MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, JANUARY 9, 1998 (3)
EXCHANGE INFORMATION
LOON ENERGY INC. has submitted an application for listing on The Alberta Stock Exchange. Loon, formerly known as Trident Systems Inc., was listed on the ASE prior to July, 1995. On December 31, 1997 Loon completed a private placement of 1,944,750 flow-through special warrants at $0.40 for gross proceeds of $777,900. McDermid St. Lawrence Securities Ltd. acted as agent. Earlier, in September, 1997, Loon completed a private placement of 2,000,000 flow-through special warrants at $0.10 for gross proceeds of $200,000. A prospectus will be filed shortly to clear for trading the common shares issuable upon exercise of the special warrants and to qualify additional common shares of the Corporation for distribution through a public offering expected to occur in early March, 1998.
Loon has reciprocal participation agreements with TUSK Energy Inc. (TSE:TKE) and has arranged a farm-in on certain of their properties including a Bluesky gas prospect at Pine Creek, Alberta and a Leduc gas prospect at Strachan, Alberta. TUSK is the largest shareholder of Loon. In addition, Loon has acquired a 50 percent interest in Sparky oil prospects at Epping and Silverdale, Saskatchewan which will be developed when economic conditions are favourable.
SEVEN SEAS PETROLEUM INC. (Toronto: SVS.U) announced today that its common stock has been cleared by the United States Securities and Exchange Commission and approved by the American Stock Exchange (Amex) for trading in the United States. Trading is expected to commence on the Amex early in the week of January 12, 1998. The Company will trade on the Amex under the ticker symbol 'SEV'. Seven Seas currently trades on the Toronto Stock Exchange under the ticker symbol 'SVS.U' and will continue to do so after listing on the Amex.
KERM'S TOP 21 - SPEC 15 - SERV 9 COMPANIES IN THE NEWS
No news to report.
KERM'S WATCHLIST COMPANIES IN THE NEWS
It comes as no surprise that ARCHER RESOURCES LTD.'s board of directors has engaged FirstEnergy Capital Corp. ("FirstEnergy") to examine strategic alternatives for the Company. FirstEnergy's mandate is to examine a variety of options that include continuing with the current successful growth program, arranging a merger with another company or finding a purchaser for all the outstanding shares of the Company.
Archer entered 1997 with three strategic objectives, which were: to grow the value of the Company's asset base west of the 4th meridian (W4M), acquire and exploit properties outside the W4M area and demonstrate Archer's capability as a full cycle explorer. Substantial progress has been made on all three of these objectives, as recently demonstrated at the Company's Willingdon, Sedgewick and Knob Hill projects. Exploratory drilling is underway at Edson and further winter drilling is scheduled at High Prairie and Shekilie.
As a result of Archer's success in achieving these objectives as well as its recently executed property rationalization and hedging programs, the company has a number of alternatives available to grow shareholder value. The Board has decided that this is an appropriate time to consider those strategic alternatives cited above as part of the company's ongoing business. FirstEnergy has initiated its mandate but does not have a specific proposal under discussion.
Archer has 21.6 million common shares outstanding (fully diluted 23 million), debt of $30 million (approximately one times annual cash flow) and positive working capital of approximately $4 million. The Company believes it will meet or exceed the 1997 cash flow and earnings targets previously communicated to the market.
OTHER COMPANIES IN THE NEWS
TEMBA RESOURCES LTD. closed their acquisition of oil and gas properties from a private company on January 8, 1998. Temba acquired all of the Assets of the private company effective September 1, 1997 for a purchase price of $3.7 million cash plus one million common-share-purchase warrants. The warrants entitle the Vendor, for a period of 2 years following closing, to purchase one common share of Temba for a price of $0.50/share. The purchase price was financed with a combination of cash and debt.
The Assets are comprised of interests in various oil and gas properties located in Alberta and British Columbia currently producing at levels of 260 BPD of oil and liquids and 1,675 MMCFD of gas with cash flows averaging $130,000 per month plus ARTC recovery during the first 9 months of 1997.
The Company also reported that it has entered into an agreement to sell its non-core properties in order to reduce bank debt. The final value of the disposition is subject to further negotiation. This disposition of non-core properties is scheduled to close on January 31, 1998.
BRIGDON RESOURCES INC. (TSE - BRG.A) of Calgary has completed the three-well Buffalo Lake drilling program that was announced on November 14, 1997. Two wells (average working interest 52.5%) were cased as Basal Quartz and/or Glauconite gas discoveries and one well was abandoned. Pipelines have been surveyed and the company hopes to have the two completed wells on stream by early February. Flow tests indicate that production from these wells will increase throughput at the Red Willow plant by 3,000 mcf per day. Pipeline construction crews have recently built lines to two other Buffalo Lake wells (average working interest 80%). Surface connections will be completed this weekend and the wells should be on stream next week producing a combined 1,200 mcf per day.
Brigdon plans an ambitious exploration drilling program for 1998. A drilling rig has been contracted for a minimum of eight wells. The rig will be returning to Buffalo Lake towards the end of January. Brigdon expects to drill two to four more wells this winter.
SHARPE RESOURCES CORPORATION is planning an initial ten (10) well program to produce areas of high potential oil reserves within its 100 percent owned West Thrifty Unit. Drilling will commence in the central portion of the field which have historically proven to be more productive. Sharpe will be drilling within areas of the field where individual wells produced about 3,000 bbl's/d during primary production in the 1930's. Potential production response could exceed expectations of 1,000 bbl's/d from the current drilling program.
CROWNJOULE EXPLORATION LTD. (TSE/CJE) stated that their second Doris gas palant is on-stream. the company also announced key additions to their staff. The company said that production at the Doris South (II) Gas Plant is now into its first full month of maximum production capability of 18 Mmcf/d. With the Doris plants now achieving their combined production capabilities of 36 Mmcf/d, CrownJoule's current net production is over 1,150 BOE/d. With these production volumes and its gas marketing program anticipated to average $1.90/Mcf through this winter "heating" season, CrownJoule anticipates record revenues, cash flow and earnings in the fourth quarter. With a strong balance sheet, stable cash flow and an aggressive, strengthened management team in place, CrownJoule is poised for significant growth in 1998.
ENDLESS ENRGY CORP. (EEC/ASE) shareholders approved the purchase of certain oil and gas interests in the areas of Alberta and British Columbia from a third party for $3,714,800 expected to close before the end of January. The company will proceed to place up to a total of 4,000,000 special common share purchase warrants at a price of $0.75 per warrant expected to close before the end of January. In addition, the company also gained approval to issue up to 4,000,000 common shares at a later date.
INTERNATIONAL SCENE
COMPANIES IN THE NEWS
SHARPE RESOURCES announced that due to a change in the company's focus with more emphasis on US production and exploration, Sharpe has elected not to pursue the Peruvian oil project at this time. This position is subject to change in the future. The company has not incurred any positive or negative financial impact as a result of this decision.
CIRQUE ENERGY has received the approval for both the completion of its new pool discovery in the UK and a 60 day production test. Completion of Fiskerton will commence on January 10, 1998. The well is expected to be turned over to the production testers on January 20th. A total of 30 feet of the 60 foot oil pay zone will be perforated. The long term production test is expected to begin on February 1st, or as soon as the test site and equipment have conformed to UK health and safety standards.
The company also provided an operational update. Permitting has been completed on the 16.5 square kilometer 3D UK seismic survey. A crew has boon contracted to commence the shooting of the program around February 1, 1998, weather permitting. The UK government has yet to announce the new on-shore land awards that were due for release on December 22, 1997.
Applications are being prepared for a six well development project on the Fiskerton lease, of which Cirque as operator has targeted two wells for drilling in June/July 1998. Cirque's interest is 48.2%.
In Canada at Turin, where Cirque operates with a 50% working interest, a total of eleven wells were drilled resulting in eight oil wells, one gas well, one salt water injector and one dry hole. With battery construction underway, Cirque is producing five oil wells at rates averaging 86 barrels of oil per day each or 215 barrels of oil per day net to Cirque. Three oil wells and the gas well are shut in pending completion of the $1.5 million oil and gas processing facility. The start-up date is anticipated to be March 1, 1998. These four shut-in wells should increase the Turin production to around 700 beopd (360 boepd) net to Cirque. Two wells are scheduled to be drilled in February, offsetting an existing 200 bopd Turin producer. The 3D seismic shot over four sections of farm-in acreage has identified a minimum of twelve locations, two of which are scheduled to be drilled prior to break-up.
At Bow Island, 3D seismic shot over three sections of working interest lands has identified two exploratory drill sites. Both locations will be tested in 1998.
Cirque's current domestic production is 750 barrels of oil per day equivalent and is expected to reach 1000 barrels of oil per day by the Company's year end at March 31, 1998.
COUNTRIES IN THE NEWS
Marxist rebels dynamited COLUMBIA's second largest oil pipeline a record 65 times in 1997 causing about $14 million in damage and more than $85.6 million in lost production, state-run oil company Ecopetrol said Friday.
The 460-mile (740 km) pipeline snakes from the Cao Limn oil field, operated by U.S. multinational Occidental Petroleum Corp (NYSE:OXY) in northeast Arauca province, to the Caribbean coast lifting terminal at Covenas.
According to Ecopetrol, more than 200,000 barrels of crude were spilled in the multiple attacks and more than 5.3 million barrels of production were lost.
Throughout its service history, the Cao Limn-Covenas pipeline has been blown up 503 times -- including two attacks in 1998 -- with the spillage of more than 1.7 million barrels of crude. Repairs costs alone are estimated at more than $238 million and the value of lost output is close to $1.5 billion.
The Cao Limn-Covenas pipeline has capacity to pump 230,000 barrels per day and was the country's largest pipeline from the time it came into operation in late 1985 until mid-1997.
The 500 mile (800 km) Ocensa, which serves British Petroleum Co Plc's (quote from Yahoo! UK & Ireland: BP.L) Cusiana-Cupiagua field in eastern Colombia, is now the longest pipeline in the country and has a maximum pumping capacity of about 620,000 barrels per day. It was blown up just once last year.
The fiercely nationalistic ELN guerrilla group, founded in 1964 and now led by a Spanish former Roman Catholic priest, specializes in attacks on Colombia's oil infrastructure as a way of protesting what it believes is ''excessive'' foreign involvement in the industry.
PIPELINES
The already confused outlook for North American pipeline expansion became even more muddied after TransCanada PipeLines Ltd. said it plans a 1.4 billion cu. ft. (bcf) per day expansion.
The expansion, which will replace the earlier proposed TransVoyageur project, will connect to the planned Viking Voyageur pipeline and ultimately serve the Chicago area, Michigan and Wisconsin.
Chicago is also the terminus of the proposed $3.7 billion Alliance Pipeline, which is the subject of current heated hearings before the National Energy Board that has Nova Corp. and Foothills Pipe Lines Ltd., among others, pitted against project proponents.
The $920-million TCPL proposal is aimed directly at Alliance, said TCPL spokesman Gary Davis.
"We've been working hard to increase the profile of Viking Voyageur to producers, because the market in the U.S. is there," said Davis.
He added the timing of the announcement, four days after the NEB hearings began, is no coincidence.
"Because the Alliance hearing has started, we think it's important something is filed with the NEB relatively quickly -- and it's before the board."
That way, said Davis, "people really do have some alternatives to talk about."
It's the latest blow for Alliance, which began as a producers' initiative, became dominated by pipeline giants and evolved into perhaps the most contentious pipeline project in a generation.
On Wednesday, Foothills officials launched an offensive against Alliance, arguing it has inadequate supply, could be unsafe, and will undermine prices in the U.S.
TCPL's plans for 1999 come on top of its 417 million cu. ft per day expansion under way for this year, budgeted at $825 million.
Between November 1996 and November 1998, TCPL will increase its capacity by about 900 million cu. ft. per day.
As well, the Northern Border Pipeline expansion, in which TCPL has a 30% stake, will increase export capacity by 700 million cu. ft. per day.
MISC NEWS
Halliburton Company's (NYSE: HAL) Brown & Root business unit and its joint venture partner, AGRA Monenco, have received authorization to move ahead in their role as project managers, engineers and procurement contractors for the Sable Offshore Energy Project, a $3 billion pioneer development of Canada's first offshore natural gas field.
This week's groundbreaking ceremonies for the key onshore facility, 300 kilometers northeast of Halifax, marks the beginning of two years of onshore and offshore construction activity.
Construction of the $2 billion first tier of the project, scheduled for completion by December 1999, includes facilities and gathering lines at Thebaud, North Triumph and Venture fields as well as all onshore facilities. The second tier development cost is estimated at more than $1 billion and includes the facilities and gathering lines for the Alma, Glenelg and South Venture fields and will be progressively completed by 2006.
"We are pleased to be a key player in the first major oil and gas alliance contract on the east coast of Canada," said Dave Lesar, president and chief operating officer of Halliburton, Brown & Root's parent company. "SOEP's alliancing approach helps ensure an integrated team that will lower development and operating costs and deliver significant improvements in project value in support of Nova Scotia's long-held goal of bringing offshore natural gas to market."
In addition to engineering, procurement, and project management responsibilities, Brown & Root has three additional roles in the project:
-- Brown & Root and partners AGRA Monenco and BMS Offshore Ltd. will
provide construction management services for the project's onshore facilities including a gas processing plant at Goldboro, a natural gas liquids pipeline, and fractionation facilities at Point Tupper. Future construction subcontracts for the onshore facilities will generate hundreds of jobs in Nova Scotia throughout 1998 and 1999.
-- Brown & Root and its partner, MM Industra, were awarded a contract last summer for fabrication of two drilling jackets, which are substantially complete at MMT's fabrication yard in Dartmouth, Nova Scotia, and are scheduled to be installed on location in March 1998 to enable drilling activities to commence in April.
-- Brown & Root and MMI have been awarded the fabrication of the North Triumph deck which will be fabricated in Dartmouth commencing May 1998.
In conjunction with other alliance partners, Brown & Root will move forward to design, construct and install the four offshore platforms, accommodation modules, onshore gas processing and handling facilities and the laying of approximately 400 kilometers of pipelines.
SOEP participants are Mobil Oil Canada Properties Limited, Shell Canada Limited, Imperial Oil Resources Limited, Nova Scotia Resources Limited, and Mosbacher Operating Limited.
Halliburton is one of the world's largest diversified energy services, engineering, maintenance, and construction companies. Founded in 1919, Halliburton provides a broad range of energy service and products, industrial and marine engineering and construction services. |
