Calgary
China firm set for oil sands joint venture
Nathan VanderKlippe
RTGAM
Calgary - A Chinese interest is prepared to announce what a Calgary banking source called a "big" joint venture agreement with privately-owned oil sands firm Athabasca Oil Sands Corp.
Rumours of the impending deal, which is scheduled for release later Monday, pushed up shares in several small junior oil sands companies, including UTS Energy Corp. and Connacher Oil and Gas Ltd. , on a belief that major outside investment interests are once again prepared to invest in the oil sands.
"It's great news for the oil sands business. It shows that there are still large, sophisticated, deep-pocketed companies out there prepared to write big cheques," said one Calgary banker.
UTS shares are up about seven per cent; Connacher rose five per cent on morning trading.
Athabasca calls itself the largest leaseholder in the Athabasca region of the oil sands, with 526,000 hectares of net land. It believes it can recover anywhere from seven to 11-billion barrels of crude from that land.
Sveinung Svarte, the president and chief executive of Athabasca, was not immediately available Monday morning. However, in an interview this May, he said the company had spent months searching for joint venture partners.
"That has always been our philosophy to finance our projects," he said then. "We are talking about quite a few billion dollars [in] long-term [capital requirements], and to have a partner coming in and finance a large part of that has been our model."
At the time, he said even with low oil prices, large oil sands properties continued to attract "a lot of interest."
"Even in this market. I would say maybe even more in this market, because I think the buyers have recognized that it's easy to make a deal today," he said. "Because the sellers are a bit more, what shall I say, they expect a bit less than with the price at $147 oil."
The rumoured partner in the deal is the China National Petroleum Corp., which made a $449-million deal for Verenex Energy Inc. in February - although that deal has had troubles proceeding thanks to difficulties in acquiring permission from authorities in Libya, where Verenex has the bulk of its holdings.
CNPC is not, however, the only Chinese company that has moved on Canada's oil sands. Late last year, Sinopec paid about $2-billion for another Calgary company, Tanganyika Oil, which has production-sharing agreements in Syria.
The Athabasca deal shows "that major international companies are game to put up big dough for Canadian oil sands projects. So I'm sure people are looking at that and saying another potentially ready-to-go project is obviously Fort Hills," said another Calgary investment source. "So UTS could be a beneficiary of that."
UTS holds a 20 per cent stake in the proposed Fort Hills oil sands mine, which is majority owned by Suncor Energy Inc. after its acquisition of Petro-Canada. UTS rebuffed a bid by French energy giant Total S.A. to buy that share earlier this year.
Monday, August 31, 2009
China firm set for oil sands joint venture
Saturday, August 29, 2009
Lottery retailers, employees and their families won $198 million in prizes over 13 years, dating from 1996.
Robert Benzie
A Good Samaritan treated shabbily when he tried to turn in a cache of lost tickets;
A malfunctioning slot machine erroneously informing a player he'd won $42.9 million when the maximum payout was $9,025;
A misprinted scratch-and-win ticket that led a man to believe he had won $135,000 when he hadn't.
But the straw that broke the camel's back appears to be Liberal fears of a reprise of the eHealth Ontario debacle at OLG...
...McDougald was not in her office yesterday afternoon and did not return emails and calls from the Star.
She was put in the top job after previous troubles at the Crown agency, where it was found that lottery retailers, employees and their families won $198 million in prizes over 13 years, dating from 1996.
S&P/Case-Shiller 20-city, U.S. home price index is a key measure to make $$$
August 29, 2009
Bill Carrigan
Early last week we learned that the S&P/Case-Shiller 20-city, U.S. home price index and the 10-city home price index both rose 1.4% in June, more than double the rate of increase seen in May. One component, home prices in the Phoenix area, rose 1.1 per cent from the first quarter to second quarter of this year. That is considered to be good news because Phoenix home values are down 31.6 per cent from a year ago.
Cleveland had the greatest month-to-month home price rise in June, 4.2 per cent, followed by San Francisco (3.8 per cent), Minneapolis (3.1 per cent), Washington (2.8 per cent), Dallas (2.7 per cent) and Boston (2.6 per cent).
Now with the good news out perhaps we should jump into the iShares Dow Jones U.S. Home Construction ETF (NYSE-ITB). According to Barclays Global Fund Advisors, the fund seeks investment results that correspond generally to the price and yield performance of the Dow Jones U.S. select home construction index. The index measures the performance of the home construction sector of the United States equity market, and includes companies that are constructors of residential homes,
Our chart this week shows the weekly closes of the ITB, spanning about 30 months. Note the price peak around $40 (U.S.) in the first quarter of 2007.
Keep in mind most of the components such as Pulte Homes Inc., D.R. Horton Inc., Lennar Corp. and Toll Brothers Inc. had broken under their long-term moving averages in late 2005 and early 2006 – long before the housing bubble became apparent.
Note the subsequent decline to the March 2009 lows at the $6 level followed by the stunning, 25-week, 117 per cent rebound to the $13 level. Clearly, we are too late to play the bottom fishing housing recovery game.
Late Wednesday, meanwhile, we learned that the number of new homes sold in the U.S. rose for a fourth consecutive month, posting an advance of 9.6 per cent month over month. The market consensus was for an advance of only 1.6 per cent.
Confused?
Perhaps the following quote from a book I read years ago will help.
"I didn't ask the tape why when I was 14, and I don't ask today, at 40. Your business with the tape is now – not tomorrow. The reason can wait."
(Reminiscences of a Stock Operator, Edwin Lefèvre.)
The message here is clear, stocks will rise and fall for reasons we discover only after the price movement. That is, bull and bear markets will be caused by circumstances that may not be known for weeks or months after the fact.
Birds of a feather fly together. When the components of the housing ETF are scanned for price movement we find the group is highly price correlated.
Another example is the Canadian financial sector, with most of the component banks posting quarterly earnings this week that surpassed expectations.
By the same token, another bottom fishing opportunity is lost because the iShares CDN S&P/TSX Financials Index Fund (XFN-T) has almost doubled in price from the March lows in anticipation of the banks' good news.
Once again ,when the components of the financial ETF are scanned for price movement, we find the group is highly price correlated.
These are examples of the powerful effect of bull and bear markets on equity returns. I believe investors would be better served by putting less emphasis on stock selection and chasing so-called compelling stories and more on adopting a sound investment strategy.
These can vary from using seasonal patterns, rotating through the various market sectors to simple quarterly rebalancing between fixed and equity exposure.
I prefer to use the long-term charts of stock sectors and the major stock indices to identify bull and bear cycles operating in these diverse asset classes. The strategy is to use any trend following tool and if upward adopt a buy-and-hold strategy.
If downward, take some profits and reduce your equity exposure.
Try this on Excel: Download the weekly closes of the S&P/TSX60 index from Yahoo Canada finance and identify the weekly high and low of the past 30 weeks. When the current close is above the highest 30-week high the trend is upward. When it is below the lowest 30-week low the trend is downward
The batting average has been good at 83 per cent from January 1994 to date, with the last signal a buy on May 29, 2009
Friday, August 28, 2009
Globe/CP say Delphi sees a future in owning Fairmount
Globe/CP say Delphi sees a future in owning Fairmount
2009-08-24 05:04 ET - In the News
Also In the News (C-FMT) Fairmount Energy Inc
The Globe and Mail reports in its Saturday edition that Delphi Energy is buying Fairmount Energy. A Canadian Press dispatch to The Globe reports that Delphi will swap 0.3571 of a common share for each common share of Fairmount. The deal is worth $14.5-million, including the assumption of $7.3-million of debt and transaction costs of $1.4-million.
The friendly bid will be mailed to Fairmount shareholders on Aug. 28 and will expire 35 days later, the Calgary-based oil patch junior said. The deal is backed by the boards of both companies. Directors and senior executives of Fairmount holding more than 23.4 per cent of the company's shares have agreed to tender their stock to the bid under lockup arrangements.
Delphi stock jumped a nickel Friday to close on the Toronto Stock Exchange at $1.05. Fairmount stock shed half a penny to close on the TSX at 39.5 cents.
Schachter Asset Management president Josef Schachter recommended buying Delphi stock in The Globe on Nov. 19 when it could be had for $1.20.
Aston Hill Financial vice-president Joanne Hruska was bullish on Delphi in The Globe on Dec. 7, 2007, when it was worth $1.72.
Mr. Schachter said buy Delphi in The Globe on June 5, 2007. It was then trading at $1.96.
