Canadian energy stocks surged after Petroliam Nasional Bhd agreed to buy Calgary-based oil and natural gas producer Progress Energy Resources Corp. (PRQ) for C$4.8 billion ($4.65 billion) in cash.
State-owned Petronas offered to pay Progress shareholders C$20.45 a share, 77 percent more than the company’s closing share price yesterday in Toronto in a deal valued at about C$5.5 billion, including debentures.
“It’s really ignited interest in the natural-gas space,” Eric Nuttall, who manages C$90 million at Toronto-based Sprott Inc. (SII)’s Energy Fund, said today in a telephone interview. “It’s a natural tendency post-large announcement to play the ‘who’s next’ game.”
Advantage Oil and Gas Ltd. rose 5.3 percent to close at C$2.96 in Toronto, Celtic Exploration Ltd. (CLT) rose 7.2 percent to C$13.72 while ARC Resources Ltd. (ARX) rose 8.7 percent to C$22.19. ARC was raised to buy from hold by Roger Serin, an analyst at TD Newcrest Inc.
Birchcliff Energy Ltd. (BIR) closed 2.1 percent lower at C$5.19 after rising earlier in the day.
“Natural gas has been under a great deal of pressure as the gas price has been hitting new lows,” Rick Hutcheon, president of Toronto-based RKH Financial, said in a phone interview. “That has spooked a lot of investors and it’s forced the valuations down to levels that a number of offshore foreign energy companies are going to look at and think, ‘Boy, these things are pretty cheap and maybe it’s not a bad idea to pick up some of these things now.’”
Natural gas prices dropped in New York after the U.S. Energy Department said U.S. stockpiles increased. The commodity fell 2.7 percent to $2.722 per million British thermal units on the New York Mercantile Exchange. The futures are down 8.9 percent this year.
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