MARKET ACIVITY/TRADING NOTES FOR DAY ENDING WEDNESDAY, MARCH 11, 1998 (3)
FEATURE STORY
Fun Around The World
Calgary Sun
Dale Simmons, chairman of the Simmons Group, Inc., a Calgary-based, domestic and international oil service company, has a very simple mission statement: "Join the drilling business -- see the world."
Which is precisely what Simmons has been doing during 36 years at the helm of the Simmons Group. He's done well workovers in frozen Siberia and well drilling deep in the Indonesian jungle.
He's worked on an island in the Red Sea as well as way out in the West Australian outback and many other places in between.
"We operate 22 rigs worldwide," explains Simmons.
"Our international operating office is in Donnington Castle, England, and we have rigs in France, Spain, Kazakhstan, Indonesia, Albania, Vietnam and El Salvador."
But Simmons Group is also very busy domestically. It has been Canada's foremost driller for Saskatchewan potash, the biggest potash bed in the world.
The company owns and operates the natural gas pipeline into Syncrude at Fort McMurray.
From its Lacombe field office, it operates 10 service and workover rigs and 14 industrial rigs which keep 100 rig staff busy doing well servicing, boring and coring all over the province.
"We're expanding the service end of the business," says Simmons.
"It's a stable business and a good bed for a drilling contractor."
Until 1996, Simmons operated 27 drilling rigs them in order to concentrate on its growing international operations.
"We've been international since 1981," says Simmons. "We felt it was a good time to sell and expand operations overseas."
Operating internationally is much different from operating domestically, says Simmons, especially with respect to the amount and diversity of equipment the company needs. "We need to have more assets than just rigs," says Simmons. "We need our own trucks, cranes and camps and the logistics involved in getting a rig from place to place are more complex."
Simmons says he's had a lot of fun in the drilling business, which was a good way to combine the two things he likes to do. "I've always liked drilling rigs and I've always liked international travel," he says. "I just liked the whole business."
FEATURE STORY
Geco/Prakla awarded seismic study contract 3/12/98
A contract has been awarded for a seismic study of recently acquired acreage on the Grand Banks by four major oil companies.
Petro-Canada, Chevron Canada Resources, Mobil Oil Canada Properties and Norsk Hydro Canada Oil and Gas Inc. said Wednesday the contract went to Geco/Prakla, a unit of Schlumberger.
The seismic work will be done on acreage located approximately 25 kilometres south of the Hibernia oilfield and 25 kilometres southwest of the Terra Nova field.
The program will cover portions of three exploration licences which the companies acquired in 1996 and 1997 and will enable the companies to finalize locations for a drilling program on the acreage.
The program is to be carried out this summer and will involve acquiring approximately 1,000 square kilometres of three dimensional seismic data over a two-month period.
Geco/Prakla will acquire the data using the marine vessel Geco Orion, which will be based out of St. John's for the program.
Petro-Canada will operate the seismic program on behalf of the four companies.
FEATURE STORY
More Offshore Bids 3/11/98
The Canada Newfoundland Offshore Petroleum Board is once again feeling the waters off Newfoundland to see if major oil companies are interested in exploration.
The CNOPB announced its 1998 call for bids Tuesday, offering exploration licences on 13 new parcels, more than half of which are outside the Jeanne d'Arc basin.
The minimum bid for each parcel is $1 million.
Six of the parcels are located in the Jeanne d'Arc Basin, home to Hibernia, Terra Nova, Whiterose and Hebron. Three parcels are in the Outer Ridge Complex, two are in the Flemish Pass and two more are in the North Grand Banks Basin.
Successful bidders are issued a nine-year exploration licence and must drill a well generally estimated to cost at least $50 million - within the first five years.
The bidding period closes Sept. 16 at 4 p.m.
FEATURE STORY
Exploration Firms Look To Merge 3/12/98
The Evening Telegram
A St. John's-based oil and gas exploration company holding petroleum land rights in western Newfoundland has agreed to merge with a Vancouver based exploration firm.
The board of directors of Imperial Venture Corp. said Wednesday the company has reached an agreement to merge with TKO Resources Inc.
Imperial Venture, headed by Steven Millan, chairman and chief executive officer, holds 100 per cent rights to two parcels of land on the province's west coast.
The parcels are the onshore Harry's River block of 84,000 acres; and the offshore Bonne Bay block of 399,000 acres.
Imperial Venture's board said TKO will issue 19,761,000 shares for the 6,587,000 issued and outstanding shares of the St. John's company.
In addition to the issuance of stock, TKO will issue options and warrants to replace those existing in Imperial Venture at the time the agreement is signed. The agreement is subject to the approval of the Vancouver Stock Exchange.
"This transaction represents a strategic move on the part of Imperial Venture and TKO Resources to improve the merged entities' position in the oilpatch and to explore a world class opportunity on the East coast of Canada," the board of directors said.
The Imperial Venture board said preliminary exploration on the Imperial Venture onshore block has identified a number of prospect leads.
The Harry's River block has potential prospects of 50 million to 100 million barrels of oil equivalent (BOE) recoverable, the company said. BOE is a measure of the total energy potential from oil and gas combined.
"Three prospect leads with total potential recoverable reserves of 395 million barrels are identified with an additional 100 million barrels possible on the upside," the board of directors said.
Imperial Venture said its offshore acreage is covered by 2,400 line kilometres of seismic and several major structures are defined.
The Bonne Bay block has potential prospect sizes of 100 million to 500 million BOE recoverable with four prospect leads, the company said.
Total potential recoverable reserves of 931 million barrels have been identified.
The other members of Imperial Venture's board are Ted Best, principal of The Foste Group, a business and economic consultants group in Calgary; Jack Bolter, petroleum geologist and former president of Pointer Exploration, which recently merged with Pan Atlas Corp.; and George Langdon, president and exploration manager of Imperial Venture.
FEATURE STORY
Environmental Company Gets $4.5-Million Contract 3/12/98
SCC Environmental Group Inc., a St. John's-based environmental company, has been awarded a $4.5million contract in South America.
Paul Antle, president and chief executive officer of SCC, said the contract in Ecuador is to treat drilling muds and cuttings produced by a major U.S. oil company at an oilfield installation in the rain forest.
SCC is currently a subsidiary of Stratos Global Corp. of St. John's but discussions are under way for the possible sale of the environmental firm to interested parties.
Meanwhile, in announcing the South American contract Wednesday, Antle said the company will use its thermal phase separation (TPS) technology to extract the drilling fluids from the mud, rendering the solids inert and recovering the drilling fluid for reuse.
The company made a decision in 1997 to heavily invest in the TPS technology and focus on promoting the application of the technology to the oil and gas sector, Antle said.
"Apparently, the investment and enhanced focus has paid off for the company."
Antle said drilling muds and cuttings are the byproduct of drilling oil wells.
He said the TPS technology is attractive to the oil and gas industry because it enables soil to be replaced on the drill site with no environmental impact. Also, the drilling fluid can be recovered and reused by the oil company in its continued drilling operation.
"So there is a double saving and a very positive environmental benefit."
SCC is currently pursuing contracts in Ecuador, Peru, Colombia, Venezuela, Mexico, Australia, New Zealand, Brunei, Kuwait and Saudi Arabia, Antle said.
Meanwhile, Stratos Global said in its annual financial report, released Tuesday, that it is in the process of divesting itself of the environmental firm.
In order to position SCC for sale, Stratos Global has reclassified SCC as a discontinued operation, for accounting purposes.
As a consequence, Stratos Global has taken a $1.7-million writedown, which includes SCC's $625,000 operating loss in the fiscal year ended Oct. 31, 1997, Antle said.
He said the loss resulted from an increased investment in the TPS technology and securing permits and contracts throughout the globe.
Antle and Derek Woods, Stratos Global's president, have said discussions are under way with interested parties concerning SCC. The discussions are expected to lead to "a positive announcement in the very near term."
FEATURE STORY
Irvings And McCains Face Off Over Gas
The Financial Post
Two of the most powerful families in Atlantic Canada have joined opposing camps in a new battle for the rights to distribute Sable Island natural gas in the region.
The Irvings have joined Vancouver-based Westcoast Energy Inc. as a 50/50 partner in a bid to distribute the gas in New Brunswick and Nova Scotia.
Westcoast is already a partner in a consortium building a $1-billion pipeline to move the gas from Sable Island to the eastern U.S. The $3-billion project led by Mobil Corp. won government approval late last year.
The McCains, through Harrison McCain, are among a group of 23 New Brunswick investors that joined forces with Consumers Gas Energy Inc., a subsidiary of Calgary-based IPL Energy Inc., to seek the rights to distribute natural gas in New Brunswick. Consumers has 1.4 million customers in Ontario, Quebec and upper New York state.
The McCain family controls McCain Foods Ltd., while the Irving family controls Irving Oil Ltd. Consumers, which has a 67% stake in the bid, estimates it would cost $300 million to set up a city distribution network and another $200 million for lateral lines.
IPL is also a partner with Nova Scotia Power in a bid to win the distribution rights in Nova Scotia. Sable Island gas is expected to start flowing through New Brunswick and Nova Scotia to the eastern U.S. in November 1999.
A decision on who wins the distribution rights in both provinces is expected this year.
FEATURE STORY
West Meddling Behind Oil Slide, Say Gulf Papers
Gulf Arab newspapers on Thursday voiced suspicion that the slump in world oil prices had been steered by Western powers happy to break up the Arab-led Organisation of the Petroleum Exporting Countries (OPEC) and benefit from cheaper energy import bills.
With oil prices shadowing their lowest level in nine years, some Gulf newspapers said the combination of flagrant production violations by OPEC-member Venezuela and a move by the United Nations to get Iraq to export more oil were more than mere coincidence.
Other papers said the West's pleasure with falling petroleum prices was part of the pay-back for the crippling 1973 Arab oil embargo and a way for industrialised countries to cut the price of their own exports during Asia's economic slowdown.
''...It is the interest of the West to buy oil at very cheap prices, to push Venezuela to flood the market and to pressure the U.N. to issue a decision to double the value of Iraqi oil exports,'' the al-Kahleej newspaper in the United Arab Emirates said in an editorial.
Referring to press reports that Venezuela had been used by the United States to pressure OPEC and control prices, the Emirates News daily ran a leading commentary under the title ''Suspicious moves.''
''...The timing of the (U.N.) resolution and the insistence of the U.S. and its allies on its implementation despite Iraq's reservations is a clear indication of the true intentions behind such as resolution,'' Emirates News said.
''It (the resolution) is closely related to the blow to the oil producing countries amid declining prices and the looming blow to OPEC from Venezuela to destroy its foundations,'' the state-owned paper added.
Iraq and the United Nations will close four days of talks on Monday on an expanded ''oil-for-food'' program that would allow Iraq to export $5.256 billion of its oil over six months rather than the current cap of $2.14 billion.
The higher export level, which would go into effect in June if agreed by Iraq, has undermined sick oil markets which have lost 40 percent of their value in the last five months.
Venezuela has long ignored its OPEC quota, pushing OPEC kingpin Saudi Arabia aside to become the main source of America's oil imports and boosting the 11-member's group output to its highest level since 1979.
The UAE's al-Bayan newspaper said in an editorial that the industrial countries had been keen to ''exterminate'' OPEC ever since the Arab producing countries used oil as a strategic weapon by cutting off the West's oil supplies in 1973.
''Since then the big industrial countries have been planning how to exterminate OPEC. They looked at developing alternative sources of energy and oilfields outside OPEC countries,'' al-Bayan said.
Another UAE newspaper, the Gulf News, said the drop in oil prices meant an overhaul in economic planning.
''The UAE has made a giant leap in its economic development by using oil revenues. Now it is time to succeed in the post-oil era,'' the Gulf News paper said in an editorial after a UAE minister call for restraint in government spending amid falling oil revenue.
OPEC ministers, including those in the Gulf, have blamed the oil price slide on a combination of factors including higher OPEC and non-OPEC production, a mild winter in the northern hemisphere and Asia's economic slowdown. |
