MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, FEBRUARY 17, 1998 (4)
MARKET ACTIVITY
Weaker gold and oil issues forced Toronto's equities market to lose ground by Tuesday's close.
"It was a really tough day in the resource sectors," said Josef Schachter, portfolio manager at Schachter Asset Management. "By midday, when people started worrying about this situation inIraq again, you saw things back off."
Fears re-emerged that Iraq would sell more crude oil and other resources if it and the U.S. reached an agreement, increasing the present market glut, Schachter said.
The U.S. has continued to urge Iraq to bow to United Nations resolutions calling for an open inspection of sites alleged to have the capability of producting destructive weapons.
Fred Ketchen, ScotiaMcLeod's director of equity trading, added: "No joy at all in any of the natural resource sides."
Haven't listed a quote for the day in a long time. Here's a comment one Canadian analyst made Monday in expectation that the TSE would flatten out this week. "We expect the main casualties of a less bullish market will be the oil shares. The TSE Oil & Gas Index has been treading water while the oil price has slid into the toilet again. Flush."
In the U.S., the prospect for military action in the Middle East weighed on oil drilling and related stocks. Halliburton (HAL), Cooper Cameron (RON), Smith International (SII), Camco (CAM), and Transocean Offshore (RIG) all suffered more than $2 declines.
INDEXES
The Toronto Stock Exchange 300 Composite Index fell 0.4% or 24.70 to 6960.46. In comparison, the Oil & Gas Composite Index took a larger hit, dropping 2.2% or 137.20 to 6236.18. The Integrated Oils fell 0.5% or 47.66 to 8865.51. The Oil & Gas Producers fell 2.7% or 148.62 to 5410.16. The Oil & Gas Services Index gave up its big gain of yesterday, plus much more - falling 3.9% or 109.10 to 2707.18.
INDEX CHARTS
TSE 300.......... canoe.quote.com
O&G Composite. chart.canada-stockwatch.com
Integrated Oil's.... chart.canada-stockwatch.com
O&G Producers.. chart.canada-stockwatch.com
O&G Services..... chart.canada-stockwatch.com
NEW PHLX OIL SERVICE SECTOR
bigcharts.com.
lonestar.texas.net
MOST ACTIVES
Kerms Top 21 - Spec 15 - Serv 9 Companies are in bold print.
Norcen Energy Resources, Rio Alto Exploration, Renaissance Energy, Gulf Canada Resources, Petro-Canada, Ranger Oil, Alberta Energy and Anderson Exploration were among the top 50 most active traded issues on the TSE.
No producers or integrated oils were among the list of top gainers.
Percentage gainers included Profco Resources 8.3% to $1.04, TransGlobe Energy 8.0% to $41.89, Pacific Cassiar A 7.8% to $5.50, Spire Energy 6.5% to $1.65 and Eurogas Corp. 5.4% to $2.13.
On the downside, Seven Seas Petroleum (U) fell $2.50 to 25.50, Crestar Energy $2.40 to $19.50, Denbury Resources $1.85 to $26.15, Talisman Energy $1.75 to $40.20, Renaissance Energy $1.00 to $27.45 and Canadian Occidental Petroleum $0.75 to $28.25.
Percentage losers included Black Rock Ventures 12.5% to $1.05, Crestar Energy 11.0% to $19.50, TriGas Exploration 9.5% to $0.95, Seven Seas Petroleum (U) 8.9% to $25.50, Cavell Energy 7.5% to $1.11, Petrobank 7.4% to $2.50, Purcell Energy 7.3% to $1.02, Black Sea Energy 6.9% to $1.35 and Denbury Resources 6.6% to $26.15.
Ram Petroleum reached a new 52-week high.
Pinnacle Resources reached a new 52-week low.
There were no service sector issues listed among the top 50 most active traded issues on the TSE.
Computalog gained $1.25 to $22.00, Enerflex Systems $1.00 to $39.00 and Shaw Industries B $0.75 to $45.50.
Among percentage gainers, Computalog gained 6.0% to $22.00 and Computer Modeling 5.0% to $1.05.
On the downside, Dreco Energy Services fell $2.15 to $39.85, Ensign Resource Services $1.80 to $29.25, Canadian Fracmaster $1.00 to $19.00 IPSCO $0.75 to $62.75 and Tesco $0.65 to $20.10.
There were no percentage losers.
No new 52-week highs.
Enertec Resource Services reached a new 52-week low.
Over on the Alberta Stock Exchange, Bearcat Exploration, Raptor Capital, Stampede Oils, Doreal Energy, HEGCO Canada, Green River Petroleum, Scimitar Hydrocarbons, Dalton Resources, Hampton Court, Colt Energy, Cirque Energy, EMR Microwave, Red Sea Oil, Dakota Resources and ICE Drilling were among the top 30 most active traded issues.
Solid Resources gained $0.40 to $6.95, Doreal Resources $0.35 to $2.10, Blue Power Energy $0.21 to $0.41, Progress Energy A $0.15 to $2.50, Parkcrest Exploration $0.13 to $1.24, Raptor Capital $0.12 to $0.72, Green River Petroleum $0.11 to $1.48, Golden Trend Petroleum $0.10 to $0.85, Ionic Energy $0.10 to $1.35, Talon Petroleum $0.10 to $0.85 and Underbalanced Drilling $0.10 to $2.25.
Percentage gainers included Blue Power Energy 105.0% to $0.41, Doreal Energy 20.0% to $2.10, Raptor Capital 20.0% to $0.72, Brigadier Energy 14.3% to $0.40, PanOil Resources 14.3% to $0.40, Golden Trend Petroleum 13.3% to $0.85, Talon Petroleum 13.3% to $0.85, Oilexco 12.5% to $0.45 and Parkcrest Exploration 11.7% to $1.24.
On the downside, Brandon Energy fell $0.29 to $0.35, Capco Resources $0.25 to $2.50, HEGCO Canada $0.15 to $3.10, AltaQuest Energy $0.10 to $2.15, Stellarton Energy $0.10 to $4.20, Real Resources $0.09 to $0.86, Best Pacific Resources $0.08 to $0.97, Redeco Energy $0.08 to $0.65, DeTECH $0.07 to $0.76, Jett Investment $0.07 to $0.93 and Gold Star Energy $0.06 to $0.43.
Percentage losers included Brandon Energy 45.3% to $0.35, Aspen Energy 16.7% to $0.25, Gold Star Energy 12.2% to $0.43, Scimitar Hydrocarbons 11.9% to $0.37, Redeco Energy 11.0% to $0.65 and Real Resources 9.5% to $0.86.
Doreal Energy and Green River Petroleum reached new 52-week higfhs.
Scimitar Hydrocarbons reached a new 52-week low.
An excellent summary of most actives covering all four of the Canadian Stock Exchanges can be found at quote.yahoo.com
ANALYSTS - FUND MGR.'S - BUY - HOLD - SELL - MISC.
Bonus Resource Service Corp.
(BOU/TSE $5.35) Buy
Bonus recently announced the acquisition of Canuck Well Servicing Ltd. The purchase price was $12.3 million for 13 service rigs operating in the Slave Lake region. Added to Bonus' existing fleet, this acquisition gives Bonus dominance in the service rig business in the Slave Lake area with 26 of 35 rigs in the area. We expect the acquisition to be accretive to earnings.
Outlook
Bonus now owns 153 service rigs in western Canada and 4 in Australia. Yearend 1997 results will be released in a couple of weeks and we are estimating EPS of $0.32 ($0.10 in Q497 vs. $0.08 in Q397). In 1998, the addition of rigs acquired during the course of 1997 and in 1998 will increase EPS to $0.45 with CFPS of $0.90. The company still has $25 million in cash to fund future acquisitions which management is confident they can utilize in the near term.
Valuation
We continue to like the prospects for the service rig industry which we feel has far less downside than the contract drilling industry. Oil and gas producers are likely to focus on workovers of existing wells in 1998 to maximize cash flow which utilizes service rigs. Investors can buy the shares at current levels with a one year target price of $7.00 per share.
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