MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, FEBRUARY 24, 1998 (5)
KERMS TOP 21 - SPEC 15 - SERV 9 COMPANIES IN THE NEWS, Con't
Paramount Resources Ltd. and Berkley Petroleum Corp. updated the ongoing exploration activities in the southern NWT and NEBC.
The Para et al Bovie C-76 60 degrees 20' 122 degrees 45' drilled in winter 1997 has tested gas from a 58 metre zone (average porosity 5.3 percent) in the Middle Devonian. Mechanical problems prevented full evaluation in the vertical well-bore. The companies are currently drilling a horizontal well from the C-76 well bore to further evaluate the prospect.
The Para et al Maxhamish b-57-L/94-0-15 well is cased with only modest gas shows from the Middle Devonian to date. The companies are currently drilling a shallow 1400m test at d-87-I/94-0-14 and one to three additional shallow tests are planned during March. The Para-Berkley Arrowhead N-65 60 degrees 40' 122 degrees 45' well has been drilled and cased to a total depth of 2925m as a gaswell. The well flowed gas at rates up to 28MMcf/d along with formation water while drilling in the Middle Devonian section under-balanced, and production tests will proceed this winter to determine the extent of the gas pay.
The companies are currently drilling a fourth new pool wildcat at Arrowhead O-5 60 degrees 30' 123 degrees 00' and have licenced an additional wildcat at Netla M-23 60 degrees 50' 123 degrees 00'.
Paramount and Berkley both have 50 percent before payout working interests in the NWT wells.
Lexxor Energy Inc. (LXX.A/ASE) has recently acquired drilling rights encompassing 22 sections of acreage (14,000 acres) along a productive Mississippian gas trend in the South Haro area of northwestern Alberta. Six exploratory locations have been delineated by the Company and industry competitors have recently licensed 9 exploratory wells adjacent to and on trend with Lexxor's acreage. Lexxor has surveyed the 6 locations, with drilling dictated by rig availability and seasonal access.
Lexxor is also proceeding with plans to tie-in two recently drilled gas wells adding approximately 800 mcf/d (80 BOE/D) to the Company's production base. The wells, a new pool discovery at Michel/Cardiff near Edmonton (Lexxor 50%) and at Conroy in north east British Columbia (Lexxor 15%) are expected to be on stream in March.
Lexxor has also announced that its Plover Lake, Saskatchewan heavy oil pool has been shut-in temporarily. The Bakken Sand reservoir, which has production capability in excess of 300 BOPD (150 BOPD net) will be brought into production when heavy oil prices recover. Lexxor's first quarter exit rate, excluding heavy oil, is expected to be approximately 450 BOE/D of which 70 per cent is natural gas production.
First quarter activity has focused on the generation of new Alberta prospects by an expanded exploration group. Lexxor is planning an active drilling program following spring breakup focusing on natural gas targets in central and northwestern Alberta and light oil plays in the south central part of the province utilizing $2 million in proceeds from a December, 1997 private placement of flow through shares.
Granger Energy Corp. (GAS.A/ASE) announced its audited financial and operating results for the fiscal year ended November 30, 1997.
Total company production increased 31 percent over the prior year to average 530 barrels of oil equivalent per day. Oil production increased 50 percent to average 477 barrels per day and natural gas production averaged 533 thousand cubic feet per day (mcfd), down from 872 mcfd. Net revenue rose 46 percent to $3,762,000 from $2,576,000. The average gas price received increased 21 percent to $2.00 per mcf, while the average net oil price increased 2 percent to $23.51 per bbl. Cash flow increased 72 percent to $2,096,000 ($0.72 per share basic) from $1,216,000 ($0.46 per share basic) in 1996. Net earnings increased 49 percent to $535,000 ($0.18 per share basic) from $360,000 ($0.14 per share basic) in the previous year.
Granger participated in drilling 22 (6.43 net) wells during the year, including 17 (4.50 net) horizontal wells, resulting in 17 (4.30 net) oil wells, 2 (.40 net) service wells and 3 (1.73 net) dry holes for a 73 percent net success rate. Granger's $6,655,000capital investment program added 17,000 net acres of undeveloped land plus 876,000 BOE's of established reserves, replacing 1997 production 4.5 times.
Granger is currently producing 650 barrels of oil equivalent per day
KERMS WATCHLIST OF COMPANIES IN THE NEWS
Ranger Oil Limited (RGO/TSE) announced their 1997 financial and operating results. Highlights include;
Total proven and probable reserves increased 125 percent, from 174 to 392 million barrels of oil equivalent (BOE)
Additions to proven and probable conventional oil and gas reserves from extensions, discoveries and revisions replaced 250 percent of 1997 production
Oil production increased 32 percent
ELAN Energy Inc. acquired September 29, 1997
Shares in issue increased 27 percent broadening the shareholder base
Substantial additional acreage acquired in West Africa and West of Shetlands
Two potentially high impact wells in the Northwest Territories currently testing
"1997 was a year of building foundations," said Ranger President and Chief Executive Officer, Fred Dyment. "In North America, the ELAN acquisition has added a new heavy oil division with a tremendous resource base as well as tripling light oil production. North Sea reserves have increased 25 percent and significant production growth will follow later this year. Exciting new exploration and exploitation opportunities have been added in West Africa and West of the Shetlands. Together, these achievements position Ranger for continued growth over the next five years."
Production
Oil production increased 32 percent to 38,403 barrels per day. The acquisition of ELAN in the fourth quarter contributed 7,632 barrels per day to annual average production. North Sea oil production increased 12 percent to 26,863 barrels per day with the benefit of a full year's production from the Ninian area acquisition in October 1996.
Gas production declined slightly from 170 to 165 million cubic feet per day in 1997. Non-core property sales and normal reservoir declines in Canada were responsible for the decrease.
Financial Results
Total revenues were US$351 million compared to US$299 million for 1996. Oil prices fell 15 percent averaging US$17.43 per barrel, down from US$20.49 in 1996. This reflected lower world prices as well as the addition of a heavy oil component in the fourth quarter of 1997.
Gas prices increased 18 percent, averaging US$1.70 per thousand cubic feet in 1997. Higher prices in North America accounted for the increase.
Operating expenses increased 39 percent to US$124 million in 1997. On a unit-of-production basis costs were US$5.93 per barrel of oil equivalent compared to US$5.14 in 1996. The increase reflects the greater proportion of production coming from high cost producing fields in the northern North Sea and Northeast British Columbia.
Interest charges increased to US$16 million from US$9 million in 1996. Higher average debt levels associated primarily with the ELAN Acquisition accounted for the increase.
Funds Generated from Operations before tax were US$195 million, compared to US$190 million in 1996. Current Income Taxes increased from US$1 million to US$11 million in 1997. The North Sea accounted for most of the increase, with taxable revenues in 1996 being sheltered from income tax by deductions brought forward from previous years. Current North Sea Petroleum Revenue Taxes fell from US$44 million to US$38 million as a result of lower oil prices. Funds Generated after tax were US$146 million (US$1.38 per share) compared to US$144 million (US$1.46 per share) in 1996.
Depletion and depreciation charges increased to US$131 million compared to US$123 million in 1996. Higher production volumes were responsible for the increase. On a unit of production basis, oil and gas depletion fell from US$6.41 to US$5.85 per BOE. During 1997 the Company also wrote-off US$8.8 million of unsuccessful exploration costs primarily in Algeria.
Earnings before tax were US$54 million compared to a loss of US$14 million in 1996. The loss in 1996 reflected a US$71 million write-down in Angola. Earnings after tax amounted to US$9 million (US$0.09 per share) compared to a loss of US$56 million (US$0.57 per share) in 1996.
Elan Acquisition
Effective September 29, 1997 Ranger acquired ELAN Energy Inc. The purchase consideration of US$517 million included 26.7 million new Ranger shares and US$276 million of additional debt. Proven and probable reserves acquired amounted to 214 million BOE, of which 179 million BOE represented heavy oil. At year end proven and probable reserves, primarily at Cold Lake, were revised downwards by 16 million barrels, mainly due to the decline in heavy oil prices. Average daily production in the fourth quarter of 1997 from ELAN amounted to 8,855 barrels of light oil, 21,424 barrels of heavy oil and 9 million cubic feet of gas. Heavy oil operating costs averaged US$4.87 per barrel. Since the acquisition approximately 2,000 barrels of daily production has been shut-in in response to declining world oil prices and widening differentials between heavy and light oil.
Ranger acquired ELAN's heavy oil business on the basis of adding long-term value for shareholders. Notwithstanding the recent weakness in commodity prices, the Company remains confident of the long-term future for heavy oil in Canada.
Oil & Gas Reserves
Including the ELAN acquisition, total proven and probable reserve additions in 1997 amounted to 238 million BOE. The North Sea accounted for 37 million BOE of additions, reflecting new field developments at Kyle and Columba E, upward revisions for Pierce, Columba B, and Columba D, and the acquisition of further Anglia field gas reserves. In Angola, 8 million BOE was added in respect of the Kiame oil field development. Proven and probable reserves at year-end amounted to 392 million BOE, an increase of 125 percent from 1996. Based on annualized fourth quarter production volumes, the Company's proven and probable reserve life index increased to 13.7 years (9.6 years for proven).
Finding, development and net acquisition costs for additions to proven and probable reserves in 1997 amounted to US$4.25 per BOE for conventional reserves and US$1.98 per BOE for heavy oil reserves.
Capital Expenditures
Excluding the ELAN acquisition, net capital expenditures in 1997 amounted to US$128 million. Exploration expenditures of US$93 million included US$42 million in North America, US$16 million in the North Sea and US$35 million for International, mainly Angola. Development expenditures of US$95 million were concentrated in the North Sea (US$50 million) and Canada (US$36 million). Property acquisitions of US$21 million were in the North Sea while property dispositions of US$78 million were in Canada
North America
Exploration well P-66 was spudded in January 1997 on a large potential gas prospect in the Fort Liard area of the Northwest Territories. In the Fort Norman area an exploration well has been drilled at Nota Creek. Both wells are currently being tested and results are expected shortly. In addition, two new wells have recently spudded in the Fort Norman area.
In March 1997, the Company was successful bidder on 11 offshore Blocks in the US Gulf of Mexico. Seismic evaluation has been carried out and the first exploration well drilled, unsuccessfully. A second well has recently spudded on West Cameron Block 478.
Disposition proceeds of US$50 million resulted from an alliance between the Company and Chesapeake Energy Corporation. Under the alliance, Chesapeake purchased 40 percent of Ranger's interest in the Helmet area of Northeastern British Columbia, outside of the July Lake pool, and future operations in the area will be conducted on a 60/40 basis. Other dispositions included non-core heavy oil properties and the Company's ownership interest in the proposed Alliance gas pipeline.
North Sea
Significant development activity occurred during the year. The Banff and Pierce oil fields were moved towards full-scale production in late 1998 and an additional 20 percent of Kyle was acquired doubling the Company's interest in this oil field satellite development. Infill drilling progressed at several fields with an important horizontal sidetrack successfully completed in the
Anglia gas field.
Two unsuccessful exploration wells were drilled in 1997, one an appraisal of the Selkirk oil discovery and the other a farm-in well on Block 20/10b. A well is currently drilling on Block 44/17a in the Southern gas basin.
In a mini-round award, Ranger acquired a 17.5 percent interest in Blocks 204/14 and 15 West of the Shetlands. This highly prospective acreage is adjacent to the Suilven oil discovery announced by BP earlier in 1997. Drilling of a possible Suilven extension as well as a separate exploration prospect is planned in 1998.
International
During 1997 approval was received for Ranger's first International development, the 8 million barrel Kiame oil field in Angola. The field is owned (100 percent) and operated by the Company. Elsewhere in West Africa, Ranger acquired a 24 percent interest in and became operator of Block CI-26 in the C“te d'Ivoire containing the previously relinquished Espoir oil field. Plans to develop this 100 million BOE field are currently under consideratio
Exploration wells were drilled during the year in Angola (three), Ecuador and Algeria. All were unsuccessful. Further drilling on Angola Block 4 and Ecuador Block 19 is planned for later this year or early 1999.
New exploration licenses have been acquired in Angola deepwater (Block 19), the C“te d'Ivoire (Blocks CI-26, CI-101, 102 and 103) and Peru (Block Z-29). First drilling on each of these substantial tracts is anticipated in 1999. Several giant oil fields have been discovered in the Angolan deepwater over the past year.
Financing
As a result of the ELAN acquisition, total long-term debt, less net current assets, increased to US$423 million at year-end. This represents debt to cash flow ratio of 2.6, based on the annualized fourth quarter cash flow. The ratio should fall below 2.0 as new production and cash flow comes on stream in the North Sea and Angola.
During 1997 the Company's previous short-term bank facilities were replaced with a US$425 million syndicated credit agreement. It is expected that a portion of this will be refinanced in 1998 with fixed-rate long-term notes. A prudent financial position is a key corporate objective and the Company remains committed to maintaining a strong balance sheet.
For further detail with table data, see Message 3522200
New Cache Petroleum Ltd. (NWA/TSE) reportd 1997 results. A successful year of drilling and acquisitions resulted in proven and probable reserves increasing 113% from 9.6 million boe in 1996 to 20.6 million boe in 1997. Proven reserves rose from 6.9 million boe in 1996 to 15.1 million boe in the current year. Proven and probable gas reserves rose over five-fold to 117.1 Bcf in 1997, up from 22.4 Bcf recorded the previous year. Additions were from the acquisition of gas production at Doris, subsequent development and new pool discoveries at Mahaska and Nig Creek.
New Cache replaced 1997 production by a factor of 11.6 times. A more balanced portfolio of reserves evolved in 1997 with gas comprising 57% while oil and liquids account for 43%. Comparatively, in 1996 gas made up only 23% of New Cache's reserve base.
Finding and development costs of $6.75 per boe were achieved based on proven and 50% of probable reserves. The three year rolling average on this basis is $6.46 per boe.
New Cache recorded a drilling success rate of 90% this past year, an improvement over the 78% tallied in 1996. The Company participated in 47 gross wells resulting in 24 gross (5.43 net) oil wells, 18 gross (12.33 net) gas wells and 5 gross (1.88 net) dry holes. The average participation interest was 42%.
Combined oil and gas production increased 31% from an average 2,163 boepd in 1996 to 2,834 boepd for 1997. Gas production increased 183% to 10.305 mmcf/d in the 1997 fiscal year, up from 3.646 mmcf/d in 1996. Oil and liquids production was flat at 1,803 bopd relative to 1996. New Cache averaged 3,538 boepd during the fourth quarter of 1997 compared to 2,239 boepd in 1996. Oil and gas production was 1,930 bopd and 16.080 mmcf/d, respectively during the last quarter. The Company averaged in excess of 5,000 boepd in December, the first month of the new fiscal year.
The Company invested a total of $71.5 million in 1997 with $43.7 million expended on producing property and corporate acquisitions and $27.8 million on conventional oil and gas drilling, land acquisitions, seismic and facilities.
Cash flow increased from $9.703 million in 1996 to $10.112 million for 1997. Cash flow per share declined from $1.17 per share in 1996 to $0.99 per share for the year ended November 30, 1997. Delays in getting on new gas production from acquisitions at Doris and new discoveries at Mahaska and Nig Creek resulted in lower than expected cash flow for the year. Equity issued to finance the acquisitions had a dilutive effect on cash flow per share. Net income was $.384 million ($0.04 per share) in 1997 down from $2.110 million ($0.25 per share) recorded in the prior year. Net income was effected significantly by an increase in the deferred tax rate from 46% in 1996 to 78% for 1997 due to the lower tax basis associated with the acquisitions. However, New Cache has tax and resource pools of $76.5 million which allows full shielding of cash flow well into the future.
Weighted average number of issued and outstanding shares were 10.190 million and 11.596 on a fully diluted basis for 1997.
Cash flow for the fourth quarter of 1997 was $3.109 million ($0.26 per share) compared to $2.536 million ($0.28 per share) for the 1996 period. The Company recorded a net loss of $74,000 ($0.01 per share) in the fourth quarter of 1997. Comparatively, net income of $761,000 was recorded in 1996.
As at November 30, 1997 New Cache had a total bank debt and working capital deficiency of $22.6 million representing a 1.25 debt to forward cash flow ratio. The Company had a working capital deficiency of $2.6 million and no long-term bank debt at the end of the previous year. New Cache currently has approximately 14.1 million common shares issued and outstanding.
Gulfstream Resources Canada Limited (GUR/TSE) recorded a profit of $2,724,631 or 5 cents per share for the three month period ended December 31, 1997. Income for the quarter is more than double the income level of $1,359,814 or three cents per share for the same period in the prior year. Per share calculations are based on 58,876,320 common shares outstanding for the first quarter of 1998 compared to 48,972,294 for the first three fiscal months of 1997.
Financial results reflect payment of a 2 cent per share dividend on December 31, 1997, payable to shareholders of record on December 19, 1997.
Gross revenues for the quarter totaled $11,255,166 compared to $6,384,693 for the same period in 1997. Expenses were $6,618,402 to the end of the quarter compared to $3,521,216 for the prior year period. Operating cashflow was $3,790,299 for the first quarter of 1998 compared to $1,078,894 for the first quarter of 1997.
Expenditures on oil and gas interests totaled $14,977,616 compared to $9,477,482 for the three-month period in 1997. Cash at quarter-end was $34,606,717.
Two additional production wells were brought on stream at Al-Rayyan offshore Qatar in late-November, 1997, increasing thenumber of producing wells in the field to six. Oil production from Al-Rayyan averaged 32 thousand barrels per day in December and 23 thousand barrels per calendar day for the quarter. No production was recorded from Al-Rayyan in the quarter ended December 31, 1996 as commercial production from the field did not begin until January 1, 1997.
A Plan of Development for longer-term development of the Al-Rayyan field has been submitted to the Government of the State of Qatar. In Madagascar, a 320 kilometre seismic program was completed in late November, 1997. Plans are underway to initiate seismic and drilling activity in Oman for 1998. Subsequent to December 31, the Company secured a $73 million, 3-year revolving credit facility with a consortium of international banks.
Encal Energy Ltd. (ENL/TSE - ECA/NYSE) announced operating and financial results for the year ended December 31, 1997. Revenue increased 35% to $167.8 million compared to $124.3 million in 1996.
Funds from operations increased 27% to $84.1 million ($0.81 per share) from $66.2 million in 1996 ($0.64 per share).
Net earnings for the year ended December 31, 1997 were $13.0 million ($0.12 per share) compared to $11.5 million ($0.11 per share) in 1996.
Net capital expenditures totalled $157.6 million in 1997 compared to $109.3 million in 1996. The capital program was financed by cash flow, debt and proceeds from the sales of minor properties.
Net Asset Value per share increased 17% during 1997 to $5.08 per basic common share from $4.35 in 1996.
1997 was another year where Encal improved its cost structure, with General and Administrative costs averaging $1.07 per BOE ($1.26 per BOE in 1996) and operating costs averaging $4.28 per BOE ($4.29 in 1996).
Production averaged 22,436 BOE per day compared to 17,803 BOE per day in 1996, an increase of 26%
Production during the fourth quarter averaged 24,855 BOE per day, an increase of 27% over the same period in 1996.
The exit production rate exceeded 26,000 BOE per day.
Approximately 10,500 BOE per day of new production was added at an average cost of below $15,000 per BOE per day.
Finding and development costs inclusive of all additions and revisions were $6.92/BOE proven and $5.46/BOE proven plus probable.
Net proven plus probable reserve additions amounted to 15.7 million barrels of crude oil and NGL and 132.1 billion cubic feet of natural gas or 28.9 million barrels of oil equivalent.
These reserve additions exceeded annual total production by a multiple of 3.5 times on a proven plus probable basis.
85% of reserve additions were generated by the drilling program
1997 was the most active year in Encal's history with the drilling of 181 gross wells resulting in 66 gas wells and 75 oil wells for an overall success rate of 78%.
Undeveloped land inventory for future exploration activity increased by 20% to 719,500 net acres.
For further detail with table data, see Message 3521985
|
