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Fox-Davies Capital Friday Energy and Mining News Wrap

Oil & Gas Corporate News

Libya's investment fund may be interested in buying a 20% stake in Repsol YPF SA from Sacyr, Gaceta de los Negocios reported in its Friday Internet edition.
 
Comments: If confirmed this would highlight a growing interest from Libya in International oil and gas asset. A Libyan fund took recently a major stake in Circle Oil.
 
Media reported yesterday that Russian President Dmitry Medvedev has ordered Gazprom CEO Alexei Miller to collect the Ukrainian gas debt, either voluntarily or compulsory. Miller told the president that the Ukrainian gas debt to Russia stood at $2.4 billion.
 
Comments: this supports our view that Russia needs cash and will get it where it can: in Eastern Europe and Ukraine. This supports our Europe gas convergence scenario. We are bullish about gas prices in Ukraine. Stocks to play this theme include JKX, Cadogan and Regal.
 
Gas matters reports that the Alberta government has amended plans to increase oil and gas royalties in a bid to protect the Canadian province's energy industry. Premier Ed Stelmach had planned to increase royalties by around 20% from January 2009.
 
Comments: fiscal regimes deteriorated as oil prices increased. This prevented the sector to capture the entire upside associated with higher oil prices. As oil prices drop, we anticipate a general improvement of fiscal regimes in oil and gas around the world.
 
Canadian explorer Oilexco said it has abandoned plans to raise as much as US$150 million selling convertible debentures and to issue 20 million shares because its board considered the move too dilutive.
 
Comments: this supports our view that in the current environment of limited liquidity, the best option for companies to protect share holder value is to postpone projects (if possible) or farm down.
 
Mining Corporate News

Target Resources  (TGT) announced production of terrace gravel started in October, with output averaging 3.5 cpht.  Output to date has yielded 847 carats, with a Kimberley Process valuation average of $682 per carat on exported parcels. New 200 tph scrubber has landed in Freetown and is planned to be installed and commissioned by the end of November at which time the mine construction phase will be complete.
 
Commodities
The International Copper Study Group released its November statistical bulletin detailing ytd data through August for world copper supply and demand showing a production surplus of about 75Kt. This compares to a surplus of 22Kt for the same period in 2007. World refined copper usage in the first eight months of 2008 increased by 2.5% yoy. Of the four leading copper markets, only China experienced strong growth (13%), with usage remaining depressed in the EU-15 countries, Japan, and the United States, where it decreased by 5%, 1%, and 9%, respectively. World mine production in the period fell around 100Kt, or 1% yoy, affected mainly by lower output in Argentina (-23%), Chile (-2 %), Indonesia (-35%) and Mexico (-36). World refined production between January and August increased by 2.9% yoy, although output was down in several countries including India, Japan, Poland, South Korea and the United States as a result of operational problems, labour issues, maintenance shutdowns, lower ore grades and adverse weather conditions.