Canada's oil sand stocks mixed on Provincial outlook
By Eileen Bircher
(SP) Toronto - Canada's oil sands stocks were mixed last week thanks to concern over Provincial lawmakers' outlook towards further development that gave way to worries in Alberta that lawmakers could want a bigger stake in the revenue.
Wade Locke, a Memorial University economist, has accused Newfoundland and Labrador's premier Danny Williams of holding the offshore oil developers for ransom, saying "Williams needs to act to get the offshore oil industry back on track."
While the economist is known to be a critic of government interference, Friday energy traders were taking his comments more seriously in wondering whether Williams plans were being considered by Alberta lawmakers as well.
The Hebron mega-project came to a screeching stand still last year after Williams insisted that the project's partners give the provincial government an ownership stake of almost five per cent and so far, the development hasn't budged one way or the other.
Investors in Canadian oil sands companies grew concerned that lawmakers in Alberta could do the same thing and demand a bigger stake in what's turned into one of the largest oil fields in the world. Especially after the minimum wage in Alberta was raised $1. Already high wages and booming demand has created enough scarcities in and around Calgary that investors are a bit edgy and are showing quick buy and sell turnarounds, which was evident by Friday's close of Patch International (OTCB: PTCH) which finished the week's trading session down 20 per cent at $2.00 from Monday's $2.40 price.
Patch, which may be the largest junior play in the oil sands arena, has yet to notch up a processing plant, though it is widely expected to announce application for a SAGD plant shortly. Skittish institutional investors were selling down the Calgary-based company's shares this week, though it appears to have settled down at the close on Friday. Patch management is expected to release results on its winter drilling programme as well. Concern over delays coupled with skittish provincial lawmakers may have added to the stock's decline.
On the opposite spectrum were shares of Western Oil Sands (TSX: WTO), which closed up $2.41, or seven per cent, at $37.91 Friday after reports the company may have found a buyer.
Back in February, Western said it was reviewing its strategic alternatives, including a possible merger or sale of the company.
Western holds a 20 per cent ownership interest in the Athabasca Oil Sands Project. Shell Canada Ltd. and Chevron Canada Ltd. hold the remaining 60 per cent and 20 per cent, respectively.