MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, JANUARY 19, 1998 (5)
KERM'S TOP 21 - SPEC 15 - SERV 9 COMPANIES IN THE NEWS
See PETRO-CANADA story and Analyst Comments on NEWPORT PETROLEUM.
PEAK ENERGY SERVICES LTD. announced that it has filed a notice with The Toronto Stock Exchange of its intention to make a normal course issuer bid. The maximum number of common shares, which Peak may acquire under the bid, is 1,824,024, representing approximately 5 percent of the 36,480,484 common shares, which are currently outstanding. All shares acquired will be cancelled upon acquisition by Peak. Peak is putting this normal course issuer bid in place because, in the view of Peak management, recent trading prices for the Corporation's shares have not reflected the value of Peak.
KERM'S WATCHLIST OF COMPANIES IN THE NEWS
GULF CANADA RESOURCES LTD., on behalf of its wholly owned subsidiary Clyde Petroleum Plc, announced that as part of Gulf's strategy to expand its presence in the North Sea, the office for United Kingdom operations will be moved to London. The Company is in negotiations for office space in the London's West End and the relocation should be completed by mid-year.
''London will mean closer proximity to all levels of industry contacts, placing Gulf more squarely in the London oil and gas deal flow'', said Doug Manner, Vice President of International for Gulf Canada. Gulf will also streamline support and administration functions between the UK and Netherlands offices. The UK office will also continue to be responsible for current Middle Eastern and African projects and other regional opportunities for Gulf.
NEUTRINO RESOURCES INC., SAWTOOTH INTERNATIONAL and BLUE SPRINGS RESOURCES INC. reported their Lessard 13-25-123-18 W5M horizontal Keg River test drilled during February, 1997 has been placed on production effective December 29, 1997 at 270 BOPD. The well has been choked back to currently produce 240 BOPD per day of light clean 29 degree API oil with a BS & W cut of approximately 7% consisting of 6% Ashphaltines and 1% water. The 13-25 well adds approximately 48 BOPD to Sawtooth's current production of 55 BOPD.
Neutrino Resources Inc., as operator is preparing to spud the first of two (2) horizontal wells on the 10 section partner-held lands by January 24, 1998. Immediately following the completion of the first well, Neutrino plans to move the drilling rig on to the second location which is expected to spud by February 13,1998. Pending the outcome of the drilling program described above, the construction of pipeline and storage facilities with a terminal at the Hay River highway will be considered for late 1998 or early 1999. Additional seismic and/or 3-D program may be acquired and/or shot over the prospect during February 1998.
NEUTRINO RESOURCES INC., in a separate announcement, said they are beginning an aggressive winter drilling program which includes a minimum of 2 development wells and 5 exploratory wells by the end of first quarter, 1998. Neutrino's year end production met their 1997 year-end projections, reaching 3,501 barrels of oil equivalent per day.
OTHER COMPANIES IN THE NEWS
SUNCOR ENERGY INC. Monday reported a 19 percent jump in profits for 1997, with the company's northern Alberta oil sands business accounting for the bulk of the improvement.
Calgary-based Suncor's results were the first of what analysts expect will be a strong showing from all of Canada's big four integrated oil companies, or those that drill for oil and natural gas as well as refine and sell gasoline.
"The oil sands are producing very well, probably better than the company wants to let on, and that looks like it's going to continue," said Doug Monaghan, an analyst with Scotia Capital Markets.
Suncor, the smallest of Canada's big integrated oil companies, reported 1997 earnings of C$223 million ($155 million) or C$2.04 ($1.42) a share, up 19 percent from C$187 million ($130 million) or C$1.71 ($1.19) a share the year before.
Revenues for the year totaled C$2.2 billion ($1.53 billion), compared with C$2.1 billion ($1.46 billion) in 1996.
In the fourth quarter of 1997, earnings were C$72 million ($50 million), or C66 cents (46 cents) a share, up 53 percent from C$47 million ($33 million) or C43 cents (30 cents) a share, the year before.
Fourth-quarter revenues were C$565 million ($393 million), down from C$573 million ($399 million) in 1996.
Suncor operates Canada's second-largest oil sands mining and synthetic oil production operation, produces conventional oil and gas in western Canada and refines and markets gasoline in Ontario under the Sunoco banner.
Suncor Chief Executive Rick George said that despite sharply lower crude oil prices, he expected his firm to pump out strong results again in 1998 as a result of sales of future oil production at above market prices and lower raw materials costs at its Sarnia, Ontario, refinery.
The company said it planned to invest more than C$1 billion ($700 million) in its operations this year to increase its production by 15 percent. It spent C$847 million ($590 million) last year.
Suncor's overall oil and gas production averaged 119,000 barrels of oil equivalent a day in 1997, up 3 percent from 116,500 the year before.
Of the total, synthetic oil wrung from mined oil sands accounted for 79,400 barrels a day, up from the year earlier average of 77,600, despite a monthlong maintenance shutdown at the Fort McMurray, Alberta, plant last spring.
In 1998, oil sands production was expected to average 90,000-95,000 barrels a day at a production cost of C$13.25 ($9.23) a barrel, George said.
Under Suncor's "Project Millenium" plans announced in July, it plans to spend out C$2.2 billion ($1.5 billion) on oil sands to boost output to 210,000 barrels a day by 2002.
RAMARRO RESOURCES INC. announced year end results for the year ended September 30, 1997. Revenue for the year increased to $2,338,131from $1,734,389 a year ago. Cash flow was $959,232 ($0.080/share) compared to $552,806 ($0.049) last year. Net earnings amounted to $242,809 ($0.020/share) vs $60,700 ($0.005/share) a year ago.
Daily production increased to 2.43 mmcf/d from 2.02 mmcf/d the previous year. Average natural gas price realized was $1.78 vs $1.39 a year ago.
The value of Ramarro's proven reserves, at a present worth discount of 15 percent, totals $6.02 million, which is an increase of 40 percent over last years value. At September 30, 1997 Ramarro had 16,165,173 shares issued and outstanding. The above results reflect the merger with Ripple Resources Ltd. effective May 21, 1997.
ARCIS CORP. announced that it has entered into a letter of intent to acquire all of the shares of Sourcex Geophysical Inc. for $2.5 million plus 2,307,694 common shares of Arcis (valued at $1.5 million or $0.65 per share). Sourcex is a privately owned seismic acquisition company which has three acquisition crews utilizing state of the art equipment. In the year ended September 30, 1997, Sourcex had revenues of $20.8 million.
Arcis, which was established in December, 1996, is a uniquely integrated geophysical services company operating in Western Canada. The Company processes, archives, brokers and manages seismic data as well as provides two field acquisition crews to shoot exclusive and non-exclusive seismic data. It is Arcis' primary objective to create a significant proprietary seismic data library in the next few years as well as to continue to provide outstanding service to over 150 oil and gas companies.
The acquisition will significantly enhance the combined companies' ability to conduct 2D and particularly larger 3D seismic acquisition for its clients. It also allows Arcis to continue to build its seismic data library.
Arcis Corp. has 23.6 million shares issued and outstanding.
INTERNATIONAL - COMPANIES IN THE NEWS
RED SEA OIL CORP. and SANDS PETROLEUM AB announced the results of the initial three drillstem tests conducted on the B1-NC177 well currently being evaluated on Block NC177, onshore Libya. Drillstem tests were conducted at the Beda, Lower Zelten and Upper Zelten levels. Combined flow rate was 5,789 barrels of oil per day. The principal target, the Facha level, has yet to be tested.
The Upper Zelten or Zelten "A" interval flowed high quality oil (48 degrees API) at 4,761 BOPD through a 1 1/4 inch choke. TheLower Zelten flowed 303 BOPD through a 1/2 inch choke. The Beda flowed 725 BOPD through a 1 inch choke.
The testing program will now continue and two additional tests will be carried out in the Facha level. Different options for appraisal drilling and early production systems are now being reviewed.
Red Sea Oil has a 60 percent interest in Block NC177 with Sands Petroleum AB holding 40 percent. Sands owns approximately 61 percent of the outstanding shares of RSO.
Sands Petroleum AB, as of today, on the Toronto Stock Exchange under the symbol "SPB", and expects to be quoted on NASDAQ, under the symbol "SANPY", January 20, 1998.
CIRQUE ENERGY LTD., ALTAQUEST ENERGY CORP. AND COURAGE ENERGY INC. announced the initial U.K. test results from the new pool oil discovery at the Fiskerton Airfield No. 1 well in the United Kingdom. On January 16, 1998 a 9.5 meter pay section of the 23 meter sand interval was perforated in the Fiskerton Airfield No. 1 well. The well was flowed for 28 hours on a 32/64 inch choke recovering 654 barrels of oil. Flow rates varied from 520 to 650 barrels of oil per day for an average rate of 560 barrels per day. Water production was 0.6%.
The well is currently shut-in to conduct bottom hole pressure testing and to install long term production testing surface equipment. It is anticipated that the long term testing will commence on January 24, 1998. Preparations are continuing for the 3D seismic program scheduled for February, 1998 and applications are being prepared for a five well development drilling program. Two of these wells are slated for drilling in June/July, 1998.
INTERNATIONAL - COUNTRIES IN THE NEWS
ALBANIA
Albania's struggling oil industry received a double boost on Monday as two international consortia signed onshore exploration and production sharing contracts, leaving little of the country uncovered.
A group led by Austrian oil and gas company OMV (OMVV.VI) signed two contracts for three blocks while a second group led by U.S. oil major Occidental (NYSE:OXY) wrapped up agreements for another three blocks.
''The fact we signed five agreements for six blocks is a big success because most of Albania's territory is now covered by contracts,'' Fatbardh Ademi, head of the National Hydrocarbons Agency, told Reuters.
''Signing with two groups made up of seven companies is positive and also proves Albania remains interesting for oil exploration.''
OMV, which owns a 40 percent stake in its consortium, is partnered by British independent Enterprise Oil (UK & Ireland: ETP.L) with 30 percent, Hungarian MOL (MOLB.BU) and Clyde Expro -- a unit of Gulf Canada Resources (Toronto:GOU.TO) -- each with 15 percent.
The second consortium includes unlisted U.S. Anschutz Corp and Canada's International Petroleum Corporation (Toronto:IRP.TO), which own 30 percent and 20 percent, respectively to Occidental's 50 percent.
Numerous foreign oil companies have been given concessions to explore for oil onshore and offshore in Albania since the former communist Balkan state invited bids seven years ago.
None has yet struck it rich and some of them suffered damage during the social turmoil which enveloped the country after the collapse of bogus pyramid investment schemes last spring.
Ademi would not reveal details of the investments planned under the 25-year contracts but said a minimum of $19 million would be spent exploring the six blocks during the first seven year phase.
He said the foreign groups would operate all the blocks.
''Their partner is the Albanian state through the National Hydrocarbons Agency, not the (state-owned oil company) Albpetrol,'' Ademi said.
OMV and Occidental have been active in Albania since 1989 and 1992, respectively and each also has an offshore concession.
OMV said it had drawn up a work programme including seismic surveying and the drilling of at least one test well.
''Through the signing of these contracts, OMV... and its partners are confirming their interest in exploring the country's remaining hydrocarbon potential and further strengthening Albania's upstream oil and gas industry,'' it said in a statement.
Ademi said he hoped the Occidental group would begin seismic surveying during the summer of 1998 and start drilling in the next couple of years.
Albanian crude oil production fell to 74,575 tonnes in the third quarter of 1997, down from 87,250 tonnes in the second quarter which itself was already 30 percent below the same period in 1996.
Prime Minister Fatos Nano last month signed a joint venture agreement with Britain's Premier Oil (UK & Ireland: PMO.L) worth $250 million to increase oil production and build an 18 km (12 mile) pipeline.
COLUMBIA
Repair work on Colombia's crippled Cano Limon-Covenas pipeline was still stalled Monday because of continued rebel activity around the site where the latest bomb attack took place, the state-run oil company Ecopetrol said.
A spokesman said about 7,000 barrels of crude had spilled into a creek near the blast site, 220 miles (352 km) west of the Cano Limon oil field operated by Occidental Petroleum Corp (NYSE:OXY - news) in northeast Arauca province.
''The zone is not yet secured yet. There's still a law and order problem in the area,'' the Ecopetrol spokesman said.
''About 7,000 barrels of crude fell into the Cano La Victoria creek but we have managed to contain that with floating barriers,'' he added.
National Liberation Army (ELN) guerrillas blew up the 230,000 barrel per day capacity pipeline Saturday afternoon just 16 hours after it had been repaired from the previous attack.
There was no immediate word about production levels at the Cano Limon field but back-to-back blasts tend to force a cut in output as crude cannot be pumped to the Caribbean coast lifting terminal at Covenas and on-site storage capacity is limited.
The Cuban-inspired ELN, which specializes in attacks on the country's oil infrastructure, blew up the pipeline, the second largest in the country, a record 65 times last year and twice forced Occidental and Ecopetrol to declare force majeure on production and deliveries.
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