MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, MARCH 24, 1998 (5)
KERM'S LISTING'S UPDATED NEWS
Paramount Resources Ltd. announced audited results for 1997. Strong operational results pushed the financial results to record highs. Record production levels of 162.5 MMcfeq/d were achieved (148.6 MMcf/d of natural gas and 1392 Bbl/d of crude oil/liquids) representing a 14 percent increase over 1996 levels.
Furthermore, year end exit rates of approximately 190 MMcf/d and 2000 Bbl/d, or 210 MMcfeq/d, represent an increase of 29 percent over the 1997 averages.
High energy prices realized were also a major factor in the overall improved financial performance. The average gas price realized in 1997 was $2.12/Mcf as compared with $1.84/Mcf for 1996. Crude oil prices realized were down slightly at $26.36/Bbl in 1997 as compared with $27.91/Bbl in 1996.
Net capital expenditures for 1997 were $184.2 million including the $72 million for the purchase of the Reserve Royalty Corp. properties coincident with their acquisition of Jordan Petroleum Ltd. Paramount acquired 40 MMcf/d, 120 Bcf of proven reserves and 164,000 net acres of land.
Total revenue for 1997 was $128.5 million, a 28 percent increase over 1996 results. This significant increase in revenues reflects the benefit of substantially higher growth in volumes sold over 1996 together with higher natural gas prices realized in 1997 over 1996.
Cash flow from operations was $70.9 million ($1.42 per share) as compared with $63.1 million ($1.32 per share) for 1996, an increase of 12 percent. Net earnings were $23.4 million ($0.47 per share), down slightly from the 1996 results of $25.5 million ($0.53 per share). The higher weighted average number of shares outstanding reflects primarily the issue of 4.0 million shares on November 4, 1997, for net proceeds of $62.9 million.
Outlook
Paramount has an extremely active program planned for 1998. Significant 1998 production increases are expected at East Liege, Teepee Creek, Corner, Kettle River and North Quigley in northeast Alberta, at Kaybob and Obed in central Alberta, at Zaremba in northeast British Columbia, at Pedigree and Sousa in northwest Alberta, and at Midale in southeast Saskatchewan. This activity should add a further 45 MMcfeq/d leading the Company to anticipate 1998 average production rates of 230 MMcf/d and 3500 Bbls/d, totalling 265 MMcfeq/d.
Remington Energy reported record results for both the fourth quarter and the year ended December 31, 1997. Cash flow per share increased from $1.07 in 1996 to $2.28 in 1997 while earnings per share rose from $0.28 in 1996 to $0.33 in 1997. Production volumes increased four fold from 3,010 BOE/d in 1996 to over 12,202 BOE/d for 1997. Reserves also showed dramatic increases from 19.2 MMBOE in 1996 to over 76 MMBOE in 1997. Average natural gas prices for 1997 were $1.80/mcf while oil and NGL's averaged $23.57/bbl. Total debt at year-end 1997 was $142 Million.
Due to lower commodity pricing, Remington has also announced that the overall capital budget for 1998 has now been set at $110 Million.
Along with the outstanding financial results, Remington also released finding and development costs that were $7.00 per BOE on a proven basis and $5.06 on a proven plus probable basis. The companies rolling five year average finding and development costs on a proven plus probable basis are $4.83.
For detailed table listed data, go to techstocks.com
The head of Petro-Canada is on a drive to get more oil and gas industry players involved in preparing for potential computer system failures, anticipated when the clock ticks over on Jan. 1, 2000.
James Stanford, president and chief executive officer at Petro-Canada, has urged action now by energy industry companies in protecting against the threat posed by the millennium bug.
"On behalf of Task Force 2000, I encourage all business owners and executives, who have not already done so, to prepare for year 2000 by immediately implementing a formal action plan," Stanford said in a statement.
Statistics Canada research shows less than 10% of firms and 30% of resource sector companies have so far planned for the potential failure of computer systems as a result of the millennium bug.
The millennium bug or Year 2000 problem is associated with the susceptibility of computers and data-activated devices to fail Jan. 1, 2000. Because systems may store only the last two digits as the year indicator, they may not be able to translate the changeover and prevent a major breakdown.
System failures could hamper oil and gas drilling, facility and transmission operations and prohibit delivery for producers and consumers.
As a member of the task force, set up by federal Industry Minister John Manley in 1997, Stanford indicated Petro-Canada is taking steps to ensure its 30,000 vendors are preparing for 2000 so its complex network does not breakdown because of a potential computer glitch.
Task Force 2000 is composed of 14 CEOs including John D. Wetmore at IBM Canada Limited, which is likely to be a major player in helping firms adapt systems to meet the millennium bug problem.
Small to medium-sized companies of less than 250 employees, the majority of which Statistics Canada indicated have not yet taken any corrective action, are of particular concern to the task force.
Canadian Fracmaster Ltd. announces that it has made application to list its Common Shares for trading on the New York Stock Exchange. Documents have also been filed for registration of those shares with the United States Securities and Exchange Commission. Listing of the Common Shares on the New York Stock Exchange will not include listing of the Instalment Receipts of the Corporation at this time. Upon payment of the final instalment on or before September 9, 1998, holders of such Instalment Receipts will receive a Common Share for each fully paid Instalment Receipt. These Common Shares will then be listed on the New York Stock Exchange.
RESEARCH
U.S. Oil Drillers May Soon Join Stock Rally
NEW YORK, March 24 - Shares in leading oil services and drilling companies missed out on the broader market rally on Tuesday, but the sector may soon rejoin the party on a sustained basis after its four-month sell-off, analysts said.
Analysts' hopes were pinned on the deal brokered among leading world producers to scale back production, a belief that much of the bad news -- including one of the warmest winters in the United States this century -- is already factored into the relatively low oil prices, and on steadily growing demand for oil.
Several analysts announced positive recommendations on the sector Tuesday, including Ensco International Inc. (ESV), R&B Falcon Corp. (FLC), Diamond Offshore Drilling Inc. (DO) and Cliffs Drilling Co. (CDG)
''For investors who believe in buying their straw hats during the winter when the prices are cheap, these companies will be relied on for heavier activity in the future,'' said Matt Conlan, an analyst at Prudential in Houston.
He particularly liked the land drillers, such as Nabors Industries Inc. (NBR), which have been hit by the slide in world oil prices to nine-year lows this month.
''I think the sector is still in a very solid long-term recovery and what we've had is volatility in the commodity price has not derailed that recovery,'' he said.
Indeed, world oil prices fell about three percent on Tuesday, after jumping nearly 14 percent on Monday after Saudi Arabia, Venezuela and non-OPEC member Mexico announced a deal to curb world production by up to two million barrels a day.
The Standard & Poor's Oil Drillers Index rose six percent Monday and then fell 1.8 percent on Tuesday, to 4,426.09, down from its record high of 5,238.56 touched in early November.
The index includes, among others, bellwether Schlumberger Ltd. (SLB), down 11/16 at 77-9/16, Baker Hughes Inc. (BHI), off 2-7/16 at 40-3/16, and Halliburton Co. (HAL), 1-1/16 weaker at 50-3/4.
''I think the oil drillers are a great investment here,'' said Mike Smolinski, an energy analyst at First Albany Corp. in Boston.
''We have seen the price of oil fall to OPEC's 'uncle price,''' he said, referring to the oil group's threshold for lower prices.
''It looks like based on ... the inventory side and economic side that demand continues to grow at a rapid pace and we continue to deplete existing wells faster than ever because of new technology,'' he said.
SBC Warburg Dillon Read started Ensco, one of the largest offshore drilling contracts in the world, as an outperform, and initiated R&B Falcon and Diamond Offshore as buys.
Also, EVEREN Securities started Cliffs Drilling Co. with intermediate and long term outperform ratings. The brokerage also started Ensco, Marine Drilling Cos Inc. (MDCO), and Parker Drilling Co. (PKD) with the same ratings.
Oil Driller Coverage Begun
NEW YORK, March 24 - SBC Warburg Dillon Read said on Tuesday it started coverage on shares of various oil drillers and also lowered its rating on shares of Schlumberger Ltd (SLB) and BJ Services Co (BJS).
-- Analyst Byron Dunn cut Schlumberger to outperform from buy, saying an extended period of oil price weakness has resulted in field activity reductions and announced and potential capital budget cuts in key oil and gas markets around the world.
-- BJ Services lowered to outperform from buy due to similar reason.
-- Ensco International Inc (ESV), one of largest offshore drilling contractors in the world with a fleet of 53 offshore rigs working in Gulf of Mexico, North Sea, South America and in Asia-Pacific region, started as outperform.
-- R&B Falcon Corp. (FLC) started as buy. Dunn said believes company is well positioned to outperform relative to its peer group during a continued period of soft commodity prices.
-- Diamond Offshore Drilling Inc. (DO), one of world's premier providers of deep and ultra deepwater drilling units, begun as buy. Bulk of its fleet is contracted through 1998.
-- Rowan Cos. (RDC) started as outperform, as company is uniquely positioned to grow revenues and cash flow 1998-2000.
-- Transocean Offshore Inc (RIG) started as buy. Dunn said comapny has a higher percentage of rigs focused on deepwater harsh environment market than any offshore drilling contractor.
DMG Downs Oil Stocks
NEW YORK, March 24 - Deutsche Morgan Grenfell said on Tuesday it lowered its rating on shares of oil companies Texaco Inc.(TX), Unocal Corp.(UCL), Atlantic Richfield Co. (ARC) and Amoco Corp (AN).
INSIDER TRADING NOTES
Denbury Resources Inc. -TPG Advisors Inc., which holds more than 10%, exercised 625,000 warrants for US$7.40 each to hold more than 8.4 million shares indirectly.
Pason Systems Inc. - James Hill, officer, director and holder of more than 10%, sold 400,000 shares for $7 each to hold more than 5.6 million shares indirectly.
Precision Drilling Corp. - Hank Swartout, chief executive, sold 100,000 shares in October for $46.50 each and 100,000 shares in February for $25.57 each to hold almost 551,000 shares.
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