by Stockwatch Business Reporter
West Texas Intermediate crude for September delivery lost 54 cents to $90.23 on the New York Merc, while Brent for October lost 24 cents to $96.48 (all figures in this para U.S.). Western Canadian Select traded at a discount of $19.70 to WTI, up from a discount of $20.10. Natural gas for September added 34 cents to $9.68. The TSX energy index added 2.11 points to close at 237.40.
The widely hyped visit to Canada from German Chancellor Olaf Scholz is proving to be -- as widely expected -- a bust for anyone hoping for fast progress on Canadian exports of LNG (liquefied natural gas). The three-day official visit, which began Sunday, initially stirred up hopes that Mr. Scholz and Prime Minister Justin Trudeau would throw their support behind one or more proposals to export Canadian LNG to Europe, as a means of reducing Europe's reliance on Russian gas. Those hopes faded as LNG garnered not a single mention in the visit's itinerary earlier this month. A press conference with Mr. Trudeau and Mr. Scholz this morning confirmed that their priorities lie elsewhere.
In particular, according to Mr. Trudeau, the priorities lie in investments in hydrogen, critical minerals, renewables and "a range of things" -- just not things that would seem to include LNG. Responding to a question from a German reporter on whether and when Canada might export LNG to Germany, Mr. Trudeau acknowledged Europe's need for alternatives to Russian gas, but said the real take-away is that "the world needs to accelerate its ending of its dependency on oil and gas in general." Canada will play its part by "working very, very hard to decarbonize." Mr. Trudeau did gesture vaguely toward "economic conversations ... between businesses in Canada and in Germany" to "see if it makes sense to export LNG." He then went back to reiterating his promise of "accelerating our commitment to decarbonization."
The real answer to the German reporter's question, in case he did not find the above word salad especially sating, is that Canada is years away from LNG exports. The only LNG project actively under construction in Canada is the Shell-backed LNG Canada plant in Kitimat, B.C., which aims to start operations in 2025 and target the Asian market (indirectly benefiting Europe by freeing up other sources of LNG for rerouting). The most promising idea in Eastern Canada would add export capabilities to an existing LNG import plant in New Brunswick. Yet even if fast-tracked, this would take an estimated two years or more. Meanwhile, a decade-old proposal for a Europe-focused LNG export plant in Nova Scotia has been mothballed since last year over a lack of financing.
In other words, even if Ottawa wanted to help Germany with the near-term LNG exports, a long history of regulatory, environmental and investment hurdles has ensured that it cannot. There will be no short-term relief from Canada to help Germans through their next couple of cold, expensive winters. Today's downplaying of LNG seemed to come as little surprise to the sector. Pieridae Energy Inc. (PEA), the company behind the mothballed Nova Scotia proposal, even edged up three cents to $1.30 on 399,700 shares in today's trading.
The fact that Canada has no feasible way of providing Europe with a near-term alternative for Russian gas is cause for celebration in some circles. Green Party politician and former party leader Elizabeth May recently took to Twitter to cheer on anti-LNG protesters in Germany. "Thank you, German climate activists! Cdn [Canadian] LNG is a climate killer," she wrote. The remark prompted an unimpressed chief executive officer of an Alberta oil and gas company to reply over the weekend with: "Thank you, Ms. May. Your kind words will warm the hearts of many Europeans this winter."
The CEO was Alex Verge of Journey Energy Inc. (JOY), up 12 cents to $6.42 on 675,400 shares. On-line sniping aside, he is presumably in a good mood these days, having watched Journey's share price climb by nearly $1.50 in less than a month. Investors are fans of its proposed asset acquisition from Enerplus Corp. (ERF: $19.32). Seeking to narrow its focus on its U.S. assets, Enerplus put its Canadian ones up for sale in February. Journey agreed in late July to buy some of the assets for $140-million. The deal will add 4,400 barrels a day, boosting Journey's fourth quarter production to about 14,400 barrels a day, assuming an October closing date. Enerplus is likely feeling pleased with itself too: It will receive three million shares of Journey as part of the deal, which were valued in July at $14.1-million and today are worth $19.2-million.
Further afield, Dr. Art Halleran's Trillion Energy International Inc. (TCF) added half a cent to 39.5 cents on 4.29 million shares, after providing an update on a planned drill program in Turkey. It expects to have a rig in place next week to start the first drilling since 2011 at its SASB gas field in the Turkish Black Sea. "We are pleased to announce a clear path to drilling and gas production -- we are counting the days before we embark on this historical milestone achievement to bring substantial new gas production into the region at a critical time," declared CEO Dr. Halleran, apparently determined to cram as many promotional goodies as possible into a single sentence. The more useful sentence to investors is that the seven-well program should start (weather permitting) on Sept. 1.
Trillion separately announced a handful of new hires. Ozge Karalli, the finance director of Trillion's subsidiary, Park Place Energy Turkey, has won a promotion to company-wide chief financial officer. She replaces the retiring David Thompson. Both Mr. Thompson and Dr. Halleran came to Trillion (then Park Place Energy Inc.) as part of a broad management overhaul in 2017. Mr. Thompson already had three decades of experience at the time (including as founder and CEO of Sea Dragon Energy, a long-ago Parvez Tyab promotion) and has now decided to retire. Meanwhile, Sean Stofer is joining Trillion's board of directors. Mr. Stofer is the chief operating officer of Green Data Center Real Estate, a commercial real estate developer with a focus on solar-powered data centres.
Back in North America, Ian Atkinson's Southern Energy Corp. (SOU) added seven cents to $1.01 on 2.45 million shares, enjoying unusually heavy volume as it rose above $1 for the first time in two months. It had no news to explain the excitement. A potential source is the so-called "BNN bump," a gift from StoneCastle Investment president Bruce Campbell, who appeared today on BNN and chose Southern as one of his "top picks." He predicted that Southern could quintuple its 3,100-barrel-a-day production from its Mississippi gas assets by 2024. "It's a growth opportunity in a very strong natural gas market," he declared, adding that Southern's gas receives a premium to already lofty U.S. benchmarks. "... If you want a growth natural gas business, this is one to look at for sure."
One wonders whether a look at StonePoint's investing activities would include a sizable subscription to Southern's recent financing. The company raised $40.4-million last month at 87 cents a share, saying it would use the proceeds for drilling in Mississippi (where its wells cost about $3.5-million (U.S.) a pop) and for potential "M&A [merger and acquisition] opportunities." Investors seem mildly intrigued. Given today's closing price of $1.01, a subscriber who put in $10,000 last month would now have $11,608