MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, MARCH 16, 1998 (6)
UPDATES ON KERM'S TOP 21 - SPEC 15 - SERV 9 COMPANIES (con't)
Calgary March 12 - Tethys Energy Inc. (TET/TSE) reported 1997 results. An active 1997 acquisition and drilling program resulted in significant increases in cash flow, production and reserves.
For the year ended December 31, 1997 Tethys had record cash flow of $4.8 million, a 214% increase over the amount reported in 1996 of $1.5 million. On a per share basis, cash flow increased 81% from $0.16 to $0.29. The cash flow increase was a result of significant growth in daily production volumes of 145% from an average of 585 barrels of oil equivalent (BOE) per day in 1996 to an average of 1,431 BOE per day in 1997. Oil and liquids production increased 198% from 289 barrels per day (Bbl/d) in 1996 to 860 Bbl/d in 1997 and natural gas production increased 93% from 2,959 thousand cubic feet per day (Mcf/d) in 1996 to 5,617 Mcf/d in 1997. Net income remained relatively constant between years at $0.3 million. On a per share basis, net income declined from $0.04 in 1996 to $0.02 in 1997.
For the quarter ended December 31, 1997, cash flow from operations was $2.0 million ($0.11 per share), a 131% increase from $0.9 million ($0.06 per share) in 1996. During the fourth quarter of 1997, Tethys experienced exceptional drilling results which resulted in doubling its fourth quarter 1996 average production from 1,006 BOE per day to 2,017 BOE per day in 1997. Fourth quarter 1997 production was comprised of 1,455 barrels of oil per day and 5.6 MMcf per day.
Oil and natural gas liquids prices improved 38% from an average of $13.97 per BOE in 1996 to $19.24 per BOE in 1997. The price gain was due to increasing volumes of light oil production in Tethys' product mix. For the quarter ended December 31, 1997, oil and natural gas liquids prices averaged $22.16 compared to $15.84 for the fourth quarter of 1996. Natural gas prices declined from an average of $2.04 for the year ended December 31, 1996 to an average of $1.74 for 1997. Natural gas prices remained constant between the fourth quarter of 1997 and 1996 at $1.77 per mcf.
Capital expenditures increased 489% from $6.1 million in 1996 to $36.0 million in 1997. The 1997 capital expenditures were comprised of acquisitions of $24.5 million, drilling and completions of $8.6 million and land and other of $2.8 million. Tethys drilled 11 (8.1 net) wells in 1997 resulting in 3 (net 1.5) gas wells, 6 (net 5.1) oil wells and 2 (net 1.5) dry and abandoned wells, for an overall success rate of 82%.
Tethys acquired Mercury Energy Corporation Ltd. in September 1997 which provided Tethys with an additional land base of over 15,000 acres, 700 barrels of oil per day, and 10 firm drilling locations. Tethys has had a very successful drilling program on these lands resulting in the addition of an average of 700 barrels of light oil per day in the first quarter of 1998.
Calgary March 11 - Artisan Corp. (ADR/TSE) announced a record fourth quarter in 1997. Compared to the same quarter in 1996, revenues increased 54% to $41 million, net earnings increased by 89% to $4.7 million (35 cents/share, basic), and cash flow rose 97% to $8.1 million (62 cents/share, basic).
For the year ending December 31, 1997, revenue increased 78% to $141 million, net earnings grew by 143% to $15.5 million ($1.24/share, basic), and cash flow improved 116% to $24.5 million ($1.97/share, basic), compared to the same period in 1996.
Artisan expects that the first quarter of 1998 will be strong due to high activity levels in the oil and gas industry.
On December 19, the second 1997 interim dividend of 5 cents per common share was paid to Artisan shareholders of record on November 28, 1997.
In December 1997, Artisan acquired all of the assets of a privately owned wireline company and two companies providing coiled tubing services primarily on gas wells. These transactions added four wireline trucks and 11 coiled tubing units to the Corporation's operating assets. The operational management and staff of the vendors have joined the Artisan team and will continue to operate the purchased assets. These acquisitions will provide new business opportunities for the Corporation in 1998.
Calgary March 10 - Pan East Petroleum (PEC/TSE) announced Reserves as of December 31, 1997 and updated activity in Alberta. The company also reported an increase in production.
Year End Reserves
At December 31, 1997, Pan East's reserves totaled 161.2 BcfE on a gas equivalent basis (liquids and sulphur converted at 1:10) as compared with reserves of 129.1 BcfE at the end of 1996. Pan East's reserves were assessed by independent reservoir engineers, Sproule Associates Limited and 1997 additions were 42.4 BcfE, replacing 1997 production of 10.2 BcfE by over 400 percent. Proven reserves (108.3 BcfE) represent 67 percent of total reserve volumes with 87 percent of the reserves being natural gas. Pan East's finding and development costs for 1997 were $0.55 per McfE for established reserves (Proven plus 50 percent probable) and $0.56 per McfE for proven reserves only.
Pan East's President and CEO, Richard A. Walls, stated, "Despite the fact that, during 1997, several large exploration wells were not successful, we are pleased that the entire program, as a whole, resulted in the replacement of over 400 percent of our production at very competitive finding and development costs."
Alberta/Activity Update
To date in 1998, Pan East has participated in the drilling of 12 (4.5 net) wells resulting in 5 (1.5 net) gas wells, 5 (2.3 net) wells being drilled at present and 2 (0.7 net) wells were abandoned. These wells range in depth from 1,900 meters (6,300 feet) to 5,200 meters (17,000 feet) and have an average depth of 2,900 meters (9,600 feet). Pan East has operated six of these wells.
Greater Kaybob
At Karr, installation of wellsite facilities and tie in of an existing well (Pan East - 90 percent) is underway with an expected sales rate of 7.5 MmcfE per day (Pan East - 7.0 MmcfE per day) to commence in April. An exploratory well (Pan East - 66 percent) is presently drilling at 3,850 meters (12,700 feet) and should reach total depth of 4,150 meters (13,700 feet) within two weeks. At Kaybob South, an exploratory well (Pan East - 50 percent) spudded this week and should reach total depth within three weeks. At Gregg Lakes, an exploratory re-entry of a 5,200 meter (17,000 feet) well (Pan East - 20 percent) has commenced with Pan East earning 9,000 acres of undeveloped land on this farmout.
Strachan Deep Basin
At Sunchild/Ferrier, a gas well drilled last year (Pan East - 45 percent) commenced production in February at 4.5 MmcfE per day (Pan East - 2.0 MmcfE per day). Another exploratory well (Pan East - 40 percent) has been cased and test rates will be available next week. At Nordegg, a development well (Pan East - 67 percent) should spud in the third week of March.
Production Increases
The Company anticipates that reserve additions combined with successful drilling over the winter drilling season will result in production increases of 15 MmcfE per day during the second quarter. Increases at Karr, Kaybob, Nordegg and Sunchild in Alberta and Midwinter in British Columbia will bring Pan East's daily production to approximately 40 MmcfE.
Pan East's Vice President of Finance and CFO, Robert A. Maitland, stated, "The combination of existing cash on hand, 1998 cash flow and available bank lines will allow Pan East to undertake the largest drilling program in the Company's history."
Calgary March 10 - Petro-Canada (PCA/TSE) announced significant natural gas discoveries in the Wildcat Hills area, in the Alberta Foothills about 50 kilometres west of Calgary. The net vertical pay in the two wells announced today is the best ever discovered by Petro-Canada in Western Canada. These discoveries follow seven successful wells already drilled in the Wildcat Hills area over the past two years as part of Petro-Canada's strategic initiative to grow its natural gas reserves and production.
The most recent well, Petro-Canada Shell Wildcat 16-12-28-7 W5, reached a total depth of 4 075 metres and encountered 140 metres of pay in multiple zones within the Turner Valley formation. The well is scheduled for production testing in mid-March.
The prior well, Petro-Canada Shell Wildcat 8-8-28-6 W5, was drilled to 3 620 metres, encountering 113 metres of net gas pay, also in multiple zones within the Turner Valley formation, and tested at a combined rate of 25 million cubic feet per day from two zones.
Petro-Canada has a 56 per cent interest in both wells, with the remaining 44 per cent held by Shell Canada.
The Wildcat Hills exploration program has breathed new life into a gas field that first came on production in 1962. Petro-Canada expects successful exploration will enable it to run its Wildcat Hills gas plant at its full capacity of 110 million cubic feet per day by the end of 1999. Eight discoveries (four Turner Valley and four Viking) have already been tied in to the plant, while the latest well will be tied in by mid-1998. Petro-Canada has a 100 per cent interest in five of the earlier wells, and a 66 per cent interest in the other two, in addition to the 56 per cent interest in the two wells announced today.
Petro-Canada plans to drill five to eight additional wells on its current land holdings in the Wildcat Hills area over the next year.
Petro-Canada sees natural gas in Western Canada as a major growth opportunity. In 1998, the Company plans to invest $375 million in conventional exploration and development in Western Canada, most of it earmarked for natural gas growth. In addition, the Company plans to divest certain mature oil properties in Western Canada and reinvest the proceeds in natural gas growth opportunities.
The natural gas growth strategy is focused on the Alberta Foothills and northeastern British Columbia. In 1997, the Company more than replaced production, achieving record natural gas and gas liquids reserve additions of 363 billion cubic feet of gas equivalent. Natural gas production set a record, averaging 760 million cubic feet per day. Despite rising industry costs, in 1997 Petro-Canada reduced its natural gas finding and development costs for proved reserves to 70 cents per thousand cubic feet of gas equivalent.
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