MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING THURSDAY, FEBRUARY 19, 1998 (7)
INTERNATIONAL COMPANIES IN THE NEWS
TecnoPetrol Inc. (TPTE.U/CDN) has successfully completed its previously announced US$4 million offshore offering of 8,000,000 Units at US$0.50 per Unit, each Unit consisting of one common share and one-half of one share purchase warrant, with each whole warrant being exercisable at US$0.80 on or before February 17, 1999. A second and final closing consisting of 1,600,000 Units at the same subscription price is scheduled to take place within fifteen business days, for additional net proceeds of US$800,000.
TecnoPetrol will use the proceeds of this offering to fund its exploration activities in Colombia. At present, seismic work is being performed in the Vuelta Larga Association Contract area, in which the Company has a fifty percent interest through a farm-in arrangement with Emerald Energy plc, with drilling expected to start by year-end. Geological studies are being carried out in the Company's Alejo Association Contract area, with seismic scheduled for the second quarter of this year and drilling expected to commence at the beginning of next year.
TecnoPetrol recently acquired a 60.91% interest in Petronorte, a long-established Colombian operating company with gross production of 2,000 b/d and excellent exploration potential. Petronorte's properties are located in the Middle Magdalena Valley in the immediate vicinity of Harken Energy Inc.'s Bolivar contract. Harken recently announced the successful completion in this area of its first well, "Catalina", through horizontal drilling into a fractured cretaceous carbonate reservoir, with estimatedproduction of a total of 9,000 b/d of 38 degree gravity oil equivalent. TecnoPetrol has already commenced 3D seismic recording in the Petronorte areas and drilling of the first of eight identified prospects is expected to start in August, 1998. Drilling in the Petronorte areas will be over 3,000 feet of fractured carbonate reservoirs similar to Harken's, where significant reserves of 38 degree or higher gravity oil are expected. The utilization of horizontal wells, drilled with the most advanced technologies, is being contemplated by the Company.
TecnoPetrol also has additional acreage in Colombia under application. TecnoPetrol commenced its activities in Colombia at the beginning of last year, with full operations commencing in the middle of 1997. TecnoPetrol's growth has been described by Petroconsultant, an international oil trade publication, as constituting a rapid entry in 1997 as an exploration and production company in the Colombian market.
All of the 8,000,000 Units were purchased by Naphtha Inc., a nominee of Grupo Financiero Popular ("GFP"), which is a Latin American regional financial services group with commercial banks in Ecuador, Colombia and Venezuela and extensive experience in investing in Latin American markets. With the purchase of the Units, GFP becomes TecnoPetrol's largest shareholder, holding approximately 34% of the issued and outstanding capital of the Company. The issuance of the 8,000,000 Units has resulted in the increase of the Company's issued and outstanding capital to 23,189,168 common shares.
TecnoPetrol is an oil and gas exploration and production company whose current focus is on Colombia. TecnoPetrol also has various exploration properties at differing stages of development.
SERVICE SECTOR NEWS
Tesco Corporation (TEO/TSE - TESOF/NASDAQ) announced today that it has acquired a 100% interest in the Tesco Casing Drilling Joint Venture for consideration of 418,036 common shares of the Corporation. Prior to the acquisition, Tesco held a 4.691% interest and an option to increase that interest to 50% for a $5 million contribution to the Joint Venture. Prior to Tesco's acquisition, the remaining interest in the Joint Venture had been owned by joint interest unit holders who had contributed $5 million for the purposes of conducting research and development activities into the casing drilling process.
Drilling with casing, if perfected, could reduce drilling costs by as much as 30%. With the goal of eliminating the use of drill pipe and much of the time spent on unscheduled drilling events such as sidetracking, reaming and backreaming, casing drilling could have significant, worldwide commercial potential. The casing drilling project is a high-risk, high-return research and development project.
Significant interest has already been expressed in this project by several of the world's largest oil and gas operators. With rising finding and development costs, the commercial potential will be significant for new technologies aimed at cost reduction, including drilling with casing and Tesco's proven rental top drive systems.
To date, a specialized casing drilling rig has been constructed and prototype downhole tools have been designed and fabricated. It is expected that initial drilling tests will begin by the end of May, 1998 at Tesco's R&D centre in Calgary, Alberta. Testing and development of the casing drilling process will likely proceed into 1999.
PIPELINE NEWS
On January 27, 1998 NOVA Corporation (NVA/TSE) announced unaudited net income of $362 million ($0.78 per share) for the year ended December 31, 1997. Subsequent to this announcement, NGC Corporation (25.7% owned by NOVA) announced it would be recording one-time charges in 1997 primarily relating to the company's planned restructuring in its natural gas liquids and crude oil business. These charges totaled U.S.$194 million after-tax and were significantly higher than the amount NOVA had provided for in calculating its net income for 1997. NOVA's share of the NGC special charges, adjusted for differences between U.S. and Canadian generally accepted accounting principles, is $57 million. This is $37 million higher than what NOVA had provided for and accordingly the previously announced net income will be reduced by this amount. The revised unaudited figures are available at Message 3481324
TransCanada Pipelines Ltd , (TRP/TSE) Mexico's Gutsa and U.S. Intergen formally began construction on Thursday of a natural gas pipeline in Mexico along the Yucatan Peninsula.
The pipeline, estimated to cost $266 million, will stretch 700 km from Ciudad Pemex to the Yucatan peninsula, the companies said in a statement.
Starting in 1999, the pipeline would ship 370 million cubic feet per day (cfd) to a power plant called Merida III.
"The pipeline's design has the versatility to grow easily, if necessary, to support the region's growth and even extend to Cancun," Gutsa President Juan Diego Gutierrez said at the ground-breaking ceremony.
The project is Mexico's first pipeline to be constructed and financed by the private sector. The consortium won the contract from Mexico's state monopoly Federal Electricity Commission in April.
Also known as the Mayakan pipeline, the project is divided into 62.5 percent participation by TransCanada, 32.5 percent by an Intergen unit and 5 percent by Gutsa.
ENERGY TRUSTS
Enerplus Resources Fund (ERF.G/TSE&MSE) distribution notice is hereby given that a cash distribution at the rate of $0.0350 (three and one half cents) per unit will be payable on March 15, 1998, to all unitholders of record at the close of business on March 1, 1998. Consequently, the new trailing last twelve month distribution paid totals $0.6125 (sixty-one and one quarter cent) per Unit.
Shiningbank Energy Income Fund (SHN>UN/TSE) announced significant increases in its oil and gas reserves following the results of its 1997 year-end reserves review by Paddock Lindstrom & Associates Ltd. For complete detail with table data, see Message 3476491
EARNINGS REPORTS
Canrise Resources Ltd. (CRE/TSE) See Kerms watchlist of companies in the news
Amber Energy Inc. (AMB/TSE) See Kerms watchlist of companies in the news
Airgen Corporation (AIR.A/ASE) See Kerms watchlist of companies in the news
Poco Petroleums Ltd. (POC/TSE) See Kerms Top 21, Spec 15 & Serv 7 companies in the news
FINANCIAL
Big Horn Resources Ltd. (BGH/VSE) announced it has agreed to, subject to regulatory approval, a Private Placement to arm's length parties of 1,000,000 units, each unit consisting of 3 Common Shares at a price of $1.20 per Common Share and 2 Common Share Purchase Warrants for aggregate proceeds of $3,600,000. Each Common Share Purchase Warrant entitles the holder thereof to acquire one Common Share of Big Horn for a period of 1 year at an exercise price of $1.50. Big Horn has agreed to pay a finders fee equal to 7% of the gross proceeds raised on the offering to an arm's length party. The finder's fee will be paid through the issuance of 210,000 Common Shares of Big Horn at a deemed price of $1.20 per Common Share.
Proceeds of the Private Placement will be used to finance Big Horn's on-going oil and gas exploration and development programs, potential acquisitions and for general working capital.
Big Horn is a junior oil and gas company trading on the Senior Board of the Vancouver Stock Exchange.
United Tri-Star Resources Ltd. (UTS/TSE) announces a private placement of up to 6,875,000 Special Warrants at $0.80 per warrant to be cleared by prospectus. Upon prospectus approval (to be within 120 days of closing) the warrants will be converted 1 for 1 into common shares of UTS. The proceeds will be used to complete the acquisition of Solv-Ex's 12 percent interest in its Athabasca Oil Sands project including Lease 5 and 52 as described in the February 13, 1998 News Release issued by UTS.
Dominick and Dominick and Groome Capital Advisory are placing the issue as Agents for UTS and expect to close the transaction by February 25th, 1998.
Along with its interest in the Athabasca tar sands project, UTS also maintains a 31 percent interest in International Reef Resources Ltd, which is actively pursuing development of Coal Oil Agglomeration projects in the United States. As well, UTS holds a 36 percent interest in Tri-Star Gold Corporation which has one of the largest mineral property holdings in the Ghanaian gold belts of West Africa.
Chauvco Resources International Ltd. (CHV/TSE) announced that 55 million special warrants will be issued at a price of $0.40 each for gross proceeds of $22 million. For each special warrant, the holder will have the right to acquire one common share of the Company for no additional consideration. Closing is expected to occur within two weeks of today's date.
This special warrant financing, which is being led by First Marathon Securities Limited and Newcrest Capital Inc., is subject to regulatory approval.
INTERNAL AFFAIRS
Scimitar Hydrocarbons Corporation (SIY/ASE) announced that it has received approval from The Alberta Stock Exchange to make a Normal Course Issuer Bid (the ''Bid'') to purchase, from time to time, as it considers advisable, up to 1,154,955 of its issued and outstanding Common Shares (''Shares'') (being 5% of the issued Shares of Scimitar) on the open market through the facilities of The Alberta Stock Exchange. The price which Scimitar will pay for any shares purchased by it will be the prevailing market price of such shares on The Alberta Stock Exchange at the time of such purchase.
The Bid will commence on February 23, 1998 and will terminate on February 23, 1999 or such earlier time as the Bid is completed or terminated at the option of Scimitar.
Scimitar believes that the recent and current market prices of its Shares do not fully reflect the underlying value of the Shares and that, accordingly, the purchase of Shares would be in the best interests of Scimitar shareholders. Scimitar bases this decision on internal valuation of its current development projects which, in Scimitar's view, have a net present value exceeding $50,000,000 and without taking into account Scimitar's exploration projects and other assets, cash on hand and absence of debt. Purchases by the Corporation of its Shares will increase the proportionate share interest of, and be advantageous to, all remaining shareholders. In addition, the purchases by Scimitar will afford increased liquidity to Scimitar
shareholders wishing to sell their Shares.
Headquartered in Calgary, Canada, Scimitar's current projects include a heavy oil development in Egypt, gas and liquids exploration and exploitation in the United Arab Emirate of Ajman, gas exploration in Mozambique, petroleum product marketing in eastern Africa and exploration in western Canada.
MISC.
Poco Petroleums Ltd. (POC/TSE) will hold a briefing for analysts and media to discuss its 1997 year end results on Thursday, February 19, 1998 at 2:30 p.m. Mountain Standard Time 4:30 p.m. Eastern Standard Time
To participate in the conference call, dial 1-800-789-0135. Please call in about five minutes early to ensure your participation.
A taped rebroadcast of the call will be available to listeners for two business days beginning Thursday, February 19, 1998 at 4:30 p.m. MST, 6:30 p.m. EST. To listen to the rebroadcast, please call 1-800-558-5253 and provide the following reservation number 807228.
Imperial Oil Limited (IMO/TSE) today declared a quarterly dividend on the outstanding common shares of the company to shareholders of record at the close of business on March 2, 1998, payable on April 1, 1998. The cash dividend on common shares is 55 cents per share.
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