chavez said during a televised meeting with Caribbean and Central American leaders as part of an energy cooperation scheme called Petrocaribe.
Chavez also said oil prices were being influenced by a "speculative bubble", the collapse of which could send prices as low as $70 per barrel.
This contrasted with his Saturday statements that geopolitical tensions, particularly the threat of an invasion against Iran, could push oil prices to $200 per barrel.
"Years ago I said oil was going to go to $100 per barrel, now it looks like it is headed toward $200," he said. (Reporting by Manuel Hernandez, writing by Brian Ellsworth; Editing by Toni Reinhold)
Friday, July 11, 2008
Ivanhoe Energy completes acquisition of Athabasca oilsands assets from Talisman Energy
Ivanhoe Energy completes acquisition of Athabasca oilsands assets from Talisman Energy
16:15 EDT Friday, July 11, 2008
Athabasca to be home for first integrated HTL (heavy-to-light) oil
project
CALGARY, July 11 /CNW/ - Robert Friedland, Executive Chairman, President and Chief Executive Officer of Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN), announced today that the company has completed its previously announced acquisition of Talisman Energy Canada's 100% working interests in two leases (Leases 10 and 6) located in the heart of the Athabasca oilsands region in the Province of Alberta, Canada. Talisman Energy Canada is an affiliate of Talisman Energy Inc. (TSX:TLM; NYSE:TLM).
The total purchase price is C$90 million, of which an initial payment of C$22.5 million has been made from proceeds of an C$88 million private placement financing that closed on July 8th. The financing, consisting of C$3.00 special warrants and originally targeted at C$50 million, was increased to C$88 million due to significantly increased expressions of interest from institutional investors. The balance of the funds will be used for Ivanhoe Energy's planned development activities on the acquired oilsands leases and for general working capital purposes.
The acquisition of Lease 10 will provide the site for the first commercial application of Ivanhoe Energy's proprietary, HTL(TM) heavy-oil upgrading technology in a major, integrated heavy-oil project. Lease 10 has a relatively high level of delineation (four wells per section). It is believed to be a high-quality reservoir and an excellent candidate for thermal recovery production using the SAGD (steam-assisted gravity drainage) process.
The Lease 10 reservoir characteristics are believed by Ivanhoe to be similar to those at Petro-Canada's 30,000-barrel-per-day MacKay River project, located nearby, across the Athabasca River. MacKay River is acknowledged to be one of the most successful and longest-producing SAGD projects in the Athabasca oil sands.
Lease 10 would be capable of producing between 30,000 and 50,000 barrels of oil per day, based on estimates by independent reservoir engineers Sproule Associates Limited. Based on the most recent evaluations conducted by Sproule, Lease 10 is estimated to contain, on a best-estimate basis, approximately 244 million barrels of contingent bitumen resources (with low and high estimates of approximately 188 million and 313 million barrels, respectively). The evaluation of Lease 10 has an effective date of August 31, 2007. Using Sproule's interpretation of net pay, Ivanhoe expects to encounter an average of 30 metres of continuous bitumen saturated sand within the initial development area.
Based on these contingent resource estimates, Ivanhoe Energy's acquisition price of C$90 million represents a price of approximately C$0.37 per barrel of contingent bitumen resource measured on a best-estimate basis, with a range of approximately C$0.29 per barrel on a high-estimate basis to approximately C$0.48 per barrel on a low-estimate basis.
Since Ivanhoe Energy's oilsands announcement on May 29th, the holder of the 25% working interest in Lease 50 has exercised its right of first refusal to acquire Talisman's 75% working interest in Lease 50 - a third lease that Ivanhoe was to acquire from Talisman. Lease 50 is a less-delineated asset located approximately 19 km southeast of Fort McMurray. Contingent bitumen resources attributable to Talisman's 75% working interest in Lease 50 were estimated by Sproule as of July 31, 2006, to be, on a best-estimate basis, approximately 50 million barrels. As a consequence, Ivanhoe Energy has proceeded to purchase Lease 10 and Lease 6 - and the total purchase price has decreased from C$105 million to C$90 million.
Lease 50 was considered by Ivanhoe to represent possible expansion potential. The reduced cost to Ivanhoe of acquiring its principal target, Lease 10, leaves Ivanhoe with additional cash resources to initiate the development of Lease 10 and also allows Ivanhoe to apply its resources to alternative expansion targets as appropriate.
Lease 6 is a small, undelineated, 680-acre block 1.6 km south of Lease 10.
Talisman's Rights
Talisman will retain back-in rights of up to 20% in the acquired leases for a period of three years. During this period, Talisman also will have the right of first offer to acquire any participation interests in heavy-oil projects in Alberta that Ivanhoe wishes to sell, excluding the acquired leases, on mutually agreeable terms. In addition, Ivanhoe and Talisman have entered into an HTL Data Monitoring Agreement to allow Talisman to effectively monitor the commercial effectiveness of Ivanhoe's HTL technology.
Lease 10 to be the site for Ivanhoe's first HTL integrated heavy-oil
--------------------------------------------------------------------
project
-------
Lease 10 is a 6,880-acre contiguous block located approximately 10 miles (16 km) northeast of Fort McMurray, immediately south of Suncor's operating Steepbank and Millennium projects. The block also adjoins leases held by ExxonMobil, Laricina Energy and E-T Energy.
The Lease 10 resource target is considered to be of high-quality McMurray sands, with clean and continuous average net pay of approximately 20 metres and no significant top- or bottom-water or top-gas issues. The average porosity is 34%, average bitumen saturation is 79% and permeabilities are between one and 10 Darcies, all of which are considered excellent reservoir characteristics. The high quality of the asset is expected to provide for favorable projected operating costs, including attractive steam-oil ratios (SOR) using SAGD development techniques.
Ivanhoe's HTL plant on Lease 10 is projected ultimately to be capable of operating at production rates of at least 30,000 barrels per day for approximately 25 years. Ivanhoe intends to integrate established SAGD thermal recovery techniques with its patented HTL upgrading process, producing and marketing a light, synthetic sour crude.
Ivanhoe plans to continue the Lease 10 delineation program in preparation for the submission of permits for an integrated HTL project. In general, thermal oilsands projects, including SAGD projects, require a period of initial development, including delineation, permitting and field development, which is followed by relatively stable operations for many years. Ivanhoe will provide guidance on expectations regarding development timelines, as appropriate, at a future date.
Benefits of HTL Integration
---------------------------
HTL is a field-located upgrading process that converts heavy oil to a transportable, partially upgraded synthetic crude oil and converts the upgrading by-products to onsite energy. The process frees the heavy-oil producer from the need to purchase diluent for transport, significantly eliminates the need to purchase natural gas to steam the reservoir, and allows the producer to capture the majority of the heavy-oil/light-oil value differential. The net result is enhanced rates of return and reduced earnings volatility. Furthermore, the HTL process is technically and economically scalable down to as low as 10,000-30,000 bopd, allowing for vertical integration of smaller, heavy-oil assets in Canada and internationally.
Purchase details
Ivanhoe has purchased all of Talisman's interests in Leases 10 and 6. The total purchase price for the two leases is C$90 million, allocated as follows:
<<
1. C$22.5 million cash that has been paid.
2. A C$12.5 million note, with interest at prime plus 2%, is to be
repaid on or before December 31, 2008.
3. A C$40 million, three-year convertible note, with interest at prime
plus 2% with principal convertible at C$3.13, which represents a 25%
premium to Ivanhoe Energy's share price based on the volume-adjusted,
weighted-average closing price for the 10 business days prior to the
signing of the preliminary agreement on May 29th. If the note were
fully converted, 12,779,552 common shares of Ivanhoe Energy would be
issued to Talisman, representing approximately 4.44% of the issued
and outstanding shares of Ivanhoe Energy as of July 11th, after
giving effect to the conversion, as well as the C$88 million
financing that just closed.
4. C$15 million cash upon Ivanhoe Energy receiving requisite government
and other approvals to develop the northern border of Lease 10, which
is subject to a Mineral Surface Lease (MSL) held by Suncor.
>>
Ivanhoe's obligations under the notes and the contingent payment are secured.
Ivanhoe intends to finance future payments with funds from a combination of strategic investors and/or traditional debt and equity markets, either at the Ivanhoe Energy Inc. level or project level.
Financial Advisor
Tristone Capital Inc. is acting as financial advisor to Ivanhoe for this transaction.
Ivanhoe Energy
16:15 EDT Friday, July 11, 2008
Athabasca to be home for first integrated HTL (heavy-to-light) oil
project
CALGARY, July 11 /CNW/ - Robert Friedland, Executive Chairman, President and Chief Executive Officer of Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN), announced today that the company has completed its previously announced acquisition of Talisman Energy Canada's 100% working interests in two leases (Leases 10 and 6) located in the heart of the Athabasca oilsands region in the Province of Alberta, Canada. Talisman Energy Canada is an affiliate of Talisman Energy Inc. (TSX:TLM; NYSE:TLM).
The total purchase price is C$90 million, of which an initial payment of C$22.5 million has been made from proceeds of an C$88 million private placement financing that closed on July 8th. The financing, consisting of C$3.00 special warrants and originally targeted at C$50 million, was increased to C$88 million due to significantly increased expressions of interest from institutional investors. The balance of the funds will be used for Ivanhoe Energy's planned development activities on the acquired oilsands leases and for general working capital purposes.
The acquisition of Lease 10 will provide the site for the first commercial application of Ivanhoe Energy's proprietary, HTL(TM) heavy-oil upgrading technology in a major, integrated heavy-oil project. Lease 10 has a relatively high level of delineation (four wells per section). It is believed to be a high-quality reservoir and an excellent candidate for thermal recovery production using the SAGD (steam-assisted gravity drainage) process.
The Lease 10 reservoir characteristics are believed by Ivanhoe to be similar to those at Petro-Canada's 30,000-barrel-per-day MacKay River project, located nearby, across the Athabasca River. MacKay River is acknowledged to be one of the most successful and longest-producing SAGD projects in the Athabasca oil sands.
Lease 10 would be capable of producing between 30,000 and 50,000 barrels of oil per day, based on estimates by independent reservoir engineers Sproule Associates Limited. Based on the most recent evaluations conducted by Sproule, Lease 10 is estimated to contain, on a best-estimate basis, approximately 244 million barrels of contingent bitumen resources (with low and high estimates of approximately 188 million and 313 million barrels, respectively). The evaluation of Lease 10 has an effective date of August 31, 2007. Using Sproule's interpretation of net pay, Ivanhoe expects to encounter an average of 30 metres of continuous bitumen saturated sand within the initial development area.
Based on these contingent resource estimates, Ivanhoe Energy's acquisition price of C$90 million represents a price of approximately C$0.37 per barrel of contingent bitumen resource measured on a best-estimate basis, with a range of approximately C$0.29 per barrel on a high-estimate basis to approximately C$0.48 per barrel on a low-estimate basis.
Since Ivanhoe Energy's oilsands announcement on May 29th, the holder of the 25% working interest in Lease 50 has exercised its right of first refusal to acquire Talisman's 75% working interest in Lease 50 - a third lease that Ivanhoe was to acquire from Talisman. Lease 50 is a less-delineated asset located approximately 19 km southeast of Fort McMurray. Contingent bitumen resources attributable to Talisman's 75% working interest in Lease 50 were estimated by Sproule as of July 31, 2006, to be, on a best-estimate basis, approximately 50 million barrels. As a consequence, Ivanhoe Energy has proceeded to purchase Lease 10 and Lease 6 - and the total purchase price has decreased from C$105 million to C$90 million.
Lease 50 was considered by Ivanhoe to represent possible expansion potential. The reduced cost to Ivanhoe of acquiring its principal target, Lease 10, leaves Ivanhoe with additional cash resources to initiate the development of Lease 10 and also allows Ivanhoe to apply its resources to alternative expansion targets as appropriate.
Lease 6 is a small, undelineated, 680-acre block 1.6 km south of Lease 10.
Talisman's Rights
Talisman will retain back-in rights of up to 20% in the acquired leases for a period of three years. During this period, Talisman also will have the right of first offer to acquire any participation interests in heavy-oil projects in Alberta that Ivanhoe wishes to sell, excluding the acquired leases, on mutually agreeable terms. In addition, Ivanhoe and Talisman have entered into an HTL Data Monitoring Agreement to allow Talisman to effectively monitor the commercial effectiveness of Ivanhoe's HTL technology.
Lease 10 to be the site for Ivanhoe's first HTL integrated heavy-oil
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project
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Lease 10 is a 6,880-acre contiguous block located approximately 10 miles (16 km) northeast of Fort McMurray, immediately south of Suncor's operating Steepbank and Millennium projects. The block also adjoins leases held by ExxonMobil, Laricina Energy and E-T Energy.
The Lease 10 resource target is considered to be of high-quality McMurray sands, with clean and continuous average net pay of approximately 20 metres and no significant top- or bottom-water or top-gas issues. The average porosity is 34%, average bitumen saturation is 79% and permeabilities are between one and 10 Darcies, all of which are considered excellent reservoir characteristics. The high quality of the asset is expected to provide for favorable projected operating costs, including attractive steam-oil ratios (SOR) using SAGD development techniques.
Ivanhoe's HTL plant on Lease 10 is projected ultimately to be capable of operating at production rates of at least 30,000 barrels per day for approximately 25 years. Ivanhoe intends to integrate established SAGD thermal recovery techniques with its patented HTL upgrading process, producing and marketing a light, synthetic sour crude.
Ivanhoe plans to continue the Lease 10 delineation program in preparation for the submission of permits for an integrated HTL project. In general, thermal oilsands projects, including SAGD projects, require a period of initial development, including delineation, permitting and field development, which is followed by relatively stable operations for many years. Ivanhoe will provide guidance on expectations regarding development timelines, as appropriate, at a future date.
Benefits of HTL Integration
---------------------------
HTL is a field-located upgrading process that converts heavy oil to a transportable, partially upgraded synthetic crude oil and converts the upgrading by-products to onsite energy. The process frees the heavy-oil producer from the need to purchase diluent for transport, significantly eliminates the need to purchase natural gas to steam the reservoir, and allows the producer to capture the majority of the heavy-oil/light-oil value differential. The net result is enhanced rates of return and reduced earnings volatility. Furthermore, the HTL process is technically and economically scalable down to as low as 10,000-30,000 bopd, allowing for vertical integration of smaller, heavy-oil assets in Canada and internationally.
Purchase details
Ivanhoe has purchased all of Talisman's interests in Leases 10 and 6. The total purchase price for the two leases is C$90 million, allocated as follows:
<<
1. C$22.5 million cash that has been paid.
2. A C$12.5 million note, with interest at prime plus 2%, is to be
repaid on or before December 31, 2008.
3. A C$40 million, three-year convertible note, with interest at prime
plus 2% with principal convertible at C$3.13, which represents a 25%
premium to Ivanhoe Energy's share price based on the volume-adjusted,
weighted-average closing price for the 10 business days prior to the
signing of the preliminary agreement on May 29th. If the note were
fully converted, 12,779,552 common shares of Ivanhoe Energy would be
issued to Talisman, representing approximately 4.44% of the issued
and outstanding shares of Ivanhoe Energy as of July 11th, after
giving effect to the conversion, as well as the C$88 million
financing that just closed.
4. C$15 million cash upon Ivanhoe Energy receiving requisite government
and other approvals to develop the northern border of Lease 10, which
is subject to a Mineral Surface Lease (MSL) held by Suncor.
>>
Ivanhoe's obligations under the notes and the contingent payment are secured.
Ivanhoe intends to finance future payments with funds from a combination of strategic investors and/or traditional debt and equity markets, either at the Ivanhoe Energy Inc. level or project level.
Financial Advisor
Tristone Capital Inc. is acting as financial advisor to Ivanhoe for this transaction.
Ivanhoe Energy
Worse to come?
Worse to come?
Friday, July 11, 2008
If you have a nervous disposition, and you're already feeling shell-shocked, be warned: As rough as the stock market looked midway through Friday, the fact that this is the day before a summer weekend could make the closing minutes of activity particularly nerve-racking.
Note that the last hour of trading could be volatile today, particularly in the U.S., as it could give an indication of investor sentiment toward equities,” said Colin Cieszynski, market analyst at CMC Markets Canada, in a note.
“In particular, markets may show how much fear is out there depending on investors' willingness to hold long or short positions heading into a summer weekend.”
So far, there seems to be little willingness to hold onto anything at all, except cash. At midday, the Dow Jones industrial average was down 197 points, or 1.8 per cent, to 11,032. The broader S[amp]amp;P 500 was down 20 points, or 1.6 per cent, to 1233. Just one stock on the 30-member Dow was up, and only slightly: General Electric Co., up 0.8 per cent.
The swarm of losing stocks was led by financials, amid growing concerns that a foot is about to drop in the sector, in the form of a failure, leading to a cascade of losses elsewhere. The S[amp]amp;P 500 financials index was down 3.9 per cent. Particular names were clobbered: Bank of America Corp. was down 6.5 per cent and JPMorgan Chase [amp]amp; Co. was down 6 per cent. As for Fannie Mae, one of two mortgage finance companies at the centre of this particular storm, it was down 23 per cent.
All 10 subindexes within the S[amp]amp;P 500 were down, including energy and materials. That's surprising, given that crude oil rose to $145.87 (U.S.) a barrel, up $4.22, and gold rose to $958.45 an ounce, up $10.80.
In Canada, the S[amp]amp;P/TSX composite index, which had been up earlier in the day thanks to energy and gold producers, dipped into negative territory at noon. It fell 42 points, to 13,702. Materials were up 2.1 per cent and energy was up 0.7 per cent. But financials fell 2 per cent, with Royal Bank of Canada falling 4.1 per cent to its lowest level since 2005.
© Copyright The Globe and Mail
Friday, July 11, 2008
If you have a nervous disposition, and you're already feeling shell-shocked, be warned: As rough as the stock market looked midway through Friday, the fact that this is the day before a summer weekend could make the closing minutes of activity particularly nerve-racking.
Note that the last hour of trading could be volatile today, particularly in the U.S., as it could give an indication of investor sentiment toward equities,” said Colin Cieszynski, market analyst at CMC Markets Canada, in a note.
“In particular, markets may show how much fear is out there depending on investors' willingness to hold long or short positions heading into a summer weekend.”
So far, there seems to be little willingness to hold onto anything at all, except cash. At midday, the Dow Jones industrial average was down 197 points, or 1.8 per cent, to 11,032. The broader S[amp]amp;P 500 was down 20 points, or 1.6 per cent, to 1233. Just one stock on the 30-member Dow was up, and only slightly: General Electric Co., up 0.8 per cent.
The swarm of losing stocks was led by financials, amid growing concerns that a foot is about to drop in the sector, in the form of a failure, leading to a cascade of losses elsewhere. The S[amp]amp;P 500 financials index was down 3.9 per cent. Particular names were clobbered: Bank of America Corp. was down 6.5 per cent and JPMorgan Chase [amp]amp; Co. was down 6 per cent. As for Fannie Mae, one of two mortgage finance companies at the centre of this particular storm, it was down 23 per cent.
All 10 subindexes within the S[amp]amp;P 500 were down, including energy and materials. That's surprising, given that crude oil rose to $145.87 (U.S.) a barrel, up $4.22, and gold rose to $958.45 an ounce, up $10.80.
In Canada, the S[amp]amp;P/TSX composite index, which had been up earlier in the day thanks to energy and gold producers, dipped into negative territory at noon. It fell 42 points, to 13,702. Materials were up 2.1 per cent and energy was up 0.7 per cent. But financials fell 2 per cent, with Royal Bank of Canada falling 4.1 per cent to its lowest level since 2005.
© Copyright The Globe and Mail
Capitulation, here we come
At the open: Capitulation, here we come
Friday, July 11, 2008
Well, at least there's gold. That's the sort of day Friday is shaping up to be, as financial stocks were whacked in the United States in the morning and dragged down just about everything in their wake.
At the start of trading, the Dow Jones industrial average fell 114 points, or 1 per cent, 11,115 – with all 30 stocks in the index down, including the big energy producers. The broader S[amp]amp;P 500 fell[amp]nbsp;18 points, or 1.4 per cent, to 1236.
Financials were particularly hard-hit, following concerns that Fannie Mae and Freddie Mac are in mortal danger, with the U.S. government considering stepping in to take over one or both of the mortgage finance companies and wiping out the equity. Bank of America and JPMorgan Chase [amp]amp; Co. each fell 3.5 per cent. Meanwhile Fannie Mae tumbled 48 per cent, to $6.92, and Freddie Mac fell 50 per cent, to $4.02.
Even General Electric Co., which had been looking like a bright spot in the market after it met earnings expectations with its second-quarter results, fell 0.7 per cent.
In Canada, the S[amp]amp;P/TSX composite index rose 9 points, to 13,753 – a small victory given that crude oil prices surged to a record high. Oil traded at $146.36 a barrel, up $4.71, giving a modest boost to most energy stocks. EnCana Corp. rose 1.1 per cent and Suncor Energy Inc. rose 1.2 per cent.
The Big Banks were weak, following the lead in the United States. Royal Bank of Canada fell 2.5 per cent and Bank of Montreal fell 1.2 per cent.
However, gold was one of the few bright spots, as investors turned to a reliable safe haven amid the volatility. Gold surged $20 an ounce, to $967.66, lifting the stocks of gold producers. Barrick Gold Corp. rose 5.8 per cent and Goldcorp Inc. surged 6.8 per cent.
[amp]nbsp;
© Copyright The Globe and Mail
Friday, July 11, 2008
Well, at least there's gold. That's the sort of day Friday is shaping up to be, as financial stocks were whacked in the United States in the morning and dragged down just about everything in their wake.
At the start of trading, the Dow Jones industrial average fell 114 points, or 1 per cent, 11,115 – with all 30 stocks in the index down, including the big energy producers. The broader S[amp]amp;P 500 fell[amp]nbsp;18 points, or 1.4 per cent, to 1236.
Financials were particularly hard-hit, following concerns that Fannie Mae and Freddie Mac are in mortal danger, with the U.S. government considering stepping in to take over one or both of the mortgage finance companies and wiping out the equity. Bank of America and JPMorgan Chase [amp]amp; Co. each fell 3.5 per cent. Meanwhile Fannie Mae tumbled 48 per cent, to $6.92, and Freddie Mac fell 50 per cent, to $4.02.
Even General Electric Co., which had been looking like a bright spot in the market after it met earnings expectations with its second-quarter results, fell 0.7 per cent.
In Canada, the S[amp]amp;P/TSX composite index rose 9 points, to 13,753 – a small victory given that crude oil prices surged to a record high. Oil traded at $146.36 a barrel, up $4.71, giving a modest boost to most energy stocks. EnCana Corp. rose 1.1 per cent and Suncor Energy Inc. rose 1.2 per cent.
The Big Banks were weak, following the lead in the United States. Royal Bank of Canada fell 2.5 per cent and Bank of Montreal fell 1.2 per cent.
However, gold was one of the few bright spots, as investors turned to a reliable safe haven amid the volatility. Gold surged $20 an ounce, to $967.66, lifting the stocks of gold producers. Barrick Gold Corp. rose 5.8 per cent and Goldcorp Inc. surged 6.8 per cent.
[amp]nbsp;
© Copyright The Globe and Mail
Oil hits new record, surges past $147
Oil hits new record, surges past $147
PABLO GORONDI
Friday, July 11, 2008
KUALA LUMPUR — Oil prices spiked Friday as continued tensions in the Middle East and concerns of renewed violence in Nigeria pushed the price for a barrel of oil to a record near $147 (U.S.).
By midday in Europe, light, sweet crude for August delivery jumped $5.25 to $146.90 on the New York Mercantile Exchange.
Oil prices had fallen $10 over two days to start the week and as oil rebounded Friday, Dow Jones industrial average futures fell more than 120 points.
In London, August Brent crude soared $4.92 to $146.95 a barrel on the ICE Futures exchange after hitting a record $147.25.
“There's always a fear premium in pricing. The tensions in Iran and the threat of supply disruption will help support oil prices,” said Jeff Brown, managing director of FACTS Global Energy in Singapore.
JBC Energy in Vienna, Austria, said the news about Iran, Nigeria, as well as a reported threat of a strike by oil workers in Brazil were “enough to wake the market from its two-day slumber.”
A day after Iran tested a missile capable of reaching Israel, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies. Iran then responded with another missile launch, drawing buyers back to jittery energy markets.
Both the U.S. and Israel have not ruled out a military strike on Iran.
Domestically, there was another disappointing report on U.S. stocks.
Heating oil futures on Friday rose to a record $4.15 in other Nymex trading, adding more than 11 cents a gallon.
The Organization of Petroleum Exporting Countries has warned that it cannot replace the shortfall if Iran is attacked and takes its crude supplies off the market. The fear is that Iran, OPEC's second-largest producer, could block the Strait of Hormuz, a passageway that handles about 40 per cent of the world's tanker traffic.
Meanwhile, attacks on Nigerian oil facilities could again disrupt supplies in the oil-rich region.
Nigeria's main militant group vowed Thursday to resume attacks because of Britain's recent pledge to back the government in the conflict there. Unrest during the past two years have already slashed the country's normal daily oil output by a quarter.
Still, while supply worries abound and the U.S. dollar remains weak compared with levels a year ago, many investors are seeing reasons to believe that oil might be peaking because of resistance to the record-level prices.
“Here in the United States, airplanes are being grounded. Travel has definitely changed. People are looking at hybrids,” said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
“It's been about a three- or four-year bull market, and anyone who has called a peak in this market has ended up with a red face,” he said. However, “it appears that demand destruction is at a level where we might have seen the high in oil prices.”
The U.S. Energy Department reported Wednesday that American demand for gasoline during the four weeks that ended July 4 was 2.1 per cent lower than a year earlier, at about 9.3 million barrels a day.
“I don't think we're going to imminently fall out of bed here,” said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos. Inc., referring to crude-oil prices. “But I'm finding it difficult to justify prices at much higher levels.”
Natural gas futures rose 28 cents to $12.59 per 1,000 cubic feet.
© Copyright The Globe and Mail
PABLO GORONDI
Friday, July 11, 2008
KUALA LUMPUR — Oil prices spiked Friday as continued tensions in the Middle East and concerns of renewed violence in Nigeria pushed the price for a barrel of oil to a record near $147 (U.S.).
By midday in Europe, light, sweet crude for August delivery jumped $5.25 to $146.90 on the New York Mercantile Exchange.
Oil prices had fallen $10 over two days to start the week and as oil rebounded Friday, Dow Jones industrial average futures fell more than 120 points.
In London, August Brent crude soared $4.92 to $146.95 a barrel on the ICE Futures exchange after hitting a record $147.25.
“There's always a fear premium in pricing. The tensions in Iran and the threat of supply disruption will help support oil prices,” said Jeff Brown, managing director of FACTS Global Energy in Singapore.
JBC Energy in Vienna, Austria, said the news about Iran, Nigeria, as well as a reported threat of a strike by oil workers in Brazil were “enough to wake the market from its two-day slumber.”
A day after Iran tested a missile capable of reaching Israel, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies. Iran then responded with another missile launch, drawing buyers back to jittery energy markets.
Both the U.S. and Israel have not ruled out a military strike on Iran.
Domestically, there was another disappointing report on U.S. stocks.
Heating oil futures on Friday rose to a record $4.15 in other Nymex trading, adding more than 11 cents a gallon.
The Organization of Petroleum Exporting Countries has warned that it cannot replace the shortfall if Iran is attacked and takes its crude supplies off the market. The fear is that Iran, OPEC's second-largest producer, could block the Strait of Hormuz, a passageway that handles about 40 per cent of the world's tanker traffic.
Meanwhile, attacks on Nigerian oil facilities could again disrupt supplies in the oil-rich region.
Nigeria's main militant group vowed Thursday to resume attacks because of Britain's recent pledge to back the government in the conflict there. Unrest during the past two years have already slashed the country's normal daily oil output by a quarter.
Still, while supply worries abound and the U.S. dollar remains weak compared with levels a year ago, many investors are seeing reasons to believe that oil might be peaking because of resistance to the record-level prices.
“Here in the United States, airplanes are being grounded. Travel has definitely changed. People are looking at hybrids,” said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
“It's been about a three- or four-year bull market, and anyone who has called a peak in this market has ended up with a red face,” he said. However, “it appears that demand destruction is at a level where we might have seen the high in oil prices.”
The U.S. Energy Department reported Wednesday that American demand for gasoline during the four weeks that ended July 4 was 2.1 per cent lower than a year earlier, at about 9.3 million barrels a day.
“I don't think we're going to imminently fall out of bed here,” said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos. Inc., referring to crude-oil prices. “But I'm finding it difficult to justify prices at much higher levels.”
Natural gas futures rose 28 cents to $12.59 per 1,000 cubic feet.
© Copyright The Globe and Mail
Thursday, July 10, 2008
Wednesday, July 9, 2008
IE:TSx News
Ivanhoe Energy completes C$88 million private placement
07:30 EDT Wednesday, July 09, 2008
CALGARY, July 9 /CNW/ - Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) announced today that it has completed the C$88 million private placement that was announced on June 6, 2008.
The financing, consisting of C$3.00 special warrants, will be used to make the initial payment required under Ivanhoe Energy's agreement with Talisman Energy Canada to acquire Talisman's interests in certain leases in the Athabasca oilsands region in Alberta, Canada, as announced on May 29, 2008. The balance of the funds will be used for Ivanhoe Energy's planned development activities on the acquired oilsands leases and for general working capital purposes.
The financing, originally targeted at C$50 million, subsequently was increased to C$88 million due to significantly increased expressions of interest from institutional investors.
Subject to regulatory approval and satisfaction of all conditions precedent, the private placement is expected to close contemporaneously with the closing of the acquisition of the oilsands leases on July 11th, 2008.
The securities offered were not registered under the U.S. Securities Act of 1933 and could not be offered or sold in the U.S. without registration or an applicable exemption from registration requirements.
07:30 EDT Wednesday, July 09, 2008
CALGARY, July 9 /CNW/ - Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN) announced today that it has completed the C$88 million private placement that was announced on June 6, 2008.
The financing, consisting of C$3.00 special warrants, will be used to make the initial payment required under Ivanhoe Energy's agreement with Talisman Energy Canada to acquire Talisman's interests in certain leases in the Athabasca oilsands region in Alberta, Canada, as announced on May 29, 2008. The balance of the funds will be used for Ivanhoe Energy's planned development activities on the acquired oilsands leases and for general working capital purposes.
The financing, originally targeted at C$50 million, subsequently was increased to C$88 million due to significantly increased expressions of interest from institutional investors.
Subject to regulatory approval and satisfaction of all conditions precedent, the private placement is expected to close contemporaneously with the closing of the acquisition of the oilsands leases on July 11th, 2008.
The securities offered were not registered under the U.S. Securities Act of 1933 and could not be offered or sold in the U.S. without registration or an applicable exemption from registration requirements.
Tuesday, July 8, 2008
The Bulls Just Grabbed The Bottom
http://www.stockhouse.com/news/cpnews.aspx?newsid=9198272In my opinion... I hope you were a buyer, I think we just experienced a bottom.
I'm Long IE:TSX and ELD:TSX
Oil and Gold
VS
USA
Who's going to win...I think Gold and Oil.
Are you in?
Volatility: If she's right, it's time to buckle your seat belts.
Volatility? We're just getting started, options say
Boyd Erman, 07/07/08 at 2:20 PM EDT
This is going to sound strange on an afternoon when the SP/TSX Composite is taking another beating (down 331 points and counting) along with other global stock indexes, but the options market says that things haven't been all that volatile lately, though they will be soon.
That's the bad news. The good news is that as volatility climbs, it may signal a bottom in U.S. stocks, says strategist Rebecca Engmann Darst of Interactive Brokers Group LLC
She's watching the Chicago Board Options Exchange Volatility Index, well known as the VIX. The index is up big-time Monday afternoon, jumping almost 8 per cent to climb above 26 for the first time since March. The relative calm of the VIX "despite gathering economic headwinds and grinding losses for stocks" has "flummoxed and frustrated many market participants, who count spikes higher in the VIX for cues to capitulatory selling in the S&P that would signifiy a near-term bottom for stocks," Ms. Engmann Darst wrote in a note to investors.
The jump Monday now has some in the options market snapping up options to buy the VIX at 32.50 in July. For those calls to be in the money, given the 30-cent a contract price, would require another 20 per cent jump in the VIX in just eight days until the contract expires, the strategist notes.
If she's right, it's time to buckle your seat belts.
Boyd Erman, 07/07/08 at 2:20 PM EDT
This is going to sound strange on an afternoon when the SP/TSX Composite is taking another beating (down 331 points and counting) along with other global stock indexes, but the options market says that things haven't been all that volatile lately, though they will be soon.
That's the bad news. The good news is that as volatility climbs, it may signal a bottom in U.S. stocks, says strategist Rebecca Engmann Darst of Interactive Brokers Group LLC
She's watching the Chicago Board Options Exchange Volatility Index, well known as the VIX. The index is up big-time Monday afternoon, jumping almost 8 per cent to climb above 26 for the first time since March. The relative calm of the VIX "despite gathering economic headwinds and grinding losses for stocks" has "flummoxed and frustrated many market participants, who count spikes higher in the VIX for cues to capitulatory selling in the S&P that would signifiy a near-term bottom for stocks," Ms. Engmann Darst wrote in a note to investors.
The jump Monday now has some in the options market snapping up options to buy the VIX at 32.50 in July. For those calls to be in the money, given the 30-cent a contract price, would require another 20 per cent jump in the VIX in just eight days until the contract expires, the strategist notes.
If she's right, it's time to buckle your seat belts.
Monday, July 7, 2008
Energy takes a hit
Investors got another look at what happens to a commodity-heavy stock market index when commodities suddenly fall out of favour:
The S&P/TSX composite index closed at 13,712.8, down 297.59 points or 2.1 per cent - a rough way to begin the first full week of the third quarter.Now, the index is down 0.9 per cent in 2008, putting it under water with the rest of the world's major stock market indexes for the first time since April. But you can't blame the economy on this turn. Instead, it appears to have more to do with a quick retreat from everything from corn to oil:
The Reuters/Jefferies CRB commodity index fell 2.8 per cent, its biggest dip since mid-March with 17 of the index's 19 commodities falling.To be fair, commodity producers weren't the only drags on the S&P/TSX commodity index. Nine of the 10 subindexes were down, as were 82 per cent of the 253 stocks in the broader index.
Financials were mixed, with Royal Bank of Canada rising 1.3 per cent and Canadian Imperial Bank of Commerce falling 2.8 per cent.But energy producers took the biggest hit, falling 2.8 per cent, after the price of crude oil tumbled to $141.37 (U.S.) a barrel in New York, down $3.92. The price briefly dipped below $140. EnCana Corp. fell 4.8 per cent and Canadian Natural Resources Ltd. fell 3.6 per cent.In the United States, the Dow Jones industrial average closed at 11,231.96, down 56.58 points, or 0.5 per cent.
The broader S&P 500 closed at 1252.31, down 10.59, or 0.8 per cent - its lowest close in nearly two years and 20 per cent below its October high, the definition of a bear market.Although energy stocks also took a hit, tumbling 2.3 per cent, the biggest drag were the financials, which fell 3.2 per cent.
Freddie Mac and Fannie Mae fell 17.9 per cent and 16.2 per cent, respectively, on a report from Lehman Brothers that the two troubled mortgage finance companies may have to raise a combined $75-billion - a prospect that soured views on the rest of the sector. Citigroup Inc. fell 2.5 per cent and Bank of America Corp. fell 3.9 per cent.Copyright 2001 The Globe and Mail
The S&P/TSX composite index closed at 13,712.8, down 297.59 points or 2.1 per cent - a rough way to begin the first full week of the third quarter.Now, the index is down 0.9 per cent in 2008, putting it under water with the rest of the world's major stock market indexes for the first time since April. But you can't blame the economy on this turn. Instead, it appears to have more to do with a quick retreat from everything from corn to oil:
The Reuters/Jefferies CRB commodity index fell 2.8 per cent, its biggest dip since mid-March with 17 of the index's 19 commodities falling.To be fair, commodity producers weren't the only drags on the S&P/TSX commodity index. Nine of the 10 subindexes were down, as were 82 per cent of the 253 stocks in the broader index.
Financials were mixed, with Royal Bank of Canada rising 1.3 per cent and Canadian Imperial Bank of Commerce falling 2.8 per cent.But energy producers took the biggest hit, falling 2.8 per cent, after the price of crude oil tumbled to $141.37 (U.S.) a barrel in New York, down $3.92. The price briefly dipped below $140. EnCana Corp. fell 4.8 per cent and Canadian Natural Resources Ltd. fell 3.6 per cent.In the United States, the Dow Jones industrial average closed at 11,231.96, down 56.58 points, or 0.5 per cent.
The broader S&P 500 closed at 1252.31, down 10.59, or 0.8 per cent - its lowest close in nearly two years and 20 per cent below its October high, the definition of a bear market.Although energy stocks also took a hit, tumbling 2.3 per cent, the biggest drag were the financials, which fell 3.2 per cent.
Freddie Mac and Fannie Mae fell 17.9 per cent and 16.2 per cent, respectively, on a report from Lehman Brothers that the two troubled mortgage finance companies may have to raise a combined $75-billion - a prospect that soured views on the rest of the sector. Citigroup Inc. fell 2.5 per cent and Bank of America Corp. fell 3.9 per cent.Copyright 2001 The Globe and Mail
Oil whacked
At noon: Oil whacked
Monday, July 07, 2008
Sorry, Canada, but you can't blame investors around the world for celebrating the tumbling price of oil on Monday, which sent U.S. indexes slightly higher at midday but has put Canada's benchmark index into a tizzy.
Oil fell to – can you believe it? – the low-low price of $139.57 (U.S.) a barrel in New York, down $5.72 a barrel,[amp]nbsp;possibly because of reduced fears that Iran is about to join the nuclear club, and possibly because investors have the impression that the G8 annual summit will somehow put the global economy back on track. Whatever the cause, oil is still not cheap, but it's moving in the right direction to remove some of the uncertainty surrounding inflation and corporate earnings.
The Dow Jones industrial average rose 63 points, or 0.6 per cent, to 11,351. The broader S[amp]amp;P 500 rose 4 points, or 0.3 per cent, to 1267. Both indexes were heading down again, though. Technology stocks were the clear favourites, after Microsoft Corp. said it would consider taking another run at Yahoo Inc. Yahoo shares rose 11.7 per cent, Apple Inc. rose 2.3 per cent and International Business Machines Corp. rose 2 per cent.
In Canada, the commodity-heavy S[amp]amp;P/TSX composite index fell 117 points, or 0.8 per cent, to 13,893. Energy stocks were by far the biggest drag, with the sub-index tumbling 2.1 per cent. In particular, Canadian Natural Resources Ltd. fell 2.9 per cent, EnCana Corp. fell 2.4 per cent and Canadian Oil Sands Trust fell 4.6 per cent.
However, Potash Corp. of Saskatchewan Inc. provided some relief, rising 1 per cent and contributing 18 points to the benchmark index.
© Copyright The Globe and Mail
Monday, July 07, 2008
Sorry, Canada, but you can't blame investors around the world for celebrating the tumbling price of oil on Monday, which sent U.S. indexes slightly higher at midday but has put Canada's benchmark index into a tizzy.
Oil fell to – can you believe it? – the low-low price of $139.57 (U.S.) a barrel in New York, down $5.72 a barrel,[amp]nbsp;possibly because of reduced fears that Iran is about to join the nuclear club, and possibly because investors have the impression that the G8 annual summit will somehow put the global economy back on track. Whatever the cause, oil is still not cheap, but it's moving in the right direction to remove some of the uncertainty surrounding inflation and corporate earnings.
The Dow Jones industrial average rose 63 points, or 0.6 per cent, to 11,351. The broader S[amp]amp;P 500 rose 4 points, or 0.3 per cent, to 1267. Both indexes were heading down again, though. Technology stocks were the clear favourites, after Microsoft Corp. said it would consider taking another run at Yahoo Inc. Yahoo shares rose 11.7 per cent, Apple Inc. rose 2.3 per cent and International Business Machines Corp. rose 2 per cent.
In Canada, the commodity-heavy S[amp]amp;P/TSX composite index fell 117 points, or 0.8 per cent, to 13,893. Energy stocks were by far the biggest drag, with the sub-index tumbling 2.1 per cent. In particular, Canadian Natural Resources Ltd. fell 2.9 per cent, EnCana Corp. fell 2.4 per cent and Canadian Oil Sands Trust fell 4.6 per cent.
However, Potash Corp. of Saskatchewan Inc. provided some relief, rising 1 per cent and contributing 18 points to the benchmark index.
© Copyright The Globe and Mail
Thursday, July 3, 2008
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Oil soars to record above $145
Oil soars to record above $145
PABLO GORONDI
Thursday, July 03, 2008
KUALA LUMPUR — Oil prices neared $146 (U.S.) a barrel Thursday for the first time ever on reports of declining U.S. stockpiles and the threat of conflict with Iran.
Comments by Saudi Arabia's oil minister suggesting his country had no immediate plans to boost production also lifted prices.
Expectations that the European Central Bank will raise interest rates later Thursday could further weaken the U.S. dollar and drive oil prices even higher, as investors turn to commodities as a hedge against a falling greenback, traders said.
By midday in Europe, light, sweet crude for August delivery rose $2.28 to a record $145.85 a barrel in electronic trading on the New York Mercantile Exchange.
On Wednesday, the contract set a new closing record for floor trade at $143.57 — a full $2.60 above the previous close.
The latest spike means a barrel of crude has gone up by more than 50 per cent since the end of last year, when oil was going for $96 a barrel.
In London, Brent crude futures rose to a trading record of $146.69 a barrel on the ICE Futures exchange before retreating to $146.07, up $1.81.
“Even though the rise of European interest rates has been priced into oil, an official announcement by the ECB will still add momentum to oil prices,” said Victor Shum, an analyst with Purvin & Gertz in Singapore.
The push above $145 a barrel was seen as a last technical barrier to prices hitting $150, in what analyst Olivier Jakob of Petromatrix in Switzerland called “the Morgan Stanley self fulfilling prophecy.”
In early June, a prediction by Morgan Stanley analyst Ole Slorer that oil prices could reach $150 by the July 4 weekend caused the Nymex contract to jump nearly $11 in a single day.
Speaking Thursday in Madrid, Saudi Arabia's oil minister, Ali Naimi, left the door open for increased output, but said the kingdom's oil customers were satisfied and that no production growth was planned for now.
The Energy Department's Energy Information Administration said Wednesday crude oil supplies fell by 2 million barrels last week, or about 800,000 barrels more than analysts surveyed by the energy research firm Platts had predicted.
However, the report offered a mixed picture of energy use by the world's thirstiest oil consumer. Gasoline supplies unexpectedly grew by a considerable amount, and demand continued to slide — suggesting record fuel prices are prompting a shift in American driving habits.
Ongoing rhetoric about possible attacks on Iran, the world's fourth-largest oil producer and OPEC's second-largest exporter, also left the market jittery.
Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the United States. About 40 per cent of the world's tanker traffic passes through the Middle Eastern choke-point.
Iran's foreign minister did not rule the possibility that Iran could try to restrict oil traffic in the strait if the country was attacked.
“In Iran we must defend our national security, our country and our revolutionary system and we will continue to do so,” Foreign Minister Manouchehr Mottaki said in an interview with The Associated Press in New York.
Mr. Mottaki said he does not believe Israel or the United States will attack, however, calling the prospect of another war in the Middle East “craziness.”
A senior U.S. military commander vowed to ensure that the strait remains open.
“We will not allow Iran to close it,” said Vice Admiral Kevin Cosgriff, commander of the 5th Fleet based in Bahrain, after talks with naval commanders of Persian Gulf countries in the United Arab Emirates.
The saber-rattling has left energy traders on edge as they try to ascertain the likelihood of a Middle East flare-up and the effect it could have on the world's already tight supply of oil.
In other Nymex trading, heating oil futures added 5.15 cents to $4.1230 a gallon, while gasoline futures rose 2.56 cents to $3.5750 a gallon. Natural gas futures gained 13.7 cents to $13.526 per 1,000 cubic feet.
© Copyright The Globe and Mail
PABLO GORONDI
Thursday, July 03, 2008
KUALA LUMPUR — Oil prices neared $146 (U.S.) a barrel Thursday for the first time ever on reports of declining U.S. stockpiles and the threat of conflict with Iran.
Comments by Saudi Arabia's oil minister suggesting his country had no immediate plans to boost production also lifted prices.
Expectations that the European Central Bank will raise interest rates later Thursday could further weaken the U.S. dollar and drive oil prices even higher, as investors turn to commodities as a hedge against a falling greenback, traders said.
By midday in Europe, light, sweet crude for August delivery rose $2.28 to a record $145.85 a barrel in electronic trading on the New York Mercantile Exchange.
On Wednesday, the contract set a new closing record for floor trade at $143.57 — a full $2.60 above the previous close.
The latest spike means a barrel of crude has gone up by more than 50 per cent since the end of last year, when oil was going for $96 a barrel.
In London, Brent crude futures rose to a trading record of $146.69 a barrel on the ICE Futures exchange before retreating to $146.07, up $1.81.
“Even though the rise of European interest rates has been priced into oil, an official announcement by the ECB will still add momentum to oil prices,” said Victor Shum, an analyst with Purvin & Gertz in Singapore.
The push above $145 a barrel was seen as a last technical barrier to prices hitting $150, in what analyst Olivier Jakob of Petromatrix in Switzerland called “the Morgan Stanley self fulfilling prophecy.”
In early June, a prediction by Morgan Stanley analyst Ole Slorer that oil prices could reach $150 by the July 4 weekend caused the Nymex contract to jump nearly $11 in a single day.
Speaking Thursday in Madrid, Saudi Arabia's oil minister, Ali Naimi, left the door open for increased output, but said the kingdom's oil customers were satisfied and that no production growth was planned for now.
The Energy Department's Energy Information Administration said Wednesday crude oil supplies fell by 2 million barrels last week, or about 800,000 barrels more than analysts surveyed by the energy research firm Platts had predicted.
However, the report offered a mixed picture of energy use by the world's thirstiest oil consumer. Gasoline supplies unexpectedly grew by a considerable amount, and demand continued to slide — suggesting record fuel prices are prompting a shift in American driving habits.
Ongoing rhetoric about possible attacks on Iran, the world's fourth-largest oil producer and OPEC's second-largest exporter, also left the market jittery.
Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the United States. About 40 per cent of the world's tanker traffic passes through the Middle Eastern choke-point.
Iran's foreign minister did not rule the possibility that Iran could try to restrict oil traffic in the strait if the country was attacked.
“In Iran we must defend our national security, our country and our revolutionary system and we will continue to do so,” Foreign Minister Manouchehr Mottaki said in an interview with The Associated Press in New York.
Mr. Mottaki said he does not believe Israel or the United States will attack, however, calling the prospect of another war in the Middle East “craziness.”
A senior U.S. military commander vowed to ensure that the strait remains open.
“We will not allow Iran to close it,” said Vice Admiral Kevin Cosgriff, commander of the 5th Fleet based in Bahrain, after talks with naval commanders of Persian Gulf countries in the United Arab Emirates.
The saber-rattling has left energy traders on edge as they try to ascertain the likelihood of a Middle East flare-up and the effect it could have on the world's already tight supply of oil.
In other Nymex trading, heating oil futures added 5.15 cents to $4.1230 a gallon, while gasoline futures rose 2.56 cents to $3.5750 a gallon. Natural gas futures gained 13.7 cents to $13.526 per 1,000 cubic feet.
© Copyright The Globe and Mail
Wednesday, July 2, 2008
Coal gets dusted As Does The TSX
TSX plunges 433 points
Wednesday, July 02, 2008
TORONTO — — The Toronto stock market plunged more than 400 points Wednesday, its biggest one-day drop in more than three months as investors worried that slowing economic conditions in North America and Europe will slash demand for metals and crude.
It was a broad-based retreat led by commodity stocks, but transportation stocks also fell sharply on concerns about lower commodity shipments and even the Toronto Stock Exchange energy sector backtracked despite record high oil prices.
The S&P/TSX composite index retreated 432.92 points to 14,034.11.
“The primary reason here is simply that there seems to be a disappearing level of confidence in our market,” said Fred Ketchen, manager of equity trading at Scotia Capital.
“Confidence has declined in the ability of our economy to maintain its head above water, many people are growing to believe that a recession in the U.S. is probably well-established now and the spillover into the Canadian economy is going to be more severe than many had figured.”
The TSX Venture Exchange was off 39.19 points to 2,596.59 while the Canadian dollar gained 0.61 of cent (U.S.) to 98.68 cents.
New York markets were also negative on high oil prices, factory orders that showed the weakest performance in three months in May and grim jobless news.
The Dow Jones industrial average closed down 166.75 points at 11,215.51, while the Nasdaq composite index was down 53.51 points at 2,251.46.
The S&P 500 index slipped 23.39 points to 1,261.52.
Worries about slowing economies have dogged investors for months.
There were hopes that the damage that started with the fallout from the collapsing U.S. housing sector could be contained.
But concerns about slowing global economies have heightened recently as oil prices inch closer to $150 a barrel and show no sign of abating despite signs of lower demand.
Investors worry that high energy prices are boosting inflation, pressuring central banks to raise interest rates, which could make the economic slowdown even worse.
The European Central Bank is expected to hike its key rate a quarter point Thursday to deal with higher inflation.
“Much more so than the Fed or the Bank of Canada, the ECB is focused on overall inflation, so high energy prices and a 4 per cent inflation rate have got the ECB spooked,” said BMO Nesbitt Burns deputy chief economist Doug Porter.
The tumble on the first day of third-quarter trading on the TSX came after a lopsided second-quarter performance.
“The TSX was up 4.5 per cent in the first half of the year,” observed Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.
“But energy and materials combined were up about 24 per cent and if you do the math, the rest of the TSX is down about 17 per cent.”
The base metals sector was by far the weakest TSX group Wednesday, down 7.5 per cent — a slide that didn't come as a huge surprise to many analysts.
“The last month or so, so much has been coming out about the slowdown in the global economy and the thing that has been surprising is the lack of connection back to the mining and metals sector,” added Ms. Warne.
“We've been worried about it, particularly as [the sector] kept climbing as a percentage of the TSX.
Sector heavyweight Teck Cominco Ltd. lost $4.11 (Canadian) to $45.06 even as copper prices shot up 15.3 cents to $4.0635 (U.S.) a pound on the Nymex, mainly because of a weakening greenback.
But the worst damage was reserved for coal stocks — Fording Canadian Coal Trust lost $15.80 (Canadian) to $81.70 and Western Canadian Coal Corp. plunged 96 cents to $8.
Financials were also a weak spot as investors worried about earnings prospects for banks.
The sector lost 2.16 per cent after Oppenheimer analyst Meredith Whitney predicted investment bank Merrill Lynch will rack up $5.8-billion (U.S.) in writedowns for the second quarter. Merrill shares were off $1.10 to $31.15.
Royal Bank of Canada retreated $1.83 (Canadian) to $44 and Bank of Montreal declined $1.08 to $41.42.
The TSX energy sector fell 3.1 per cent despite a rise in the August crude contract in New York of $2.60 (U.S.) to $143.57 a barrel.
The jump to yet another record high came even as the U.S. Energy Department reported a weekly decline of two million barrels of crude oil inventories, while gasoline inventories rose by 2.1 million barrels.
Suncor Energy Inc. dropped $2.85 (Canadian) to $56.35 and EnCana Corp. moved down $2.19 to $91.17.
Talisman Energy Inc. stepped back $1.68 to $20.90 after an oil well operated by the company off the Norwegian coast turned out to be dry.
High oil costs continued to take a big bite out of transportation companies, as the industrials sector gave back almost 4 per cent. Canadian Pacific Railways lost $5.45 to $62.25 and Canadian National Railways declined $2.72 to $46.26.
Bombardier Inc. gave back 20 cents to $7.21 after German engineering firm Siemens AG was reported to have pulled out of the bidding for Toronto's streetcar replacement project. Only Bombardier and a small British manufacturer submitted bids.
U.S. indexes came under pressure after payroll processor ADP estimated a loss of 79,000 jobs in the U.S. last month, deeper than the expected loss of 20,000. This comes ahead of the U.S. government's employment report for June, being released Thursday, which was expected to show the economy shed 55,000 jobs last month.
On the positive side, the U.S. Commerce Department reported that factory orders rose 0.6 per cent in May after gaining 1.3 per cent in April.
General Motors Corp. was as major weight on the Dow after it was downgraded to underperform by Merrill Lynch, which cut its price target to $7 (U.S.) from $28 and warned that “bankruptcy is not impossible if the market continues to deteriorate and significant incremental capital is not raised.” The auto maker's shares fell $1.77 to $9.98.
© Copyright The Globe and Mail
Coal gets dusted
Wednesday, July 02, 2008
Investors were left scratching their heads as the commodity-heavy S[amp]amp;P/TSX composite index took a bath on Wednesday afternoon. It's not gold's fault: Gold rose to $946.50 (U.S.) an ounce. It's not crude oil's fault: Oil rose to $142.80 a barrel.
Indeed, the Reuters/Jefferies CRB commodities index rose 0.7 per cent on Wednesday afternoon, to a new high.
Instead, blame the downturn on coal. The price of coal fell 10 per cent in London, either on concerns that we're going to need less of it if the economic slowdown persists or because this is a “technical” correction caused by surging prices.
Either way, Fording Canadian Coal Trust plunged 13.3 per cent, to $84.58 (Canadian) – just one day after the coal producer hit a record high, with year-to-date gains of more than 150 per cent. The retreat also arrives just days after an analyst at CIBC World Markets raised his price target on the units to $100.
“This big selloff in the top performing names indicates that money managers and other institutional investors were most likely holding onto these names for window dressing purposes through the end of the quarter, only to take profits in them at the first chance they had,” said Bespoke Investment Group, on its blog, Think B.I.G.
For sure, Fording is not alone. Massey Energy Co. fell 10.9 per cent on Wednesday and James River Coal fell 11.6 per cent.
What's also problematic for Canada's benchmark index is that the decline in coal is also taking down the railroads, which depend on heavy coal traffic for a big chunk of their revenues. Canadian Pacific Railway Ltd. fell 6.5 per cent and Canadian National Railway Co. fell 5.1 per cent.
[amp]nbsp;
© Copyright The Globe and Mail
Wednesday, July 02, 2008
TORONTO — — The Toronto stock market plunged more than 400 points Wednesday, its biggest one-day drop in more than three months as investors worried that slowing economic conditions in North America and Europe will slash demand for metals and crude.
It was a broad-based retreat led by commodity stocks, but transportation stocks also fell sharply on concerns about lower commodity shipments and even the Toronto Stock Exchange energy sector backtracked despite record high oil prices.
The S&P/TSX composite index retreated 432.92 points to 14,034.11.
“The primary reason here is simply that there seems to be a disappearing level of confidence in our market,” said Fred Ketchen, manager of equity trading at Scotia Capital.
“Confidence has declined in the ability of our economy to maintain its head above water, many people are growing to believe that a recession in the U.S. is probably well-established now and the spillover into the Canadian economy is going to be more severe than many had figured.”
The TSX Venture Exchange was off 39.19 points to 2,596.59 while the Canadian dollar gained 0.61 of cent (U.S.) to 98.68 cents.
New York markets were also negative on high oil prices, factory orders that showed the weakest performance in three months in May and grim jobless news.
The Dow Jones industrial average closed down 166.75 points at 11,215.51, while the Nasdaq composite index was down 53.51 points at 2,251.46.
The S&P 500 index slipped 23.39 points to 1,261.52.
Worries about slowing economies have dogged investors for months.
There were hopes that the damage that started with the fallout from the collapsing U.S. housing sector could be contained.
But concerns about slowing global economies have heightened recently as oil prices inch closer to $150 a barrel and show no sign of abating despite signs of lower demand.
Investors worry that high energy prices are boosting inflation, pressuring central banks to raise interest rates, which could make the economic slowdown even worse.
The European Central Bank is expected to hike its key rate a quarter point Thursday to deal with higher inflation.
“Much more so than the Fed or the Bank of Canada, the ECB is focused on overall inflation, so high energy prices and a 4 per cent inflation rate have got the ECB spooked,” said BMO Nesbitt Burns deputy chief economist Doug Porter.
The tumble on the first day of third-quarter trading on the TSX came after a lopsided second-quarter performance.
“The TSX was up 4.5 per cent in the first half of the year,” observed Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.
“But energy and materials combined were up about 24 per cent and if you do the math, the rest of the TSX is down about 17 per cent.”
The base metals sector was by far the weakest TSX group Wednesday, down 7.5 per cent — a slide that didn't come as a huge surprise to many analysts.
“The last month or so, so much has been coming out about the slowdown in the global economy and the thing that has been surprising is the lack of connection back to the mining and metals sector,” added Ms. Warne.
“We've been worried about it, particularly as [the sector] kept climbing as a percentage of the TSX.
Sector heavyweight Teck Cominco Ltd. lost $4.11 (Canadian) to $45.06 even as copper prices shot up 15.3 cents to $4.0635 (U.S.) a pound on the Nymex, mainly because of a weakening greenback.
But the worst damage was reserved for coal stocks — Fording Canadian Coal Trust lost $15.80 (Canadian) to $81.70 and Western Canadian Coal Corp. plunged 96 cents to $8.
Financials were also a weak spot as investors worried about earnings prospects for banks.
The sector lost 2.16 per cent after Oppenheimer analyst Meredith Whitney predicted investment bank Merrill Lynch will rack up $5.8-billion (U.S.) in writedowns for the second quarter. Merrill shares were off $1.10 to $31.15.
Royal Bank of Canada retreated $1.83 (Canadian) to $44 and Bank of Montreal declined $1.08 to $41.42.
The TSX energy sector fell 3.1 per cent despite a rise in the August crude contract in New York of $2.60 (U.S.) to $143.57 a barrel.
The jump to yet another record high came even as the U.S. Energy Department reported a weekly decline of two million barrels of crude oil inventories, while gasoline inventories rose by 2.1 million barrels.
Suncor Energy Inc. dropped $2.85 (Canadian) to $56.35 and EnCana Corp. moved down $2.19 to $91.17.
Talisman Energy Inc. stepped back $1.68 to $20.90 after an oil well operated by the company off the Norwegian coast turned out to be dry.
High oil costs continued to take a big bite out of transportation companies, as the industrials sector gave back almost 4 per cent. Canadian Pacific Railways lost $5.45 to $62.25 and Canadian National Railways declined $2.72 to $46.26.
Bombardier Inc. gave back 20 cents to $7.21 after German engineering firm Siemens AG was reported to have pulled out of the bidding for Toronto's streetcar replacement project. Only Bombardier and a small British manufacturer submitted bids.
U.S. indexes came under pressure after payroll processor ADP estimated a loss of 79,000 jobs in the U.S. last month, deeper than the expected loss of 20,000. This comes ahead of the U.S. government's employment report for June, being released Thursday, which was expected to show the economy shed 55,000 jobs last month.
On the positive side, the U.S. Commerce Department reported that factory orders rose 0.6 per cent in May after gaining 1.3 per cent in April.
General Motors Corp. was as major weight on the Dow after it was downgraded to underperform by Merrill Lynch, which cut its price target to $7 (U.S.) from $28 and warned that “bankruptcy is not impossible if the market continues to deteriorate and significant incremental capital is not raised.” The auto maker's shares fell $1.77 to $9.98.
© Copyright The Globe and Mail
Coal gets dusted
Wednesday, July 02, 2008
Investors were left scratching their heads as the commodity-heavy S[amp]amp;P/TSX composite index took a bath on Wednesday afternoon. It's not gold's fault: Gold rose to $946.50 (U.S.) an ounce. It's not crude oil's fault: Oil rose to $142.80 a barrel.
Indeed, the Reuters/Jefferies CRB commodities index rose 0.7 per cent on Wednesday afternoon, to a new high.
Instead, blame the downturn on coal. The price of coal fell 10 per cent in London, either on concerns that we're going to need less of it if the economic slowdown persists or because this is a “technical” correction caused by surging prices.
Either way, Fording Canadian Coal Trust plunged 13.3 per cent, to $84.58 (Canadian) – just one day after the coal producer hit a record high, with year-to-date gains of more than 150 per cent. The retreat also arrives just days after an analyst at CIBC World Markets raised his price target on the units to $100.
“This big selloff in the top performing names indicates that money managers and other institutional investors were most likely holding onto these names for window dressing purposes through the end of the quarter, only to take profits in them at the first chance they had,” said Bespoke Investment Group, on its blog, Think B.I.G.
For sure, Fording is not alone. Massey Energy Co. fell 10.9 per cent on Wednesday and James River Coal fell 11.6 per cent.
What's also problematic for Canada's benchmark index is that the decline in coal is also taking down the railroads, which depend on heavy coal traffic for a big chunk of their revenues. Canadian Pacific Railway Ltd. fell 6.5 per cent and Canadian National Railway Co. fell 5.1 per cent.
[amp]nbsp;
© Copyright The Globe and Mail
Talisman-operated oil well comes up dry
Talisman-operated oil well comes up dry
Wednesday, July 02, 2008
CALGARY — An oil well operated by Talisman Energy Inc. off Norway was abandoned after drilling came up dry, the Calgary-based energy company's Norwegian partner said.
Det Norske said the 32/2-1 well on the Trow prospect in production licence 369 drilled dry.
Talisman holds a 40 per cent stake in the production licence, Petro-Canada Norge 20 per cent, Revus Energy 20 per cent and Det Norske 20 per cent.
Partner Revus Energy said no signs of hydrocarbons were encountered at the well, which will be plugged and abandoned.
Talisman shares were off 59 cents, 2.6 per cent, at $21.99 in morning trading at the Toronto Stock Exchange. Petro-Canada shares were up 60 cents at $57.71.
© Copyright The Globe and Mail
Wednesday, July 02, 2008
CALGARY — An oil well operated by Talisman Energy Inc. off Norway was abandoned after drilling came up dry, the Calgary-based energy company's Norwegian partner said.
Det Norske said the 32/2-1 well on the Trow prospect in production licence 369 drilled dry.
Talisman holds a 40 per cent stake in the production licence, Petro-Canada Norge 20 per cent, Revus Energy 20 per cent and Det Norske 20 per cent.
Partner Revus Energy said no signs of hydrocarbons were encountered at the well, which will be plugged and abandoned.
Talisman shares were off 59 cents, 2.6 per cent, at $21.99 in morning trading at the Toronto Stock Exchange. Petro-Canada shares were up 60 cents at $57.71.
© Copyright The Globe and Mail
