MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING THURSDAY, FEBRUARY 19, 1998 (6)
KERMS TOP 21 - SPEC 15 - SERV 9 COMPANIES IN THE NEWS
Poco Petroleums Ltd. (POC/TSE) reported 1997 financial and operating results. Record production and reasonably strong commodity prices generated record cash flow of $336.7 million, a 45 per cent increase from 1996. On a per share basis, cash flow increased 30 per cent to $2.63 from $2.02. Since 1993, Poco's compound annual growth rate for cash flow per share has been 18.1 per cent.
Higher cash flow contributed to a 70 per cent jump in net earnings to $58.3 million. On a per share basis, net earnings increased 53 per cent to $0.46 from $0.30 in 1996. Since 1993, Poco's compound annual growth rate for earnings per share has been 66.4 per cent.
1997 Highlights
A 31 per cent increase in average daily production to 81,758 barrels of oil equivalent, including a 53 per cent increase to 432.9 million cubic feet of natural gas, a 22 per cent increase to 17,014 barrels of natural gas liquids and a six per cent increase to 21,454 barrels of crude oil.
Exploration, development and acquisition expenditures of $607.2 million added proven and probable reserves of 86.9 million barrels of oil equivalent which is 291 per cent of 1997 production of 29.8 million barrels of oil equivalent.
Realized 30 per cent growth in cash flow per share to $2.63.
Earnings per share increased 53 per cent to $0.46.
Accessed the Canadian public debt markets by issuing $150 million of 6.6 per cent 10-year notes and $100 million in short term commercial paper.
1998 Outlook
Poco remains bullish on the medium and long term outlook for natural gas prices. Demand growth for natural gas in the United States is expected to remain strong for the foreseeable future, while producers are having difficulty materially increasing supply. This will likely be more apparent in the latter months of 1998 particularly if North America experiences more normal winter weather. With 1.1 billion cubic feet per day of incremental pipeline capacity coming onstream in November 1998, all Alberta natural gas production will be able to be transported to markets outside of Alberta. Poco is forecasting an average gas price of $2.00 per thousand cubic feet.
Given the recent economic turmoil in Asian countries and the resultant decrease in expected demand growth for crude oil, Poco expects West Texas Intermediate crude oil to trade in a band of U.S. $16.00 to U.S. $20.00 per barrel for much of 1998. However, the unpredictability of world events makes any price forecast very vulnerable.
Poco's achievements have been driven by a business plan focused on building a dominant position in the deeper more prolific portions of the Western Canadian sedimentary basin, with a significant emphasis on natural gas prospects. Poco is now extremely well positioned to benefit from stronger natural gas prices expected by the end of 1998. We are confident this strategy will continue to generate profitable growth for our shareholders.
For a greater content of detail with table data, see Message 3480494
Carmanah Resources Ltd. (CKM - TSE) has now completed previously announced arrangements for a $50 million credit facility with Canadian Imperial Bank of Commerce. The facility is comprised of senior and subordinated secured loans, due on January 31, 2000. The loans may be prepaid without penalty, may be drawn in either Canadian or US dollars and bear floating rate coupons related to market conditions and the denominated currency. The senior secured loan may be redrawn during its term. In conjunction with establishing the facility, Carmanah has issued the lender, by way of private placement, 1.1 million common shares from treasury. As a result, Carmanah now has 36,087,079 common shares outstanding.
Proceeds will be utilized in conjunction with projected cash flow from operations to fund a planned $84 million capital budget during 1998 to develop the Camar and Langsa Fields offshore Indonesia and the Onado Field onshore Venezuela. This program will involve development drilling, tie-backs and facility installation to realize the productive capacity of established proven reserves in these three regions. Additionally, Carmanah will be carried, at no cost to the Company, in up to $35 million of exploration activity at Northeast Natuna during the year, all funded by a third party.
Separately, in Venezuela, the consortium in which Carmanah holds a 26 percent working interest has received formal approval of its Plan of Development ("POD") for the Onado Area, acquired in mid-1997 during the Third Round of Awards by PDVSA, the state oil company. Compania General de Combustibles S. A. ("CGC"), the operator, took over operations this week and will be proceeding immediately to implement activities pursuant to the POD. This will initially involve reactivation and recompletion of existing wells and the drilling of at least one new well, scheduled for mid-1998. The CGC-led group is the second consortium to receive formal plan approval and handover of operations of those which were successful during the Third Round.
KERMS WATCHLIST OF COMPANIES IN THE NEWS
Canrise Resources Ltd. (CRE/TSE) announced its unaudited financial and operating results for the fourth quarter and 1997 fiscal year. Revenue was $25, 210,000 vs $12,181,000 in 1996. Earnings was $2,896,00 (fd-$0.20/share) compared to $1,983,000 (fd-$0.17/share) last year. Cash Flow was $13,977,000 (fd-$0.90/share) compared to $6,566,000 (fd-$0.54/share) in 1966. Production averaged 3,501 boe/d in 1997 compared to 1,691 boe/d in 1996.
Canrise Resources Ltd. is an Alberta based corporation engaged in the business of evaluating and acquiring oil and natural gas properties and exploring for, developing and producing petroleum substances in western Canada. The Corporation currently has issued 17,665,765 common shares.
For a much more detailed report, including 4th quarter results and table data, see Message 3480030
Amber Energy Inc. (AMB/TSE) reported its audited financial results for the year ended November 30, 1997. The company reported total revenue of $108.6 million compared to $73.9 million of a year ago. Earnings was $12.6 million (fd-$0.24/share) versus $11.9 million (fd-$0.26/share) of a year ago. Cash flow amounted to $59.3 million (fd-$1.09) compared to $43.7 million (fd-$0.90/share) of a year ago.
Average production was 17,230 boe/d compared to 11,257 in 1996.
1998 Outlook
Amber's 1998 drilling program has already encountered great success. Amber has achieved a 100% success rate in two of its main growth areas by drilling 35 (35 net) horizontal oil wells at Pelican Lake and 8 (5.7 net) oil wells at Springburn. Amber also recently drilled 16 (16 net) natural gas wells and 3 (3 net) dry holes in the Wabasca area resulting in an 84% success rate.
These recent drilling results have contributed to Amber's current production levels of approximately 20,000 Bopd and 105 Mmcfd of natural gas. The construction of the Pelican Lake Heavy Oil Sales Pipeline will be completed in May 1998 and be fully operational by June 1, 1998.
Amber will complete its entire 1998 winter drilling program in March 1998 with the drilling of 100 wells at Pelican Lake and twelve wells at Springburn. The Company is currently expecting its 1998 average production volumes to be approximately 27,000 Bopd and 120 Mmcfd of natural gas.
For a much more detailed review with tables, see Message 3476445
Airgen Corporation (AIR.A/ASE) is pleased to announce unaudited financial results for the third quarter ending December 31, 1997. Revenues for this nine month period increased from $1.77 million in 1996 to $9.30 million in 1997.
Net income increased from ($403,657) or ($0.029) per share fully diluted for the nine months ended December 31, 1996 to $795,400 or $0.024 per share fully diluted for the nine months ended December 31, 1997.
Cash flow from operations for the nine month period increased from($229,233) or ($0.17) per share fully diluted for 1996 to $1.56 million or $0.046 per share fully diluted in 1997.
These significant increases are the result of the acquisition of Petro-Therm Enterprises Ltd. on March 27, 1997 and Mocoat ServicesLtd. on June 23, 1997 and strong underbalanced drilling revenues during the period.
Airgen's recent announcements regarding the Option Agreements to purchase Commercial Sandblasting and Painting Ltd. and its subsidiary Christie Corrosion Control (1983) Ltd. and to purchase Geo-Ray Oilfield Inspections Ltd. continue to support Airgen's strategy of increasing shareholder value through acquisitions.
Airgen is a diversified oil and gas service company that provides (1) underbalanced drilling services, (2) heavy oil thermal recovery services, and (3) asset integrity services, currently pipeline testing and protective coatings. Airgen's goal is to become a leading provider of oilfield services by acquiring and developing successful private oilfield service companies, and investing in the development of new technologies.
OTHER COMPANIES IN THE NEWS
Colt Energy Inc. (COE/ASE) and Ultra Petroleum Corp. (UP/VSE) provided an update of the drilling and completion activity in the Green River Basin, Sublette County, Wyoming.
Completion work has commenced on the North Lizardhead 11-B well with completion of the special seismic program. A service rig is currently on site. The lower sections in the well should be perforated this week. Hydraulic fracturing will be coordinated with completion of the Western Gas Resources ("WGR") a pipeline to the Lizardhead area. Construction of the WGR pipeline has commenced with completion scheduled for month end.
Ultra has obtained the drilling permit and completed lease construction on the Horse Creek 14-33 well, the earning well on the Antelope ranch prospect. Drilling has been delayed by the federal regulatory authority because of the unusually mild winter weather, which results in access road problems. The well is not expected to commence drilling until May, 1998.
Centurion Energy (CUX/TSE) reported that the Ezzaouia No. 12 well which was spudded on December 26th, 1997 has reached a total depth of 2350 m.T.V.D. within the M'Rabtine layer of the Jurassic formation. Significant hydrocarbon shows were encountered from the M2 layer at 2133 m.T.V.D. to the base of the M5 layer at a depth of 2285 m.T.V.D. Log analysis indicates a gas/oil contact and an oil/water contact that correspond with the regional Ezzaouia Jurassic Field. Therefore, the producing layers M2, M3 and M5 are within the oil leg. Porosity of all three layers M2, M3 and M5 varies from 18 to 20 percent.
RFT pressure measurement in the M2 layer at a depth of 2141 m. is 2525 psi. Original pressure measured in Ezzaouia-11, the last well drilled prior to Ezzaouia-12, was 2700 psi at a depth of 2158 m. Adjusted pressure for depth in Ezzaouia-12 indicates that the well penetrated a new fault block in the field. Approximately 20 meters of total net pay were encountered in the M2, M3 and M5 sands in Ezzaouia-12.
Presently a 7" production liner is being run in the hole. The well will be tied in and production tested through existing production facilities.
Founders Energy Ltd. (FDE/ASE) reported that the Company has completed the Founders et al Hartaven 12-1T-10-9W2M well as a Winnipeg Sandstone oil well. Founders has a 55 percent working interest in the well which has flowed an average of 415 barrels per day of 53 degree API oil over the last sixteen days, through a 12/64 choke. This zone is also present in the Founders 7B-2-10-9W2M well. Further development of the Winnipeg Sandstone may take place depending on sustained production results over the next few months. The 12-1T well has also produced oil from two separate Yeoman (Red River) intervals. On a combined basis, these intervals are capable of producing 300 barrels per day of 43 degree API oil.
In addition, the Company is currently drilling a well in the Minard area of southeast Saskatchewan targeting Ordovician oil. The Company is operator and has a 50 percent working interest in the Founders PanAtlas Minard 14-6-6-6W2M well. Founders also reports that it is currently in the process of putting on production two recently drilled horizontal wells in the Company operated Weir Hill area in southeast
Saskatchewan. In the Gilby area of Alberta the Company has just tied-in and put on production a gas well, in which it has a 50 percent working interest, at an initial rate of one mmcf per day.
Sharpe Resources Corp. (SHO/MSE - SHGPF/OTC) is currently focused on a debt financing to develop its advanced projects. The company is evaluating serious interest from several lenders regarding the relative economic merits of the 100 percent owned, offshore Texas, Matagorda gas project and the West Thrifty waterflood project. The financing will probably involve senior secured debt with an equity interest in the property or the company as part of a US$10 million dollar credit facility.
The work programs during the second, third and fourth quarters of 1997 have proven that the reserves are there to recover and that the projected production rates of 15,000 mcf per day are possible. Additionally, the balance of the 5,000-acre block holds potential to greatly expand reserves on this property. The reserves have been audited by independent petroleum engineers, Hainey & Hainey Petroleum Consultants of Houston, Texas.
Management believes that full development of Matagorda's 582 gas field will be accomplished with expenditures of approximately US$8 million. These funds will be used to further develop the company's property as part of a program to expand long-term sustainable growth with minimal shareholder dilution. Based upon previous production rates from similar zones on the property, the company expects production to exceed 15,000 mcf per day or approximately 2,500 BOEPD. At these production rates, the property should pay off the debt in less than one year. Current production from the Matagorda project is approximately 3,000 mcf per day.
Plans to bring wells 3 and 4 back online (about 5,000 mcf/day) will be integrated into the current full field development plan, in this manner the company can make more effective use of its financial resources if this work is part of a larger development program. This program is expected to commence during the end of the first quarter, 1998. The program will involve the drilling ofthree (3) new wells which will access two untested structures on the 582 block and the recompletion of three (3) currently existing wells. New wells will help insure long term sustainable production and are considered to be infill drill wells on a currently productive structure. As part of this program the company plans to acquire a large block of 3D seismic data which will be employed to further evaluate the remaining 10 blocks of leases that the company currently controls within the 582 and 483 gas fields. Success on these blocks will likely result in further production increases on this project. The processing facilities can handle up to 30,000 mcf gas per day. Gas pricing is currentlyabout US$2.30 per mcf.
The current proved reserves (17 BCF) relegated to only block 582 will be the focus of the first phase development program. Preliminary evaluation of 2D seismic for portions of the ten (10) under-explored blocks indicates very good potential to greatly expand shallow (7,000') gas reserves on the adjoining blocks. This potential has very attractive economics due to the existence of production infrastructure that currently exists on the property. The under explored blocks lie between the 582 and the 483 gas fields, the 483 production pipeline crosses these blocks.
The drilling program on the 100 percent owned West Thrifty waterflood is progressing slowly due to the availability of drill rigs in this area. Sharpe has completed one well on the property in January, 1998. An earlier drilled well is currently being flowtested at a rate of between 16-22 BOPD. The percentage of oil to water is improving as production continues on this well which is expected to return improved oil production. The target production of 1,200 BOPD is expected to come from 15 wells with average production per well of approximately 80 BOPD from this field.
The first new well is currently being flow tested. The initial results show low oil to water percentages (smaller than 1 percent), however this well is expected to follow a production path of the earlier drilled well indicating improving oil cuts with time. At this time, the company is concentrating on areas that indicated high productivity during the primary production phase, where productivity exceeded 3,000 BOPD. This effort is currently focused on the southern portion of the field. The objective is to have these wells drilled and on line before the first half of the year, 1998. Total current production from the project is approximately 50 BOPD.
Production revenue from the company's non-operated production in Texas, Oklahoma and Wyoming is being affected by the low oil prices, however, the gas producing component of the production is receiving prices that help offset some of the oil revenue shortfalls. Sharpe management is very optimistic with regard to the company's ability to grow its domestic reserves by 30 percent to 7 million BOE's along with
commensurate increases in production in 1998. |
