NORTH VANCOUVER, BC / ACCESSWIRE / September 21, 2015 / Many of the leading Canadian natgas/condensate producers have exciting (bullish) short term stock charts–just at a time when one fundamental natgas chart looks ominously bearish. The Big Play for natgas in Canada is the liquids-rich Montney formation on the BC-Alberta border.

It is the Eagle Ford of Canada, with very high condensate levels. So all the main junior and intermediate Canadian producers are focused there, and are anywhere from 10-50% condensate along with their natgas production.

But after a bit of research I found–these stock charts are likely heading up because of increasing Canadian heavy oil production. That’s counter-intuitive, but hear me out.

First off, I’ll eliminate natural gas as the likely reason for these bullish short term stock charts. The fundamental bearish chart I mentioned in the lead is the Bloomberg graph below which shows US natural gas pipeline flows in billions of cubic feet per day (bcf/d).

If my comments in the graph end up being true, then that would suggest the cheaper Marcellus gas will soon be displacing Canadian natgas in the US Midwest–which would mean a larger discount (lower price) is coming for Canadian gas to stay competitive in North America. And natgas storage on both sides of the 49th are very healthy; not quite burgeoning but close.

So that’s not really bullish at all. Now, it’s not all bad news–Canada has been shipping a lot more gas down to the US west coast in the last few quarters due to the drought, which is restricting hydro-electric power generation there. And the EIA is showing a shallow but steady decrease in natgas production across the 7 major US natgas plays.

My suspicion is these charts are moving up because of condensate pricing. In the US, condensate (or C5 for short as it has 5 carbon atoms) is a pain; everyone wants oil, and C5 trades at a discount to oil most of the time in the US. But in Canada, it’s an essential part of the energy complex.

That’s because condensate is a very light oil that is used to dilute Canada’s heavy oil to make it flow in pipelines, and oilsands production is expected to continue increasing in Canada for 3-5 more years-increasing demand for condensate. Several new deposits are coming onstream right now, including Imperial Oil’s new Kearl deposit. So Canada has a very large and very close domestic demand source for its condensate. That’s why I think these stock charts are starting to have some bullish set-ups.

And right now, my network tells me this increasing heavy oil production is creating heavier demand for spot condensate–and making making supply very tight. In fact, it will likely get tighter through the winter.

That’s because Canada’s heavy oil becomes even more gooey (or viscous, as the industry calls it) in winter with cold temperatures–so it needs even more condensate to dilute it (That’s why condensate is called a diluent). My very rough math says that equates to an extra 60,000 bopd of condensate in winter, on roughly 3 M bopd of heavy oil production.

So maybe these stock charts have some room to move still. I’ll show you a few below:

Tourmaline (TOU-TSX) is a bellwether Canadian natgas/condensate producer, with over 100,000 boepd now. It has completed a near textbook reverse head and shoulders formation, which is bullish:

That stock should go first as the leader. Basically, all the leading natgas-condensate stocks have charts that are only a few days behind Tourmaline–think of Dave Wilson’s Kelt Exploration (KEL-TSX), Jonathan Wright’s NuVista Energy (NVA-TSX), and Jeff Tonkin’s Birchcliff Energy (BIR-TSX).

Birchcliff Energy

Kelt Exploration:

It’s not all good news for investors–when you step back and look at the longer term 3 year chart, it’s clear that a strong downtrend on these stocks is still in place–but for some of them, they’re not far off a breakout. And they are all trading back up into a months-long band of consolidation which will act as resistance.

3 year chart on Tourmaline:

Birchcliff is getting close to breaking its downtrend:

But Kelt still has work to do:

So despite some positive fundamentals on condensate demand and pricing, investors may want to beware trading off short term signals. But when the energy market gets relatively bullish–as it has a bit coming out of the late August spike down–it’s easy to get caught up in the action.

It’s interesting to see that these “almost” breakouts are also happening in the leading junior oil stocks and service companies. Of course the question is…can this be sustained…maybe a better way to phrase it is…are these stocks leading commodity prices or following them?

In oil, Rick McHardy’s Spartan Energy (SPE-TSX) is also sporting this kind of recent short term action.

Spartan Energy

And here’s a chart of Secure Energy, which I would consider one of Canada’s Top 2 service companies.

But then swing back to the 3 year charts and the same effect is happening–butting up against strong downtrends and coming into a band of trading that will also act of resistance.

Will increased condensate demand be enough to get these stocks up above their moving averages and through the bands of resistance just overhead? That’s a tough call–commodity prices are so volatile now.

SOURCE: Oil & Gas Investments

ReleaseID: 432113

TORONTO, ON / ACCESSWIRE / September 21, 2015 / Augustine Ventures Inc.’s (CSE: WAW) joint venture partner and Operating Manager of the Joint Venture Agreement (JVA), Red Pine Exploration Inc. (“Red Pine”), announced on September 17, 2015 the first assay results from its Summer 2015 exploration program. These results, as well as geological observations, indicate the potential for the Hornblende Shear Zone (HSZ) to host high grade gold mineralization zones similar to those encountered in the Surluga Deposit.

The HSZ is located 200-300 metres west of the Jubilee Shear Zone, which hosts the Surluga Deposit (see Figure 1). The interpretation of aeromagnetic data and subsequent Summer 2015 fieldwork by Red Pine, traced the HSZ along a strike length of at least 2 kilometres with an observed surface width that locally exceeds 45 metres. The shear zone consists of a series of alternating high and low strain zones, with individual highly strained zones observed at surface with a measured width greater than 2 metres at surface.

Red Pine reports that grab samples were taken of the highly strained zones and quartz veins of the HSZ. Each sample consisted of at least 1 kilogram of material and was representative of the targeted unit (HSZ). The grab samples returned gold values up to 24.4 g/t for the quartz veins and between 3 and 4 g/t gold for some of the highly strained zones. (see Table 1).

This gold-bearing structure has not been extensively tested but returned a historical drill intersection of up to 10.27 metres at 3.01 g/t (U0007L7) (see Figure 1). Additional drilling also identified subsidiary gold-bearing shear zones (0.64 metres at 8.1 g/t gold in S087 and 2.08 metres at 3.06 g/t gold in S088), and high-grade quartz tension veins (1 metre at 53.2 g/t gold and 1 metre at 51.7 g/t gold in SD-15-11) between the Surluga Deposit and the HSZ. Should continuity be established along those structures, they may eventually add to the total mineral resource.

Red Pine reports that the fieldwork defined many geological similarities between the HSZ and the Jubilee Shear Zone (Surluga Deposit). These two shear zones are now interpreted as forming a single and interconnected NNE-trending shear system with subsidiary gold-bearing shear zones and high-grade quartz tension veins in-between. These geological observations indicate the potential for the HSZ to host high-grade gold mineralization zones similar to those encountered in the Surluga Deposit. Red Pine will focus part of the future exploration efforts to prove this working hypothesis as this could considerably expand the existing gold resource on the Wawa Gold Project.

Table 1 – Medium- to high-grade gold samples collected in the Hornblende Shear Zone

Figure 1 – Wawa Gold Deformation Zone

To view an enhanced version of Figure 1, please visit:
https://orders.newsfilecorp.com/files/698/17326_augustine1enhanced.jpg

“It is hard not to over emphasise the potential change to the Wawa Gold Project the Hornblende Shear Zone represents,” said Quentin Yarie, Red Pine’s President and CEO. “Identifying a parallel related gold-bearing structure has the potential to significantly improve the size and economics of the project.”

Dr. Robert (Bob) Dodds, President and Chief Executive Officer of Augustine, states “We agree with Red Pine that establishment of the HSZ gold mineralization in the foot wall has significant and positive impacts on the economics of the potential development of a mine. These results support our confidence that the Wawa Gold project could host a major gold deposit”.

On-site Quality Assurance/Quality Control (“QA/QC”) Measures

Red Pine reports that grab and channel samples are transported in security-sealed bags for analyses at Activation Laboratories Ltd. in Ancaster, Ontario. Individual samples are labeled, placed in plastic sample bags and sealed. Groups of samples are then placed into durable rice bags that are then shipped. All grab and channel samples are photographed and geo-referanced.

Red Pine has implemented a quality-control program to comply with best practices in the sampling and analysis of drill core. As part of its QA/QC program, Red Pine inserts external gold standards (low to high grade) and blanks every 20 samples in addition to random standards, blanks, and duplicates.

Wawa Gold Project Highlights

– NI 43-101 inferred resource of 1,088,000 ounces of gold at a 1.71 g/t gold using a 0.40 g/t gold cut-off grade for pit-constrained and 2.50 g/t gold cut-off grade for underground-constrained resources, contained in 19.82 million tonnes open along strike and at depth(1) ;

– Additional gold mineralization present, but not well defined, in the hanging wall and footwall secondary structures indicate that the contained gold of the pit-constrained resource can be increased and would significantly improve the economics of the resource(1);

– Strike length continuity for some gold-bearing structures exceed 2.5 kilometres with potential continuous gold mineralization;

– Advantageous land position in an under-explored gold camp that hosted eight past producing mines with average grades of 8.9 g/t gold;

– Proximity to established regional infrastructure (roads, rail, airport, high voltage power lines, existing mill) and skilled workforce;

Qualified Persons

Quentin Yarie, PGeo. is the qualified person responsible for preparing, supervising and approving the scientific and technical content of the news release of September 17, 2015,the results of which are contained herein, and is responsible for overseeing all aspects of the company’s exploration programs.

Any technical information in this new release presented by Augustine has been reviewed by Dr. Ed Walker, Ph.D., P. Geo, a Qualified Person as defined in NI 43-101.

(1)The Mineral Resource is disclosed in the NI 43-101 technical report titled “Mineral Resource Statement*, Surluga-Jubilee Gold Deposit, Wawa Gold Project, Ontario, SRK Consulting (Canada) Inc (effective May 26, 2015)”. The report is available on www.SEDAR.com under Red Pine’s profile.Cut-off grades are based on a gold price of US$1,250 per once and a gold recovery of 95 percent.

About Augustine Ventures Inc.

Augustine Ventures Inc. is a junior gold exploration company headquartered in Toronto, Ontario, Canada. The Company’s common shares trade on the CSE under the symbol “WAW”.

Augustine has a 30% interest in the Wawa Gold Project and has entered into a Joint Venture Agreement (JVA) with Citabar LLP and Red Pine Exploration Inc. The Wawa Gold Project is now owned by Citabar/Red Pine/Augustine in the ratio of 40%, 30% and 30%, respectively. Under the terms of the JVA, Red Pine is the Operating Manager and will continue to explore and advance the current gold resource on the property. Red Pine is currently expediting negotiations to consolidate ownership of the Wawa Gold Project.

For additional information contact:

Augustine Ventures Inc.
Robert (Bob) Dodds, President & CEO
Tel: (416) 363 2528
Cell: (905) 599-2025
Email: bdodds@augustineventures.com

This news release may contain forward-looking statements. All statements, other than of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding the estimation of mineral resources, exploration results, potential mineralization, potential mineral resources and mineral reserves) are forward-looking statements. Forward-looking statements are often identifiable by the use of words such as “anticipate”, “believe”, “plan”, may”, “could”, “would”, “might” or “will”, “estimates”, “expect”, “intend”, “budget”, “scheduled”, “forecasts” and similar expressions or variations (including negative variations) of such words and phrases. Forward-looking statements are subject to a number of risks and uncertainties, many of differ materially from those discussed in the forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include, among other things, without limitation, failure to establish estimated mineral resources,the possibility that future exploration results will not be consistent with the Company’s expectations, the price of gold and other risks identified in the Company’s most recent filings with Canadian securities regulatory authorities on SEDAR.com. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement.

SOURCE: Augustine Ventures Inc.

ReleaseID: 432115