Here is the story from todays G&M
Berkley leads juniors up
Market eyes California gas joint venture
GUY DIXON
Investment Reporter
Thursday, October 7, 1999
Shares of Berkley Petroleum Corp. and a host of junior energy
stocks rose yesterday on speculation that their jointly owned natural gas wells in
California may yield promising results.
Berkley, a mid-sized oil and gas producer based in Calgary, rose 45 cents to $14.65 in
heavy trading in Toronto. Vancouver-based Hilton Petroleum Ltd. jumped nearly 16 per
cent, closing up 70 cents to $5.10. With close to 2.2 million Hilton shares trading hands,
volume was eight times more than usual.
Another of the major movers among junior energy stocks was Vancouver-based Trimark
Oil & Gas Ltd., up 48 cents to $2.33 on volume of nearly 946,000 shares. Trimark and
Hilton have the same chairman and chief executive officer, Donald Busby, and both
businesses are managed by Chase Management Ltd. in Vancouver.
All three energy companies gained yesterday -- sparking queries from the Toronto Stock
Exchange -- as word spread that the companies may be on the brink of tapping another
major natural gas find with a second well.
It all started months ago with a bang. The first of the wells -- the East Lost Hills joint
venture in the San Joaquin Valley area in central California -- blew under the tremendous
pressure of a natural gas pool deep in the ground. It caused the drilling equipment to
break down, catch fire and melt, said analysts following the story.
The eruption lasted five months, giving good reason for investors to believe this was a
major find. The well's owners have kept generally mute until more drilling and tests are
completed, though speculation has run rampant among investors.
"There's a little bit of silliness," said one analyst yesterday, noting the continuing market
buzz. "You get a lot of people following this . . . and a lot of rumours flying around."
Berkley is one of the major owners of the venture, with a 27-per-cent stake in the East
Lost Hills well.
Berkley and the developers were able to separate the water that had subsequently
seeped into a pool from the natural gas and then began selling some of that gas on the
market, further piquing investor interest. The East Lost Hills well has since been
contained and regular test drilling resumed.
A different California well at Cal Canal is part of a second joint operation known as the
Greater San Joaquin Venture, which has already begun drilling and was a focus of
investor attention yesterday.
The Cal Canal well has now reached down about 17,000 feet to what investors are
speculating is a major deposit of natural gas in the Temblor layer of underground sand.
All of the wells are said to be tapping this Temblor deposit and are in close proximity in
the California's San Joaquin Valley.
"There is no formal news, but the word on the Street is that there are significant gas
readings in the top of the Temblor," said Des O'Kell, a spokesman for Hilton Petroleum,
which has a 6-per-cent stake in the second joint venture.
Berkley is the largest joint owner of the Greater San Joaquin Venture, with a 40-per-cent
interest. The company is currently in a quiet period as it prepares to issue new equity,
though people watching the California operations, as well as industry analysts, say that
more drilling is needed to determine the actual size of the natural gas find.
The companies involved in the Greater San Joaquin Venture are Berkley, Hilton and
Trimark, along with Elk Point Resources Inc. and Paramount Resources Ltd., both based
in Calgary, and PYR Energy Corp. of Denver. There are two additional companies
participating in the separate East Lost Hills venture: Calgary-based Richland Petroleum
Corp. and Kookaburra Resources Ltd. of Vancouver.
With most of the energy sector in decline this week, many of the companies involved in
the California wells stood out as beacons in the market yesterday. |
