MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING WEDNESDAY, FEBRUARY 4, 1998 (5)
KERM'S WATCHLIST OF COMPANIES IN THE NEWS
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OTHER COMPANIES IN THE NEWS
TRANSGLOBE ENERGY CORP. (ASE/TGL - NASDAQ symbol "TGLEF") reported that the well, BROG 13-19 in Richland County, Montana, drilled horizontally , production tested at a stabilized rate of 804 bpd of 45 degree API oil and no water on a 24/64 choke with 550 psig flowing tubing pressures from the Red River "C" formation. TransGlobe has a 50 percent working interest and a net revenue interest of 40 percent in the BROG well.
Another exploration well, Johnson 21-1 in Richland County, Montana, was spudded January 29, 1998. This well is to test the Tyler Sand at approximately 7600 ft. TransGlobe has a 25 percent working interest and a net revenue interest of 20 percent in this well.
FIRST STAR ENERGY LTD. announced the drilling rig commenced moving onto its Strachan, Alberta location today, February 4, and should start drilling this 4275 meter Cambrian test early next week. The well has been re-licenced as Apache et al 03-22-38-9W5M, approximately 1/2 mile from the previous location.
The location move is the result of a 3-D seismic survey which has better defined the structural high and which confirms the previous large 2-D anomaly under the lands. Estimated potential reserves for this prospect are between 1 and 2 TCF of sales gas (First Star 20 percent BPO, 25 percent APO).
The well is a Cambrian test which will evaluate several horizons producing in the immediate area, including the primary objectives - Leduc D-3 and Beaverhill Lake - Swan Hills reefs. First Star and partners (APACHE CANADA LTD., TUSK ENERGY, DALTON RESOURCES LTD. AND LOON ENERGY) hold all Petroleum and Natural Gas rights at this new location. This well is expected to take 75-90 days to drill and complete.
MAGIN ENERGY INC. announced annual 1997 and fourth quarter financial results will be released on March 2, 1998. Production for 1997 averaged 4,900 barrels of oil equivalent per day with the fourth quarter averaging 7,015 barrels of oil equivalent per day (4,435 barrels, 25.8 million cubic feet). Average production for the month of January increased a further 24 percent to 8,700 barrels of oil equivalent per day (5,500) barrels, 32 million cubic feet).
The company further announced that it has filed and received receipts for a final prospectus in British Columbia, Alberta, Manitoba, Ontario and Quebec. The prospectus qualifies for distribution to the public 2,966,125 flow-through common shares issuable upon the exercise of previously issued Special Warrants. The issue price per share was $3.25. The Company has, after the issue, 50,386,694 common shares issued and outstanding.
GOLDEN TREND PETROLEUM LTD. reported that, at the January 21, 1998 Alberta Crown land sale, it acquired 4080 gross acres (2040 net acres) in its core Redwater area, which will be added to its existing undeveloped lands at Redwater for future development drilling. The Company's 1998 capital plans for Redwater include the drilling of at least 3 development wells and the recompletion of several wells, which should increase gross production from the area to 6.0 mmcf/d (net 3.0 mmcf/d). Golden Trend holds a 50 percent working interest and is the operator of the Redwater gas field.
INTERNATIONAL
COMPANIES
PACALTA RESOURCES thinks Ecuador has the potential to join oil's big league if it can only overcome a paralysing political deadlock. Chief executive John Wright said the country's little-explored Amazonian basin could support three times its current oil production if it embraced foreign investors. As it was, however, the small Andean nation faced a gaping budget deficit and falling output forecasts because it is starved of capital.
"You can't ignore this basin -- it's too good, too underdeveloped, too easy and there's almost no-one else here. It has the potential for a million barrels per day (bpd)," Wright told Reuters in an interview Monday.
Latin America's fourth biggest oil exporter after Venezuela, Mexico and Colombia, Ecuador produces 390,000 bpd of oil, three quarters of it by a state oil company Petroecuador.
But the state firm can hardly pay its running costs, let alone invest in new exploration or production, Wright said.
While others, such as France's Elf , are trying to get out of the country, Pacalta, already Ecuador's biggest foreign investor, is stepping up its commitment. The Calgary-based firm is so confident it sold all its Canadian assets last year and plans to plough $120 million into Ecuador in 1998, up from $80 million in 1997.
Its goal is to position itself with some prime oil real estate so its output can take off once the capacity on the country's main export pipeline is increased.
"The country has so little else that anyone with a stake here has a great position going forward -- it could turn out to be a gold mine," Wright said.
Ecuador's oil producers are constrained by limited pipeline capacity linking the remote Amazonian oil basin to the Pacific coast for export. But private operators are pushing the government to expand it.
Pacalta now pumps 20,000 bpd of oil, but has the capacity to produce 35,000 bpd if the transport were available and by the end of this year expects to reach 80,000 bpd potential.
"Sooner or later there will be a solution to the transport problem, either one we create or one we share in," Wright said.
Last year, private sector investors including Pacalta offered to finance an expansion of the Transecuadorean Pipeline System (SOTE) in the form of advance tariffs, but the government rejected the offer in favour of a more home-grown scheme.
The $160 million project is now in the hands of the Finance Ministry, which has appointed the military to oversee construction. Companies are hoping it will get financing, $50 million through a government bond and $110 million from the Andean Finance Corporation (CAF), before presidential elections in May.
Despite a broad consensus in the country that the expansion is the right thing to do, Ecuador's continual administration changes and bureaucratic decision-making process have kept it on hold for five years, forcing oil producers to shut in wells.
Industry analysts at Wood Mackenzie in Scotland say the country is losing 90,000 bpd because of the capacity shortage.
Pacalta is also looking at some other cheap, quick measures to boost export capacity in the meantime, Wright added. The government last month raised Pacalta's export capacity by 45 percent, but simultaneously issued a decree limiting the whole private sector to 85,000 bpd in the pipeline. Wright says this violates his contract and also goes against investment treaties signed by the government. "I don't want to get into a fight over this, but our shareholders aren't going to sit back and say "that's fine"." "If we don't see any potential to increase production, the 1998 budget will drop to $50 million," he said.
GHP Exploration Corporation (CDN:GHPX.U) is pleased to announce testing plans to evaluate the hydrocarbon potential of the Sud Nefta (NF-1) well located in Tunisia in which GHP has an 8% working interest.
The NF-1 well has reached a total depth of 4,675 meters in the Cambrian formation. The NF-1 well was drilled to evaluate the Alpha prospect, a large paleo structure with over 43,000 acres of closure. The well confirmed the presence of the structure and found it to be some 340 meters higher than the prognosis at the Cambrian level.
Based on the encouraging results obtained from shows while drilling, evaluation of multiple wireline logs (including repeat formation test) and whole core data, the joint venture has elected to run seven inch production casing to total depth in preparation for perforating and testing. Specifically, potential pay in the Cambrian, the Triassic-Tagi and the Tags formations are planned to be tested. Additionally, in the portion of the hole covered by 9 5/8 inch casing, the Lias and Dogger formations had mudlog and wireline log shows and may be tested. All together there may be up to 11 sets of perforations covering five separate potentially productive formations. The encouraging whole core data results mentioned above was restricted to the lower portion of the regionally productive Tagi formation. Additional details of the tests will be reported when available.
The Company's West Delta 78 prospect is currently drilling in the Gulf of Mexico at 17,114 feet towards a proposed total depth of 17,500 feet.
SERVICE SECTOR
Dominion Bridge ownership may be resolved today. The deadline for settling the future ownership of embattled Dominion Bridge Corp. has been set for tomorrow, but the final outcome is anything but certain.
The Dominion board, facing urgent liquidity problems, accepted the broad terms of a US$93-million offer from the fast-growing Houston based construction group AMERICAN ECO CORP. late Tuesday. A rival bid from Roxco Ltd., another U.S. construction group, was higher in value, but lacked assured financing, insiders said. The deal with American Eco was to have been announced late Tuesday, but confirmation is now delayed until tomorrow, when the U.S. firm is due to come up with US$5 million cash - part of a total of US$30 million in interim financing promised.
American Eco and Roxco officials said they could not comment yesterday on the outcome. Dominion is Delaware incorporated, but managed from Montreal.
Deere Park Equities, a small U.S. institution that together with management controls 20% of Dominion's shares, did not return calls.
Dominion's chief operating officer Nicolas Matossian said he "did not know if or when an announcement may be made."
ALPINE OIL SERVICES announced that a full design has been completed to implement their proprietary electromagnetic (E-M) telemetry communication techniques in conjunction with the manipulation of downhole valves and switches in various oil and gas related tools.
Although this technology has been used successfully for measurement while drilling (MWD) and for Alpine's present pressure/temperature monitoring systems for drill stem tests (DST) and production surveys, Alpine will be the first company to implement E-M technology to directly control downhole mechanical instrumentation.
Present technology requires downhole tools to be manipulated mechanically from surface through the use of wireline assisted techniques. Recently, micro-processor controlled electronic instrumentation allowed for the equipment to cycle using a pre-programmed time base. This technology improved the gathering of critical well data, but did not allow for versatility and changing of cycle times once a tool had been programmed and lowered to test depth. Well conditions change often, and circumstances force the opening of a downhole valve sooner than expected, or a valve is required to stay closed for a longer duration. Presently, downhole tools must be manipulated from surface with the aid of a slickline truck or skid-mounted system.
Alpine's new design involves the use of their E-M telemetry technology to transmit a low frequency radio wave to a shut-in-tool encased with a downhole power amplifier, receiver and central processor unit. The system interprets specific digital commands from surface, and automatically activates the tools. The cycle of commands can be repeated as many times as is required. The new design is expected to be conducive to most geologic environments, except highly concentrated salt formations or thick zones of anhydrite. For these environments, Alpine will continue to use their pre-programmed time-based electronic instrumentation.
By giving the operator the total flexibility associated with this technology, expanded well data can be gathered in a more efficient and economic manner. This technology complements Alpine's already proven commercial tools that measure pressure and temperature in real-time during a DST and Extended Production Test.
Future development will include the use of E-M technology to activate downhole pumps to inflate packers during DST's.
The addition of this now technology is expected to further strengthen Alpine's dominance as a leading provider of telemetry services related to the collection of reservoir data relevant to the life of a well. The Company expects to have commercial systems available by the fourth quarter of 1998.
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