MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING THURS DECEMBER 18, 1997 (2)
OIL & GAS
Unleaded gasoline futures rose sharply on the New York Mercantile Exchange after Amerada Hess Corp. shut down its 130,000 barrel a day gas-making unit at its large St. Croix refinery. The unit, called a fluid catalytic cracker, suffered an unknown mechanical problem and may take a week to repair. It is particularly significant because it produces the reformulated gasoline used in the Northeast and traded on the exchange.
NYMEX January light sweet crude oil closed up $0.33 to settle at $18.52.
NYMEX January natural gas closed down $0.026 to settle at $2.412.
NYMEX Hub natural gas futures were expected to open a few cents higher Friday in light trade amid talk of steady cash prices and electricity buying in the West, industry sources said.
January over-the-counter business hovered around $2.45 per mmBtu at 0935 EST after settling to the downside Thursday at $2.412 but recovering to a high of $2.46.
Early cash prices at Henry Hub were talked at $2.35 per mmBtu.
Above-normal temperatures are expected to continue in the East and upper Midwest into early next week. However, in Texas, temperatures are forecast to fall to about six to 12 degrees F below normal Sunday.
Technically, traders said January support was at $2.35, a level which held Thursday. Further support was seen at $2.25, which is the low for January this year, and then at $2.14 and $2.05. Resistance was seen at Thursday's high of $2.50, and then at $2.52 and $2.58.
In Thursday's cash, Gulf Coast quotes were steady to down slightly in the low-to-mid $2.30s. Midcon pipes were up about two cents to the low-$2.20s, with Chicago city-gate quoted mostly in the mid-to-high $2.30s. New York city gate prices were mostly in the mid-to-high $2.60s.
REFERENCES
Charts: oilworld.com
NYMEX Reference quotewatch.com
CANADIAN SPOT NATURAL GAS
Mixed Ahead Of Milder Weather
Canadian spot natural gas prices were mixed Thursday ahead of milder weather in Alberta but continued constraints into the northwestern U.S., market sources said.
Spot gas at the AECO storage hub in Alberta was quoted at C$1.36-1.37 per gigajoule (GJ), off one cent from Wednesday.
The transportation charge to the Empress border point in eastern Alberta eased to about 30 cents per GJ, from yesterday's 50 cents, as some interruptible capacity into the TransCanada PipeLines mainline became available, a Calgary-based trader said.
January AECO was quoted little changed at C$1.41-1.42 per GJ.
Following today's high of about -2 or -3 degrees C, temperatures in Calgary are forecast to reach a high of +4 degrees C by Saturday.
Meanwhile, the compressor outage in northern Alberta, which is taking about 150 million cubic feet of gas off the NOVA Corp (Toronto:NVA.TO - news) system, is expected to end Friday.
Spot gas for export at Sumas, Wash., continued to firm, with deals reported done near $2.20 per million British thermal units, up about 18 cents from Wednesday.
Traders blamed the uptick on the ongoing interruptible constraints on Westcoast Energy Inc's ''T South'' mainline.
In the East, Niagara was talked mostly at $1.46-1.50 per mmBtu, down about two cents from Wednesday.
FEATURE STORY
Land Sale Record Of 1997 Will Be A Tough Act To Follow
With 1997 as the record-setting act to follow, governments in Western Canada can only hope next year will be as nearly fruitful in providing top dollars for oil and gas exploration land rights.
Oil and gas producers seeking prospects in Western Canada handed over more than $1.51 billion in payments for rights to some 6.88 million hectares of Crown land in 1997.
The record bonus provided an average per hectare price at $219 -- another all-time high.
Only 1994 came close to the bonus total, when companies provided Al- berta, Saskatchewan, British Columbia and Manitoba governments with $1.42 billion in payments for 7.08 million hectares. That worked out to an average bonus of $199 per hectare.
With the fiscal year ending March 31, 1998, the director of the Al- berta minerals and tenure branch wasn't about to make a forecast for what's ahead. "We don't make forecasts," said David Coombs. "We've still got three months to go in the fiscal year."
The province led the record-setting onslaught in 1997. Alberta totals blew by the previous highs with some 5.15 million hectares hauling in a bonus of $1.15 billion. That topped the $1.01 billion put up for 4.77 million hectares in 1994. The average bonus of $234 per hectare this year topped the previous high of $211 in 1994.
The high figure for calendar 1997 was, in part, thanks to some $183.29 million spent for rights to 366 329 hectares of oil sands, Coombs said. "I don't think we would have done it (topped $1 billion) otherwise."
It was the third time the province gone over $1 billion in a calender year. "It's been a good year," he understated.
The three of the top spenders among producers acquiring land in the first nine months this year have a slightly different approach planned for 1998.
Amber Energy Inc. was one buyer heating up the competition for oil sands. But those purchases could slow for 1998 as the company works to develop its Pelican Lake area interests in northeastern Alberta, said Deric Orton, Amber's vice-president of land.
"We think we have good acreage (at Pelican Lake) and further postings are possible," he said.
It has not yet established the 1998 capital spending budget, Orton said. "We have some postings in some new regions."
Over at Norcen Energy Resources Limited, about $30 million has been budgeted for land in Western Canada for 1998, said Gerhard Shopp, vice- president of exploitation at the company. "It'll be about the same as this year."
He estimated Norcen put about $32 million into land in Western Canada in 1997.
Poco Petroleums Ltd. won't be altering its land-buying strategy next year as it will be putting some $40 million into acquiring rights to properties, Chief Financial Officer John Ferguson said. "It think it will be about the same percentage as last year (1997)."
The company anticipates allocating most of its land purchases into core areas. Poco put about $55 million into land this year, he said.
Besides Alberta, B.C. and Manitoba also set records for bonus pay- ments, racking up $216.77 million and $5.69 million respectively in 1997. Those provinces easily surpassed previous highs of $208.02 million and $4.22 million set in 1994 and 1985 respectively.
"This year (1998) will be a good year as well," said Carol Martiniuk, manager of administration and geology and petroleum registrar with Manitoba Energy And Mines. "But we don't anticipate going higher than levels approached in '97."
She said several new companies came into the province and this helped increase 1997 exploration, both with drilling and seismic.
"We were quite pleased overall with the activity this year," Martiniuk said. "It was a banner year, I think." Improving from 1996, when it raised $122.23 million, Saskatchewan picked up $131 million this year but fell short of the record $199.74 million set in 1994.
FEATURE STORY
The oilpatch came out swinging when Natural Resources Minister Ralph Goodale brought the Kyoto agreement to town Thursday.
"They obviously don't mince words," said the federal minister. "They were very blunt and direct in their assessment."
The controversial deal left Canada agreeing last week at the conference in Japan on global climate change to cut this country's greenhouse gas emissions to six per cent below 1990 levels by 2008-2012.
The Kyoto agreement is open for signature for one year as of March 1998. Then it has to be ratified by 55 countries representing 55 per cent of the CO2 emissions.
"I don't want to underestimate the magnitude of the challenge," said Goodale. "We've all got a lot on our plate to accomplish and it isn't going to be easy."
The minister began his journey to engage all stakeholders by meeting energy organizations as well as CEOs.
"There needs to be open and transparent (talks) and everyone needs to be meaningfully involved. It has to extend far beyond government and has to engage individuals as consumers," said Goodale.
He emphasized statistics show most emissions flow from energy consumption of energy, not its production.
"We made it clear we wanted a say," said David Manning, president of the Canadian Association of Petroleum Producers. "The membership were pretty outspoken about their concerns over lack of analysis."
A major issue is whether Canada will ratify the Kyoto deal before the U.S., its major trading partner.
"The key thing for us is to watch very closely the actual American conduct. We need to monitor that very carefully," said Goodale. "We need to be sure we're not putting ourselves at a disadvantageous and non-competitive situation with the U.S."
Goodale also insisted Canada is not locked into a specific ratification process.
"The first thing is to complete this consultation process," he said. "That will take one and a half to two years to talk with (everyone). To get the full blown detail of the implementation plan will take that long."
Producers were concerned about the economic impacts of the agreement that could cost billions of dollars and thousands of jobs while putting the country at a trade disadvantage.
"That is the issue they wish to flag with me. How in the Canadian national interest we can all manage this (Kyoto) file so it is a winning situation for Canada and doesn't put us at a national or international disadvantage?" said Goodale.
Goodale said his talks focused on:
- Comprehensive consultations and implementation
- No province, region, or sector called upon to bare undue burden
- No carbon tax
- Broaden and strengthen voluntary emission control efforts
- Energy efficiency with intelligent regulations and incentives
- Co-generation projects and renewable resources
- Emphasis on technology
- Utilize our flexibility tools like emissions trading, joint implementation with credit.
MARKET ACTIVITY
The Toronto Stock Exchange 300 fell 0.5% to 6594.94.
In comparison, the Oil & Gas Composite Index gained 0.3% or 18.52 to 6499.35. Amaong the sub-components, the Integrated Oils fell 0.5% or 45.04 to 8891.03. The Oil & Gas Producers gained 0.6% or 31.38 to 5692.82. The Oil & Gas Services also gained, rising 0.9% or 27.57 to 3005.75.
INDEX CHARTS
TSE 300.............. chart.canada-stockwatch.com
O&G Composite. chart.canada-stockwatch.com
Integrated Oil's.... chart.canada-stockwatch.com
O&G Producers.. chart.canada-stockwatch.com
O&G Services..... chart.canada-stockwatch.com
Poco Petroleums, Berkley Petroleum, Petro-Canada, Anderson Exploration, Talisman Energy, Baytex Energy and Rio Alto Exploration were among the top 50 most active issues traded on the TSE.
No service related companies were listed.
Over on the Alberta Stock Exchange, Enterprise Developement, Justnian Exploration, Lodestar Energy, NTI Resources, Red Sea Oil, Oilexco, Burner Exploration, Cirque Energy, Prarie Pacific Energy, Reeflex Petroleum, Tessex Energy and Fox Energy were among the top 30 most active traded issues.
For other most active categories, go here;
canoe.ca
KERM'S TOP 20 - SPEC 12 - SERV 7 COMPANIES IN THE NEWS
Genesis Exploration has drilled eight (average W.I. 79%) successful exploration discoveries to date in the fourth quarter at Marlboro, Windfall, Oldman (uphole), Entwistle, Highvale, Majeau, Corbett and Brant, all in Alberta.
Production adds are anticipated in the 1200 BOE/d range (90% gas) with 400 BOE/d to be turned on prior to year-end and the rest throughout the first quarter of 1998. This will give the Company an exit production rate for 1997 of 5,500 BOE/d while averaging about 4,400 BOE/d for the year. These results compare favorably with those from 1996: exit rate of 2,400 BOE/d; average 1,550 BOE/d.
Genesis expects its 1997 finding and on-stream costs for proven reserves to come in around $6.00 BOE giving its shareholders a three year average for proven reserves of $5.17/BOE.
The Company is looking for a strong finish with six additional wells to be drilled for year-end. Genesis will exit the year with a solid balance sheet of 1.1 years trailing debt to cashflow and just over six months 1998 debt to cashflow. In addition, 5 mm/day of spot gas was locked in at $2.15/GJ from November 1, 1997 to April 1, 1998. The Company is ready to execute its 1998 capital program and will continue its exploration efforts in Alberta while shooting delineation seismic on the above discoveries with a full-scale development program to follow.
KERM'S WATCHLIST COMPANIES IN THE NEWS
OCELOT ENERGY INC. unit O.J. Pipelines Ltd. has been awarded a $14 million contract to do work on a northwestern Ontario portion of TransCanada PipeLines Ltd.'s mainline. Calgary-based O.J. will replace and lower portions of 30-in. and 36-in. pipe and valves, as well as install pig (internal pipe inspection device) launchers and hydrostatically retest two valve sections. The work is expected to be completed by the end of March 1998.
BONUS RESSOURCE SERVICES CORP. has gone down under, acquiring four double service rigs and other assets of Brisbane-based Superior Well Servicing Rty. Ltd. of Australia. The $8.4-million deal also allows Bonus to manage and earn a stake in three double service rigs operating on Barrow Island, off the northwest coast of Australia. Superior is Australia's second-largest service rig operator. The transaction, subject to government approval, represents Calgary-based Bonus' first international acquisition.
BADGER DAYLIGHTING INC. of Red Deer said yesterday it has closed the $20-million acquisition of Delta Oilfield Construction, a unit of Delta Energy Ltd. The construction division builds small diameter pipelines and provides related services. TSE-listed Badger, a vertically integrated industrial technologies service company operating in the petroleum and utilities industries, paid for the buy with $10 million in cash and two million Badger shares.
OTHER COMPANIES IN THE NEWS
Quite a little news regarding Canadian companies with international operations. Companies in the news included;
CITYVIEW ENERGY CORP. LTD. subsidiary Western Nusantara Energi Pty Ltd ("Western Nusantara") as Operator of the Tanjung Miring Timur field announces that its initial workover program has been completed. Current production is running at approximately 450 barrels of oil per day, of which 160 barrels per day is shareable oil (the non-shareable oil rate now being 290 barrels per day after declining from the original 330 barrels per day). To further enhance production the existing gas compression and processing equipment are being upgraded. It is anticipated that this upgrading work will be completed by March 1998. The production revenue will be credited in United States dollars to the Operator's account commencing in the first quarter of 1998.
CityView Energy also announced that it has acquired from WAPET an AJAX DPC600 360HP Gas Compressor and an 10 MMSCFPD natural gas liquid processing plant for Aus$150,000.00 plus mobilisation costs. This equipment will assist in CityView's gas production plan and will be transported to Indonesia late in 1998.
Also, at Tuba Obi East Block, South Sumatra, CityView's Western Akar Petroleum Pty. Ltd. is pleased to announce that its data review and well engineering studies have been completed and a well site (Location B) has been selected for the drilling of a delineation well TOE#2 during March 1998. The proposed well TOE#2 will be situated approximately 350 metres from the discovery well TOE#1 which flowed 350 bopd with several untested gas zones. The seismic anomaly at Location B indicates that the oil bering sand is structurally more prominent than at TOE#1.
Kerr-McGee And PENDAIRES PETROLEUM Drills Successful Appraisal Well In China
Kerr-McGee Corp said Thursday it had conducted a third consecutive successful appraisal of a discovery well in China.
The oil exploration company said in a statement that appraisal well CFD 2-1-4 had a calculated flow of 2,992 barrels of oil per day and 3.7 million million cubic feet of gas per day.
The well, located on Block 04/36 about 3.5 miles east of discovery well CFD 2-1-1 in Bohai Bay, China, had perforations over an interval from 12,140 feet to 12,336 feet.
Oil gravity was 36 degrees API and no formation water was recovered during the test, it said.
The 13,120-foot-deep well, designed to test the eastern extent of the discovery, is located 3.5 miles east of the CFD 2-1-1, it said.
"The drilling rig Bohai Four is moving to drill the CFD 1-1-1 well," read the company statement. "This 13,000-foot exploratory test will evaluate a large pre-Tertiary buried hill prospect located about four miles west-northwest of the CFD 2-1-1 discovery."
Kerr-McGee said a three-dimensional seismic survey and further drilling scheduled in the new year will give it the information it needs to decide whether to develop the field.
The discovery well tested about 7,000 barrels of oil per day in June 1996.
Kerr-McGee China Petroleum Ltd, a wholly-owned subsidiary of Kerr-McGee Corp, operates contract area 04/36 with partners Murphy Pacific Rim Ltd, a wholly-owned subsidiary of Murphy Oil Corp , and Sino-American Energy Corp, a majority-owned subsidiary of Pendaries Petroleum Ltd .
NAFTEX ENERGY CORPORATION announced that a Declaration of Commerciality has been made with respect to the West Esh El Mallaha (''WEEM'') Concession and a Development Lease, covering an area of 20,200 acres in the south-eastern portion of the WEEM Concession, has been negotiated. A Joint Operating Company is now in the process of being created with the Company's joint venture partner Cabre Exploration (Cyprus) Limited (''Cabre'') and the Egyptian General Petroleum Corporation (''EGPC'') in order to oversee development and bring the Concession on to production.
Production from the two wells known as Rabeh-1 and Rabeh East-1 will begin as soon as a leased early production unit is in place. EGPC have offered full cooperation for the task at hand and it is estimated that production, at an initial rate of 2,500 bopd, will commence in January 1998.
A four well exploration and development drilling program will begin as soon as a drilling rig can be secured. In addition an extensive 2D and 3D seismic program is scheduled to begin in the first or second quarter of 1998 to continue exploration and development of the 222,000 acre WEEM Concession.
EUROGAS CORPORATION released today the following status report on the Company's Sud Nefta well in Tunisia. Intermediate 9 5/8" casing has been successfully set at 3960 meters above the three primary objectives in the Triassic, Ordovician and Cambrian and drilling operations are expected to resume by December 20.
Prior to running the intermediate casing, the well was wireline logged to its current depth. The log evaluation has indicated various zones of interest, which will be tested after the primary targets have been drilled, evaluated and tested.
During drilling operations, a thick zone of pyritized dolomites and anhydrites was encountered, which caused a considerable reduction in the rate of penetration. It is now estimated that drilling operations on the well will be concluded by the end of January, 1998. Results from any operations on the well will be released as conclusive data is acquired.
Other than the excessive delays caused by the unexpected dolomite / anhydrite sequence, the company is satisfied with the well and operations to date.
PETROLEX ENERGY CORPORATION reported the safe return of three personnel who were abducted, on 16 September 1997, from the Santi No.1 well location on the Los Toches Association Contract Area. Two men, Petrolex employees, and one employee of a contractor were reunited with their families on 15 December, 1997.
The Company is encouraged by the release of these personnel and hope that two other Petrolex employees who were abducted from the Rubiales Field in August will be released in the near future.
The Company's operations in Colombia remain suspended pending the release of all abducted personnel and the implementation of the recommendations from the security assessment presently being completed.
Throughout this operational shutdown, management has been continuing with development plans for the Rubiales Field. This has included the commissioning of a pipeline study which has recently been completed, and initiating preliminary discussions regarding financing for the project. It is now common knowledge that excess capacity may become available in the OCENSA pipeline in the near future. The OCENSA pipeline is the major trans-Andean export pipeline running from the Cusiana Field in the western Llanos Basin to the port of Covenas on the Caribbean Coast. The Company has been in positive discussions with the operator of the OCENSA pipeline regarding the possibility of accessing this excess capacity.
In concert with these discussions and the growing awareness of available export capacity out of the Llanos Basin, the Company has been approached by other major international companies with regard to Petrolex's future plans for the substantial reserve base at the Rubiales Oilfield and possible joint-venture arrangements.
RED SEAS OIL (RSO/ASE) announced that drilling of the B1-NC177 well has been completed. Total depth was 8,750 feet. Strong oil and gas shows (later confirmed by electric logs) have been encountered in the Facha, Zelten and Beda formations and the Company is making preparations to conduct four drill stem tests. Testing is expected to take approximately 20 days. The B1-NC177 was drilled on the En Naga North prospect in Block NC177 onshore Libya. The En Naga North Prospect is on structural and geological trend with the En Naga Oil Field less than 15 kilometres to the southeast. Block NC177 is located in the prolific Sirte Basin which produces over 1.8 million barrels of oil per day. Red Sea Oil is the operator and holds a 60 percent interest in the Block. Sands Petroleum AB holds the remaining 40 percent interest. (INTERNATIONAL PETROLEUM)
TANGANYIKA OIL COMPANY (VSE/TYK) announce that against competition from international oil companies, it has been awarded a 100 percent interest in the West Gharib Block. West Gharib is a 2,530 square kilometre onshore oil exploration concession along the western coastline of the Gulf of Suez in Egypt. It is located to the west of large producing oil fields held by Amoco, AGIP and GPC which have original proven oil reserves of over 5 billion barrels The Gulf of Suez Basin is a prolific oil producing region with in excess of 800,000 barrels of daily oil production. Over a dozen international oil companies, including Amoco, Shell, AGIP, Marathon, Pennzoil, British Gas, etc., hold production or exploration concessions in this area.
SEVEN SEAS PETROLEUM Seven Seas Petroleum Inc. (Toronto: SVS.U - news) announced today the completion and results of 34 days of production and reservoir testing of its Tres Pasos No. 1-E well located on the Rio Seco Block of the Emerald Mountain project in Colombia, South America. Maximum actual production rates of 13,123 barrels of oil per day and 5.97 million cubic feet of gas per day with no water were realized from a perforated production interval of 288 feet in the Upper Cretaceous Cimarrona formation encountered approximately 600 feet low to the structural position of this formation in the three previously announced El Segundo wells. This test confirmed drilling results of no evidence of an oil water contact. Actual production rates were limited by the size of the downhole pump. Robert A. Hefner III, Chairman of Seven Seas, said ''The Tres Pasos 1-E well produced at a materially higher rate compared to any well drilled so far on the Emerald Mountain Project. The capability of this well to produce at such higher rates is yet a further indication of a very significant discovery''.
In addition Seven Seas announced that the test equipment used for the Tres Pasos No. 1-E production testing is being mobilized to the El Segundo No. 2-E well to begin initial production testing. Testing of this well is estimated to take approximately 30 to 45 days once initiated.
GHK Company Colombia, a wholly owned subsidiary of Seven Seas, is the operator of the Emerald Mountain project. Seven Seas holds a 57.7% interest in the Emerald Mountain project which encompasses the Dindal and Rio Seco Blocks
PEBERCAN COMPANY (PBC/MSE) has started its first exploration well located on its VARADERO licence in Cuba. This first company well, CANTEL PROFUNDO 1 is a vertical drill hole, with a total depth forecast of 3,200 metres.
This well should penetrate Cretaceous to Jurassic reservoirs lying below 2,000 metres, made of fractured carbonates. Pebercan reminds that the Russians initiated the exploration of these same deep reservoirs. They evidenced below 2000 metres, in two different wells, light oil shows (29 degrees API ) and a gas flow of 70,000 m3/day. These wells, located in the vicinity of Pebercan prospect area, Cantel Profundo, had been stopped due to a lack of appropriate technology .
The rig National 110 UE, which belongs to PEBERCAN company, is used to drill Cantel Profundo 1, and is equipped with the appropriate technology in order to control expected high pressures. The staff in place is essentially made of both Canadian and French engineers and technicians.
CHAUVCO RESOURCES INTERNATIONAL a Bermuda company, is being launched as a result of the strategic alternatives review process undertaken by Chauvco Resources Ltd. (''CRL'') to increase shareholder value. Under the terms of a plan of arrangement approved today, shareholders of CRL receive one share of Chauvco for each CRL share held. Chauvco is an international natural resource company formed for the purpose of acquiring oil and natural gas properties and exploration, development, production and marketing of crude oil and natural gas. Initially, the Company's principal properties, operations and oil reserves are located in Gabon, central west Africa. Chauvco proposes to actively evaluate and secure other international petroleum resource opportunities, principally focusing on west and north Africa and the Middle East.
On December 22, 1997, Chauvco will begin public trading of its common
shares on The Toronto Stock Exchange and The Montreal Exchange under the symbol of CHV. The Company has 51,346,282 shares outstanding.
PACIFIC TIGER ENERGY INC. (PTE/MSE) will be listing as of December 19th, an aggregate of 15,237,901 Common Shares, of which 13,937,901 will be issued and outstanding.
Pacific Tiger Energy Inc. acquires and develops oil and gas prospects in South East Asia. The Company holds an interest in the SW1 Petroleum Concession located in the Phetchabun Basin in the central plains region of Thailand, roughly two hundred miles from Bangkok.
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