Talisman: Lower Capex, Gas Drilling To Squeeze 2009 Output
14:36 EST Tuesday, November 04, 2008
OTTAWA -(Dow Jones)- Talisman Energy Inc. (TLM) expects to cut spending next year from 2008's reduced levels on the weakness in financial and commodity markets, squeezing production forecasts, Chief Executive John Manzoni said Tuesday.
The Calgary-based company is now likely to spend C$5 billion to C$5.3 billion in 2008, down from the previous estimate of C$5.5 billion, Manzoni said on a call to discuss third-quarter earnings.
It also expects 2009 capital spending plans to be lower still, the latest among Canadian oil and gas companies to announce or hint at budget cuts next year as the credit crunch stymies their ability to tap debt markets.
"We will prioritize spending in 2009 depending on returns," Chief Financial Officer Scott Thomson said. He added that the lack of major financial commitments next year affords the company some flexibility with its budget.
Talisman's conventional natural gas operations in North America will feel the brunt of these cuts, which Manzoni described as a "marginal activity," particularly in Alberta. The resource-rich province is bringing in higher oil and gas royalty rates from Jan. 1, rendering large swathes of gas drilling uneconomic at current gas prices, according to industry participants.
The company will instead focus on unconventional plays such as the Montney tight gas resource in Alberta or the Marcellus shale in Pennsylvania, Manzoni said. These are promising but early stage reserves and shifting cash away from producing conventional resources will have an impact on output next year, he added.
-By Hyun Young Lee, Dow Jones Newswires; 613-237-0669; hyunyoung.lee@ dowjones.com
Tuesday, November 4, 2008
Talisman: Lower Capex, Gas Drilling To Squeeze 2009 Output
Talisman Energy Reports Record Net Income of $1.4 Billion, Cash Flow Increases 48%
Talisman Energy Reports Record Net Income of $1.4 Billion, Cash Flow Increases 48% to $1.7 Billion, Production From Continuing Operations Up 10%
05:00 EST Tuesday, November 04, 2008
CALGARY, ALBERTA--(Marketwire - Nov. 4, 2008) - Talisman Energy Inc. (TSX:TLM) (NYSE:TLM) reported its operating and financial results for the third quarter of 2008.
- Cash flow(1) during the quarter was $1.7 billion, an increase of 48% from a year ago and relatively unchanged from the second quarter. Cash flow from continuing operations(1) was also $1.7 billion.
- Net income was a record $1.4 billion, an increase of 305% from a year earlier, driven by increased netbacks, mark-to-market gains on derivative contracts and stock-based compensation recovery.
- Earnings from continuing operations(1) were $731 million, up 189% compared to the third quarter in 2007, driven by increased volumes and higher netbacks.
- Production averaged 443,000 boe/d, 1% above the third quarter of 2007, despite the sale of approximately 40,000 boe/d of non-core assets over the past year. Production was also 3% above the previous quarter.
- Production from continuing operations averaged 435,000 boe/d, 10% above the same quarter last year and 4% higher than the second quarter of 2008.
- Netbacks for the quarter were $56.19/boe, up 60% from a year ago, but below $61.33/boe in the second quarter.
- Net debt(1) at quarter end was $3.7 billion, down from $4.3 billion at December 31, 2007.
- Talisman's unconventional gas strategy is on track, with 210 gross (129 net) wells drilled year-to-date in unconventional plays, including success in Quebec and Pennsylvania.
- The Company continued to focus operations with the agreed sale of non-core interests in the Netherlands.
- Talisman declared a C$0.10 per share dividend, payable on December 31, 2008.
(1) The terms "cash flow", "cash flow from continuing operations", "earnings from continuing operations" and "net debt" are non-GAAP measures. Please see the advisories and reconciliations elsewhere in this press release.
"Talisman delivered another solid quarter," said John A. Manzoni, President & Chief Executive Officer. "Cash flow, at $1.7 billion, was close to the record set in the previous quarter and up 48% compared to a year ago. Production from continuing operations was up 10% year on year. We set a new record for net income in the quarter at $1.4 billion, although roughly one-third of this came from non-cash gains on our derivatives position. Excluding one-time items, earnings from continuing operations were almost three times the levels reported in the third quarter of last year. Unit operating costs fell slightly during the quarter, as anticipated.
"Strategic implementation continued on track during the quarter. We are making significant progress in the delineation and development of our unconventional resource base in North America and have spent over $1 billion to date, reflecting the impact of accelerated drilling and land purchases.
"The Company continues to build a substantial position in several parts of the Montney shale play, among which is one of the best land positions in the Groundbirch area in BC. With approximately 40,000 net acres in this area, we are accelerating our development plans.
"We are pleased with the progress of our unconventional drilling programs. Overall, Talisman has drilled more than 200 gross wells in unconventional play areas so far this year. We've also had encouraging early results from our first shale tests in Quebec and Pennsylvania.
"The UK North Sea continued to generate substantial amounts of free cash flow during the quarter, with netbacks averaging over $80/boe.
"In Malaysia/Vietnam, growth projects are being progressed, with Northern Fields first gas delivered on time during the quarter, and although start up of Song Doc has been slightly delayed, we expect first oil in the next few weeks. Northern Fields first oil remains on track for the first quarter of 2009. Early development plans for the Hai Su Trang and Hai Su Den fields are also moving toward approval. First production from Rev and Yme in Norway remains on track for the announced dates.
"We have important exploration wells currently drilling in Kurdistan and Colombia, where we have recently added new acreage. In the fourth quarter, we will spud wells in the UK (Godwin), Norway (TR3) and Qatar (TQ-3).
"Our sales program was progressed during the quarter with the agreed sale of assets in the Netherlands. The Trinidad sale is also on track.
"Production for the quarter was strong and benefited from the new projects coming on stream and the completion of planned shutdowns in the UK in particular. However, the Song Doc delay along with the extension of a planned maintenance shutdown at PM-3 CAA means that we now expect annual production to be closer to 430,000 boe/d than our previous target of 435,000 boe/d, since the achievement of this was always dependent on new project delivery in the last quarter of the year.
"The current economic environment remains volatile, and it is important that Talisman continues to implement its strategy through a period of relatively weak commodity prices. Talisman has a strong balance sheet and significant levels of liquidity.
"While we are in the early stages of finalizing our investment plans for 2009, capital programs for next year will be adjusted to ensure that we maintain our current balance sheet strength and liquidity levels through a period of weaker commodity prices. We are currently high-grading our spending plans to invest in those projects that are consistent with the strategy and have the highest returns. This is likely to result in a slowdown in expenditures in North American conventional drilling and prioritizing among our unconventional plays.
"We intend to maintain flexibility and liquidity over the next 12-24 months. Our investment plans will be finalized over the remaining months of this year and we will provide details around capital spending levels and the impact on deliverables in January.
"In summary, the third quarter was a solid quarter of delivery and we are making good progress on the strategy. Talisman is in strong financial shape and we will act to ensure our investment patterns for the remainder of this year and into 2009 allow us to preserve that strength while maintaining momentum in implementing our strategy. "Talisman Generates a Record $1.4 Billion in Net Income
For Full Report Click The Link Below
Website: www.talisman-energy.com
Monday, November 3, 2008
The close: Markets shrug
RTGAMBullish investors who believe that the stock market saw its lowest point in October could find plenty to smile about on Monday. U.S. manufacturing activity fell to its lowest level since 1982 and U.S. auto makers reported their worst sales month since the Second World War - and yet major North American stock market indexes barely budged.
The Dow Jones industrial average closed at 9319.83, down 5.18 points or less than 0.1 per cent. The broader S&P 500 closed at 966.31, down 2.44 points or 0.3 per cent.Given the dismal reports, the slight declines could imply that a deep recession is already be factored into stock prices. Indeed, General Motors Corp. shares fell jut 2.4 per cent after the auto maker reported that its sales plunged 45 per cent in October, year over year.
After adjusting for population growth, it represented the worst month in the postwar era. Similarly, Ford Motor Co. shares fell 2.7 per cent after it reported a 30-per-cent drop in sales.In other moves, Home Depot Inc. fell 5.8 per cent, Walt Disney Co. fell 3.4 per cent and General Electric Co. fell 1.1 per cent. On the upside, Citigroup Inc. rose 2.5 per cent, Microsoft Corp. rose 1.3 per cent and Coca-Cola Co. rose 3.2 per cent.In Canada, the S&P/TSX composite index closed at 9721.09, down 41.67 points or 0.4 per cent.
There, commodity producers were the big weight dragging the index into negative territory, after the price of crude oil tumbled to $63.91 (U.S.) a barrel, down 3.90. EnCana Corp. fell 4.5 per cent, Canadian Natural Resources Ltd. fell 5.4 per cent and Suncor Energy Inc. fell 6.2 per cent. As well, Barrick Gold Corp. fell 4.5 per cent.However, insurance companies were strong, with Manulife Financial Corp. up 8.3 per cent, and Sun Life Financial Inc. rose 4.1 per cent. Research In Motion Ltd. was another big mover, rising 3.8 per cent, and Bombardier Inc. rose 6.9 per cent.Copyright 2001 The Globe and Mail
NEWS RELEASE TRANSMITTED BY Marketwire FOR: TALISMAN ENERGY INC.Talisman Energy Inc. Conference Call SEP 24, 2008 - 13:42 ET CALGARY, ALBERTA--
(Marketwire - Sept. 24, 2008) - Talisman Energy Inc. (TSX:TLM) (NYSE:TLM) has scheduled a telephone conference call for investors, analysts and media on Tuesday, November 4, 2008 at 11:00 a.m. MST (1:00 p.m. EST) to discuss Talisman's third quarter results. Participants will include John A. Manzoni,
President and Chief Executive Officer and members of senior management. Talisman expects to release its third quarter results the morning of November 4 before markets open.To participate in the conference call, please contact the Talisman Energy conference operator at 10:50 a.m. MST (12:50 p.m. EST), 10 minutes prior to the conference call.
Conference Operator Dial in Numbers:1-800-733-7560 (North America) or1-416-915-5761 (Local Toronto & International)
A replay of the conference call will be available at approximately 2:30 p.m. MST on Tuesday, November 4 until 11:59 p.m. Wednesday, November 12, 2008. If you wish to access this replay, please call:
1-877-289-8525 (North America) passcode 21283303# or1-416-640-1917 (Local Toronto & International) passcode 21283303#
Live Internet Audio BroadcastThe conference call will also be broadcast live on the Internet and can be accessed by going to the Talisman website (www.talisman-energy.com) and following the links from the home page. Alternatively, you can point your browser to: http://w.on24.com/r.htm?e=120656&s=1&k=03030004A018B11F30E176FD88777A31Talisman Energy Inc. is an independent upstream oil and gas company headquartered in Calgary, Alberta, Canada. Talisman has operations in Canada and its subsidiaries operate in the UK, Norway, Southeast Asia, North Africa and the United States. Talisman's subsidiaries are also active in a number of other international areas. Talisman is committed to conducting its business in an ethically, socially and environmentally responsible manner. The Company is a participant in the United Nations Global Compact and included in the Dow Jones Sustainability (North America) Index. Talisman's shares are listed on the Toronto Stock Exchange in Canada and the New York Stock Exchange in the United States under the symbol TLM. FOR FURTHER INFORMATION PLEASE CONTACT:Talisman Energy Inc. - Media and General InquiriesDavid Mann, Vice President,Corporate & Investor Communications(403) 237-1196(403) 237-1210 (FAX)Email: tlm@talisman-energy.comWebsite: www.talisman-energy.comorTalisman Energy Inc. - Shareholder and Investor InquiriesChristopher J. LeGallais, Vice President,Investor Relations(403) 237-1957(403) 237-1210 (FAX)Email: tlm@talisman-energy.comWebsite: www.talisman-energy.com
Post says Talisman seen gaining
Post says Talisman, Nexen, Cdn Oil Sands seen gaining
2008-10-21 09:28 ET - In the News
Also In the News (C-COS) Canadian Oil Sands Trust (2)Also In the News (C-NXY) Nexen Inc
The Financial Post reports in its Tuesday edition that oil companies start reporting their third-quarter results today. The Post's Carrie Tait writes that third-quarter results in the oil patch may not be entirely painful. Kam Sandhar, an analyst at Peters & Co., said quarter-over-quarter production growth for the integrated oil producers will be "slightly positive."
As for domestic large cap companies, Mr. Sandhar said: "From a cash flow perspective, Canadian Oil Sands Trust, Nexen Inc. and Talisman Energy Inc. are the only three entities expected to show per share growth at 26%, 9% and 1%, respectively," he told clients in a note. Oil closed at $74.25 (U.S.), up $2.40 (U.S.) on the day -- above last week's low of $67 (U.S.) but well down from the peak of $147 (U.S.) per barrel in July.
This time around, capital expenditure plans will be under the microscope. Budgets may still be undergoing finishing touches. Analysts say that during this reporting round, capital expenditure plans will be under the microscope in an environment of plunging oil prices and with credit and equity markets in disarray.
When to buy – and what
When to buy – and what
Gordon Pape
Monday, November 03, 2008
TORONTO (GlobeinvestorGOLD)--This has become a manic-depressive stock market. That's the only description that fits as the mood of investors changes at lightning speed, not just from day to day but hour to hour.
Consider what happened last week. On Monday, Oct. 24, the S&P/TSX composite index experienced the second-worst one-day drop in history, falling 8.1 per cent in what The Globe and Mail described as a "frenzied sell-off of stocks". Then on Tuesday investors reversed course and started buying everything in sight. Over the next three days, they pushed up the composite index by more than 1,300 points, or 15.5 per cent. But by Friday they were back to selling again as the index recorded a modest 93-point decline.
What's going on? A toxic mixture of irrationality and uncertainty with conflicting bouts of fear and greed stirred in. When people wake up in the morning feeling depressed, the urge to save whatever they have left of their savings takes over and the sell orders pour in to brokers. When they wake up thinking that maybe yesterday's sell-off was the culmination and, wow, some of these stocks look like terrific bargains, they turn manic and start buying.
A simplistic explanation? Sure it is. But it also happens to be true. Strip away all the complexities of forced selling and short covering and the bottom line is that investors are trying to pick the bottom of this plunging market and profit from it.
We all know deep down inside that the markets are not going to zero. And most of us believe that the great companies that have been beaten down will rise again and that when they do the profits will flow like swollen creeks after a thunderstorm. What we don't know is where the bottom is or how long it will be before the turnaround starts.
Last week, a worried reader wrote to ask if I thought the S&P/TSX composite would fall to the 6,000 level, as someone she had seen on TV predicted. I replied that I didn't know – any more than anyone else does. No one that I know forecast this big a drop in the TSX. In fact, as recently as mid-summer some highly respected economists were predicting the composite index would be over 16,000 before the end of the year. How ludicrous does that seem now?
We never know where the bottom of a market is except in hindsight. What we do know is that there will be a bottom and that at some point a new bull will emerge.
In a recent research report, RBC Capital Markets technical analysis team, which is considered to be one of the best in the business, reiterated its view that we are in the midst of a prolonged bear market that will not reach its nadir until mid-2010.
"In a 'best case' scenario, this could mean a stabilization near current levels, followed by a broad, highly rotational trading range for the next few quarters," the team wrote in a research report. "A more probable case is that the broad indices will reach or exceed the minus 50-per-cent mark at some point before the start of a new cyclical bull market.
The 'worst case' remains open to the imagination at this point, but historical parallels might be the Nasdaq 2000-2002 (-78 per cent), Nikkei 1990-1992 (-63 per cent), 'Nifty Fifty' 1972-1974 (-67 per cent), and Dow 1929-1932 (-89 per cent)."
In other words, even some of the best technical minds in Canada can't tell us with any degree of certainty how the next couple of years will unfold. The best they can do is to provide some assurance that by mid-2010 – almost two years from now – we'll be back on the right track. Between now and then, who knows? No wonder investors are acting like inmates of an asylum!
This brings me to the core question of this column – when should you buy, and what? The answer depends on your willingness to deal with risk, your time horizon, your bank account, and your nerves.
There is no doubt that there are some wonderful bargains available now. I look at the share prices of companies like Manulife, Brookfield, Suncor, Research In Motion, Royal Bank, H&R REIT, and Teck Cominco, to name just a few, and I shake my head in wonder. Unless the world falls completely apart, every one of these companies is going to be trading at double or triple the current price in less than five years. Yet the market keeps driving them lower.
So when do you start buying some of these bargain-basement stocks? Rule No. 1 is never try to pick an absolute bottom, or an absolute top for that matter. It never works. Experienced investors are content to buy within 20 per cent of the low and sell within 20 per cent of the high.
You can make a lot of money doing that. So the first step is to pick what you believe is the lowest point a quality stock is likely to reach. Be ultra-conservative – a month ago, some of today's prices seemed inconceivable.
For example, if you decide $30 is a rock-bottom price for Royal Bank, start accumulating shares at around $36. If the price drifts lower, gradually add to your holdings. Despite all the troubles in the financial sector, Royal Bank is not going to fail. If it ever came to that, the Canadian government would follow the lead of Europe and the United States and bail it out by buying billions of dollars worth of preferred shares.
Next, focus on strong companies that you are convinced will survive even the worst economic downturn. The big banks fall into that category, for reasons explained above. None of our major oil companies is going down the tubes. The big pipeline operators will still be around. So will the cable companies and the railways.
To sum up, identify sound companies that you want to own and set a low entry point for starting to accumulate shares. Don't rush to buy if the price moves higher, as it did for most stocks last week. My hunch is there will be a lot more buying opportunities before this is all over.
Copyright © 2002 Bell Globemedia Interactive.
Sunday, November 2, 2008
Saturday, November 1, 2008
TSX posts 93-point loss, drops 17% in scary October
TSX posts 93-point loss, drops 17% in scary
October TheStar.com -
Business -
TSX posts 93-point loss, drops 17% in scary October
November 01, 2008
The Toronto stock market ended one of the worst months in its history with a fizzle yesterday, after swinging wildly most of the week amid upheaval in the world's stock, currency and commodity markets.
The main Toronto index fell 17 per cent in October and is now down more than 4,000 points since the beginning of 2008, or about 30 per cent.
Toronto's S&P/TSX composite index fell 93.45 points to 9,762.76 after mounting a brief surge into positive territory late in the afternoon, motivated by rising oil prices.
But the upward momentum was short-lived.
The energy sector wrapped the day lower even though the December crude oil contract ended ahead $1.85 to $67.81 (U.S.) on the New York Mercantile Exchange.
Crude oil has dropped 32.6 per cent since the start of October, its biggest drop in value since it began trading on the Nymex in 1983.
Although Toronto has had a horrific month, it had risen more than 1,300 points in the middle three sessions, or about 5 per cent for the week.
After such a dismal showing in October some industry observers are looking to November for some signs of direction.
John Johnston, chief strategist at The Harbour Group at RBC Dominion Securities, said markets will start to get a taste of October's bad economic data, but overall market reaction could still look comparatively good, albeit not exactly fantastic.
The Canadian dollar rose 0.92 cents to close at 83.02 cents as the American currency lost momentum. The loonie hit its lowest level in four years early in the week.
The TSX gold sector was the biggest loser, shedding 6.8 per cent as the bullion contract dropped $20.30 to $718.20 an ounce.
The Dow Jones industrial average ditched morning losses to climb 144.32 points to 9,325.01.
New York's Nasdaq composite index rose 22.43 points to 1,720.95 while the S&P 500 increased 14.66 points to 968.75.
The TSX Venture Exchange moved up 35.55 points to 915.30.
SNC-Lavalin Group Inc. shares were up five cents to $31.67 (Canadian) after third-quarter profit rose to $91.3 million from $63.2 million, although the global engineering firm's revenue slipped to $1.69 billion from $1.79 billion.
The Canadian Press
Evergreen Capital Partners closed its doors
Boutique investment dealer Evergreen Capital Partners closed its doors after losing $25-million (U.S.), a loss that could translate into major pain for Penson Financial Services Canada, the company that cleared Evergreen's trades.
Evergreen shut down on Wednesday, and regulators at the Investment Industry Regulatory Organization of Canada are now helping wind down the firm. Evergreen was a tiny dealer, with 16 employees and a focus on financing and trading small-cap energy, mining and technology companies. Sources say the investment dealer had less than $4-million in shareholder equity.
Employee-owned Evergreen lost money on a number of positions held by its trading desk, according to sources, and Penson appears to have confirmed the amount of the loss, saying in a press release Friday that it holds “an unsecured receivable from Evergreen Capital, a correspondent firm of Penson Canada, in the approximate amount of $25 million.”
Penson has opened an investigation into the loss and is working with Canadian regulators. Publicly-traded Penson's stock is down 38 per cent Friday on Nasdaq, at $7.30.
“The receivable is the result of a number of transactions involving listed Canadian equity securities by Evergreen on behalf of itself and/or its customers, for which Evergreen and/or its customers have been unable to post requested margin,” said Penson. The company said if it “is unsuccessful in reducing the exposure associated with this receivable, the Company would likely incur an after tax loss in the amount of approximately U.S.$15.5 million, equal to approximately U.S.$0.59 per share."
"We deeply regret this development, which is unprecedented in our history," said Pension chief executive officer Philip A. Pendergraft. "We are doing everything possible to learn all the facts surrounding this issue, in order to maximize the possibility of recovery, and to prevent any such issue from ever again happening."
*
Evergreen Capital loss pounds Penson
Andrew Willis, 31/10/08 at 11:01 AM EDT
Boutique investment dealer Evergreen Capital Partners closed its doors after losing $25-million (U.S.), a loss that could translate into major pain for Penson Financial Services Canada, the company that cleared Evergreen's trades.
Evergreen shut down on Wednesday, and regulators at the Investment Industry Regulatory Organization of Canada are now helping wind down the firm. Evergreen was a tiny dealer, with 16 employees and a focus on financing and trading small-cap energy, mining and technology companies. Sources say the investment dealer had less than $4-million in shareholder equity.
Employee-owned Evergreen lost money on a number of positions held by its trading desk, according to sources, and Penson appears to have confirmed the amount of the loss, saying in a press release Friday that it holds “an unsecured receivable from Evergreen Capital, a correspondent firm of Penson Canada, in the approximate amount of $25 million.”
Penson has opened an investigation into the loss and is working with Canadian regulators. Publicly-traded Penson's stock is down 38 per cent Friday on Nasdaq, at $7.30.
“The receivable is the result of a number of transactions involving listed Canadian equity securities by Evergreen on behalf of itself and/or its customers, for which Evergreen and/or its customers have been unable to post requested margin,” said Penson. The company said if it “is unsuccessful in reducing the exposure associated with this receivable, the Company would likely incur an after tax loss in the amount of approximately U.S.$15.5 million, equal to approximately U.S.$0.59 per share."
"We deeply regret this development, which is unprecedented in our history," said Pension chief executive officer Philip A. Pendergraft. "We are doing everything possible to learn all the facts surrounding this issue, in order to maximize the possibility of recovery, and to prevent any such issue from ever again happening."
Oppenheimer shows CIBC escaped just in time
Boyd Erman, 31/10/08 at 9:28 AM EDT
Canadian Imperial Bank of Commerce made some mistakes on Wall Street, where it spent big and paid dearly in a bid to run with the big dogs. The bank got one thing very right, however, and that's the timing on its exit from New York, announced almost exactly a year ago.
CIBC CEO Gerry McCaughey doesn't look much like an action star, but his nick-of-time escape from the crumbling caverns of American finance, with banks tumbling around him in ruins, brings to mind the final scene of some thriller where everything collapses but the hero manages to just make it out.
Results from Oppenheimer Holdings Inc., which bought CIBC's New York investment banking operations, show just what the Canadian bank would have been in for had it stuck around. It's not a pretty sight.
There's nary an encouraging word in the Oppenheimer review of the recent quarter. (The third-quarter earnings release is available here.)
"The investment environment during the third quarter was as hostile to investors as anything seen in decades," said Oppenheimer CEO Albert Lowenthal, whose firm went on to detail a life of cost cutting that's outpaced by revenue declines and an environment that's unlikely to get better any time soon.
"We continue to believe that the long-term benefit of our January acquisition will be substantial; however we do not foresee a quick return to profitability for the enlarged capital markets business segment, given the present state of the markets and of the U.S. econonomy," Oppenheimer said.
Knowing that Mr. McCaughey is a movie buff, it's unlikely he'll head back to New York anytime soon. After all, anyone who's seen an action movie sequel knows they're rarely any good.
What's next for Compton Petroleum?
Andrew Willis, 31/10/08 at 3:50 PM EDT
Investors are taking a deeply pessimistic view of Compton Petroleum's prospects after the debt-heavy natural gas play failed to find buyer.
After a three-month formal auction, and a far longer period of being open to offers, Compton announced late Thursday that it couldn't attract a buyer at an acceptable price. EnCana was seen as a natural suitor, and there was also talk of Enerplus Resources Fund kicking tires.
News that Compton was off the auction block knocked the stock down 21 per cent to $2.45 on the TSX. The company also said Thursday that president and CEO Ernie Sapieha will retire once a successor is choosen.
Looking ahead, Compton now must deal with $903-million of debt, against an equity market capitalization of $320-million. At the moment, Compton is maintaining that it wants to keep its reserve base intact, despite numerous offers for specific properties. If natural gas prices continue to be weak, and debts come due, that resolve may fade.
Miners getting crushed by commodity price crash
Miners getting crushed by commodity price crash
ANDY HOFFMAN
The global credit crisis and commodities collapse has pushed High River Gold Mines Ltd. to the brink of insolvency in what could foreshadow a wave of liquidity crises at mining companies.
Delays in starting up gold mines in Burkina Faso and Russia put the Toronto company offside with lending arrangements and it is now scrambling to sell assets or secure an emergency cash infusion.
"We are looking at all of the alternatives. From a sale of assets to strategic investors to strategic financings to other financial alternatives," High River chairman Terry Lyons said in an interview.
High River is among the first mining firms to hit a wall as commodity prices plunge and corporate financing dries up amid the global financial crisis.
Analysts say there are scores of other cash-strapped miners, including Canadian zinc producer Breakwater Resources Ltd. that are struggling to survive.
High River has breached the covenants of a $35-million loan from Denver royalty company Royal Gold Inc. High River's Taparko-Bouroum mine failed to achieve "project completion" by Oct. 1 - a stipulation of the financing deal.
Royal Gold is not willing to relieve High River of its obligations and could foreclose on the mine, although Mr. Lyons said that was unlikely. Royal Gold officials did not respond to a request for comment.
High River also has a looming deadline with another lender, Russia's Nomos Bank. A loan repayment of $15.2-million (U.S.) from a High River subsidiary is due to be paid to Nomos on Nov. 21.
High River has just $4.1-million (Canadian) in cash on hand and 8,300 ounces of unsold gold worth about $6.2-million (U.S.). As of Sept. 30, the company's outstanding short-term payables amounted to $32.9-million (Canadian). High River's overall debt load totalled $187-million at the end of its second quarter.
"The ability of the company to continue as a going concern is therefore dependent on the ongoing discussion with and/or forbearance of lenders, accommodations from trade creditors, establishing steady production at the two new mines and obtaining additional financing," High River said in a statement.
Mr. Lyons, who joined the beleaguered company in September, conceded that High River had failed to conserve enough cash to weather the unexpected credit crisis, its mine start-up problems, and the plunge in commodity prices, including gold.
"They really didn't have enough rainy day capital at the parent company level to anticipate all of the situations," he said.
Two of the company's directors, Graham Farquharson and Robert Buchan, have resigned, the company said yesterday.
High River shares plummeted 21 per cent to 11 cents on the Toronto Stock Exchange yesterday. They had traded as high as $3.50 this year.
Chief executive officer David Mosher was in Moscow yesterday seeking financing. "I have been having meetings with a number of interested parties who are considering taking an investment in High River," he said in an e-mail.
High River has four gold mines in Russia and West Africa that the company has said could annually produce 300,000 ounces of gold.
High River is unlikely to be an isolated case. Other mining firms, both large and small, are facing liquidity issues in varying degrees.
Breakwater Resources shuttered two zinc mines this week in response to dismal prices but analysts believe that may not be enough to save it.
"We question the company's ability to continue as a going concern despite the production cuts announced earlier this week. At current spot copper and zinc prices and exchange rates our model indicates that the company's cash reserves could be drawn down to minimal levels by year end," TD Newcrest analyst Greg Barnes said in a note to clients.
Even mining majors are reeling from the credit crunch and the worst monthly fall in commodity prices in more than half a century that has already put about $50-billion (U.S.) worth of development projects on hold.
AngloGold Ashanti, the world's third-biggest gold producer is reviewing its capital spending and may sell assets because it is having trouble refinancing a $1-billion convertible bond that is set to mature.
High River Gold (HRG)
Close: 11cents, down 3cents
The Globe and Mail
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Thursday, October 30, 2008
Exxon Mobil profit hits record $14.83-billion
JOHN PORRETTO
The Associated Press
October 30, 2008 at 8:25 AM EDT
HOUSTON — Exxon Mobil posts biggest US quarterly profit ever Exxon Mobil Corp., the world's largest publicly traded oil company, says it shattered its own record for the biggest profit from operations by a U.S. corporation, earning $14.83-billion (U.S.) in the third quarter.
Bolstered by this summer's record crude prices, the Irving, Texas-based company said Thursday that net income jumped nearly 58 per cent, or $2.86 a share in the July-September. That compares with $9.41 billion, or $1.70 a share, a year ago.
The previous record for U.S. corporate profit was set earlier this year, when Exxon Mobil earned $11.68-billion in the second quarter.
Revenue rose 35 per cent to $137.7-billion.
Exxon Mobil profit hit a new record in the third quarter
Exxon Mobil
On average, analysts expected the company to earn $2.39 per share in the latest quarter on revenue of $131.4-billion
Source
Wednesday, October 29, 2008
BNN Are More Market Crashes Ahead?
2:45 PM
Campbell HarveyProfessor of FinanceDuke UniversityFocus: Why bailouts are a bad idea. BNN interviews Campbell Harvey, Professor of Financie, Duke University.
Oil prices bounce off 17-month low
Oil prices bounce off 17-month low
ALEX KENNEDY
Wednesday, October 29, 2008
SINGAPORE — Oil prices bounced off a 17-month low Wednesday in Asia as a rally in global stock markets boosted investor confidence that the worst of a global economic slowdown and its impact on crude demand has been priced in.
Oil investors have been closely tracking equity indexes for signs of market sentiment about how deep and widespread the global downturn will be. They took heart from a rally in stocks that began Tuesday in Asia, followed through to Europe and the U.S. and continued Wednesday in Asia.
“Everybody is looking to Wall Street for guidance,” said Gavin Wendt, head of mining and resources research at consultancy Fat Prophets in Sydney. “The positive momentum in stock markets has had an impact on commodities.”
Light, sweet crude for December delivery was up $1.95 to $64.68 (U.S.) a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract overnight fell 49 cents to settle at $62.73, the lowest closing price since May 15, 2007.
Oil prices have fallen by about 57 per cent since peaking at nearly $150 a barrel in mid-July.
Japan's benchmark Nikkei index jumped 7.7 per cent on Wednesday while Australia's key stock index rose 1.3 per cent. The Dow Jones industrial average soared nearly 900 points, or nearly 11 per cent, its second-largest point gain ever.
The U.S. Federal Reserve is expected to cut its target fed funds rate by half a point to one per cent on Wednesday and investors are speculating the Bank of Japan may trim interest rates when it meets Friday.
Investors are also watching for signs of slowing U.S. demand in the weekly oil inventories report to be released Wednesday from the U.S. Energy Department's Energy Information Administration. The petroleum supply report has shown larger than expected increases in oil, gasoline and distillate stocks during the last few weeks, suggesting U.S. motorists reduced driving after oil surged to a record high in July.
OPEC members warned Tuesday that lower oil prices threaten to make unprofitable key oil infrastructure investment, which could undermine future production.
At an annual oil and money conference in London, United Arab Emirates Energy Minister Mohammed Bin Dhaen al-Hamli said the current crude prices were “very dangerous for the world's economy.”
“OPEC would like to protect the $80 price level,” Mr. Wendt said. “Many OPEC members haven't made the proper investments in their aging infrastructure.”
In other Nymex trading, gasoline futures rose 3.7 cents to $1.49 a gallon, while heating oil gained 3.8 cents to $1.95 a gallon. Natural gas for November delivery increased 12.4 cents to $6.31 per 1,000 cubic feet.
In London, December Brent crude rose $1.96 to $62.25 a barrel on the ICE Futures exchange.
© Copyright The Globe and Mail
Tuesday, October 28, 2008
Oil predictions: Drop From $200 to $50
Oil predictions: From $200 to $50
Tuesday, October 28, 2008
Say goodbye to predictions for crude oil hitting $200 (U.S.) a barrel. Say hello to $50 oil.
Okay, Merrill Lynch was never the most bullish on oil, but the commodities strategist there nonetheless ratcheted down his expectations for oil prices this year, and noted that his prediction for 2009 could take a beating.
Francisco Blanch, commodity strategist at Merrill Lynch, lowered his forecast in the fourth quarter to $78 a barrel from $107 previously – a sign that observers are beginning to throw in the towel for[amp]nbsp;expectations of an imminent energy rebound.
“Demand for physical commodities is tanking in many parts of the world, with U.S. oil consumption contracting at the sharpest rate since 1980,” he said in a note written last Friday but only released to the media on Tuesday. “More importantly, we are starting to see signs of oil demand slowing in emerging markets.”
For 2009, he believes oil will rise to $90 a barrel. But he acknowledges that there are downside risks to this prediction: “If we do indeed embark on a global recession next year, oil prices will likely drop to $50 a barrel,” Mr. Blanch said.
On Tuesday, oil traded at $63.21 a barrel, relatively unchanged after an earlier rally.
© Copyright The Globe and Mail
Housing market ‘alarms' Merrill
LORI McLEOD
Tuesday, October 28, 2008
Merrill Lynch & Co. economists are becoming more “alarmed” about the Canadian housing market every day as their data suggest it is tracking the United States with a two-year lag.
Falling prices, overbuilding and too much unsold inventory in Canada are creating a trend similar to that in the United States a couple of years ago, Merrill economists David Wolf and Carolyn Kwan said in a research note Tuesday.
“Though the consensus does seem to be gravitating towards our view of a sustained downturn in the Canadian housing market, we still do not sense any particular alarm in either the policy-making or forecasting community. We ourselves are getting more alarmed by the day,” Mr. Wolf and Ms. Kwan said in their report.
Many other economists believe Canada is in for a moderate downturn next year, but is differentiated from the U.S. experience by more prudent lending practices for both home buyers and developers.
There are a number of reasons the risk of lower house prices is not as magnified in Canada as in the United States, said Derek Holt, economist at Scotia Capital Inc.
“I still agree that Canadian housing markets have been in correction mode all year long, and that further downsides lie ahead. But the macroeconomic implications are not as stark in Canada given a lower degree of leverage on household balance sheets, on bank balance sheets through a much healthier banking system, and through the avoidance of heavily leveraged off-balance-sheet instruments that caused much of the troubles in the U.S.,” Mr. Holt said.
Merrill has a more bearish view, and made headlines recently with a report suggesting Canada's high household deficit level could make it vulnerable to a U.S.-style housing collapse.
“In our ‘tipping point' piece a month ago, we presented a chart showing the ominously high correlation between the price action in the Canadian housing market and that of the U.S. market two years earlier ... Evidence from the supply side further reinforces that Canada's housing market seems to be tracking the U.S.' with a two-year lag,” Tuesday's report said.
The earlier report raised hackles in the real estate community, and questions during the election campaign even prompted Prime Minister Stephen Harper to say Canada's housing and construction markets remain stronger than those in the U.S.
The same two-year lag idea was raised this summer by Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., who called the apparent trend “unnerving” in a report in July.
At the time, Mr. Porter said there were many reasons why the two markets were different, but said even a pale version of what had happened in the United States would be bad news for Canada.
House prices posted a record 16.6 per cent year-over-year decline in the United States in August, according to the benchmark S&P/Case-Shiller Home Price Index report, also released Tuesday. The index has now shown year-over-year declines for 20 months.
Taking into account the two-year lag, Merrill's data suggests the ramp-up in construction of housing units in Canada may be even larger than it was in the United States.
The number of units under construction currently is just off the peak hit in May, which was the highest recorded in 36 years of available data and 97 per cent above the long-term average, the report said.
By contrast at its peak in 2006, U.S. housing construction was 54 per cent above the long-term average, it added.
As of August, there were more condos under construction in both Toronto and Vancouver separately than there were in all Canadian cities combined a decade ago, Mr. Wolf and Ms. Kwan said.
“And as in the U.S. two years ago, we are now seeing completed units pile up unsold in Canada, a clear sign of overbuilding and an ominous sign given the voluminous supply still in the pipeline,” they said.
Inventories of unsold new single-family homes in Canada rose by 56 per cent year over year as of last month, close to the maximum increase in July 1990, which marked the last housing market downturn, the report said.
At the peak in April 2006, inventories of unsold new single-family homes in the United States were up 26.5 per cent over a year earlier, the report said.
The two-year lag could be the result of Canada having more room to run up because its recovery started later than that of the United States. Strong commodity prices and looser lending standards initiated in 2006 may also have contributed to the lag, the report said.
© Copyright The Globe and Mail
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