MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, NOVEMBER 19, 1997 (4)
Securities Web Sites A Big Hit
Thousands of Internet users are visiting the newest Web sites that provide official information on Canadian public companies, mutual funds and stock market action, spokesmen for the sites say.
While individual companies quickly adopted the Internet as a tool to promote and inform, public organizations have been slower. But in the past month, two of the biggest -- the Canadian Securities Administrators (the national umbrella body for the various provincial securities commissions) and the Toronto Stock Exchange -- have gone public, electronically.
The CSA site (www.sedar.com) is being managed by the Canadian Depository for Securities and uses the acronym SEDAR (System for Electronic Document Analysis and Retreval). In an easy-to-use format, offering access to many of the corporate documents filed with the Ontario Securities Commission and other CSA members.
In SEDAR, readers can find annual and quarterly reports, press releases, annual meeting and takeover-bid circulars, material change reports, and annual information forms -- "anything that has to be mailed to a shareholder," says Bill Carrigan, SEDAR's general manager.
As many as 8,000 users a day, most during business hours and probably for business purposes, are visiting the site, he said. They are downloading a volume of data equivalent to about 5,500 annual reports every week.
The need to download documents is one of sedar's drawbacks. While many web sites allow users to go to an index, identify a document, click on it and read it, sedar requires a more complicated procedure. Users must open and close files before a document is accessible. Depending on the user's computer, some documents may be completely inaccessible.
But even with its problems, sedar is a great improvement over the manual process, when it required a co-operative broker, a visit to a public library or a purchase from a securities commission or its agent to get a copy of a new prospectus.
Now it is a case of log-on, search, download and read.
The sedar site is well-organized and graphically pleasing. Upon arrival, the user chooses English or French and then selects among six options, including new filings (material from the previous day), database search (all the material on dozens of mutual funds and 6,000 companies filed since Jan. 1) and company profiles (useful snapshots). Three other options deal with connections to other sites, sedar itself and how to use the system.
Securities document and other information can be searched using various routes, such as company name or industry. Users will find that, like other Web sites, sedar has a literal mind. For example, a search on "Inco" produced 1,712 documents, most of which related to various income funds. Searching "Inco Ltd." produced 24 documents on Cominco Ltd. but nothing on Inco. Finally, calling up Inco's company profile produced the mining company's filings.
The TSE site (www.tse.com) has been attracting several hundred users at a time during business hours, says TSE spokesman Steve Key. It offers trading quotes (delayed about 15 minutes), information on listed companies, listing requirements, and derivative trading details.
Oil & Gas
On NYMEX, crude oil gained $0.17 to settle at $19.76. January natural gas gained $.055 to settle at $2.767. Unable to provide commentary on conditions and impacting data that influenced trading due to lack of information from the service site.
On Friday, The Toronto Stock Exchange 300 Index gained 0.1% or 10.00 to 6773.93. For the week, the TSE 300 gained 0.7% or 47.73.
The Oil & Gas Composite Index rose 0.1% or 9.69 to 7094.11. For the week, the index lost 2.5% or 179.61.
Among the subcomponents, the Integrated Oils gained 0.3% or 30.42 to 9403.07. For the week, the index fell 0.6% or 54.29.
The Oil & Gas Producers fell 0.2% or 15.36 to 6298.86. For the week, the index fell 2.9% or 181.33.
The Oil & Gas Service group gained 2.7% or 87.23 to 3275.07. Even with Friday's hefty gain, the index still lost 6.6% or 216.21 for the week.
Renaissance Energy, Canadian 88 Energy, Interaction Resources, Crestar Energy and Newport Petroleum were among the top 50 most active traded issues on the TSE.
Baytex Energy gained $1.25 to $18.00, Gulfstream Energy $1.10 to $11.20, Newquest Energy $1.05 to $7.30 and Rider Resources $0.75 to $5.00.
Percentage gainers included Rider Resources 17.6% to $5.00, Newquest Energy 16.8% to $7.30, Pointer Exploration 15.7% to $1.40, Petrobank 11.1% to $2.00, Bonavista Petroleum 11.1% to $4.22, Gulfstream Resources 10.9% to $11.20, Comstate Resources 10.0% to $2.20, Triumph Energy 9.5% to $3.45, Genesis Exploration 9.4% to $7.00, Search Energy 8.2% to $1.05, Elk Point Resources 8.0% to 8.75 and Paragon Petroleum 7.8% to $3.45.
On the downside, Denbury Resources slipped $1.00 to $32.00, Tri Link Resources $1.00 to $26.00, Chieftain Int'l $0.80 to $31.55 and Talisman Energy $0.75 to $44.15.
Percentage losers included United Tri Star 15.0% to $0.85, Raider Resources 7.0% to $0.93, Compton Petroleum 5.9% to $1.55, Bow Valley Energy 5.9% to $1.60 and Southward Energy 5.9% to $1.60.
There were no new 52-week highs. Blue Range Resources, Bow Valley Energy, ML Cass Petroleum and Renaissance Energy reached new 52-week lows.
Among the oil and gas service sector, none were listed within the top most active traded issues on the TSE.
Precision Drilling gained $1.80 to $37.40, Prudential Steel $1.02 to $17.35, Canadian Fracmaster $0.80 to $21.00, Plains Energy Resources $0.75 to $11.75 and Enerflex Systems $0.65 to $33.85.
There weren't any companies listed among the top percentage gainers.
On the downside, Shaw Industries lost $3.00 to $50.00, Mullen Transportation $0.95 to $24.50, Akita Drilling A $0.75 to $12.25 and CE Franklin $0.65 to $14.75.
Percentage losers included Enerchem International 16.4% to $2.30, Computer Modeling 11.1% to $1.60, Inter-Tech Drilling 8.7% to $1.05, Geophysical Micro 8.6% to $1.80, Bowridge Resources 7.0% to $0.93 and Akita Drilling A 5.8% to $12.25.
There weren't any new 52-week highs or lows.
Over on the Alberta Stock Exchange, Deena Energy, Cirque Energy, Master Downhole Drilling, Cubacan Exploration, NTI Resources, Raptor Capital and Stampede oils were among the top traded issues.
Venator Petroleum gained $0.25 to $2.25, Telford Resources $0.17 to $1.25, Farm Energy $0.15 to $0.60, Meota Resources $0.15 to $1.10, Deena Energy $0.14 to $1.65, Parkcrest Exploration $0.14 to $1.90, AltaQuest Energy $0.10 to $2.35, Barra Resources $0.10 to $0.60, International Hydrocarbons $0.10 to $0.36 and Global Link $0.10 to $1.75.
Percentage gainers included International Hydrocarbons 38.5% to $0.36, Farm Energy 33.3% to $0.60, Trans Coastal Ind 30.0% to $0.26, Barra Resources 20.0% to $0.60 and Rockport Energy 20.0% to $0.30.
On the downside, Tier One Energy lost $0.25 to $1.50, Destiny Resource Services $0.20 to $3.00, Red Sea Oil $0.15 to $1.05, Underbalanced Drilling $0.15 to $3.05 and Brigadier Energy $0.10 to $0.85.
Percentage losers included AC Energy 16.7% to $0.25, Trego Int'l 16.7% to $0.25, Tappit Resources 14.9% to $0.40, Tier One Energy 14.3% to $1.50 and Red Sea Oil 12.5% to $1.05.
Telford Resources reached a new 52-week high.
Cubacan Exploration and Tappit Resources reached new 52-week lows.
Energy Affair Cool's
Oilpatch Investors Worried By Rising Reserve Replacement Costs
Soured by rising costs and broken performance promises, investors' infatuation for Canada's heated oil and gas sector is cooling off.
The sector "is due for a retrenchment," Martin Molyneaux, managing director of institutional research at First Energy Capital Corp. in Calgary, said yesterday.
Institutional investors are concerned about the industry's rising reserve addition costs, expected to surpass $9 a barrel this year in some cases and are reducing their exposure, he said.
Another concern is missed production targets, said Tom Budd, managing partner, corporate finance, Griffiths McBurney & Partners.
Several companies have failed to meet promised production volumes for reasons ranging from equipment shortages to bad weather.
"It usually hits the whole sector for a while, not just specific companies, because investors will assume that for everyone that reports lower than expected exit rates, there will be many others," Budd said.
There has been such a proliferation of new companies and so many acquisitions and mergers, he said, it has been difficult for investors to work out who owns what.
"There will be continuing interest in the sector, but there will be a split between those that are in higher regard and those that are considered average or mediocre," he predicted.
"And you will see price valuation differences within the same size category, which you haven't had lately."
There are already indications a retrenchment is under way. The Toronto Stock Exchange's oil and gas index closed at 7094.11 yesterday, up 10.00 points from the previous day, but a big dip from the high of 8031.57 on Oct. 7.
In some cases, rising costs and reduced availability of equity capital will mean cuts in capital spending for exploration, said Molyneaux.
"That's why 1998 budgets have been so difficult to come to grips with. Companies are saying they have lost control over costs. They are realizing that at [reserve replacement costs] beyond $8, they are eroding value."
Concerns are further magnified by such things as the likelihood of higher Middle East oil supplies because of easing tensions between the U.S. and Iraq, and Saudi Arabia's wishes for higher output.
Demand, on the other hand, is expected to weaken as Asian economies adjust to the recent currency related setbacks.
Concerns about capital spending cuts are one of the reasons investors in Canada and the U.S. pummelled shares of oil services companies in recent days.
Canadian Fracmaster Ltd. (CFC/tse) closed up $0.80 Friday at $20.20, down from a high of $27.10 on Oct. 22.
Ensign Resource Service Group Inc. (ESI/TSE) closed at $42.95, up $0.40 yesterday, but down from $56.90 on Oct. 10.
The stocks' large selloffs were also caused by profit taking after spectacular gains, said John King, oilfield services analyst in Calgary with Peters & Co. Ltd.
The sector has posted unprecedented returns in recent quarters because of producers' high level of drilling activity, which caused equipment shortages across the board.
"You have shareholders who are sitting on oilfield services companies that have gained 100%, 200%, even more," said Fred Mutalibov, an oilfield services analyst with Southwest Securities in Dallas. "They will take advantage of any warning signal and start taking profit."
The market downturn for oil services will likely be shorter term than for exploration and production companies, Budd said.
With a series of major pipeline expansions on the drawing board, drilling will have to accelerate again soon to fill the new capacity.
"On the other hand, the decrease in the producer sector is being driven by a concern about poor results, missed forecasts, higher operating costs and finding costs, and that could have a longer-term impact on the producer sector," he said.
Oil Service Shares Bounce Back After Selloff
Shares of oil service companies rose Thursday as investors took advantage of several straight days of weakness in the sector to snap up bargains, analysts said. On Friday, shares gave up a small portion of Thursday's gains.
Global Marine, Baker Hughes and Transocean were among the most active issues on the New York Stock Exchange.
''It was a climactic blowoff,'' Rauscher Pierce Refsnes analyst James Wicklund said of Wednesday's selloff, sparked by profit-taking and fear that oil driller stocks were too widely held.
''So much of this is being driven by seasonal mentality and portfolio managers looking at their annual bonuses,'' he said. ''The reality is that for anyone with an investment time horizon past Decmeber 31, this is a hell of a buying opportunity.''
The oil services group had been one of the strongest performers on Wall Street this year before the recent pullback.
Yesterday Prudential Securities said the sector was oversold and that its fundamentals remained sound. It reiterated buy ratings on several stocks, including Patterson Energy and UTI Energy Corp.
Morgan Stanley plans a meeting about the sector this afternoon. A source close to Morgan Stanley said the firm would reiterate the sector's positive fundamentals.
In Toronto, the oil & gas services group gained a combined total of 114.14 points on Thursaday and Friday, but still ended down 6.6% for the week.
Rig Counts
In Canada, the number of working rigs rose by 21 to 459, versus 341 one year ago. The U.S. rig count was down 47 to 947 from a week ago.
The number of rigs exploring for oil and natural gas in the United States stood at 947 as of November 21, down 47 from the prior week, and 96 above the year-ago total of 851, Baker Hughes Inc reported.
The number of rigs drilling on land fell by 47 to 799, while rigs working offshore remained at 126. The number of rigs active in inland waters rose one to 22.
Among the individual states, the biggest changes occurred in Texas, down by 12, in Wyoming, down by 11, and in Louisiana, and Colorado, both down by seven.
The Gulf of Mexico rig count remained at 124.
A total of 342 rigs were exploring for crude oil, down 17 from last week. The number of rigs searching for gas fell 30 to 601, while the number of miscellaneous drilling projects remained at four.
There were 219 rigs drilling directionally, 56 drilling horizontally and 672 drilling vertically.
In Canada, the number of working rigs rose by 21 to 459, versus 341 one year ago.
The weekly rig count reflects the number of rigs exploring for oil and gas, not those producing oil and gas.
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