Wednesday, October 17, 2007

More Good Marketplace News in Alberta's Energy Sector "...regardless of what happens with the royalty review."

Oops! More good news from the marketplace on oil sands investments. How could this be happening when there is so many who are warning that the Alberta sky is falling on the energy sector?

Synenco Energy (SYN/TSX) is reported to have had a 13% one day rise in share prices now at $11.37. One analyst tagging it as a player to “outperform” and has a target share price of $15 on this company. Synenco Energy holds a 60% interest in the oil sands play known as the Northern Lights Partnership and they will be the operator of the Northern Lights project. They also hold a 100% interest in another adjacent oil sand project. They are also active in developing an upgrader just outside of Edmonton. These guys are not bit players.

The really interesting info on the Northern Lights Partnership is the other 40% partner. That is the SinoCanada Petroleum Corporation, an indirect wholly owned subsidiary of Sinopec – the large China based oil company. Again we see more confidence in the Alberta energy sector from non-North American sources. Why is that?

Mr. Bouchard, an analyst with Raymond James is quoted in the Financial Post as saying “Based on our analysis, current trading levels simply don’t reflect the value of the assets – regardless of what happens with the royalty review. (emphasis added.)

Some business writers (including this National Post piece) are still of the opinion that the “Our Fair Share” Royalty Review has caused the Alberta energy sector to “have taken a hit.” I presume they are talking share prices mostly. There has been some share volatility, off record or near record highs for most companies since the release of the Royalty Review on September 18. That volatility has been in a relatively narrow range that is more likely tied to oil prices being up and down on a daily basis...and setting new record highs this week.

For some more perspective, I see in the Globe and Mail Report on Business today noted that 4 out of 5 of the TSX Index Lifters are energy companies – all of whom are engaged extensively in Alberta oil sands activity. Curious wouldn’t you say? The sky is not falling. It looks to me like it is raining money.