MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, NOVEMBER 24, 1997 (2)
OIL & GAS
OPEC linchpin Saudi Arabia renewed a call on Tuesday to hike oil production limits to match growing world demand, setting the stage for potentially stormy talks among the cartel's members this week. It was not immediately clear how easily Riyadh might win support for its bullish view from those members opposed to an increase in limits because they are already pumping at capacity.
But as OPEC ministers flew in for a conference starting on Wednesday the outlines of a possible tussle emerged when Gulf rival Iran said the talks on output levels should centre on shoring up oil prices rather than simply on pumping more crude.
"Of course there exists some increase in demand for the OPEC oil next year, but the important issue is to meet this demand without disturbing the market," said Iranian Oil Minister Bijan Zanganeh on arriving in Jakarta. Libya, whose oil capacity is restricted by sanctions, was even more conservative, calling for a freeze on the group's widely-ignored 25.03 million barrel a day (bpd) ceiling. OPEC heavyweight Saudi Oil Minister Ali al-Naimi signalled he wanted the group to raise member output quotas to take account of quota-busting that has lifted actual supplies nearly three million barrels daily beyond the official limit. Saudi's top oil official told Reuters he had no doubt the oil market could absorb more than 27 million barrels per day (bpd) of OPEC supply.
"There is no question about that. It is absorbed today and demand is supposed to grow next year," Naimi said. A Gulf source familiar with Saudi policy said the kingdom would like to see prices for world benchmark North Sea Brent crude at $20-21 per barrel, up one to two dollars from current levels.
Prices in the past 18 months have averaged about $20 a barrel, some $3 better than the first four years after the Gulf War. However, the remarks by the oil ministers could herald a price-damaging battle over the first major reshuffle in quotas for four years if the meeting proves short on a spirit of compromise.
The level of any ceiling agreed by the Organisation of the Petroleum Exporting Countries is crucial because markets are finely balanced after two years in which global demand has been rising by up to three percent a year.
Saudi Arabia, the world's largest oil producer and exporter, has the planet's largest reserves and is the most influential voice among the often ill-tempered OPEC grouping that is responsible for almost 40 percent of global output. Signs that Saudi patience with the violators has been wearing thin has been reflected in independent estimates which put the kingdom's own output in October 2.5 percent above its eight million bpd quota. Sources familiar with Saudi policy have indicated demand for OPEC oil might run as high as 28 million bpd next year. If Riyadh does secure a ceiling of around 27.5 million bpd, it would be looking at a 10 percent quota increase to the highest volume since since the 1991 Gulf War.
Delegates will be hoping that with future Iraqi output still undecided, and tension between Baghdad and Washington still simmering, the compulsions of Middle East politics will not goad its major producers into rhetorical combat over market share.
Some OPEC members are likely to want to discuss a number of factors they feel could depress prices in the event that a higher output ceiling is agreed.
One is output from Iraq, which may pump more oil under reforms due to be made in its U.N.-monitored oil-for-food exchange following a standoff with the world body over arms inspections.
NYMEX
Gasoline futures rose nearly 2% Monday on the New York Mercantile Exchange, reflecting predictions record numbers of Americans will take to the road for the Thanksgiving holiday because of low prices at the pump.
The American Automobile Association estimates that a record 27.2 million Americans will take trips longer than 100 miles during the holiday weekend beginning Thursday. The expected heavy demand has prompted retailers to stock up, particularly of the reformulated gasoline blend required on the East Coast and traded on the New York Merc, analysts said. Gasoline futures also were lifted by a fire at a refinery owned by Citgo in Lyondell, Texas. While the fire did not affect operations, market participants said the threat to supplies during a good demand period provided a boost.
Meanwhile, crude oil barely moved in quiet trading despite perceptions of ample supplies as investors awaited developments out of a meeting of the Organization of Petroleum Exporting Countries on Wednesday in Indonesia.
January light sweet crude gained $0.07 to settle at $19.83. December natural gas was down $0.185 to settle at $2.577
EARNINGS
Canadian 88 Energy Corp. (TOP 20 Listed)
The company announced record growth through the drillbit: production, revenue, cash flow and earnings at all-time high for first nine months. For the nine month period, revenue was 54,353,000 vs 36,422,000 (+46%) of a year ago. Net earnings were $15,252,000 vs $2,171,000 (+603%) and earnings per share was $0.17 vs $0.03 (+467%). Cash flow amounted to $26,689,000 vs $15,553,000 (+72%) and cash flow per share was $0.29 vs $0.23 (+26%). Average production, excluding sulphur, was 9,081 boe/d vs 7,433 boe/d of a year ago.
For the three month period, revenue was $18,568,000 vs $13,612,000 (+69%) compared to the same period of a year ago. Earnings were $1,748,000 vs $1,033,000 and earnngs per share were $0.02 vs $0.01. Cash flow was $8,731,000 vs $6,066,000 (44%) and cash flow per share was $0.09 vs $0.09. Production for the three month period, less sulpher, averaged 9,798 boe/d vs 8,409 boe/d of a year ago. Average common shares outstanding for both the three and nine month periods were 90,796,000 vs 68,921,000 of a year ago.
Total proven gas reserves have increased 34 percent to 615 bcf from 460 bcf at December 31, 1996 with estimated record low proven finding and onstream costs of $5.85 per boe for the nine month period.
Berkley Petroleum
The company reported net revenue in the first nine months was $31.4 million compared to $23.1 million in the first nine months of 1996. Cash flow in the first nine months of 1997 was $20.0 million, nine month 1997 net earnings were $6.2 million. Production in the first nine months averaged 7000 barrels of oil equivalent per day. The company also noted that the nine month production levels have been more than doubled over the past six weeks. The Company participated in 58 wells in the first nine months, resulting in 17 gas wells (7.5 net), 29 oil wells (12.5 net), five suspended wells (1.8 net) and seven dry holes (2.8 net). Production in the third quarter averaged 2218 BPD oil and liquids and 47.5 MMCFPD natural gas. Production in the third quarter and during the first nine months of 1997 has been less than anticipated, primarily due to delays in unitizing and obtaining GPP for the company's three large oil pools at Midale, Pembina and Carstairs. All three are now unitized and all will have GPP prior to year end, enabling the company to achieve the forecast exit target of 20,000 boepd. Current daily production levels are 18,031 BOEPD, and will hit the 20,000 mark in mid-December through further increases and additions at Carstairs, Crossfield, Midale, Froude and Fort St. John. Cash flow and earnings were also lower in the second and third quarters due to the temporary replacement of high net-back shut-in Carstairs production with lower price/lower net back gas production from NEBC. With the new unit production from Midale and Pembina and the resumption of production from Carstairs, corporate net-backs will increase considerably.
Hurricane Hydrocarbons Ltd.
The company released its results for the quarter ended September 30, 1997. Highlights of activities include the company's listing on the TSE 200 and TSE 300 indices as well as being granted a Nasdaq listing. The company also recently completed a US$105 million debt offering, the proceeds of which will be used to accelerate the development of its reserves and increase crude oil production.
With total revenue of US$47.0 million, the company reported quarterly earnings of US$9.5 million and cash flow from operations of US$17.2 million for the three month period. This represents basic earnings of US$0.22 per share and cash flow of US$O.40 per share based on an average of 42.7 million shares outstanding during the quarter. These results compare with the prior year's three month period revenues of US$60,335, earnings of US$15,456 and cash flow of US$27,632.
For the nine month period, revenue was US$120.5 million with net earnings of US$21.4 million. Cash flow and nine month comparative data wasn't provided
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