Bloomberg News

Canadian Stocks Advance as Energy Shares Rally After Exxon Deal

October 17, 2012

Canadian stocks rose to their highest level in a month as energy shares rallied after Exxon Mobil Corp. agreed to acquire oil and gas producer Celtic Exploration Ltd. and U.S. housing starts jumped to a four-year high.

Celtic Exploration jumped 45 percent after agreeing to a C$2.86 billion ($2.91 billion) sale to Exxon Mobil. Encana Corp. (ECA) increased 2.4 percent. Ivanplats Ltd. rose 6.3 percent in its first day of preliminary trading after raising C$300.8 million in an initial public offering yesterday.

The Standard & Poor’s/TSX Composite Index (SPTSX) added 53.54 points, or 0.4 percent, to 12,461.24 in Toronto, its highest close since Sept. 14. Energy companies contributed the most to gains in the benchmark equity gauge as six of 10 industries advanced on trading 16 percent higher than the 30-day average.

“There’s a positive tone in oils because of the surprise takeover of Celtic Exploration, (CLT)” said Bob Decker, a money manager at Aurion Capital in Toronto. His firm manages about C$5.5 billion.

“It’s put a bid on most of the E&P companies with similar assets and put a general positive tone on the sector,” Decker said, referring to energy exploration and production companies that also have interests in the Montney and Duvernay shale fields in which Celtic operates.

Celtic surged 45 percent to C$26.29. Shareholders will receive C$24.50 a share and half a share of a new company that will hold assets not included in the agreement, Calgary-based Celtic said in a statement. The deal will give Exxon Mobil, the world’s largest energy company, significant new production in the Alberta shale fields, where oil and gas are extracted by horizontal drilling and hydraulic fracturing.

Shale Plays

Among Montney and Duvernay shale companies, Cequence Energy Ltd. (CQE) added 12 percent to C$1.98, NuVista Energy Ltd. (NVA) gained 13 percent to C$5.14, Advantage Oil & Gas Ltd. (AAV) rose 1.6 percent to C$3.88 and Trilogy Energy Corp. (TET) advanced 6.1 percent to C$27.69.

New-home construction in the U.S. surged to the highest level in four years, raising hopes that the economy of the world’s biggest oil-consuming country is improving. Crude for November delivery rose three cents to settle at $92.12 a barrel in New York, reversing earlier losses of as much as 0.6 percent after the U.S. Energy Department said inventories rose more than analysts expected last week.

Encana added 2.4 percent to C$22.78 and Suncor Energy Inc. (SU) increased 1.3 percent to C$33.60.

Harry Winston

Harry Winston Diamond Corp. (HW) rose 3.7 percent to C$13.83, paring earlier gains of as much as 10 percent. The mining company, which owns 40 percent of the Diavik diamond mine in the Northwest Territories, is in talks with major European luxury goods companies such as PPR SA and LVMH Moet Hennessy Louis Vuitton SA to sell its jewelry and watches business, according to Challenges, a weekly French business magazine.

Ivanplats (IVP), a mining company founded by billionaire Robert Friedland, rose 6.3 percent to C$5.05, trading on an “if and when issued basis” ahead of its official listing on the TSX. The company yesterday sold 63.3 million shares at C$4.75.

Kirkland Lake Gold Inc. (KGI) slumped 4.9 percent to C$9.99 after announcing it will sell C$60 million in convertible notes. The company plans to use the cash to pay for production expansions at its mine in Kirkland Lake, Ontario.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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