RIG April 2013

2 RIG MAGAZINE

News04 OPEC market highlights08 Alberta Oil Sands 10 Gold Futures16 Natural Gas18 Natural Gas prices24 Keystone pipeline

Investment 6 month gold futures 11 Barrick 12 Mining stocks 14-15 Renewables 20 Major oil stocks 26-29

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Contents

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3RIG MAGAZINE

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4 OIL

OPEC Announcement

OPEC Market Highlights

Listen to the March 2013 OPEC announcement below.

The OPEC Reference Basket retreated by more than 5% in March to average $106.44/b. All Basket component values contributed to the decline, particularly Dated Brent-related crudes. On the ICE exchange, the Brent front-month decreased by almost 5.6% or $6.53 to average $109.54/b. On the Nymex, the WTI front-month dropped by about 2.5% or $2.36/b, to aver-age $92.56/b. Reduced refinery demand due to substantial maintenance worldwide was a key in pushing prices lower. This, coupled with renewed Euro-zone fears, was sufficient to shave off more than 5% of ICE Brents value. WTI managed to cap losses partly due to some indica-tions that the US is on a faster path to economic recovery. Additionally, with more routes availa-ble to carry crude south to the US Gulf coast, the build-up of crude in the US midcontinent has begun to ease, reducing one of the downward factors weighing on WTI prices.

World economic growth is forecast is forecast at 3.2% for 2013 and estimated at 3.0% for 2012, unchanged from the previous month. The recovery in the housing and labour markets has triggered a revision in the forecast for US GDP growth to 1.8% from 1.7%. While Japans fore-cast remains at 0.8%, the effect of the recently announced monetary stimulus will require close monitoring. The contraction in Euro-zone growth has been revised to minus 0.5% from minus 0.2%. China continues to benefit from the rebound in global trade and is forecast to grow by 8.1% in 2013. Indias forecast remains un-changed at 6.0%.

OPEC- March Oil Market Report

OPEC(Organization of petroleum exporting countries) has the ability to set the price of oil based on production. If production is up or down they will set the price accordingly to the supply of their inventories. OPEC meets on occasion and has an announcement that is made public on whether they will increase or decrease their reserves. News from this announcement has a great effect on the price of oil as the country members that make up OPEC contribute to a significant size of the worlds oil supply. 11 members currently make up OPEC- Algeria, Indonesia, Iran, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, Venezuela and the United Arab Emirates. OPEC announcements and highlights are shown on

5CONTEMPORARY MAGAZINE MONTH 20XX

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5OIL

World oil demand growth in 2012 remained broadly unchanged from the previous report at 0.8 mb/d. This was despite a downward revision in the fourth quarter due to the release of actual data. In 2013, world oil demand growth has been revised down slightly by 40 tb/d to stand at 0.8 mb/d. The bulk of the growth is expected to come from China, where demand is seen in-creasing by 0.4 mb/d. Other non-OECD coun-tries are expected to add another 0.7 mb/d, while OECD demand is forecast to see a slightly lower contraction of 0.3 mb/d compared to the previ-ous year.

Non-OPEC oil supply is forecast to grow by 1.0 mb/d in 2013, a downward revision of 40 tb/d from the previous month. Historical revisions and updated production data were behind the adjustment. Anticipated growth continues to be driven by the US, Canada, Brazil, Russia, Malay-sia, Colombia, South Sudan, and China, while Norway, Azerbaijan, Indonesia, and Syria will see declines. OPEC natural gas liquids (NGLs) and non-conventional oils are forecast to in-crease by 0.2 mb/d in 2013 to average 6.0 mb/d. According to preliminary data from secondary sources, total OPEC crude production in March averaged 30.19 mb/d, a decrease of 100 tb/d from the previous month.

Product markets turned bearish in March, los-ing the ground gained in the previous months. Light and middle distillate cracks declined, under pressure from weak global demand and increasing supplies, despite the on-going main-tenance season. The downside to margins should be limited in the coming months as preparations begin for the start of the summer season.

OPEC spot fixtures were higher in March com-pared to the previous month, averaging 12.81 mb/d. OPEC sailings also saw a marginal in-crease to average 23.82 mb/d. Arrivals on most reported routes increased, except in West Asia which declined 3%. Dirty tankers spot freight-rates for different segments edged higher on the back of increased activity and tighter tonnage availability for certain dates. Clean spot freight rates were mixed. East of Suez saw a notable increase over the previous month, while West of Suez activities declined along with freight rates.

OECD commercial oil stocks fell seasonally by around 34 mb in February, representing a slight deficit of 8.1 mb with the five-year average. Crude inventories stood 23.6 mb higher than the fiveyear average, while products indicated a defi-cit of almost 25.0 mb. In terms of forward cover, OECD commercial stocks stood at 59.2 days, nearly two days more than the five-year average. In March, US commercial stocks fell 9.1 mb, but continued to show a surplus of 33.0 mb with the seasonal average. The drop was attributed to products as crude showed an increase.

Demand for OPEC crude in 2012 experienced an upward revision to stand at 30.2 mb/d, although still showing a decline of 0.1 mb/d compared to the previous year. Required OPEC crude for 2013 remains unchanged at 29.7 mb/d, representing a decline of 0.4 mb/d from the previous year.

6 OIL

Oil futures market

The perceptions of hedge funds and other large speculators on the direction of crude oil prices were mixed in March, as they raised their bets on higher Nymex crude oil prices and reduced their bullish positions on the ICE Brent market. US Commodity Futures Trading Commission (CFTC) data showed that Nymex WTI net long positions were 199,129 contracts at the end of March, higher by 23,918 lots compared to the end of the previous month. On the other hand, the money manager groups ICE Brent net long positions stood at 130,473 lots compared to 158,816 contracts at the end of February, rep-resenting a 17% reduction. Furthermore, the combined open interest volume (OIV) for the two major contracts, although they remained high, decreased by 45,800 contracts by the end of March to 4.2 million contracts. The daily average traded volume during March for WTI Nymex contracts decreased by 81,652 lots, or 13%, to av-erage 525,699 contracts or more than 525 mb/d. For ICE Brent, the volume increased by 77,348 lots, or 13%, to 687,976 contracts, significantly surpassing WTI volume by more than 162,277 lots.

Crude oil futures prices declined in the month of March, with prices for both Brent and WTI falling well below last months highs. Reduced refinery demand due to substantial maintenance worldwide was a key in pushing prices lower. In total, some 6.9 mb/d of refining capacity was offline in March, the highest figure expected for the year and some 1.2 mb/d more than last year. This, coupled with renewed fears over the Euro-zone and higher North Sea pro-duction, was sufficient to shave off more than 5% of ICE Brents value from its February aver-age. WTI did manage to cap losses partly due to increasing signs that the worlds largest oil consumer is likely on a faster path to economic recovery. The US Federal Reserves pledge to continue its fiscal stimulus measures also helped to support prices. Ac-cording to the Feds latest round of industrial production figures, industrial output increased by 0.7% m-o-m in the country and 2.5% y-o-y. The pressure on WTI also eased as the build-up of crude in the US mid-continent has halted as more routes carrying crude south to the US Gulf coast become available. On the Nymex, the WTI front-month declined by about 2.5%, or $2.36, to average $92.56/b in March. Compared to the 1Q12, the WTI value decreased by $8.56. On the ICE exchange, the Brent front-month decreased by almost 5.6%, or $6.53, to average $109.54/b. For 1Q 2013, ICE Brent also registered a lower value compared to the same period last year, dropping by $5.70, or 4.8%, to $112.65/b from $118.35/b. On 9 April, ICE Brent stood at$106.23/b and Nymex WTI at $94.20/b.

OPEC- March Oil Market Report


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7OIL

The light-sweet/heavy-sour crude spreadIn Europe, sweet/sour differentials narrowed as demand for medium-sour Urals received a boost from arbitrage with several cargoes seen leaving for both Asia and the USGC over March. The drop in the light/heavy product spread, as mid-dle distillate cracks decreased along with gaso-line, also helped in narrowing the spreads. Meanwhile, the light sweet market weakened as the current peak maintenance season hit Euro-pean crude demand. North Sea crude was also affected by the anticipation of lower arbitrage to South Korea. The Urals differentials moved from over $1.80/b discount to Dated Brent in Febru-ary, to around $1.35/b in March, on a month-to-month average basis. In Asia, the fall in both gasoil and gasoline cracks, amid strengthening fuel oil cracks, have contributed greatly to the sharp narrowing of the light/heavy spread. The weak Asian market for naphtha further contrib-uted to the sharp drop in the Tapis/Dubai spread. Tapis monthly average premium to Dubai in March weakened to $9.35/b, compared to a premium of about $10.70/b in February, a

The US sweet/sour spread was quite volatile as new pipelines brought in both medium-sour WTS as well as some WTI, while rail cargoes of Bakken crude continued to stockpile in St. James, the home for many USGC crudes. The market for both Mars and Light Louisiana Sweet (LLS) was sustained by higher prices of compet-ing Mexican and Venezuelan crude. Meanwhile, spot prices for crudes on the USGC remain high compared to imported crudes with LLS last seen trading at a premium of almost $4/b to Dated Brent. The differential for LLS vs. Mars averaged $4.45/b in March, down from the previous months premium of $5.05/b, 60 lower.

Above- 6 month crude oil WTI line chart. As you can see from above the price collapse caused by lower expected economic growth from China. That did not keep oil down for very long as it bounced back due from a bounceback in the economy and higher projected corporate earnings. Oil now may enter a downward cycle as news of over production has recently surfaced from last Wednesdays oil report.

Information reported: April. 30/2013

8 OIL

Albertas bold plan to cut emissions

The Alberta government has quietly presented a proposal to sharply increase levies on carbon production and force large oil-industry producers to slash greenhouse gas emissions by as much as 40 per cent on each barrel of production, a long-term plan that has surprised Ottawa and industry executives with its ambition.Alberta Environment Minister Diana Mc-Queen stunned a recent meeting in Calgary attended by senior oil executives and her federal counterpart, Peter Kent, with the proposal, which goes well beyond anything Ottawa or the companies contemplated, industry and government sources said Wednesday. The three sides are engaged in intense negotiations, with the industry warning that regulations that are too oner-ous could undermine the competitiveness of the oil sands sector as it seeks international investment to drive production growth.Alberta Premier Alison Redford will re-turn to Washington next week as part of a federal-provincial-industry effort to lobby the Obama administration to approve Tran-sCanada Corp.s controversial Keystone XL pipeline proposal.

She and Prime Minister Stephen Harper are under considerable pressure to intro-duce regulations for the oil industry to limit greenhouse gas emissions.Opponents of Keystone XL in the United States point to the oil sands sector as one of the most carbon-intensive sources of crude.One of the really important things right now is that both the province and the fed-eral government recognize that theres got to be some signals to Washington that envi-ronmental change is taking place in Cana-da, said Bob Page, director of the Enbridge Centre for Corporate Sustainability at the University of Calgary.A larger part of the discussion around Keystone has been about greenhouse gas emissions from the oil sands, said Clare Demerse, director of federal policy with the Pembina Institute. This is clearly a sector that is under scrutiny right now, and the right answer to that scrutiny is to come out with credible regulations.Mr. Kent has promised draft regulations soon, but the federal Conservatives are re-luctant to introduce anything that could be construed as a carbon tax. Ottawa is likely to agree to an equivalency approach with Alberta and perhaps other provinces, in which the federal government would pass regulations that set levels of emission reduc-tions while provinces are free to impose their own systems, so long as they match Ottawas ambition.

Nathan Vanderklippe

OIL 9

An Alberta regulation that took effect in 2007 required oil sands producers and other larger emitters in Alberta to reduce their per-barrel emissions by 12 per cent from a base year, and pay $15 into a provincially run technology fund for every tonne of emissions above their limit.Ms. McQueens proposal would, over a period of time, require a 40-per-cent reduc-tion in per-barrel emissions and a $40-per-tonne payment when the limit is exceeded. At that rate, the regulations would boost the cost per barrel by less than $2 for oil sands producers.Sources stressed that the provincial cabinet has not yet approved Ms. McQueens pro-posals.The Redford government has conceded it wont meet its 2020 emission targets under current policies. Environmental groups warn that even if Ottawa agreed to Albertas 40/40 proposal, Canada would be on track to miss its commitment to reduce emissions 17 per cent from 2005 levels by 2020.In a report this week, the Pembina Institute urged governments to impose a levy of at least $100 per tonne for emissions above the targeted level.Getting these regulations right is critical for Canadas climate credibility, and oil and gas is the litmus test for that, Ms. Demerse said on Wednesday.Mr. Kents spokesman, Rob Taylor, declined to comment, while Wayne Wood, a spokes-man for Albertas Ministry of Environment and Sustainable Resource Development, said it was premature to speculate on the targets the province is proposing.Officials at the Canadian Association of Petroleum Producers also declined to comment, but industry sources called Ms. McQueens proposal a negotiating position rather than a hard demand. The industry is divided over the looming regulations, with some more willing to accept tougher rules than others. And many oil sands companies have already accounted for much higher carbon prices. Royal Dutch Shell PLC, for example, assumes a long-term carbon price of $40 per tonne.

But like many companies in Alberta, Shell has warned about the potential implications of raising the provincial levy. Asked in a recent interview whether the Anglo-Dutch giant would support a higher carbon price, its Canadian president, Lorraine Mitchel-more, said: Alberta needs to be sure that it keeps the industry competitive.Ms. Mitchelmore praised the provinces existing greenhouse gas policy, which can feed a technology fund, as a very, very nice package. She said any discussion of changes needs to look more holistically about the long-term development [of the oil sands]. We need to think about our cost structure, our competitiveness, but we also need to think about the environmental opportunity.Other senior energy figures have also warned about raising the carbon tax. Its a bad idea to make companies uncompeti-tive, Rick George, who last year stepped down as chief executive of Suncor Energy Inc., said in a recent interview.But oil sands firms are not the only ones that have raised competitiveness issues.More strident opposition has come from oil refineries, including those in eastern Can-ada, which are a large source of emissions and have historically suffered from narrow margins. The natural gas industry, strug-gling against low prices, has also fought a big new carbon price, warning that it could put some businesses under.The Alberta government has heard those complaints, the sources said, and is open to creating a regime that imposes different burdens on different industries, under the principle of use the right tool in the right sector.

10 GOLD

Gold has fallen to its lowest level in two years, while wider commodity prices have also de-clined following disappointing Chinese economic data.The price of the precious metal was down 9.2% to $1,395 an ounce.Meanwhile, oil prices fell to four-month lows, with Brent crude down $2.29 to $100.75 a bar-rel, and the main US share index, the Dow Jones, ended down 1.8%.This was the Dows biggest fall since November. Analysts said that the explosions at the Boston Marathon also contributed to the fall in share prices. The price of copper and aluminium were also sharply lower.Copper fell to its lowest level in a year and a half at $7,085 a tonne, and aluminium sank to a three-and-a-half year low.Powerful driver Analysts said a key factor in golds fall was the expectation that the US central bank, the Federal Reserve, will tighten monetary policy by stopping its quantitative easing (QE) programme.This means that the rate of US inflation is likely to fall, meaning investors have less reason to hold gold to avoid a corresponding decline in the value of cash investments.Cypruss announcement last week that it was planning to sell most of its gold reserves has also had an impact on the fall in the price of gold.Some analysts fear that other weak eurozone economies, such as Italy and Spain, will follow Cypruss lead and sell some of their gold stocks, adding further supply to weakening demand.Dominic Schnider, an analyst at UBS Wealth Management, said it might not have been the eurozone that triggered the mass flight out of gold: What we now see is panic selling, perhaps triggered by the Feds stimulus view. The Fed has given the signal that theres a possibility to reduce

Bleak The price of gold has had a remarkable run in recent years, hitting a record high of $1,800.Another drag on prices has come from India, the worlds biggest buyer of gold bullion, which introduced a 50% import tax that has triggered a 24% fall in the amount of gold brought into the country in the first quarter of this year.Mohit Kamboj, president of the Bombay Bullion Association, suggested prices may have further to fall: With more and more countries reducing stocks, the future of gold seems bleak.The fall means Cyprus is likely to raise less than the 400m euros ($525m) it hoped for when it an-nounced it was selling the bulk of its gold reserve.Gold mining company shares fell sharply as a re-sult, with Fresnillo ending down 15%, and Rand-gold dropping 8.3%.David Govett, head of precious metals at Marex Spectron in London, said there was a mass flight out of gold: We have seen massive liquidation from all quarters... This is a market that has only got one thing on its mind... get me out.

Gold price declines to two-year lowBBC

GOLD 11

6 Month daily gold futures chart

The above 6 month gold futures chart shows the bearish downward spiral which occured in the middle of April. This reaction in gold prices to the downside was caused by a slow down in Chinas economy as we discussed in the case of oil prices and also there seems to be an increase in hope and optimism about our economy but it almost seems as a short term falacy and that inflation is the thorn in the side of the shoe waiting for the opportune moment to present itself once the going gets to good in the stock market. The Federal Reserve bank will have to raise interest rates eventually to pay back the massive debt, the country will go through inflationary times in the not so distant future. These events will effect the price of the metal moving forward at some point in the unpredictable future. Until this time the metal may fade or stay neutral at least this could be the case for May.


12 GOLD

Shares in Barrick Gold Corp. tumbled more than eight per cent Wednesday following news that a court suspended work at its troubled Pascua-Lama mine in Chile over environmental concerns.The stock closed down 8.65 per cent, or $2.35, at $24.81 with more than 7.7 million shares traded, making it the second most active issue on the Toronto Stock Exchange.A Chilean court ordered the work stoppage after in-digenous communities complained that the project is threatening their water supply and polluting glaciers.The appeals court in the northern city of Copiapo charged the Toronto-based gold miner with envi-ronmental irregularities during construction of the worlds highest-altitude gold and silver mine.Interior Minister Andres Chadwick welcomed the mines suspension and said he hopes the worlds top gold mining company can now fix problems at Pascua-Lama.Were not surprised at all and we think it is good that through a legal organism, construction work is sus-pended while Pascua effectively attends to the charges already made by the environmental regulator, Chad-wick told local Radio Cooperativa.Barrick said it cannot say what the impacts from the suspension will be on the project that sits on the bor-der of Chile and Argentina.It is too early to assess the impact, if any, on the overall capital budget and schedule of the project, the company said in a statement.Construction not affected in ArgentinaBarrick noted that construction in Argentina, where the majority of Pascua-Lamas critical infrastructure is located, including its process plant and tailings storage facility, was not affected.Gold analyst John Ing said this is just the latest in a string of setbacks for the project.Its been a long gestation period, said Ing, president and chief executive at investment firm Maison Place-ments Canada Inc.Its up in the Andes. Its very high and the altitude presented problems and the price tag kept going up. If they ever complete it, itll be the worlds most expen-sive gold mine.

The start date for the mine straddling the Andean border with Argentina has already been delayed by more than six months to the second half of 2014. Cost overruns have seen the price tag rise from $3 billion to more than $8 billion.Ing said it is unknown how long the work suspension will last weeks or months.This is a project that is perhaps too big, he said. I always felt that megaprojects can bring mega problems and this is a mega problem.RBC analyst Stephen Walker said the suspension is negative for the company.Pre-stripping on the portion of the project in Chile has not yet been re-started since being voluntary stopped by the company as a result of dust control issues, and an injunction could cause further delays to construction on the Chilean side of the project, he said in a note.Production at the mine was originally expected to begin in the second half of 2014.The injunction on the Pascua-Lama mine stems from a petition filed with the court on Oct. 22 by a represent-ative of a Diaguita indigenous community and other individuals against Barricks Chilean subsidiary and the regional Environmental Evaluation Commission.That move followed a similar petition filed in late Sep-tember by representatives of four Diaguita indigenous communities against the Barrick subsidiary, Compa-nia Minera Nevada, with the EEC.In March, Barrick Gold also ran into problems with its project in the Domincan Republic, when a shipment of gold from its Pueblo Viejo mine was detained by customs authorities.The delay came as the company was in the midst of re-negotiations with the local government over its royalty contract.

Chile court suspends work at Barrick gold mineCanadian Press

GOLD 13

Barrick showing some large losses of share price as they reported a shut down in their mine in Chile and also of course the price of golds 10% downfall had a negative effect as you see the stock plunge in Mid-April on this news. Perhaps a good time to buy Barrick just make sure to dig into their fundamentals.

Barrick Gold- 6 month chart


14 GOLD

Gold Corp- 6 month chart

The graph above is yet another gold stock chart, this is for Gold Corp, one of the largest mining companies. These mining stocks are tough plays. Very volitile territory. These stocks are in need of some confidence from the company so investors know there profit margins wont disappear overnight from there insanely high operating costs. These companies are needing to sell off dead assets and tighten their cashflows while hopefully producing the expected amount of gold which has been pretty challenging of late. Information reported: April 30/2013

15GOLD

SIlver Wheaton- 6 month chart

Silver Wheaton showing very similar pattern to Gold corp. Seems as though these stocks could react nicely to the upside if gold is to make a rebound, but one must figure out for themselves first is if the companies current value is represented fairly in its current share price. Without knowing this you could be in for a gamble. Gold is the most speculative commodity and trades like a financial.

Information reported: April 30/2013

16 NATURAL GAS

For roughly its first two decades of existence, Standard Oil GMUI -0.67% wasnt really an oil companyat least, not in the way most peo-ple think today.Until the late 1880s, John D. Rockefellers behe-moth didnt bother owning oil fields. Standard was all about refining and distribution, the keys to building the markets that would ultimately take the oil.

More than a century later, there are lessons from this for the natural-gas business.Rising gas supply has surprised the U.S.Exxon Mobil XOM +0.96% and several partners built Texass Golden Pass liquefied natural gas, or LNG, import terminal expecting domestic gas output to keep falling. But it began operations in 2010the same year Exxon showed it rec-ognized that shale gas had changed the game entirely by paying $41 billion for domestic pro-ducer XTO Energy.Gas isnt a new fuel. The U.S. used almost 70 bil-lion cubic feet, or bcf, a day last year. But while that was up 15% from 2005, domestic-gas output jumped by a third in that same period. Some estimate a centurys worth of gas lies beneath U.S. soil. Curbing supply, the exploration-and-production industrys typical defense for prices, offers some support. But who will bid high when there is so much gas in the ground?Whats needed is more use of gas. Low prices have helped boost its share of U.S. power gen-eration. But this is very price sensitive, and the recent move by gas above $4 per million British thermal units has already helped coal win back some ground.The big prize is fostering new markets, such as selling more gas overseas. Exxon now wants Golden Pass to export LNG. Navigant Consult-ing estimates U.S. LNG exports could ultimately reach five or six bcf a day, equivalent to an extra 7% to 9% of demand.

A bigger target is transport. Last year, the U.S. burned 12.4 million barrels a day of gasoline and distillate. If gas could replace even half of that, it would boost demand by 37 bcf a day, or more than 50%.Even that is a very tall order, though. Sanford C. Bernstein points out that natural-gas vehicles make up less than 0.1% of the U.S. vehicle fleet. And the history of hybrid-electric vehicles sug-gests adoption of new technologies takes many years.Trucks and trains are good candidates for gas conversion, as their predictable routes make refueling easier. Switching costs would still be high, though. While Berkshire Hathaways BRKB +2.21% BNSF Railway plans to test replacing diesel with gas, the largest railways consume just 3.8 billion gallons of diesel a year, according to Bernstein. Displace all of that, and it would mean extra demand of 1.5 bcf of gas a dayhelpful, but hardly a game-changer.While abundance and lower emissions favor gas, creating those new markets requires big upfront investment and patiencenot something for which the often cash-strapped E&P sector is well-suited.

Setting a new standard for Natural Gas Liam Denning- WSJ

NATURAL GAS 17

Look at that nice uprise in Natural Gas prices. Got to love that! It was a very slow start which had many traders wondering what was going on with Natural gas the price was very stagnant and gas companies were losing out on tones of profits. These are the markets we love because we can play the long term rise in Natural gas safely at the lows while remaining protected on the downside. For more information on how to execute this style of trade on a commodity such as natural gas please email us at: [email protected]

So despite seeing its stock suffer since the XTO deal, Exxon, and other oil majors, are the natural vehicles to expand the reach of gas. They have the money to invest in refueling stations and other infrastructure. And, with integrated opera-tions to produce, transport and use gas, they can capture profits at various points along the value chain, mitigating price weakness at the well. They also have lobbying clout, which could help secure permission to export LNG and subsidies to encourage consumers switching to gas.The majors strength offers some hope for E&P firms. As Big Oil invests more in a gas-fired future, it will seek high-quality reserves. And despite big deals like that for XTO, consolida-tion has barely begun. The top 10 gas producers accounted for about 30% of U.S. output in the fourth quarter of 2012, the same proportion as in 2007.It is a curious turn of fate that Standard Oils big-gest descendant, Exxon, looks set to perform a similar role in the burgeoning age of gas.


18 NATURAL GAS

Higher natural gas prices defy skittish commodities markets, scotia bank analyst says

Gordon Hamilton, Vancouver Sun

A rise over the last four months in the price of natural gas bodes well for British Co-lumbia resource revenues, pushing up royalties and potentially stimulating renewed interest in the sale of gas rights in this province, Scoti-abanks chief commodities analyst said Monday.Patricia Mohr said a long, cold winter in the U.S. at a time when inventories are low has pushed the price above $4 per million BTUs. Thats not enough to make gas from B.C.s northeastern wells profitable, and its not enough to stimulate new drilling. But its an encouraging sign in what Mohr describes as an otherwise skittish commodities market, worried about slower than expected growth in China and concerns that distressed eurozone countries might start selling gold.Natural gas is an enormous source of revenue potentially for the British Columbia govern-ment, and of course the higher the prices are, the more activity you are likely to see in terms of drilling and production, Mohr said.The sale of gas rights in British Columbia has plummeted as a result of low prices for the re-source, and for the fiscal year ending March 31, brought in only $115 million. More than 35 per cent of the 2012 total $41 million came from March sales alone. April sales were also higher at $40.6 million.

Price gains in oil and gas were the bright spot in Scotiabanks Commodity Price Index for March, released Monday. The index ended the first quarter of 2013 slightly above the fourth quarter of 2012, largely due to oil and gas, and forest products. The 28 commodities tracked by the bank have fallen 15.7 per cent since April 2011, when the economic slowdown in the eurozone hit global prices.Mohr said Marchs uptick is likely a welcome surprise for financial markets.However, natural gas prices are still below the average production cost, which FirstEnergy Capital commodities analyst Martin King said is closer to $5 per million BTUs.I havent seen any producers get overly excited about this, King said in an interview from Calgary. There is still drilling going on in B.C. probably a lot of the deep basin stuff like the Montney and Horn River but there has been no real major uptick in activity that I know of.He said natural gas prices are not likely to rise much more until there are signs from the U.S. that supply is staying flat or declining and a clearer picture emerges of how much switching takes place from gas to coal for power genera-tion as prices rise.Our view right now is that we think supply is going to be flat and that fuel switching will be taking place but it wont be as large as the consensus.King said he expects to see $4.50 for the sec-ond half of the year.But ultimately I think we need to see something even higher than that for 2014, if you are going to see a sustained uptick in drilling activity, he said.

19NATURAL GAS

Mohr said gas prices were at $2.53 last year at this time. The low price, a result of the boom in shale gas drilling that has created a gas glut in North America, is the major factor that has slowed natural gas drilling in northeastern B.C. One April 19, prices hit $4.41 before falling back to $4.25 last week.Although prices are expected to soften with warmer weather, Mohr said summer demand particularly to meet North American air conditioning needs is expected to keep the price above $4.However, she doesnt see them rising much higher than todays level.If the price moves up much more, coal will probably become economic once again for elec-tricity generation in the U.S. and some of the utilities will shift away from natural gas to coal.Mohr is forecasting an average price for 2013 of between $3.75 and $4. Her forecast is higher than the 2013 forecast prepared by the B.C. government in its February budget, which ranges from $2.69 to $3.75.A higher domestic price is not likely to dampen interest in developing export terminals for liq-uefied natural gas in this province, she said.Even at $4, there is a huge spread between natural gas prices in North America and what the landed price of LNG is in Japan, she said, noting that it was fetching $16. The price spread is still in favour of project development for LNG on the B.C. coast.

On Monday, Progress Energy Canada and PETRONAS announced they had closed a transaction with the Japan Petroleum Explora-tion Company to acquire a 10-per-cent inter-est in Progress Energys natural gas assets and proposed export plant at Prince Rupert. Japex has also agreed to buy 10 per cent of the plants production for the next 20 years, signalling the strong interest in Asia for B.C.s natural gas.Mohr also notes that, although the gap between prices for western Canadian crude oil and the North American benchmark price has nar-rowed, Canada tidewater access for oil is still critically important to Canadas economy. One of several reasons she cites for the price differ-ential shrinking is the stepped-up use of rail to transport oil to the Gulf Coast.Mohr is a strong supporter of pipelines to the West Coast to break Canadas dependency on the U.S. market. She noted that western Cana-dian Select is selling for $68 US a barrel this month, while crude from Mexico, which is only slightly higher in quality, is selling for $96 US a barrel. The reason, she said, is that the overall pipeline system constrains the flow of western Canadian oil to the U.S. Gulf Coast, where world prices prevail.She said that if Canada had the infrastructure to get oil to China, producers here could likely be getting $95 a barrel or more for their oil. The cost of shipping oil by tanker from B.C. to Asia adds only $3 to $4 a barrel to its cost, she said.

20 RENEWABLE ENERGY

Renewables investment seen tripling amid supply glut

The plunge in the cost of wind and solar power that bankrupted more than two dozen manu-facturers is forecast to spur a tripling of invest-ment in renewables by 2030 and to reduce the grip fossil fuels have on world energy supply.Annual spending on clean-energy projects that dont add to greenhouse-gas pollution may rise to $630 billion at the end of the next decade from $190 billion last year, Bloomberg New Energy Finance said in a report today. Thats 37 percent more than estimated in November 2011 and means renewables would account for half of all generation capacity by 2030.The findings contrast with production gluts that made most solar and wind manufacturers unprof-itable last year, tipping a unit of Suntech Power Holdings Co. (STP) into bankruptcy andVestas Wind Systems A/S (VWS) into record losses. While suppliers are suffering, lower equipment prices are making more projects profitable to de-velop and advancing the day when renewables can rival coal and oil on cost.The apocalyptic views about what it will cost to shift the world to renewable energy simply arent true, Michael Liebreich, chief executive officer of New Energy Finance, said in an interview. Three years ago, we thought wind and solar would be cheap as chips, and theyve even gone below that.

Energy ConferenceExecutives including NRG Energy Inc. CEO Da-vid Crane and Suma Chakrabarti, head of the Eu-ropean Bank for Reconstruction & Development, will discuss the trends at a conference hosted by New Energy Finance today in New York.The London-based research group owned by Bloomberg LP estimates the cost of installing a gi-gawatt of renewable energy capacity is now about 10 percent lower during the period through 2030 than it projected in 2011. A gigawatt is enough to supply about 800,000 homes in the U.S.

European ModelThe landscape is going to look different to the European model of a subsidy for energy genera-tion, Thomas said in an interview in London. The drivers are going to change to be much less environmental and much more business-related.The result will be renewable energy projects including wind, solar, hydro and biomass ac-counting for 70 percent of new power generation capacity between 2012 and 2030, the New Energy Finance report said. By 2030, renewables will account for half of the generation capacity world-wide, up from 28 percent last year, the researcher said.``Its a strong forecast, but its believable, said Guy Turner, chief economist for Bloomberg New Energy Finance. ``That represents compound an-nual growth of 6.7 percent, and many industries have grown faster than that at this stage of their development.

Louise Downing & Alex Morales

Subsidy CutsTraditional bastions of renewable energy such as Spain and Germany have been paring back subsi-dies for clean energy, leaving developers more re-liant on lower costs to compete with fossil-fueled stations.Spain, where wind turbines and solar panels gen-erate more than 50 percent of power on the most breezy and sunny days, halted subsidies for new renewable-energy projects at the beginning of 2012. In Germany, which has more solar capacity than any nation and ranks third for wind, Chan-cellor Angela Merkel has stepped up the pace of subsidy cuts for clean energy.The reductions were made to ease the burden of higher electricity costs on consumers and reflect the declining costs of the technology. The result forced a shakeout in both wind and solar.


r

21RENEWABLE ENERGY

Vestas is more than half way through a plan to cut 30 percent of its staff over two years, and LDK Solar Co. is less a third of its peak size after par-ing employment and selling plants.Gamesa Corp. Tecnologica SA (GAM) was unprofitable in 2012 for the first time since the Spanish wind turbine maker sold shares to the public in 2000.Vestas is more than half way through a plan to cut 30 percent of its staff over two years, and LDK Solar Co. is less a third of its peak size after par-ing employment and selling plants.Gamesa Corp. Tecnologica SA (GAM) was unprofitable in 2012 for the first time since the Spanish wind turbine maker sold shares to the public in 2000.

Corporate VictimsMore than 30 solar power companies have gone bankrupt since 2011. They include Q-Cells SE and a unit of Suntech, both once the biggest solar manufacturers, and Solyndra LLC, which had taken $527 million in loans under a program guaranteed by the U.S. Energy Department.The decline in prices is very painful for manufac-turers, Liebreich said. But the kit is performing, and there arent bankruptcies among the develop-ers because these are good investments.Investors including Warren Buffett and Guy Hands have bought into renewable energy pro-jects, as have pension funds including Pension-Danmark A/S, a Danish retirement fund with $23 billion in assets.Solyndra FailureIn the U.S., Solyndras collapse led to calls from lawmakers to suspend such assistance to solar manufacturers. Congress also held back on re-newing a tax credit for wind power until Jan. 1, a day after it had been allowed to expire. President Barack Obama supports the industry and helped extend the wind tax credit.The path toward sustainable energy sources will be long and sometimes difficult, U.S. President Barack Obama said in his inaugural address on Jan. 21 after starting his second term. America cannot resist this transition. We must lead it.To drive down costs yet further, makers of off-shore wind turbines are designing larger, more powerful machines. Siemens AG is testing a 6-megawatt turbine and is considering a 10- megawatt system. Mitsubishi Heavy Industries Ltd. plans a 7- megawatt turbine that will be tested onshore in the U.K. this year. Its talking to Vestas about cooperating on an 8-megawatt device. Most turbines now produce less than 6 megawatts.

New NormalThe forecasts by New Energy Finances forecast under a New Normal scenario, which it says is the most likely. Under a barrier busting scenar-io, in which more money is channeled into meas-ures including smart meters that enable customers to monitor energy use, and in facilities that can store energy, the researcher said investment may reach $880 billion by 2030.They assume carbon prices will rise from near re-cord lows, rising demand for renewables inAfrica and the Middle East, and further reductions in the cost of the technologies.A traditional territory scenario assuming slower global economic growth, lower fossil-fuel prices and weaker climate policies may mean contain investment in renewables to $470 billion by 2030, it said.

22 OIL

Cenovus sees oil price gap widening

Increasing supplies will see the discount on Western Canadian heavy oil grow once again by the third quarter of this year, says Cenovus Energy Inc., as the oil giant moves to using rail to transport oil sands crude by 2014.

All things taken as a whole, were expecting that supply will increase somewhat more than demand, which will result in somewhat wider differentials, chief executive Brian Ferguson said in an interview following the release of the companys first quarter results on Wednesday.

Despite a recent reduction in the discount, Canadian oil producers and governments remain unsettled by the differential issue. The discount paid for Alberta bitumen compared with North American and global benchmark oil prices called the differential was wider than usual over the past winter months. Prices are affected by seasonal factors and refining capacity, and the differential has narrowed in some part thanks to increasing rail transport allowing greater access for Alberta heavy crude to certain refineries. But oil producers say the fundamental lack of pipeline capacity to get Canadian crude to the most lucrative oil markets remains a problem.

The position taken by Mr. Ferguson stands in some contrast to others in the industry, including Suncor Energy Inc., which recently cancelled its $11.6-billion Voyageur upgrader project because of soaring capital costs, and cited a view that the price gap between heavy and light oil will narrow over time.

Cenovus predicts the differential which on Wednesday stood at about $18 U.S. for Western Canada Select compared to almost $40 at one point in January will widen again in the last half of this year.

Mr. Ferguson said he believes supplies will grow above demand again. Oil production that has been temporarily halted is likely to begin being sent to market, and he expects that Imperial Oil Ltd. will begin shipping up to 110,000 barrels a day from its Kearl project site by sometime in the third quarter.

Mr. Ferguson noted there are some hints of an upcoming increase in demand, including an ongoing $4-billion upgrade to BPs Whiting, Ind., refinery to process Canadian heavy crude, which would help prices. But overall, supply is likely to be higher than the demand, he said.

Cenovus maintains it is especially well-positioned to deal with the differential, as it continues to benefit from the ability to process discounted light and heavy crude feedstocks at the Wood River refinery in Illinois and the Borger refinery in Texas, which Cenovus co-owns with operator Phillips 66. In fact, the driver of its improved cash flow in the first quarter was a market crack spread (the difference between what a refinery pays for crude or bitumen and the price it gets for the finished petroleum product) of approximately $27.50 per barrel, the company said about $4 higher than the strip pricing used in its guidance.

Cenovus is also managing the differential issue by increasing its ability to ship by rail. Rail volumes averaged approximately 6,000 barrels per day in the first quarter, moving mostly light and medium oil production from south Saskatchewan and Alberta. While pipelines are more efficient and less expensive, the company also wants to begin shipping heavy crude by rail where special tank cars with coils and insulation are required by next year.

What it does is it gives an additional outlet to markets for bitumen, Mr. Ferguson said.

Overall, Cenovus saw increased crude oil production offset by a 27-per-cent decline in the average crude oil sales price compared with the same period a year ago.

Net earnings for the first three months of 2013 were $171-million, less than the $426-million earned in the first quarter of 2012. The company reported net earnings were negatively impacted by unrealized risk management and foreign exchange losses in the quarter compared with gains in the same period of 2012.

Kelly Cryderman

23CONTEMPORARY MAGAZINE MONTH 20XX 23OPTIONS

Crude Options volatility increases as WTI Oil Futures reboundBarbara Powell

Crude options volatility rose as oil futures rebounded from a six-month low.

Implied volatility for at-the-money options expiring in May, a measure of expected price swings in futures and a gauge of options prices, was 20.93 percent at 1:49 p.m. on the New York Mercantile Exchange, the highest level since March 4. Volatility was 19.55 percent on April 5. Volatility for options expiring in June advanced to 19.91 percent from 19.8 percent.

West Texas Intermediate crude for May delivery rose 54 cents to $93.24 a barrel at 1:51 p.m. on the Nymex. It was the first increase in four days and follows a loss of 4.7 percent last week.

The most-active options in electronic trading today were December $100 calls, which rose 8 cents to $2.77 a barrel on volume of 1,801 contracts at 2:01 p.m.

active, unchanged at 2 cents on volume of 1,742.

Puts accounted for 56 percent of electronic trading volume. Puts made up 55 percent of April 5s volume of 159,017 contracts.

May $85 puts were the most active options traded in the previous session, with 12,039 contracts changing hands. They declined 1 cent to 5 cents a barrel. May $87 puts slipped 1 cent to 13 cents on 10,915 lots.

Open interest was highest for May $85 puts with 39,791 contracts. Next were December $105 calls with 36,197 and December $100 calls at 34,365.

The exchange distributes real-time data for electronic trading and releases information the next business day on open- outcry volume, where the bulk of options activity occurs.

Crude option volitility corresponding with underlying market moves. I find you get a certain feel for a commodities volitility when you trade it and pay attention to it enough times on a regular basis.


24 CONTEMPORARY MAGAZINE MONTH 20XX

Pipeline expansion still needed despite narrowing oil price-gap- Joe Oliver (Canadian Natural Resources Minister)

24 OIL

CALGARY -- Despite a dramatic improvement in the price Alberta producers are getting for their crude oil, Natural Resources Minister Joe Oliver is still pushing hard for market-opening pipeline expansions, such as the controversial Keystone XL project.

There are inevitably gyrations in price. The price of the commodity, as everyone in Alberta knows, do have a cyclicality -- sometimes a profound one, he told reporters following a speech hosted by the University of Calgary.

The difference between the Western Canadian heavy oil benchmark and its lighter American counterpart was around $40 per barrel late last year. A heavy oil discount is not unusual, given its tougher to refine -- but the size of the gap was seen as painfully high by both government and industry.

Its a phenomenon the Alberta government dubbed the bitumen bubble when explaining the hit it was taking to its revenues and the resulting budget squeeze. The main problem, it said, was with bottlenecks in getting the crude to markets that will pay the best price, such as the U.S. Gulf Coast and Pacific Rim countries.

The discount has since narrowed to below $14 -- a much more normal and manageable level. West Texas Intermediate, the key U.S. light oil benchmark, was just below US$88 on Thursday, a bit of a rebound from the four-month lows it hit earlier in the week.

The gap has closed as crude volumes moving to market by rail in recent months have increased -- something Oliver describes as helpful but no replacement for pipeline

Oliver says hes cautiously optimistic that the U.S. government will approve the $5.3-billion Keystone XL pipeline, which would enable some 830,000 barrels of mostly oilsands crude to flow to Texas refineries.

A key hearing was taking place in Grand Island, Neb., on Thursday, where both backers and opponents of the pipeline were commenting on a draft State Department report last month.

Some of those against the pipeline said they were preparing possible acts of civil disobedience should it be approved.

Nebraska has been a major battleground for the project. After an earlier iteration of the pipeline was rejected by Obama last year, its builder, TransCanada Corp. (TSX:TRP) came up with a new route to address ecologically concerns, such as a spills potential impact on the crucial Ogallala aquifer.

The Canadian Press

Natural Resource Minister Joe Oliver pictured above.

25CONTEMPORARY MAGAZINE MONTH 20XX 25OIL

The draft State Department environmental assessment flagged no major environmental issues with the new route. A decision is expected as early as the summer, though many observers say it may be closer to the fall.

Oliver will be in Washington and New York next week to stump for the project.

If it isnt ultimately approved, Oliver said he expects Canada and the United States continue to have a solid economic relationship.

My view is of course that this is a very important project for our country and we think that its beneficial for both countries and therefore we very much want to see it go ahead and we made that clear to the U.S. administration, he said.

However, we have the largest bilateral commercial relationship in the entire world -- $1.8 billion of trade every day, every three seconds a truck crosses the border -- and we do not want anything to undermine that relationship.

Oliver made his remarks after announcing a $15-million contribution to the University of Calgary to create an international policy program, which will study issues such as diversifying exports to Asian markets, among other things.

Essentially, they will be providing academic and intellectual insight into some of the critical issues that confront Canadian energy policy going forward.

Railroads as a transportation solution for oil coming out of Canada has helped increase sales which has helped Western Canada Select oil price close the gap between neighbooring partner WTI.

26 STOCKS

Integrated O&GMonthly Industry performance comparison- Majors NYSE

Price Shares Outstanding(B)

Market Cap(B) Price-to-earnings P/E Ratio

Eearnings/ Share EPS

$88.99 4.48 398.72 9.18 9.69

Exxon-mobil (NYSE:XOM)

Chevron (NYSE:CVX)




$122.01 1.94 237.03 9.22 13.32

ConocoPhillips (NYSE:COP)




$60.45 1.22 73.81 10.31 5.86

Occidental Petroleum (NYSE:OXY)

Price Shares Outstanding(M)



$89.26 805.60 71.91 15.64 5.71

Information reported: April. 30/2013 (B) = Billions (M) = Millions

27STOCKS

Exxon-Mobil (XOM)

Exxon-Mobil stock chart show above. Interesting to note the price fall in Mid April corresponding to the decreasing price of oil. The stock since bounced back and is above the 200 day exponential moving average. Exxon seems to be back in its normal trading range. Exxon shown losing market share and others staying neural while Occidental Petroleum took off shooting up to $89 from $79 as profits from the quarter beat wall street estimates one reason being that the company was able to be effective at cutting costs and increasing margins.

Information reported: April 30/2013

28 STOCKS

Upstream O&GMonthly Industry performance comparison- Majors NYSE

Anadarko Petroleum (NYSE:APC)




$84.76 500.57 42.43 17.88 4.74

Apache (NYSE:APA)




$73.88 391.64 28.93 15.18 4.87

Noble Energy (NYSE:NBL)




$113.29 179.00 20.28 21.11 5.37

EOG Resources (NYSE:EOG)




$121.16 271.75 32.92 57.72 2.10

Information reported: April. 30/2013 (B) = Billions (M) = Millions

29CONTEMPORARY MAGAZINE MONTH 20XX 29STOCKS

Apache (APA)

Apache coming out of some serious downtrends as the stock well below its 200 day exponential moving average. This company would be an interesting one to follow if, there is a momentum reversal and positive news and results from some recent projects, Apache could be a good play for 2013 if oil prices can hold out in the high 80s- mid 90s. Information reported: April. 30/2013

30 INDEX

S&P 500 corrects and bounces right back

Yes, the S&P corrected itself! for a whole week! Then stocks rebounded and now trade above the previous highs. Meanwhile commodities took a hit and have yet to really make a comeback.

What is going on in the market?

As I mentioned last month, I cautioned investors about the possible correction of the S&P 500 at that time the S&P was slightly overbought with the 14 day RSI at around 65. The market was also above the 20 day simple moving average. The S&P 500 was showing a few signs that it could perhaps end its trend and correct its steady price hike. For the first week or so until April.15 the market was steadily climbing and on the 15th it had one of its worst days in the past few years plunging around 5%. Earnings from American corporations were a little shaky and the slow down in economic growth out of China didnt help very much which resulted in a sell off which had all the markets down for the next few days.

Why does Chinas economy have such an effect on

our market?

Why is it that we have relied so heavily on foreign demand from countries like China? It seems as though the Chinese are consuming more goods than people in North America and at the same time manufacturing more product and increasing their exports. Is there a way our markets can become more independant to countries in Asia? If you said that China would surpass the United States as an economic power 20 years ago people would laugh at you, now it seems they have. It goes to show you that wherever the free market system is installed good things will happen as new businesses will be created and innovation will continue to grow and this has certainly been the case with China.

And is being seen continuing with developing countries around the world. This is great but I feel as though most of these businesses are manufacturing products cheaper than anyone else which allows North American corporations higher profit margins as their cost of goods sold decreases substantially by outsourcing factory jobs to foreign land. Can we not run successfull businesses while manufacturing products at home? Why does Apple have to manufacture their mobile devices in third-world countries? Its like were feeding and helping grow other economies and everything now teeters together like a grand balancing act.

Home advantage

Why I believe America and our economy at home will continue to dominate is that we have built companies that are not duplicatable. Corporate America is dominant, these corporations will stand the test of time and in the end are relyed upon by many other small businesses and large companies around the world. We have a very unique eco-system of business and this will always be relied upon by companies here in North America and around the world to buy products and services.

RIG trader


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31CHINA

Questions raised about Chinas growth

Growth in Chinas manufacturing sector unexpectedly slowed in April as new export orders fell, raising fresh doubts about the strength of the economy after a disappointing first quarter.

The official purchasing managers index (PMI) fell to 50.6 in April from an 11-month high in March of 50.9. Analysts had expected the April PMI to be 51.0.

The pull back on the official PMI mirrored a similar decline in a preliminary HSBC PMI last week, suggesting Chinas exports engine faces headwinds from the euro zone recession and sluggish growth in the United States.

Chinas new government has signaled it will step up infrastructure investment, which analysts said will provide support for the economy in the second quarter.

Overall, my general feel is that China is growing but slower than people expected say a month ago, said Alvin Pontoh, economist at TDSecurities in Singapore.

But I dont think this is reason for alarm... this is probably what the new administration is looking for. Structurally, China cannot grow at 9 or 10 per cent any more, so over the next few years, youd reasonably expect growth to edge lower to say 7 per cent or so.

A string of global data, including lower than expected US economic growth figures, has dented optimism seen at the start of the year that the world economy was picking up.

Market reaction to the PMI was muted as many countries in Asia and Europe are marking May 1 Labor Day holiday. Chinas markets are closed and will reopen on Thursday.

Benchmark three-month copper slipped and weighed on mining stocks in Australia following the PMI figures. The Australian and New Zealand dollars held their ground.

The official PMI figures showed a new orders sub-index fell to 51.7 in April from 52.3 in March, holding above 50 which separates expansion from contraction compared with a month earlier. However, the new export orders index fell to 48.6 from 50.9 in March, suggesting they were shrinking.

The input price sub index fell to 40.1 in April, its lowest in at least four years.

The dip in April PMI shows that the foundation for Chinas economic recovery is still not solid, Zhang Liqun, an economist at the Development Research Centre, a top government think tank in Beijing, said in an emailed statement accompanying the index.

All these show the possibility for Chinas growth to slow slightly in the future. We must work to stabilize domestic demand and make our economic recovery more sustainable, he said.

HSBCs preliminary PMI for April fell to 50.5 from 51.6 in March as new export orders shrank. The final reading is scheduled to be published on Thursday.

Reuters

32 NEWS

Halliburton beats estimates on lower North American costs

Halliburton Co. (HAL), the worlds largest provider of hydraulic-fracturing services, reported first-quarter results that beat analysts estimates as the company reduced costs in North America.Profit excluding discontinued operations and money set aside for oil-spill litigation was 67 cents a share, exceeding the 57-cent average of 34 analysts estimates compiled by Bloomberg. The results mark the 19th consecutive quar-ter Halliburton has beaten estimates. Sales climbed 1.5 percent to $6.97 billion.Halliburton benefited from lower costs of guar, an ingredient used in fracking to get oil and natural gas from dense rock formations. Helped by other cost cuts and increased cus-tomer activity, margins improved about 400 basis points from the prior quarter. The com-pany expects profit margins will continue to expand this year on modest pricing increases as customers use new technology to improve well output.

Results were phenomenal, Brian Uhlmer, an analyst at Global Hunter Securities LLC in Houston who rates the shares a buy and owns none, said today in a phone interview. Its all in driving efficiencies and keeping costs lower.Operating income in North America rose 30 percent from the fourth quarter to $605 mil-lion. Halliburtons operating profit margin was 16 percent, beating Uhlmers expectation of 13 percent. turn upThe worst of the lower pricing pressure in North American fracking services has passed, Chief Operating Officer Jeff Miller told analysts and investors today on a conference call.In addition, pricing for international work has already hit a low point and is starting to turn up, Chairman and Chief Executive Officer Dave Lesar said on the call.Ultimately I do think the results continue to improve in North America, Jeff Tillery, a Hou-ston-based analyst at Tudor Pickering Holt & Co. who rates the shares a buy and owns none, said in a telephone interview. The growth will depend on an increase in operating rigs, which has been slower than expected so far, he said.The company had a first-quarter net loss of $18 million, or 2 cents a share, compared with net income of $627 million, or 68 cents, a year earlier, Houston-based Halliburton said today in a statement.

David Wethe

33CONTEMPORARY MAGAZINE MONTH 20XX 33NEWS

Settlement talksThe results included a $637 million cost in the quarter to add to its reserves for litigation related to the 2010 U.S. Gulf of Mexico oil spill. Halliburton did cementing work on BP Plc (BP/)s Macondo well. An explosion at the site resulted in the largest offshore oil spill in U.S. history. Halliburton is in settlement talks about its liability.We have recently participated in court-facili-tated settlement discussions with the goal of re-solving a substantial portion of private claims, Lesar said in the statement. We are pursuing these settlement discussions because we believe that an early and reasonably-valued resolution is in the best interests of our shareholders.Halliburton climbed 5.6 percent to $39.29 at the close in New York, the most since Feb. 14. The shares, which have 28 buy and seven hold ratings from analysts, have gained 13 percent this year.Schlumberger Ltd. (SLB) and Baker Hughes Inc. (BHI), two other oilfield-services provid-ers, also exceeded first-quarter estimates. Both companies reported results April 19.

Good SignIts a bullish sign on the industry to have service provideres outbeating projections. It will be interesting to see how the oil industry performs as a whole in 2013 as this year has been somewhat of a specticle year with many projections bearish on the price of oil. But as long as oil and gas companies are producing and expanding operations as they will be the industry will perform wonderfully.

34 EXPLORATION NEWS

Rokmaster completes community agreement on Pinyana project

(April 9, 2013, Vancouver, B.C., Canada) --

Rokmaster Resources Corp. (Rokmaster or the Company) is pleased to announce it has reached an agreement (the Agreement) with the Community of Pinaya (the Community), Lampa Province, Peru, for the exploration and development of the Pinaya Project. The Agreement provides for the Companys wholly owned subsidiary, Minera Pinaya Peru S.A. to conduct all necessary exploration and development work on the Pinaya Project subject to the terms of the Agreement, which include the following: payment for land easement over Community surface rights and investments in social and employment programs. This Agreement indicates the Communitys support for Rokmasters work at the Pinaya Project. stated Rokmasters President and CEO, John Mirko. Mr. Mirko further states, The Company approached the Community with an open dialogue to understand the Communitys unique culture and lifestyle. This provides Rokmaster direction in establishing initiatives to facilitate and integrate the Community and the development of the Pinaya Project in the region. One of the Companys goals is to help improve the quality of life in the region on a

Stock Information

52 week: 0.26 - 0.27Open: 0.26Volume/ Avg:25-30,000Market Cap: 7.15MEPS: -0.08Shares: 26.49M


www.rokmaster.com

Rokmaster has been one of the few exploration companies to show consistant performance in stock price, which is a great sign considering the tough market conditions...


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35EXPLORATION NEWS

(April 15, 2013, Vancouver, B.C., Canada) --

Rokmaster Resources Corp. (Rokmaster or the Company) is pleased to announce that its common shares were approved for trading on the Bolsa de Valores de Lima S.A. (BVL or Lima Stock Exchange) by the Superintendencia de Mercado de Valores, on Wednesday, April 10, 2013, and will trade under the symbol RKR. Seminario & Cia Sociedad Agente de Bolsa S.A. (Seminario SAB) acted as the Companys sponsoring broker and has greatly aided in obtaining all necessary ap-provals from the BVL. Seminario SAB is proud to have acted as the listing sponsor for Rokmaster and we look forward to introducing the Company and its Pinaya Project to local and regional investors stated Mr. Luis Zapata, Head of Capital Markets at Seminario SAB.

Increased liquidityWe are extremely pleased to now be listed on the Lima Stock Exchange, one of Latin Americas most important stock exchanges stated John Mirko, President and CEO of Rokmaster. Mr. Mirko further states, This listing will provide increased li-quidity in the Companys shares and the opportuni-ty for Latin American investors to participate in and support the development of the Pinaya Project in Peru through the Mercado Integrado Latinoameri-cano (MILA). Peru is poised to continue to be one of the top producers in gold, copper, silver, zinc, and tin given its favorable mining business environ-ment coupled with a healthy GDP and an appreciat-ing Peruvian Sol.

Through MILA, the BVL is integrated with the San-tiago, Chile and Bogota, Colombia Stock Exchanges to create the third largest Stock Exchange in Latin America after Mexico and Brazil, with a combined market capitalization of US$712.5 billion. The Lima Stock Exchange website can be accessed at:www.bvl.com.pe.

John Mirko, President & Chief Executive Officer.For additional information visit the companys website www.rokmaster.com or call (604) 632-9602.

Rokmaster Approved for trading on the Lima Stock Exchangewww.rokmaster.com

The Canadian province of British Colum-bia is headed toward an election on May 14, and the polls dont look good for Premier Christy Clarks Liberal government. The Liber-als trail the opposition New Democratic Party (NDP) by 14 points, with 45 percent of voters favoring the NDP and 31 percent supporting the Liberals,according to an Angus Reid survey released on April 26. The BC Conservatives (11 percent) and Green Party (10 percent) trail well behind.A potential win by the left-leaning NDP has Philip Hochstein, president of the Independent Contractors and Businesses Association of BC, concerned that the provinces resource sector could see its growth hobbled.Resource development is hugely important to the construction industry and the small businesses that we represent, he said in an April 26 phone interview. Mines are huge generators of econom-ic activity, creating work for all manner of small businesses in the surrounding communities.The NDP position on any kind of development starts with no instead of, yes, how can we help? he added. Everything [NDP leader Adrian Dix] talks about never includes growing the economy. The NDP is about wealth redistribution, not wealth creation.

BC miners await election outcome

36 EXPLORATION

Mining is on an upswing in BC

The province has a reputation as a global min-eral exploration hotspot. Some 1,200 exploration firms are located in BC, most in the Vancouver area, according to the Mining Association of Canadas (MAC) Facts & Figures 2012 report.BC stood third on the MACs list of Canadian provinces with the most metal mines in 2012, with nine, and third in terms of value of minerals produced, at $8.6 billion. The province is perhaps best known for its coal and natural gas, but it also has significant reserves of other resources, including copper, gold, silver and molybdenum. Roughly 29,000 British Columbians work in the provinces mining sector.Moreover, as we reported in a February 4, 2013 article, exploration spending surged in BC in 2012: during the year, miners spent $680 million searching for mineral deposits in the province, up 47 percent from 2011.That spending is expected to fuel a big produc-tion jump in the coming years: according to the Conference Board of Canadas Future of Mining in Canadas North report, which was released in January 2013, Northern BCs mining output will increase by 300 percent between 2011 and 2020.The Liberals have promised 17 new or expanded mines in BC between 2011 and 2015. In a January 30, 2013 speech at the annual Mineral Explora-tion Roundup conference in Vancouver, Clark claimed that BC is making steady progress toward this goal: here we are, not even at 2015, and we are already halfway there, she said. Since 2011, three new mines are in production and three are under construction. Five major mines have received approval to expand.In addition, as we reported on December 26, 2012, the Liberals have made efforts to unify the provinces permitting process with that of the federal government to reduce delays in approving new projects. At the Roundup conference, Clark pledged to invest an additional $7 million over six months to further cut permitting backlogs.

Chad Fraser

EXPLORATION 37

Liquefied natural gas: BCs economic savior?

The Liberals also see huge potential in the de-velopment of liquefied natural gas (LNG). In its election platform, the party pledges to have at least three LNG facilities up and running by 2020. These plants convert natural gas to a liquid that can be shipped to Asian markets, where gas sells for up to five times North American prices. Clarks Liberals have claimed that the LNG in-dustrys growth could help pay off provincial debt and eliminate the sales tax.The projects mean 39,000 jobs to British Colum-bia during construction with another 75,000 full time jobs created once in operation, the Liberal platform states. We can create $1 trillion in eco-nomic activity and create the BC Prosperity Fund with $100 billion over 30 years.For its part, the NDP has promised to launch a scientific review of natural gas development, in-cluding hydraulic fracturing, or fracking, which involves using water and chemicals under high pressure to crack open rock and release trapped gas. The partys platform states that it will support sustainable LNG development and export as part of a diversified and prosperous economy.The New Democrats also accuse the Liberals of taking too rosy a view of resource development. The government refuses to acknowledge there are downsides to expanding the oil-and-gas sec-tor, said NDP mining and energy critic John Horgan in an April 23 Vancouver Sun article. I think most British Columbians recognize there are downsides, and the challenge for the new gov-ernment, whoever it might be, is to manage those downsides in the best interests of the public.

Pipeline politics take center stage

Kinder Morgan Energy Partners (NYSE:KMP) proposal to increase the capacity of its Trans Mountain pipeline has also become a flashpoint in the campaign. The line pumps oil from Edmonton, Alberta, to the port of Vancouver. Kinder Morgan has not yet made its proposal to federal regulators, but on Earth Day, April 22, 2013, BC NDP leader Adrian Dix came out strongly against the project.We do not expect Vancouver to become a major oil export port as appears to be suggested in what Kinder Morgan is proposing, he said in an April 23 article in The Province. I dont think that the port of Vancouver, as busy a port as it is and successful a port as it is, should become a major oil export port.Dixs announcement came as a surprise to some as he had earlier indicated that he would wait for the company to make a formal application before taking a position.Hochstein sees Dixs position on the pipeline as both ideologically and politically motivated. He will give up $1 billion in tax revenue over Kinder Morgan, he said. They are worried about the Green Party splitting the vote on the left, so it was no longer expedient to wait for permitting.However, not everyone in the resource industry is as pessimistic about an NDP government. Weve gone through two previous episodes where the NDP were in power, and we saw some of the drastic effects it had on the mining industry, said Tom G. Schroeter, CEO of Fjordland Exploration (TSXV:FEX), in a March interview with the Investing News Network. However, this time around is going to be really different, I think. They are much more educated and attuned to the importance of the mining sector. They have good people there. They understand the issues.However, Schroeter feels it likely wont be completely smooth sailing for miners under the NDP. The two things that probably will be most noticeable is that there will be an increase in taxes, he said. But that will affect the operations already running, mainly. And the second thing is there will probably be a bit more bureaucracy.

38 CONTEMPORARY MAGAZINE MONTH 20XX38 EVENTS

Events Coming Soon

2 Oilfield Service and Construction ContractsWHEN April 17-18. 2013WHERE Aberdeen UKCONTACT +44 (0) 1382 385871

Gain an in-depth understanding of well services and construction contracts. Enhance your skills and abilities to apply contract provisions in negotiating the resolution of claims and disputes that arise in conducting petroleum operations.

1 Talent Acquisition and Social RecruitmentWHEN April 4-5 2013WHERE San Fransisco

Talent Acquisition and Social Recruitment 2013 is a comprehensive learning and networking opportunity analyzing the evolving trends of talent acquisition, employer branding, social recruitment platforms and mobile recruitment.This two-track event is a very unique opportunity for those looking to implement best practices for Talent Acquisition and Social Recruitment.

3 Subsea SystemsWHEN May 7-10. 2013WHERE Perth AustraliaCONTACT +44 (0) 1732 371371

This course gives a comprehensive understanding of the design, installation and operation of subsea systems. Key learning areas include issues affecting subsea production; the different structures and equipment involved in a system; the design and installation of subsea equipment; decommissioning regulations; industry terminology.

39 EVENTS

4 Employing Foreign WorkersWHEN May 5 - 6. 2013WHERE Calgary ABCONTACT 1-877-927-7936

With recently announced changes to the immigration system impacting the process for hiring and retaining foreign workers, you need to stay up-to-date on the new requirements and obligations for employers and foreign workers. As the economy in Western Canada continues to strengthen, your high-stakes projects may require labour that currently is not available within Canada.

5 Crude Oil Summit

WHEN May 13-14. 2013WHERE London UKCONTACT +1 212 904 3070

The Platts Crude Oil Summit 2013 has assembled influential upstream leaders and foremost market experts from the international oil community to evaluate and debate the industrys evolving landscape and explore how the new supply and new demand era is changing the game for all involved.

6 Financial Reporting Conference for the Oil and Gas Industry

WHEN June 5-6. 2013WHERE Calgary AlbertaCONTACT 416 204 3296

The adoption of IFRS created some unique challenges for the Canadian oil and gas industry and created uncertainty for oil and gas companies on how to interpret and apply the new standards, along with concerns of diversity in practice across the industry. This industry-drive conference will provide technical updates for all the key standards impacting the industry and lessons learned to date, along with sessions addressing broader areas of interest and concern for financial professionals in this industry. This conference will also provide a unique opportunity to discuss the issues and challenges you face with colleagues and peers from across the country.

ONLINE EDITION - FREEAPRIL 2013

This Issue OPEC 4 - 7

GOLD FUTURES 10 - 11

RENEWABLES 20 - 21

Gold Futurespg. 10-11

Natural Gaspg. 16-17

Renewable Energypg. 20-21

OPEC Monthly

Report

Issue #14

Pg. 4-7

Your Resource Investment Guide- stock, commodity, options news and strategies for the serious investor.

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