MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING WEDNESDAY, DECEMBER 31, 1997 (5)
FEATURE STORY
Shell's Plans Inch Forward
Fort McMurray Today
Shell Canada has filed an Environmental Impact Assessment for its proposed $1-billion Muskeg River oilsands mine north of McMurray.
The filing with Alberta Energy and Utilities Board and Alberta Environmental Protection was made before Christmas. It contains information such as how the 120,000 to 150,000 barrels per day bitumen mine might potentially impact the environment.
"Within our timelines and schedule we said we would file an application by the end of 1997 and we have done that so we are on track," said Shell spokesperson Tara Black. "We have a ways to go before we know we have a project but that next step has happened as we promised we would."
Regulators will now review the EIA, said Black, and determine whether further information is needed. There will also be a period for public input, she added.
Start-up for the mine and extraction plant is proposed for 2002.
In Fort McMurray, the full EIA submission and application can be viewed at the public library and the Oil Sands Discovery Centre. Shell took the first steps towards regulatory approval in March, when it filed a public disclosure, a set of general project plans.
In addition to completing the EIA, the proposed oilsands player and project partner Broken Hill Proprietary Co. Ltd. (BHP) have completed a pre-feasibility study.
Now Shell and BHP, a global industrial and natural resources company with surface mining expertise will embark on a comprehensive feasibility study. Black said this full-fledge study will get into more detail when it comes to the technology, plant design and commercial viability.
"So you basically take it another step farther in understanding if the project can go ahead," she said
A decision whether the Muskeg River mine will proceed is expected by late 1998.
Meanwhile, Shell has received provincial approval to build a $10-million experimental oilsands plant on its lease. Late January is the deadline for objections to be filed.
The pilot plant will have a capacity produce up to 100 barrels of bitumen per day. An existing stockpile on the former Alsands lease will feed the six to eight-month project, which is expected to employ up to 12 people.
Pre-fabricated plant modules will be trucked to the lease site in early 1998.
Shell anticipates test production should be underway by April.
Upgrading of the bitumen will be done in facilities in France or the United States.
Jobs Line Attracts Seekers
The job hunters are calling.
Since Shell Canada set up a toll-free line on its proposed $1-billion Muskeg River oilsands mine project back in March, more than 1,000 inquiries have been logged. "It was really a way that we could make sure people had access to us and part of the public consultation process that we went through," said Shell spokesperson Tara Black. "So in all our ads and all documents that we put out publicly that number was in there."
The 1-800-334-7562 line gives callers options to hear a brief project overview and tells them how to get documents filed with provincial regulators and employment and contract opportunities. As the project hasn't received approval, the recorded information tells callers Shell isn't recruiting but is complying a list of people who do want to work on the proposed project.
Up to 800 on-site operating jobs are expected to be created when the mining and extraction operations begin in 2002. Shell expects an average of 600 local construction jobs per year between 1999 and 2002, with a peak of more than 800 in 2001.
The integrated project has a price tag of $3.2-billion: a $1-billion mine, a $375-million pipeline and a $1.8-billion upgrader to be built next to Shell's existing 80,000 barrel per day Scotford Refinery in Strathcona County.
INDEXES
The Toronto 300 Benchmark closed up 0.1% or 8.23 to 6699.44 last Wednesday.
In comparison, the Oil & Gas Composite Index finished up 0.5% or 31.34 to 6670.29. Sub components were mixed. The Integrated Oils fell 0.5% or 44.00 to 9033.15. The Oil & Gas Producers gained 0.6% or 33.00 to 5868.69. The Oil % Gas Services rose significantly, up 3.2% or 95.38 to 3083.21.
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
MARKET MOST ACTIVE
Orbit Oil & Gas, Hurricane Hydrocarbons, Renata Resources, Chaauvco Resources International, Gulf Canada Resources, Petro-Canada, Norcen Energy Resources and Abacan Resources were among the top 50 most active traded issues on the TSE.
Paramount Resources gained $2.50 to $17.00, Remington Energy $1.50 to $24.00, Northstar Energy $0.90 to $10.05 and CrestarEnergy $0.75 to $22.00.
Percentage gainers included Paramount Resources 17.2% to $17.00, Spire Energy 16.7% to $1.75, Cavell Energy 16.5% to $1.20, Abacan Resources 14.8% to $2.25, TUSK Energy 13.2% to $1.20, Benson Petrroleum 11.9% to $1.50, Torrington Resources 10.8% to $4.10 and Northstar Energy 9.8% to $10.05.
On the downside, Anderson Exploration fell $0.45 to $14.00, Petro-Canada $0.45 to $26.00, Canadian Natural Resources $0.40 to $30.60, Seven Seas Petroleum $0.35 to $17.20 and Baytex Energy $0.30 to $15.00.
Percentage losers included Petrobank, falling 4.9% to $2.15, Canadian Conquest Exploration 4.5% to $1.05, Anderson Exploration 3.1% to $14.00, Bow Valley Energy 3.0% to $1.60 and Magan Energy 2.9% to $2.38.
Chauvco Resources International reached a new 52-week high while Camberly Energy reached a new 52-week low.
Regarding the service sector, including those companies with close ties to the industry, none were among the top 50 most active traded issues on the TSE.
Dreco Energy gained $2.20 to $48.20, Enertec Resource Services $2.00 to $14.00, Precision Drilling $1.65 to $34.85, Shaw Industries A $1.60 to $48.60, Canadian Fracmaster $1.40 to $21.00 and Plains Energy Services $0.95 to $10.95.
Percentage gainers included Enertec Resource Services 16.7% to $14.00, Alpine Oil 14.8% to $1.32 and Inter-Tech Drilling 14.3% to $1.20.
On the downside, Mullen Transportation fell $0.75 to $21.00 and Enerflex Systems $0.50 to $32.50.
Percentage losers included Mullen Transportation 3.4% to $21.00.
ACTO I reached a new 52-week high. There were no 52-week lows.
Over on the Alberta Stock Exchange, ICE Drilling, NTI Resources, Enterprise Developement, Burner Exploration, Colt Energy, Bromley Marr, Peregrine Oil & Gas, Bearcat Exploration, OxbowExploration, Jerez Energy and Colony Energy were among the top 30 most active traded issues.
Veteran Resources gained $0.40 to $1.20, Burnewr Exploration $0.30 to $0.85, Underbalanced Drilling $0.30 to $3.00, Bromley Marr $0.25 to $1.55, Draig Energy $0.25 to $1.50, Ayrex Resources $0.20 to $0.50, Colony Energy $0.20 to $2.30, Kensington Energy $0.20 to $1.45, AltaQuest Energy $0.15 to $2.35 and del Mar Exploration $0.15 to $0.55.
Percentage gainers included Ayrex Resources 66.7% to $0.50, Burner Exploration 54.5% to $0.85, Veteran Resources 50.0% to $1.20, Desmarais Energy 45.0% to $0.29 and Moiibus Resources 29.0% to $0.40.
On the downside, Granger Energy C fell $1.50 to $2.00, Capco Resources $0.40 to $3.10, Red Sea Oil $0.20 to $2.90, Arrival Energy $0.15 to $2.00, Global Link Resources $0.15 to $1.35, Colt Energy $0.14 to $1.30, Master Downhole Drilling $0.10 to $1.30 and Hyduke Capital Resources $0.09 to $3.11.
Percentage losers included Granger Energy C 42.9% to $2.00, Mesquite Resources 11.7% to $0.27, Capco Resources 11.4% to $3.10, Global Link International 10.0% to $1.35 and Colt Energy 9.7% to $1.30.
There were no new 52-week highs. Granger Energy C reached a new 52-week low.
KERM'S WATCHLIST OF COMPANIES IN THE NEWS
Petrobank announces today that continued successful exploration and development of its Alder Flats property has resulted in year-end 1997 production levels exceeding 2,000 BOE per day up from approximately 400 BOE per day in December 1996. The pipeline tie-in of Petrobank's recently announced 1-27 well was completed in December. Petrobank has a 100 percent working interest in the 1-27 well, which has an extended AOF of over 15 million cubic feet per day plus associated liquids and is producing at over 1,000 BOE per day. Petrobank's total Alder Flats productive capacity currently exceeds producing rates due to gas plant capacity constraints. Petrobank is in the process of obtaining EUB approval for a capacity expansion, which should be completed in the first half of 1998. The expansion is expected to more than double Petrobank's current sustainable processing capability.
Petrobank's medium-depth drilling program is continuing with the first of two wells cased and awaiting completion and evaluation. The second well was spud on December 31 and is expected to take approximately three weeks to reach total depth. Flow results from the two wells will be released following completion and evaluation.
Petrobank advises that its deep exploration well (100 percent WI) at Alder Flats has encountered over 100 metres of porous dolomite section in the Nisku primary target horizon. The Nisku top came in as per Petrobank's prognosis confirming the company's seismic model of the feature. Drill cuttings, mud gas, and well logs indicate significant gas-bearing intervals. Petrobank expects to finish drilling operations in the next several days and completion and evaluation of the discovery will follow immediately.
Petrobank will release flow results following evaluation. Of the four possible follow-up locations on the prospect, Petrobank anticipates drilling at least one additional well (100 percent WI) in the first quarter.
Petrobank's management expects that these exciting developments will continue to fuel the company's rapid growth.
Also. J.D. Tocher, Chairman and C.E.O. of Petrobank Energy and Resources Ltd. (Petrobank) is pleased to announce the following appointments.
Mr. Kevin Adair, who joined Petrobank in July, 1997 as Vice-President Engineering and Operations now assumes the role of Senior Vice President and Chief Operating Officer.
Effective January 1, 1998, Mr. Ken McKinnon will become Vice-President Finance and Chief Financial Officer. Mr. McKinnon has a BComm from the University of Calgary and a Bachelor of Law from Queens University and brings an array of financial and legal talent to Petrobank.
Mr. Garry Hides has joined Petrobank effective November 24, 1997 as Manager, Land. Mr. Hides, a fully accredited professional landman has fifteen years experience in all phases of land work.
Ryan Energy Technologies Inc. announces that it will be changing its fiscal year end to December 31 from March 31 effective December 31, 1996.
Ryan Energy Technologies Inc. is an industry leader in the development and provision of horizontal and directional technology and services including measurement While Drilling (MWD), Logging While Drilling (LWD), and Down-hole Drilling Motors. This equipment is used to steer and evaluate horizontal and directional well-bores for major, intermediate, and junior oil and gas companies in Western Canada and the United States.
OTHER COMPANIES IN THE NEWS
A well known and respected American oil and gas publication, Hart's Oil & Gas World, in its December, 1997 edition has selected K2 Energy Corp.'s exploration play on the Blackfeet Indian Reservation in Northern Montana as their ''play of the month''. K2 is actively continuing its exploration and development work in Montana. K2 continues to pursue a farm-out partner for its Montana lands and, to date, seven large Canadian and U.S. oil and gas companies have signed a confidentiality agreement with K2 under which they have been given the opportunity to review the Company's data on the lands.
K2 Energy Corp. wishes to announce that it is recording in its October 21, 1997 unaudited financial statements, a $2.0 million write-down in the carrying value of its Canadian oil and gas properties as a result of the more than 30% decline in crude oil prices since the start of the 1997 calendar year.
Bison Resources Ltd. (''Bison'') (ASE: BIS.A) announced today that Bison has completed its major transaction to acquire 100% of the shares of Lupine Investment Corporation (''Lupine'') which owns certain oil and gas assets, for a total consideration of $500,000 payable as to $250,000 by the issuance of 1,000,000 Common Shares (at $0.25 per share) and $250,000 in cash (subject to adjustment). Payment of the purchase price will be made after closing upon completion of Bison's satisfactory review of Lupine's title to its properties. The oil and gas interests of Lupine are in the Manyberries, Hillsdown and Joffre areas of Alberta.
Bison further announces that Bison has completed a private placement of 1,000,000 flow-through shares at $0.35 per share ($350,000) which was approved by the shareholders of Bison at the December 30, 1997 shareholders meeting.
Bison is also pleased to announce that R. Bradley Hurtubise was elected to the Board of Directors at the shareholders meeting of December 30, 1997. Mr. Hurtubise was most recently the President and CEO of Grad & Walker Energy Corporation. While at Grad & Walker Mr. Hurtubise orchestrated two corporate acquisitions, a major asset disposition, two equity financings, each with a primary and secondary component, and the sale of the company.
Windsor Energy Corporation (TSE - WNS) announces that it has filed with The Toronto Stock Exchange a notice of intention to make a normal course issuer bid to purchase up to a maximum of 1,364,136 Common Shares (5 percent of the outstanding Common Shares) over the next twelve months. Not more than 2 percent of the outstanding Common Shares will be purchased in any 30-day period. As of December 5, 1997 the Corporation had 27,282,722 Common Shares outstanding. The normal course issuer bid will commence on January 7, 1998 and terminate on January 6, 1999.
The Common Shares will be purchased on the open market by Scotia Mcleod Inc., the Corporation's broker, from time to time through the facilities of The Toronto Stock Exchange. Common Shares purchased will be paid for with cash available from the Corporation's working capital. All shares purchased by the Corporation will be cancelled and returned to treasury.
The Corporation believes that the purchase of its Common Shares at recent market prices is a worthwhile investment and is in the best interests of the Corporation and its shareholders. The Corporation believes that recent market prices of its Common Shares do not properly reflect the underlying value of the Common Shares.
Cavern Resources Inc. (the "Corporation") hereby announces that, on December 30, 1996, Jeffrey Tonken sold 840,000 common shares of the Corporation to Mill Bay Investments Ltd. for a total purchase price of $5,000. As a result of this transaction, Mill Bay Investments Ltd. holds a total of 840,000 common shares of the Corporation representing approximately 38.4 percent of the issued and outstanding common shares of the Corporation and Jeffrey Tonken holds 10,000 common shares of the Corporation.
INTERNATIONAL SCENE
NEW ARCADIA RESOURCES LTD. Vancouver, B.C., announces it has executed a letter of intent with Ceiba Petroleo S.A. for an option to earn a 72% interest in the Guatemalan Oil License A-2-92. Ceiba Petroleo is a 79% owned subsidiary of Seine River Resources Inc., (VSE-SRO).
The License area, covering 554,000 acres, is in a lightly explored southern extension of the prolific Peten Basin from which Mexico produces most of its oil. An oil discovery on the license produced 145,000 barrels of 34.8 API gravity oil between 1981 and 1986. Well repairs to correct increasing water production were terminated due to political unrest in the area in 1986 and the well was abandoned. It is planned that initial drilling on the license will be directed to development of the reservoir found by this previous oil discovery. Other operators actively are exploring and producing in the region and pipeline and loading facilities have been built.
Peace has been restored to the region as a result of the election of a democratic government and subsequent signing of peace agreements, culminating in the major peace accords signed December 29, 1996 in Guatemala City between the government and local native groups.
This timely acquisition complements New Arcadia's exploration project in nearby Belize where New Arcadia has 700,000 acres under contract adjacent to the Guatemalan border.
The terms of the letter of intent require New Arcadia to pay Ceiba US$83,000 and issue 200,000 shares of common stock to secure the option. To earn the interest, New Arcadia must drill and complete one well, commencing drilling within 180 days of the final agreement.
The option is subject to the execution of the final agreement and to approval by the Vancouver Stock Exchange, the Government of Guatemala, and the Boards of Directors of New Arcadia and Seine River.
TRANSGLOBE ENERGY CORP. (TSE/TGL, ASE/TGL and TGL.S, NASDAQ/TGLEF) announced its financial and operating results for the year ended September 30, 1997 compared to year ended September 30, 1996.
During 1997, the Company undertook a successful exploration program in the East Meridian lands in Montana and participated in the exploration of Block 32 in Yemen. The Company raised funds from the issuance of convertible debentures and special warrants. Subsequent to the year- end, in December, 1997, the Company concluded a production sharing agreement ("PSA") with the Ministry of Oil and Mineral Resources (the "MOMR") in Yemen involving the Block S-1.
1997, the Company's oil and gas revenues were US $1,121,798 compared to US $1,113,274 for 1996. The revenues were primarily from the Madera No. 30-1 well in New Mexico. The Prevost #1, Larson 18-1 and Oakland wells in the East Meridian field were placed on full production in June, August and September 1997 respectively and therefore their full impact on the Company's operating results will be felt in fiscal 1998. One other discovery, the CWI BN 17-1 well, was not yet on stream at September 30, 1997.
During the year, TransGlobe sold its investment in IPC International Power Corporation for US $1,012,500, which resulted in a gain of US $262,500.
The Company has written off the capitalized costs of US $1,724,310 relating to the Barstow property to operations. The Company also determined that the net book value of the oil and gas properties exceeded the future net revenue by US $3,710,000. Consequently this amount was charged to operations.
The Company reported a loss of US $6,268,791 (US $0.46 per share) for the year ended September 30, 1997 as compared to a loss of US $3,370,096 (US $0.43 per share) for 1996.
During 1997, TransGlobe incurred US $4.0 million in capital expenditures in the United States and US $3.6 million on its activities in the Republic of Yemen. In the United States, the Company drilled four oil wells and one dry hole. In Yemen, the Company participated in two dry holes and one well that is currently under going testing.
During fiscal 1997, TransGlobe was involved in two major financings. The first one was the issuance in November 1996 of zero coupon convertible debentures for net proceeds of US $3,221,852. In January 1997, all convertible debentures were converted into 4,569,021 common shares. In March 1997 the Company issued 4,400,000 special warrants at US $1.30 per special warrant. All special warrants were exercised in July 1997, resulting in the issuance of 4,400,000 common shares. This offering generated net proceeds of US $5,179,127 to the Company.
At September 30, 1997, the Company had cash resources of US $3.5 million and net working capital of 24 million, after accounts payable and accrued liabilities relating to the capital expenditures.
In fiscal 1998, the Company plans to continue its exploration activities in Yemen and the United States. The amount of TransGlobe's capital expenditures on Block S-1, Yemen will depend on the extent of partner participation. In addition, the Company is anticipating additional seismic acquisition and drilling costs on Block 32, Yemen during fiscal 1998.
In the United States, the Company expects to continue its exploration program on East Meridian lands, Montana. The Company has also acquired an interest in the Moline Lake prospect in North Dakota. The Company anticipates drilling up to eight wells in the United States during fiscal 1998.
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