MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, APRIL 3, 1998 (6)
TOP STORIES, con't
Ranger Oil To Focus On Overseas Development
NEW ORLEANS, April 3 - Ranger Oil Ltd Chief Executive Fred Dyment said on Thursday that a cutback in the company's 1998 capital spending budget would not affect its operations in the North Sea or Angola.
Persistently lower oil prices forced Ranger to cut its capital budget by $50 million to $235 million in early March, but plans to develop the big offshore plays remained intact as did expectations for a big jump in cash flow in 1999, Dyment said in an interview.
"The focus is really on development this year," Dyment said.
Ranger expected higher output from its Ninian oil field in the Brent-Ninian system of the northern North Sea, he said. And in the central North Sea, Ranger planned to start drilling a well at the Kyle field, he said.
Ranger, which now holds a 40 percent stake in Kyle after purchasing 20 percent from Mobil (MOB) last April, plans to bring the field on production at the end of the 1998 through a tieback to Conoco's (DD - news) floating production vessel at its neighboring Banff field where Ranger holds a 26 percent interest.
The prospect initially tested 4,500 barrels per day of oil from three wells.
Dyment said he was was extremely optimistic about his company's assets offshore Angola, particularly Block 4, where theKiame oil field is expected to come on-stream in early June. Ranger has 100 percent interest in Kiame, which has estimated reserves of up to 10 million barrels.
In the Ivory Coast, Ranger has completed three-dimensional seismic surveys of its offshore CI-102 Block, and plans for development of the block to be formulated later this year, Dyment said.
Dyment said he did not expect any improvement in the market for its recently acquired heavy crude oil production before the year 2000.
Ranger's 1997 acquisition of heavy oil producer ELAN Energy Inc, added 21,000 barrels a day of production to Ranger's portfolio, but weak crude oil prices, and especially soft prices for heavy crudes, have meant that Ranger has shut in about 4,000 barrels per day of production of its heavy crude.
''We basically made the ELAN purchase for the year 2000,'' Dyment said. ''The nice thing is that we don't have to go looking for it,'' he said, adding that heavy oil now accounts for 40 percent of his company's reserves.
Tunisia Exploration Agreement Signed By Petro-Canada
CALGARY, April 3 /CNW/ - Petro-Canada has signed an agreement with the Tunisian national oil company, ETAP, to jointly explore on a large and relatively unexplored block of land in south-central Tunisia.
Petro-Canada and ETAP have acquired exclusive rights to conduct geological and geophysical studies, as well as seismic reprocessing and acquisition, on the Tataouine block, covering approximately 1.8 million acres (720 000 hectares) in the Berkine (Ghadames) Basin. This basin is relatively unexplored in Tunisia, but has provided a number of substantial oil discoveries recently in adjacent areas of Algeria.
Petro-Canada has committed to spend $5 million in Tunisia in 1998 and 1999. Following the initial two-year term, Petro-Canada will have an option to extend the agreement.
''The agreement with ETAP represents an excellent opportunity for Petro-Canada to explore a large block of land, with potentially substantial rewards,'' said Norm McIntyre, Petro-Canada executive vice-president.
''Pursuit of this opportunity is consistent with our strategy to expand our international presence and build on our nearby Algerian exploration success.''
Petro-Canada's exploration program in Algeria has yielded several discoveries on its 2 million acre Tinrhert block. The Company is producing oil from its Tamadanet field, evaluating recent gas and condensate discoveries, and conducting further exploratory drilling.
Tri Link Resources Drilling Update In Saskatchewan
Tri Link Resources Ltd., a Calgary based intermediate oil and gas producer, confirmed the second of two, new light gravity oil discoveries on the Deep Red River Ordovician play on its 100 percent owned Hazelwood oil producing project in Southeast Saskatchewan.
These two discoveries are on separate structures at about the 2,400 metre level underlying the shallower oil producing operations at 1,200 metres. The significance, over and above the two individual discoveries, is the implication on Tri Link's 300,000 acre land spread of 30 to 40 separate structural features. This is a major areal play for the Company and is projected to drive light oil production and reserves growth for Tri Link over the next several years. Drilling of these deeper structures will begin immediately following spring break up in May, utilizing two dedicated drilling rigs. Plans are to drill 20 to 30 Deep (Basement) wells over the course of the next fiscal year.
Tri Link has drilled and completed two new 100 percent owned discoveries of light, 35 degree oil in the Red River Formation on separate structures at the deeper 2,400 metre level. Both wells are now on production and are being monitored at controlled rates of 250 to 350 barrels per day each. The wells both have net pay sections averaging 45 to 50 feet, with oil in place estimates of about four million barrels each and estimated recoverable reserves of 300,000 to 500,000 barrels per well. A third well has been cased to 150 metres above the Red River and will be deepened to evaluate that zone and lower horizons following spring break up.
Tri Link is already pursuing its Hazelwood Deep Play vigorously. In addition to its existing 200 square miles of 3-D seismic coverage and 2,000 miles of 2-D data, the Company has recently completed two smaller 3-D programs, covering specific defined structures and is presently shooting an additional 180 square miles of 3-D on Company controlled lands.
Two deeper capacity drilling rigs will be used continuously throughout the May 15 to March 15 period in the year ahead, with a third rig possibly added in the late summer. The Deep Discoveries on Tri Link's lands have changed the complexion of the Hazelwood producing operations and this deeper project alone, is projected to be a large contributor to Tri Link's three year production target. The Company is planning to sell $40 to $50 million of non-core production to advance the drilling and development of the Red River and other deeper zones at Hazelwood.
The key here is that Tri Link owns its land spread 100 percent and has the seismic coverage and technology to move efficiently and quickly in an area where it already controls production and operations.
MARKET ACTIVITY
In New York, Chevron and Mobil (MOB), down 2 to 78 7/8, embodied the performance of the oil sector Friday, as the AMEX Oil Index (XOI) slid 2.79 to 483.72 and Philadelphia Oil Service Index (OSX) dipped 0.58 to 112.36.
Among individual names, Schlumberger (SLB) slid 1 9/16 to 75 11/16
and R&B Falcon (FLC) fell 1 1/8 to 30 1/8, while Triton Energy (OIL) rose 1 1/4 to 39 3/16.
Unocal (UCL) shares rose 15/16 to 40 11/16 thanks to an upgrade from
Goldman Sachs to its "priority list" from the "recommend list."
In Toronto, Abacan Resources, Westminster Resources, Canadian 88 Energy, Pan East Petroleum, Ranger Oil, Gulf Canada Resources, Newport Energy, Ulster Petroleums, Rigel Energy, Petro-Canada, Alberta Energy and Westfort Energy were among the top 50 most active traded issues on the TSE.
Berkley Petroleum gained $1.5 to $15.30, Shell Canada A $1.5 to $25.90, Canadian Natural Resources $1.0 to $30.50 and Remington Energy $0.95 to $16.25.
Percentage gainers included Blackrock Ventures 11.1% to $1.00, Founders Energy 11.1% to $1.00,Blue Range Resources $9.5% to $9.20, Petrorep Resources 8.7% to $1.25 and Westfort Energy 8.6% to $2.14.
On the downside, Canada Southern Petroleum fell $1.25 to $10.0, Morrison Middlefield $0.55 to $9.50 and Tri Link Resources $0.50 to $14.50.
Percentage losers included Canada Southern Petroleum 11.1% to $10.00, Bellator Exploration 5.5% to $1.03, Morrison Middlefield 5.5% to $9.50, Canrise Resources 5.2% to $5.50 and Courage Energy 5.0% to $1.90.
Artisan Corp was the only service sector company among the top 50 most active traded issues on the TSE.
Enerflex Systems gained $1.55 to $41.30.
Alpine Oil gained 9.1% to $1.20.
On the downside, Dreco Energy Service fell $1.50 to $48.50, Shaw Industries A $0.50 to $48.50 and ATCO I $0.40 to $36.15.
Percentage losers included Tetonka Drilling 9.5% to $1.90 and Bonus Resource Services 4.0% to $4.75.
Over on the Alberta Stock Exchange, Oxbow Exploration, Bearcat Exploration, HEGCO Canada, Green River Petroleum, First Star Energy, Moiibus Resources, Desmarais Energy, Cirque Energy and Cubacan Exploration were among the top 25 most active traded issues.
Meota Resources A gained $0.34 to $1.49, HEGCO Canada $0.27 to $2.76, Avid Oil & Gas B $.25 to $1.90 and Solid Resources $0.15 to 6.40.
On the downside, Granger Energy C fell $0.55 to $2.50, Extreme Energy $0.39 to $0.21, AltaQuest Energy $0.26 to $2.99, Syner-Seis Tech $0.20 to $0.75, Underbalanced Drilling $0.20 to $2.55, Hawk Oil A $0.13 to $0.75, Blue Power Energy $0.10 to $0.20, Hawk Oil B $0.10 to $1.30 and Stellarton Energy $0.10 to $3.80.
INTERNATIONAL NOTES
Southern China's Largest Oilfield
NANJING (April 4) - China's Jiangsu Province now has 120 million tons of proven oil reserves and has become the largest oil industrial base in the southern half of China.
The province produced 1.17 million tons of crude oil and added 11 million tons to its proven oil reserves last year.
The oilfields, which are located in the central part of the province, are expected to help solve the province's power shortage problem and power problems in the eastern part of China.
China's Energy Output in January
BEIJING (April 5) - China's total energy output reached 78.65 million tons in January, down 12.3 percent over the same period of last year. However increases were shown both in crude oil and natural gas output, according to the latest figures from the State Statistics Bureau.
The country generated 72.49 million tons of coal, down 18 percent.
The output of crude oil hit 13.71 million tons, up 0.5 percent. That of natural gas was 1.91 billion cubic meters, up 1.6 percent.
PIPELINES
TCPL Moving Full Steam Ahead Under Watson
Calgary Herald
When George Watson fixes his sharp blue eyes in the direction of a deal, you'd better pay attention. As chief executive of TransCanada PipeLines Ltd., Watson headed the team that recently masterminded the country's biggest energy merger ever, with Nova Corp.
Now he's in the middle of Canada's hottest pipeline debate.
In other words, Watson is moving in one direction only, and it definitely isn't backward.
The $14-billion Nova/TCPL merger will put Watson at the helm of the fourth-largest energy services company on the continent.
"It's about energy services and solutions," says Watson. "It's no longer Pipelines 'R' Us. Pipelines are simply a means to an end."
The new TransCanada will boast assets of $21 billion and revenue of $16 billion.
It's a far cry from Watson's humble beginnings 50 years ago in Leamington in southwestern Ontario.
Watson worked on the family's dairy farm, wheezing and coughing as he grew up. Only later, as a university student, did he learn he was allergic to cows. With his farming career gone, Watson studied at Queen's University in Kingston, Ont., earning a B.Sc. in electrical engineering and an MBA in finance marketing.
He later honed his corporate skills in the advanced management program at Harvard University.
Watson first parked his professional bags at the Canadian Imperial Bank of Commerce in Toronto. He was eventually lured to Calgary, where he assumed responsibility for the bank's oil and gas division.
He later jumped to Dome Petroleum as vice-president, finance.
When Amoco Canada Petroleum Co. Ltd. consumed Dome in the biggest and most controversial takeover of the day, Watson, with the confidence of the banks, became vice-president and treasurer for Amoco.
By the end of 1988, Watson moved on to run a junior oil and gas company. He was CEO of Intensity Resources until TransCanada rolled by with an offer Watson couldn't refuse.
While Watson has been president since 1993, and picked up the chief executive handle a year later, he prefers a low profile. He and his wife, Sheila, have three kids in college.
"I've always prided myself in trying to be the stealth CEO," Watson grins.
Others see him differently.
"He's a first-class individual and has an enduring personal style," says Mike Tims, chief executive of Peters & Co. Ltd.
"He has a good picture of where the industry is going over the next few years."
Over the next few months, Watson will work with his new management team to ensure the competitive edge.
"I have a view, but it's important that everyone share that view," he says. "We will be very focused."
The new corporate team at TransCanada boasts some of the industry's most experienced and knowledgeable managers, starting with the Nova's indomitable Dick Haskayne as chairman of the board.
TransCanada's current chairman, Gerry Maier, was also a key force behind the merger.
"Each brings to the table special skills and as a result they complement each other," says Judi Romanchuk, managing director of Loewen Ondaatje McCutcheon Ltd.
"There's definitely strength in numbers, and they have a top group that will bring vibrance and energy to the front lines."
Tims believes TransCanada's new brain trust has the right stuff.
"If anyone can do it they can with the team they've got," he says. "In terms of George being able to successfully implement their strategy, I'd bet with him. He has the capacity to do it."
As TransCanada stretches its strategic directions, it is poised to stretch globally as well.
"We're a big Canadian entrant in the global marketplace," says Watson.
"We're going to focus more on Europe. It's new for us."
What isn't new is the conflict between producers and Nova and TransCanada currently being played out at the National Energy Board hearing into the Alliance pipeline project.
Alliance is the $3.7 billion high-speed pipeline designed to carry natural gas and chemical-rich liquids from northeast B.C., through Alberta, to Chicago.
Initially proposed by 22 producers, Alliance is now a consortium primarily owned by pipeline companies. It is still backed solidly by the producer community.
"The juxtaposition of TransCanada and Nova in this deal and the players and role of the players is intriguing," says David Manning, president of the Canadian Association of Petroleum Producers. "Nova has the backdrop of a long and adversarial relationship with producers."
TransCanada has a better relationship, Manning says, primarily because of its aggressive tolling arrangement.
"TransCanada is starting from a very different plane, and an attitudinal difference with George Watson," says Manning. "George brings a fresh look."
TransCanada, Nova and CAPP are working behind closed doors to forge an
arrangement where Alliance will proceed, with CAPP supporting the giant merger.
The fact the warring parties are talking has much to do with the future the Alberta Energy and Utilities Board ruling on the merger. The AEUB, which will make a decision in June, must approve the merger as must Ottawa's competition bureau.
Manning insists there's an onus on the players to come up with a solution.
Industry sources say that next week, TransCanada and Nova will cease their objection to the issue of Alliance's tolls. The move will pave the way for producers to back the merger.
"There will be a deal, and producers will support the merger," said a source close to the parties.
The agreement will include strict codes of conduct for the merged company, a strict audit process, seamless tolls and an interconnect policy which would allow Alliance to go in and out of the Nova system. It would also prevent double tolling.
Watson assumes Alliance will proceed, especially since it has financial backing and producer support.
"To me the probability is that it will be built," he says. "I don't believe it will be approved as asked for, but competition is inevitable and healthy."
Watson cautions Alliance is a sizeable operation and recalls the Iroquois pipeline in New York State took five years to get in the ground. If Alliance receives regulatory approval, TransCanada will live with it.
"We won't go to court," Watson adds, but he also stresses Alliance is still awash in complex issues.
"There's the level-playing field issue, and the rights with respect to contract renewal issue."
Alliance has 15-year no-cut contracts, while TransCanada has one-year renewal agreements, plus shippers must give six-months notice if they plan to terminate. Watson says TransCanada should have the same ability to increase its contract terms.
The lines in the debate can sometimes be blurred.
Both Consumers Gas Ltd. and Union Gas Ltd. have contracts with TransCanada. However, Westcoast Energy Inc., which owns Union, and IPL Energy Inc., which owns Consumers are major stakeholders in Alliance.
"As owners of Alliance they want long-term contracts, but as shippers on TransCanada they want short-term," Watson notes.
Since this issue is likely to be resolved shortly, there are only two other Alliance stumbling blocks to getting TransCanada onside. Those blocks could just as easily be a concrete bridge to nowhere if they're not resolved.
The first is the Nova issue of laterals. These are the small gathering lines that feed into the large Nova pipeline. Nova still hopes to provide the laterals north of Edson for Alliance, whereas Alliance prefers to construct its own.
"Alliance wants to build laterals where laterals exist," Watson says. "Nova (believes) they should work out a deal where they would provide the transportation."
The other issue is Alliance's technology. Watson wants "a healthy debate" on the merits of the higher pressure pipe, including its safety.
In the meantime, TransCanada has its own pipeline plans to tap into the hot Chicago market. Watson maintains his Viking Voyageur project is superior to Alliance, and is feverishly trying to round up firm supply commitments.
As the Alliance hearing drags on, everyone associated with the players is hoping for a brave new world with Watson.
"You've got two giants in CAPP and Nova who are historical adversaries," says Manning. "Watson brings a fresh perspective. If there's any peace in the land, it will be because of him."
Canada Gas Pipeline To U.S. Approved
MONTREAL, April 4 - Canada's National Energy Board has approved a natural gas pipeline to the United States through Quebec's Eastern Townships region southeast of Montreal, the Montreal Gazette reported on Saturday.
It said the 133-mile (213-km) route to the New Hampshire border would be used by the Quebec gas utility GAZ Metropolitain and Co Ltd as part of plans to carry gas from Alberta to the United States.
The company said it was a major step forward, the newspaper reported, though the project has not yet received full environmental approval.
MISC
Alberta's Leased Lands
calgaryherald.com
Quarterly Snapshot: Toronto Stock Exchange
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