Vertex Makes Another Acquisition

An $8.9 million purchase of an Alida based company by Vertex Resource Group. It was announced last week Vertex had purchased Three Star Trucking, an environmental service company that provides fluid hauling, pressure trucks, hot oilers and combo vac services in Western Canada.

Deon Walsh is Vertex’s Vice-President of Environmental Services. He explained the purchase was a good fit.

“We felt it would a be a great geographical and strategic move for us to acquire Three Star Trucking to add into our current geographical footprint and service offering.”

The management team in place at Three Star is expected to stay on, and Walsh stated he is not anticipating any layoffs as a result.

“For us, we truly believe you need to keep the employees and management teams to have success when you do acquisitions,” Walsh added.

This is the fifth acquisition in Western Canada by Vertex this year. The total purchase consists of 2.6 million common shares being issued at $1.00 per share, $4.4 million in cash and $1.9 million in non-interest bearing promissory notes over two years. Vertex also assumed $10.2 million in long-term debt offset by a positive working capital of $6.3 million.

Sale of Canadian refinery falls through as owners clash over price: sources

(Reuters) - The sale of a remote Canadian refinery has been scuttled as two former oil traders running the company locked horns over the value of the plant, according to three people familiar with the discussions.

The partners, former traders Neal Shear and Kaushik Amin, sought to sell the 130,000 barrel-per-day refinery in Come By Chance, Newfoundland last year to privately held Canadian refiner Irving Oil, which was seen as the leading bidder.

The deal fell apart in recent months and is unlikely to be rekindled because Shear and Amin are at odds over the sale price, according to three people familiar with the firm, who spoke on condition of anonymity as the events were private.

Shear was ready to sell to Irving for an undisclosed value that two of the people said was about C$250 million ($191 million). Amin, however, was pushing for a C$400 million price tag, according to the people. Shear’s name has since been removed from the firm’s website, and talks with Irving have been put on hold. There are no longer any immediate plans to try to sell the plant, the people said.

Gloria Warren-Slade, communications manager for the Come By Chance refinery, did not respond to a request for comment.

Irving Oil did not respond to requests for comment.

The refinery’s value has fluctuated widely over the last 12 years. It was sold for C$1.6 billion ($1.2 billion) in 2006 and re-sold for C$930 million three years later, but the two bought it in 2014 for just C$97 million due to a slump in world oil prices.

Having paid less than any other buyer of the plant, Amin and Shear wanted to use Come By Chance as a linchpin for later purchases of other fuel shipping infrastructure globally, or to sell quickly at a profit.

 

Come By Chance’s value for suitors is hampered by its isolated locale, reducing its access to cheap domestic crude that has boosted margins for Gulf Coast or Midwest refiners, and because it lacks the processing scale of larger refineries.

The refinery’s relative proximity to Europe and shorter shipping time to eastern ports in Latin America is an advantage, but it has still been hurt by slimmer margins than other North American refiners.

 

SOURCE:REUTERS

Canadian dollar hovers near three-week high as oil prices rise

TORONTO (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Wednesday while holding near its strongest level in nearly three weeks, as oil prices rose and investors braced for a potential interest rate hike next week from the Bank of Canada.At 3 p.m. EDT (1900 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at C$1.3142 to the greenback, or 76.09 U.S. cents.

The price of oil, one of Canada’s major exports, was driven higher by a threat to supply from an Iranian commander and a drop in U.S. crude inventories for a second week in a row.

U.S. crude oil futures CLc1 rose 0.3 percent to $74.33 a barrel.

 “Right now we have many problems on the oil supply side ... and we may see high prices for a few more months,” said Hendrix Vachon, senior economist at Desjardins.

The higher price of oil and an expectation in the market that the Bank of Canada will raise interest rates next week have boosted the loonie, Vachon said.

Money markets see about a 70 percent chance of a rate increase at the July 11 announcement.

Expectations have been raised by hawkish comments last week by Bank of Canada Governor Stephen Poloz and recent domestic data that showed business optimism and stronger-than-expected growth in Canada’s economy.

Independence Day celebrations in the United States discouraged traders on Wednesday from taking big positions in major currencies, not least until there is some clarity about where the escalating U.S.-China trade tensions are heading. Washington is due to impose tariffs on Chinese imports at the end of the week.

Also, reduced Canadian oil supplies after a production problem at the Syncrude oil sands facility in Alberta could hurt the country’s economic growth in the third quarter.

Canadian government bond prices were lower across the yield curve, with the two-year CA2YT=RR down 2.5 Canadian cents to yield 1.909 percent and the 10-year CA10YT=RR falling 17 Canadian cents to yield 2.158 percent.

On Tuesday, the 10-year yield touched its highest intraday level in more than two weeks, at 2.204 percent.

Canada’s employment report for June and trade data for May are due out on Friday.

 
Reporting by Fergal Smith; Editing by Frances Kerry and Leslie Adler
 
SOURCE: REUTERS

CAD rebounds from 1-year low; oil surge counters domestic data

(Recasts with effect of oil prices; adds comment; updates prices) * Canadian dollar at C$1.3276, or 75.32 U.S. cents * Loonie touches its weakest level in a year at C$1.3384 * Price of U.S. oil rises 4.6 percent * Bond prices higher across a steeper yield curve By Fergal Smith TORONTO, June 22 (Reuters) - The Canadian dollar gained against the greenback on Friday, recovering from an earlier one-year low, as a jump in oil prices offset domestic inflation and retail sales data that crimped expectations for a Bank of Canada interest rate hike next month. At 4 p.m. EDT (2000 GMT), the Canadian dollar was trading 0.3 percent higher, at C$1.3276 to the greenback, or 75.32 U.S. cents. After the data, the currency touched its weakest intraday level since June 12, 2017, at C$1.3384. "It has been quite a ride for the Canadian dollar," said Shaun Osborne, chief currency strategist at Scotiabank. "I think most of that is due to the fact that oil prices have ground higher after the OPEC agreement." The price of oil, one of Canada's major exports, soared after the Organization of the Petroleum Exporting Countries and other top crude producers agreed to just modest crude output increases. U.S. crude oil futures settled 4.6 percent higher at $68.58 a barrel. Canadian retail sales fell 1.2 percent in April, the largest drop in more than two years, and inflation remained at 2.2 percent. While the inflation rate was above the central bank's 2.0 percent target, markets had expected an uptick to 2.5 percent. Chances of a Bank of Canada interest rate hike at the July 11 announcement fell to less than 50 percent from 69 percent before the data, the overnight index swaps market indicated. The market may now be underestimating the likelihood of a hike because the data was impacted by poor weather and the Bank of Canada is forward looking, Osborne said. "Other indicators generally suggest the economy is doing OK and price pressures are likely to pick up, particularly looking at wages and the general tightness in the labor market," he said. For the week, the loonie fell 0.7 percent after being pressured by an uncertain outlook for trade. Still, speculators have cut bearish bets on the Canadian dollar for a second straight week, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed. As of June 19, net short positions dipped to 14,014 contracts from 14,988 a week earlier. Canadian government bond prices were higher across a steeper yield curve, with the two-year up 5 Canadian cents to yield 1.799 percent. The 2-year yield fell 3.2 basis points further below its U.S. equivalent to a spread of -74.6 basis points, its widest gap since March 2007. (Reporting by Fergal Smith Editing by Phil Berlowitz and Leslie Adler)

SOURCE: REUTERS

Canada's Baytex to buy oil producer Raging River for C$2.8 billion

(Reuters) - Baytex Energy Corp will buy rival Raging River Exploration Inc for C$2.8 billion ($2.13 billion), the Canadian oil and gas producer said on Monday, becoming the latest company to bet big on Canada’s vast shale reserves.

Oil producers have made a beeline for the Duvernay and Montney formations, known for their light oil which is easier to refine and cheaper to produce than northern Alberta’s oil sands crude.

Seven Generations and Encana Corp are already among the leading Canadian producers operating in the two regions, while Chevron Corp announced its first Canadian shale development in the Duvernay in November.

The oil sands boom dates back two decades, when improved technology, rising crude prices and fears of global oil shortages sparked a rush to develop the world’s third-largest reserves.

However, in the last five years, much of that investment has migrated south as U.S. shale firms pioneered new drilling techniques and flooded global oil markets with cheaper-to-produce crude.

Earlier this year, the Canadian heavy oil discount widened significantly against the West Texas Intermediate (WTI) as growing oil stockpiles couldn’t be moved out of the resource-rich province of Alberta due to transport bottlenecks.

After the announcement of Monday’s deal, shares of both companies fell and analysts pointed to investor skepticism about the all-stock deal and a low premium for Raging River shareholders.

The Baytex deal, the second all-stock acquisition in the Canadian oil industry this year after Vermilion Energy’s buyout of Spartan Energy, sends investors the message that capital is not available for large-scale cash transactions, said Lyndon Dunkley, an analyst at Beacon Securities.

Baytex’s offer — 1.36 Baytex shares for each Raging River share — represents a 10 percent premium to Raging River’s Friday closing price, according to Reuters calculations.

The premium was much lower than investors’ expectations, Dunkley said. “It’s just not what we believe the market was expecting as an outcome for the strategic repositioning process (Raging River) announced in March,” Dunkley added.

Raging River has since March explored strategic options for its business, including selling certain assets.

The combination of Baytex and Raging River will be led by Baytex Chief Executive Officer Edward LaFehr once the deal closes in August, Baytex said.

 

The companies expect to produce a combined 100,000 to 105,000 barrels of oil equivalent per day in 2019 and expect capital expenditure of between C$750 million and C$850 million.

Reporting by Parikshit Mishra and John Benny in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta

SOURCE: REUTERS

TSX futures lower as oil prices slip

June 8 (Reuters) - Futures for Canada’s main stock index fell on Friday as oil prices dropped on waning Chinese demand and soaring U.S. production, offsetting Venezuelan and Iranian supply worries and OPEC-led production cuts.

June futures on the S&P/TSX index were down 0.13 percent at 7:15 a.m. ET.

Housing starts data is due at 08:15 a.m. ET.

The Toronto Stock Exchange’s S&P/TSX rose 8.85 points, or 0.05 percent, to 16,192.78 points, on Thursday.

Dow Jones Industrial Average e-mini futures were down 0.54 percent at 7:15 a.m. ET, while S&P 500 e-mini futures were down 0.49 percent and Nasdaq 100 e-mini futures were down 0.98 percent.

TOP STORIES

Airbus SE is set to close a deal to take a controlling stake in Bombardier Inc’s CSeries jetliner program, effective July 1, the companies said, in a move expected to kickstart the European planemaker’s ability to put its marketing and cost-cutting muscle into the Canadian plane program.

Canada’s Senate on Thursday voted to legalize recreational marijuana, clearing a major hurdle that puts the country on track to become the first Group of Seven nation to permit national use of the drug.

Oil producer BP Plc complained to Canada’s National Energy Board (NEB) regulator about Enbridge Inc’s implementation and then abrupt reversal of new rules for shipping crude on its Mainline pipeline system, NEB documents showed on Thursday.

ANALYST RESEARCH HIGHLIGHTS

Bombardier: Desjardins raises price target to C$6 from C$4.75

Canadian Western Bank: Barclays raises target price to C$38 from C$37

COMMODITIES AT 7:15 a.m. ET

Gold futures: $1302.9; fell 0.01 percent

US crude: $65.59; fell 0.55 percent

Brent crude: $76.61; fell 0.92 percent

LME 3-month copper: $7266; fell 0.9 percent

U.S. ECONOMIC DATA DUE ON FRIDAY

1000 Wholesale Inventories (y), R mm for April: Expected 0.0 pct; Prior 0.0 pct

1000 Wholesale sales mm for April: Expected 0.3 pct; Prior 0.3 pct

1030 ECRI Weekly Index: Prior 148.7

1030 ECRI weekly annualized: Prior 3.0 pct

 

Canadian markets directory ($1= C$1.30) (Reporting by Debanjan Bose in Bengaluru; Editing by Shailesh Kuber) 

SOURCE: REUTERS

Canadian Oil Has Record Day After Enbridge Scraps New Rules

By   and 
June 4, 2018, 1:05 PM CST Updated on June 5, 2018, 12:00 AM CST
  •  
    Enbridge drops plan to limit, verify shipments on mainline
  •  
    Producers have strong say in market participation: Auspice

Canadian crude surged by the most ever after Enbridge Inc. said it won’t implement a new procedure to stop shippers from claiming more space than they can use on a key pipeline linking Alberta’s oil sands with U.S. refineries.

Western Canadian Select jumped as much as $12.20 a barrel to $13.80 below the U.S. benchmark Monday, the narrowest spread since May 16. Canadian crudes have weakened to historically low levels in recent weeks as growing production overwhelms available pipeline capacity to transport Alberta’s supplies south of the border.

 
 

Canada’s biggest crude-export pipeline operator told shippers Monday that it won’t proceed with recently announced rules setting an allowance for the amount of crude companies could nominate for transport on its mainline. The move came after discussions with shippers, Enbridge said. 

"Producers have a strong say in how the market is going to be participated in,” Tim Pickering, chief investment officer at Auspice Capital Advisors Ltd., said in a phone interview from Calgary. The Enbridge turnabout shows that "the pipelines can’t just do changes that aren’t fair and are not conducive” to its customers.

The National Energy Board, Canada’s pipeline regulator, didn’t intervene on the Enbridge matter and received no complaints, spokeswoman Chantal Macleod said in an email.

In a notice last month, the company informed shippers that their volumes would be based on a 12-month rolling average, plus 15 percent for heavy crude and 40 percent for light crude and that the new rules applied to July shipments onward. Shippers who wished to send more than their allotted amount would have had to show physical proof of the volumes.

"Enbridge’s mainline system continues to be oversubscribed," Enbridge said in a statement. "We have been engaged with our customers to improve the nomination process and will continue to work directly with them on this issue."

— With assistance by Catherine Ngai

Exclusive: ConocoPhillips prepares to sell stake in Canada's Cenovus - sources

(Reuters) - ConocoPhillips (COP.N) is preparing to offload its stake in Cenovus Energy Inc (CVE.TO), which it acquired as part of an asset sale to the Canadian oil and gas producer last year, people familiar with the matter told Reuters.

The U.S. energy company has held discussions with investment banks about appointing advisers to the sale and could offer the shares to institutional investors as early as this month, said the people. They cautioned that the precise timing would depend on market conditions and could change.

If ConocoPhillips does not complete the sale in June or early July, it would then likely wait until September when institutional investors will have returned from their summer vacations, they added.

The ConocoPhillips stake in Cenovus is worth C$2.6 billion ($2 billion) based on its current share price but it would likely be sold at a small discount, the sources said. It would still be one of the biggest Canadian equity share sales this year.

ConocoPhillips has been actively selling assets and cutting costs in the past two years in order to cull debt and boost its dividend. It sold $17 billion in assets in 2017.

When Cenovus acquired oil sands and natural gas assets from ConocoPhillips for C$17 billion last year, it took 208 million shares of Cenovus, as well as C$14.1 billion of cash.

The deal made ConocoPhillips the biggest investor in the Calgary, Alberta-based company, although the U.S. oil giant has said it would not be a long-term holder of Cenovus equity.

ConocoPhillips and Cenovus declined to comment. The sources declined to be identified as the information is not public.

Shares of Cenovus extended their losses, to fall as much as 8.8 percent after the Reuters report. They closed down 5.7 percent at C$12.67 on Monday. The broader Canadian energy index was down 2.1 percent.

Cenovus shares have had a wild ride since the acquisition, declining as investors punished the stock over the deal, which was regarded as significantly stretching the Canadian company’s finances.

COP.NNEW YORK STOCK EXCHANGE
-0.39(-0.57%)
COP.N
  • COP.N
  • CVE.TO
  • RDSa.L
  • CNQ.TO

While still down 27 percent since the deal was announced, they have been bouncing back of late on the back of an oil price CLc1 rebound. The stock is up 24 percent in the last three months.

The move follows a similar overnight stock sale by Royal Dutch Shell Plc (RDSa.L), which last month sold its entire stake in Canadian Natural Resources Ltd (CNQ.TO) for $3.3 billion.

At the time of the 2017 deal, ConocoPhillips valued its Cenovus stake at $9.41 per share based on Cenovus’ New York-listed stock. Since the May 17, 2017, transaction close, the share price has see-sawed above and below that value, although it has consistently traded higher since April 25.

While overnight trades tend to be discounted from current share price levels, in order to incentivize investors, Conoco would need Cenovus’ value to be at a point where it is making money even after the discount to make the sale worthwhile. If the same 2.9 percent reduction was applied from Shell’s overnight sale of Canadian Natural Resources shares, the Cenovus stock would need to be above $9.68 to generate a profit.

 

Conoco has also moved aggressively to get cash in other areas, including by seizing international assets controlled by Venezuelan state-controlled oil producer PDVSA.

Much of the fresh cash the company has raked in has gone back to shareholders, with the company’s dividend up about 8 percent in the first quarter to 28 cents and a plan to buy back $2 billion in shares this year.

Reporting by John Tilak in Toronto, David French in New York and Ernest Scheyder in Houston; additional reporting by Rod Nickel in Winnipeg; editing by Denny Thomas, Chizu Nomiyama and Jonathan Oatis

Oil falls 2 percent, U.S. crude hits lowest since early April

NEW YORK (Reuters) - Oil prices fell about 2 percent on Monday, with U.S. crude touching its lowest level in nearly two months, breaking below technical support levels as investors kept selling amid growing U.S. production, possible global supply growth and nagging trade tensions.

Brent crude futures LCOc1 lost $1.50 a barrel, or 2 percent, to settle at $75.29 a barrel. U.S. crude CLc1 ended $1.06, or 1.6 percent, lower at $64.75 a barrel, after earlier touching $64.57, its lowest since April 10.

“We are breaking key levels of support now,” said Phillip Streible, analyst at RJO Futures in Chicago. “Once we started taking out $65.50 or so, it really started to accelerate. People are not really believing that the rally will continue,” he said.

Both benchmarks were pressured by the expectation that the Organization of the Petroleum Exporting Countries (OPEC), which has led output cuts of about 1.8 million barrels per day (bpd) since January 2017, would soon boost output.

OPEC ministers from Saudi Arabia, the United Arab Emirates, Kuwait and Algeria, along with their counterpart from non-OPEC Oman, met unofficially in Kuwait on Saturday.

“It appears that some sellers may have delayed action ahead of the weekend and re-entered the short side after a meeting between the Saudis and the other Arab producers failed to offer additional insight,” Jim Ritterbusch, president of Ritterbusch and Associates said in a note.

OPEC meets formally on June 22. It is expected to agree to raise output to cool the market amid worries over Iranian and Venezuelan supply and after Washington raised concerns that the oil rally was going too far, OPEC sources familiar with the discussions told Reuters last month.

U.S. crude production climbed in March to 10.47 million bpd, a monthly record, the Energy Information Administration said last week.

“There’s been lot of talk about U.S. production continuing to rise. And it feels like once we hit Memorial Day, we hit a seasonal peak” for prices, which “ran up until the start of the summer season, and then hit a summer doldrums,” said RJO Futures’ Streible.

Last week, the week after Memorial Day, the U.S. crude contract lost about 3 percent after a decline of nearly 5 percent the previous week.

Data from market intelligence firm Genscape showed that between May 29 and June 1, crude inventories at the Cushing, Oklahoma, storage hub and delivery point for U.S. crude futures rose 210,046 barrels, a potentially bearish signal, traders who saw the data said.

“The trade tariffs between EU, Mexico, and Canada and the friction with China are also weighing on crude oil,” said Bill Baruch, president of Blue Line Futures in Chicago.

Mexico will join the European Union in seeking World Trade Organization involvement over U.S. tariffs on steel and aluminum, its economy ministry said.

Additional reporting by Christopher Johnson in London and Naveen Thukral in Singapore; Editing by David Gregorio and Marguerita Choy

CAD rises ahead of BoC interest rate decision as oil firms

* Canadian dollar at C$1.2990, or 76.98 U.S. cents * U.S. oil prices rise 0.4 percent * Bond prices lower across the yield curve TORONTO, May 30 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday, boosted ahead of a Bank of Canada interest rate decision by higher oil prices and broader declines for the greenback. The price of oil, one of Canada's major exports, was supported by tight supplies despite expectations OPEC and its allies will pump more in the second half of 2018 and helped by forecasts U.S. inventories fell. U.S. crude prices were up 0.40 percent at $67.00 a barrel. The U.S. dollar fell after reports that Italy's biggest party would make a renewed attempt to form a coalition government and end months of political turmoil helped the euro recover some recent lost ground. The Bank of Canada probably will hold interest rates steady as indebted consumers and uncertain trade policy necessitate caution, a Reuters poll predicted. The central bank's interest rate announcement is due at 10 a.m. EDT (1400 GMT). At 9:08 a.m. EDT (1308 GMT), the Canadian dollar was trading 0.2 percent higher at C$1.2990 to the greenback, or 76.98 U.S. cents. The currency traded in a range of C$1.2950 to C$1.3040. On Tuesday it touched its weakest in more than two months at C$1.3047. Canada's current account deficit widened to C$19.50 billion in the first quarter, the third largest ever, thanks to a growing international trade gap in goods, Statistics Canada said. In separate data, Canadian producer prices rose by 0.5 percent in April from March, the fourth consecutive increase, on higher prices for energy and petroleum products. Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year fell 7 Canadian cents to yield 1.883 percent and the 10-year declined 50 Canadian cents to yield 2.247 percent. On Tuesday, the 10-year yield touched its lowest since April 11 at 2.165 percent. (Reporting by Fergal Smith Editing by Bill Trott)

SOURCE: REUTERS

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