Energy Summary for Jan. 31, 2018

by Stockwatch Business Reporter

West Texas Intermediate crude for March delivery gained 23 cents to $64.73 on the New York Merc, while Brent for March gained three cents to $69.05 (all figures in this para U.S.). Western Canadian Select traded at a discount of $27.70 to WTI ($37.03), unchanged. Natural gas for March lost 20 cents to $3.00. The TSX energy index lost 1.25 points to 185.12.

Colombian oil producer Gran Tierra Energy Inc. (GTE) fell eight cents to $3.40 on 1.12 million shares, after announcing that it produced 31,426 barrels of oil equivalent a day in 2017. This fell short of the company's production target of 33,300 barrels a day. As well, capital expenditures in 2017 totalled $238-million (U.S.), exceeding the $225-million (U.S.) that Gran Tierra had budgeted.

In the company's news release, president and chief executive officer Gary Guidry focused instead on Gran Tierra's year-end reserves update. The company increased its proved plus probable (2P) reserves estimate by 18 per cent to 137 million barrels of oil equivalent. Much of the increase came from the Acordionero field in Colombia's Middle Magdalena Valley basin. This field is "stellar," said Mr. Guidry. When Gran Tierra acquired Acordionero in August, 2016, the field was producing 5,400 barrels a day. Now, it is producing nearly 15,820 barrels a day. Mr. Guidry counts Acordionero as one of the company's "two most exciting accomplishments" in 2017. The other supposedly exciting accomplishment was the A-limestone play in Colombia's Putumayo basin, but investors and analysts do not seem to share Mr. Guidry's enthusiasm about this play. Scotia Capital analyst Gavin Wylie had expected the A-limestone to contribute more toward boosting Gran Tierra's year-end reserves, but he was disappointed. Gran Tierra spent $74-million (U.S.) on the A-limestone in 2017 but does not have much to show for it. It does estimate that more than half of its prospective resources are in the A-limestone, but resources, as a category of estimates, have less certainty than reserves. Nevertheless, Scotia's Mr. Wylie remains hopeful that further appraisal drilling on the A-limestone in 2018 will lead to significant reserve additions. Ever optimistic about Gran Tierra, he maintains his rating of "sector outperform" and his price target of $5.75.

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