MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING THURSDAY, FEBRUARY 12, 1998 (7)
KERM'S TOP 21 - SPEC 15 - SERV 9 COMPANIES IN THE NEWS
Tarragon Oil & Gas See Top Story
Anderson Exploration See Feature Story
Peak Energy Services Ltd. (PES/TSE) announced Rrecord fourth quarter and year end results for 1997. The Company has shown significant growth in the fourth quarter of 1997, generating approximately the same revenue that it achieved in the first three quarters of 1997 combined. Peak also generated more Net Income, Cash Flow from Operations, and EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) in the fourth quarter of 1997 than the first three quarters combined. This growth is attributable to the full impact of the acquisition of Lykal Sales and Oilfield Rentals Ltd. ("Lykal") and the on going capital expenditure program within Peak's subsidiaries. In addition, the Company completed three acquisitions in the fourth quarter totaling $11 million thatwere complimentary to Peak's existing business.
Peak increased its revenues in the fourth quarter of 1997 by 1192 percent as compared to the same quarter in 1996 ($15.3 million vs.$1.2 million) while expenses increased by 794 percent for the same period. This resulted in significant growth in Net Income of 1909 percent for the fourth quarter of 1997 as compared with the same quarter in 1996 ($3.4 million vs. $0.2 million). Fully diluted EPS grew by 1200 percent for the same period ($0.13 vs. $0.01). Total assets as at December 31, 1997 increased by 517 percent from December 31, 1996, and shareholders equity increased by 495 percent for the same period.
Peak's revenue for the year ended December 31, 1997 was $31 million consisting of 40 percent from well-site accommodations, 24 percent from drilling instrumentation, 19 percent from solids control, 10 percent from tension anchoring and 7 percent other.
The exponential growth experienced by Peak during 1997, especially in the fourth quarter, reflects the success of management's strategy to increase shareholder value through strategic acquisitions, internal growth of its subsidiaries and by generating superior returns on its invested capital . Peak successfully completed nine acquisitions throughout 1997 totaling approximately $62 million of which the acquisition of Lykal on August 7, 1997 was the largest at $43 million.
As well, in 1997 Peak invested approximately $12 million on capital expansion in its subsidiaries of which $8 million was invested in the fourth quarter. Of the $12 million invested in capital expansion in 1997, $3.4 million was in well-site accommodation, $3.2 million was in solids control, $3.8 million in drilling instrumentation, $0.9 million in tension anchoring and $0.7 million in other items.
The majority of the growth was financed through equity issues of $69 million and the use of $10 million cash on hand at December 31, 1996. This has resulted in a very strong balance sheet with shareholders' equity of $95 million and a debt to equity ratio of 0.07 to 1.
Entering 1998 with a strong financial position and the ability to leverage off of our existing infrastructure will enable Peak to continue to generate significant shareholder value. Peak will continue to seek out strategic acquisitions that compliment its existing businesses, pursue an aggressive internal growth strategy and evaluate opportunities to diversify the company's operations. Peak's capital expenditure budget for 1998 is $21 million, of which $20 million will be utilized for expanding its subsidiaries and $1 million will be used for sustaining capital reinvestment purposes. These expenditures will be financed from cash flowsfrom operations.
Peak will continue to be an opportunistic acquirer in the oil and gas service sector. The recent weakness in the equity market will result in reduced price expectations for potential acquisition targets. The company will take advantage of the current environment by using its strong financial position and a normalized level of debt to finance its acquisitions in 1998.
During 1997, Peak's management undertook several initiatives to streamline the operations of its businesses. The Company will continue to focus on realizing opportunities to increase efficiency and profitability within all of its operations.
Peak remains optimistic on the long-term industry fundamentals, however it anticipates a decline to 13,000 to 14,000 wells drilled in 1998 as compared to the record levels achieved in 1997. In spite of the slight decline, this level of drilling activity will continue to generate high utilization rates within the Company due to its dominance in its business segments, its high quality equipment and experienced personnel.
Peak Energy Services Ltd. is a diversified energy services company providing oilfield rental equipment and related services to the energy industry in Western Canada.
For complete report with tables, go to Message 3416240
KERM'S WATCHLIST OF COMPANIES IN THE NEWS
Morrison Middlefield Resources Limited (MM/TSE) announced that it achieved record production in 1997 accompanied by a 64% increase in total oil and gas reserves.
The Company reported another exploration success onshore in the UK. It has made an oil discovery on its Keddington prospect with initial production of 200 barrels per day.
Crude oil and natural gas liquids production in 1997 averaged 6,514 barrels per day, a 21% increase over the previous year. Natural gas production averaged 14.1 mmcf per day representing an increase of 38% over 1996.
Reserves increased on a proven and probable basis by 64% to 45 million BOE as of December 31, 1997. On a proven and half probable basis, reserves increased by 43% and on a proven basis reserves increased by 14%. This is the largest increase in total reserves by volume for the company in its history and represents a reserve replacement ratio of 4.5 times on a proven and half probable basis.
In the past year, MMRL's UK exploration drilling program got well underway resulting in the discovery of two new major oil pools and a doubling of reserves at its Saltfleetby discovery. This onshore success, along with its new initiatives offshore in the UK sector of the North Sea, led to the considerable growth in reserves as well as contributing to a finding and development cost of $4.76 per BOE on a proven plus half probable basis.
The Company expanded its UK onshore undeveloped land base substantially in 1997 and an application for exploration licences totaling a further three quarters of a million acres was submitted late in the year. An announcement of the results of this licence application is expected shortly. These onshore interests along with its 1997 offshore UK acquisitions provide a wide range of exploration and development opportunities for MMRL.
MMRL invested heavily in 1997 in projects which are expected to contribute to its long term growth. A large inventory of exploration and development projects was assembled during the year and exploitation of these opportunities will be aggressively pursued in 1998.
For more detail with tables, go to Message 3419942
OTHER COMPANIES IN THE NEWS
Belair Energy Corp (BGY/ASE). See Service sector, Dynafrac Well Services Inc.
Invader Exploration Inc. (ASE - INX) along with its partners in the Arkoma Joint Venture project, Hampton Court Resources Inc. (ASE/HCR), Plexus Energy Ldt. (ASE/PXU) and Peregrine Oil and Gas Ltd. (ASE-PGG) are pleased to announce that drilling commenced today on the Company's Crystal Springs Prospect located in western Arkansas, U.S.A. Invader has a 25 percent working interest in this well and in over 5,000 acres of associated lands. This 10,000 foot exploration well will target large reserve potential carbonate reservoirs within the Mississippian, Hunton and Arbuckle Formations and has multiple potential pay zones present within the overlying sandstone reservoirs of the Pennsylvanian Formation. Unrisked reserve potential for the Crystal Springs prospect is over 100 billion cubic feet of gas. The well is expected to take between 30 and 60 days to drill to total depth.
Completion operations and evaluation testing is proceeding on the Company's Alpine (formerly called Checotah East) and Brightstar (formerly called Keota #3) exploration wells located in Oklahoma, U.S.A. Final results are expected to be announced within the next two weeks.
The Arkoma Joint Venture is continuing with the development of additional prospects from its offices in Tulsa, Oklahoma. An additional 6 to 12 high potential exploration prospects will be drilled by the partners during the balance of 1998.
OGY Petroleums Ltd. ("OGY") provided a preliminary summary of its comparative 1997 year end results and an update of the Company's first quarter 1998 activity.
OGY posted solid gains in all areas of corporate performance in 1997. Growth through exploration accounted for the majority of OGY's 1997 success. Production volume growth through exploration and development drilling accounted for an increase of over 1000 barrels of oil equivalent (BOE) per day during 1997. Combined with the growth in production from the producing properties purchased, OGY took its production from approximately 300 BOE per day to over 1800 BOE per day by year end 1997.
The majority of this production growth resulted from two new pool discoveries made by OGY in 1997. A Lloydminster oil pool in Edgerton is presently producing about 225 BOPD net to OGY (50 percent) and in the Provost area, the Company's Fleeinghorse oil pool has had ten successful oil wells drilled into it and these wells are producing between 50 and 150 BOPD. OGY's net share of production from this pool (66 2/3 percent) will be over 600 BOPD by month's end. Future development plans for this property will be timed to the construction and installation of a battery and related facilities, expected to be completed by mid-year.
To date in 1998, OGY has drilled seven wells, resulting in six oil wells and one water injection well. An additional 15 wells will be drilled during the first half of this year with an expanded program planned for the remainder of 1998. Current production is expected to average over 2200 BOE per day by the end of this month (February) and continued growth will be realized on a quarterly basis throughout the rest of this year.
For complete report with tables, go to Message 3416206
Rapidfire Resources Ltd. (RPF-ASE) has commenced gas sales from its Kirkpatrick Lake property. Six wells are producing; however, it is too early to determine the rate at which these wells will stabilize. The Company has entered into a five-year gas purchase contract at an initial rate of 2.0 mmcf per day. Additional wells in the project will be brought on-stream in the near future.
|
