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

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