MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING MONDAY, APRIL 13, 1998 (5)
MARKET ACTIVITY
In the U.S., oil stocks were weak, with the AMEX Oil Index (XOI) falling 1.50 to 475.54 and the Philadelphia Oil Service Index (OSX) off 1.13 to 106.76. Dow component Chevron (CHV) fell 1 7/16 to 78 7/8, Royal Dutch Shell (RD) slid 15/16 to 56 15/16, while Schlumberger (SLB) fell 1 3/8 to 73.
The Toronto Stock Exchange 300 Composite Index gained 0.5% or 34.78 to 7655.42.
In comparison, the Oil & Gas Composite Index fell 0.1% or 9.51 to 6667.67. The sub-components were mixed. The Integrated Oil's fell 0.4% or 32.26 to 8765.09 and the Oil & Gas Producers Index fell 0.3% or 15.19 to 5877.54. The Oil & Gas Services gained 1.2% or 39.87 to 3271.32.
Anderson Exploration, Petro-Canada, Beau Canada Exploration, Poco Petroleums, Renaissance Energy, Newport Petroleum, Ulster Petroleums and Canadian Natural Resources were among the top 50 most active traded issues on the TSE.
Tere were no oil producers among the top net gainers.
Percentage gainers included Courage Energy 18.6% to $2.55, Ram Petroleum 15.1% to $1.45, Real Resources 10.5% to $1.05, Jet Energy 8.9% to $2.45, Bellator Exploration 8.4% to $1.03, Magin Energy 8.3% to $2.60, Black Sea Energy 7.1% to $1.50, Elk Point Resources 6.9% to $6.95 and International Rochester 6.7% to $1.60.
On the downside, Chieftain International fell $1.00 to $34.35, Shell Canada A $0.85 to $25.15, Crestar Energy $0.60 to $19.80 and Imperial Oil $0.60 to $77.40.
Percentage losers included Torrington Resources 8.4% to $4.35, Renata Resources 7.3% to $1.01, Pendaires Petroleum 6.3% to $7.50, Summit Resources 5.1% to $4.70 and Symmetry Resources 4.8% to $1.18.
Inter-Tech Drilling was among the top 50 most active traded issues on the TSE.
Dreco Energy Services gained $1.50 to $50.50, Precision Drilling $1.00 to $32.90 and Badger Daylighting $0.75 to $9.65.
Percentage gainers included Iner-Tech Drilling 33.3% to $2.04 and Badger Daylighting 8.4% to $9.65.
On the downside, Computaslog fell $0.65 to $20.60.
Peak Energy lost 7.5% to $3.70, PeBen Oilfield 4.9% to $3.90 and Enertec Resource Sedvices 4.4% to $8.60.
Over on the Alberta Stock Exchange, First Star Energy, Cubacan Exploration, AltaQuest Energy, HEGCO Canada, Dalton Resources, Green River Petroleum, Scimitar Hydrocarbons and Hyduke Capital Resources were among the top 25 most active traded issues.
AltaQuest Energy gained $0.40 to $3.75, Solid Resources $0.40 to $7.00, HEGCO Canada $0.35 to $3.05, Request Seismic $0.22 to $1.70, Big Bear Exploration $0.17 to $1.22, Green River Petroleum $0.15 to $0.80, Maxwell Oil & Gas $0.11 to $1.11 and Loon Energy $0.09 to $0.36.
On the downside, Belfast Petroleum fell $0.25 to $2.90, Sunburst Oil & Gas $0.19 to $0.55, Ionic Energy $0.15 to $1.50, Avid Oil & Gas $0.13 to $1.30, Meota Resources $0.11 to $1.20 and Underbalanced Drilling $0.10 to $2.65.
RESEARCH NOTES
Lehman Ups Financials In Portfolio, Cuts Energy
NEW YORK, April 13 - Lehman Brothers on Monday said it has raised the weighting of financial stocks in its U.S. investment strategy portfolio because of expectations that disinflation in the U.S. economy will continue this year.
The financial sector was boosted further Monday by the announcement of two more big bank mergers - a $60 billion stock-swap deal between BankAmerica Corp. (BAC) and NationsBank Corp. (NB). and a $29 billion stock deal between Banc One Corp. (ONE) and First Chicago NBD Corp. (FCN) After last Monday's announcement of the creation of Citigroup from the $83.6-billion merger of Citicorp (CCI) and Travelers Group (TRV), ''we are raising our already sizable recommended overweight in the financial sector to 30 percent from 29 percent versus the S&P (500) weight of 18 percent,'' said Jeffrey Applegate, Lehman's chief investment strategist.
''Disinflation in the 1990s has been the key driver of robust returns for financial assets -- both stocks and bonds,'' he said. ''We expect further disinflation this year and longer term.''
That expectation bodes well for stocks, in which Lehman has retained its overall U.S. strategy portfolio weighting of 75 percent, and bonds, in which Lehman has kept a 25 percent weighting.
But it's not such good news for commodity producers and related companies.
Lehman is cutting further its exposure to the energy sector to 2 percent from 5 percent, Applegate said, noting that this sector is being hit by falling commodity prices.
Crude oil for May delivery is trading at $15.43 a barrel on the New York Mercantile Exchange, down 13 cents from last Thursday's settlement. Oil prices have recovered somewhat from mid-March, when they plunged below $13 a barrel, the lowest since November 1988, on oversupply fears linked to a dispute between top producers Venezuela and Saudi Arabia. Before March ended, those two countries and Mexico agreed to cut production. But energy traders have remained skeptical about the impact of those production cuts. Looking ahead in the financial sector, Lehman expects these stocks to enjoy further relative multiple expansion, Applegate said.
The merger of BankAmerica and NationsBank will create the biggest U.S. bank in terms of deposits and the nation's first coast-to-coast bank, the companies said earlier Monday.
Banc One Corp.'s merger with First Chicago NBD Corp. (FCN) will create the fifth-largest U.S. banking company in terms of assets.
BankAmerica's stock was up 3-7/16 at 90-1/16, while NationsBank's stock was up 4-1/8 at 80-9/16, in composite trading at midday Monday on the New York Stock Exchange.
Banc One's stock rose 1-7/8 to 63-5/8 at midday Monday, while First Chicago NBD's stock gaine 5-3/8 to 99-3/8, in composite trading on the NYSE.
Several other financial stocks have rallied recently as investors bet on who will be the next takeover target.
At midday Monday, J.P. Morgan & Co. Inc.'s (JPM) stock was up 5-6/16 at 145-15/16. And Merrill Lynch & Co.'s (MER) stock was up 4-7/16 at 99-3/8.
In contrast, however, Citicorp's stock was down 6-5/16 6o 159-9/16, and Traveler's stock was down 2-7/16 to 65-1/16, in composite trading Monday on the NYSE.
Lehman, in outlining the adjustments within its stock portfolio weighting, also said Monday it's raising its overweight position in the health-care sector to 14 percent from 12 percent.
Health care continues to outperform and deliver stable earnings growth, Applegate said.
As a result of its upward shift in health care stocks and downward adjustment in energy investments, Lehman said it has sold shares in Houston-based Rowan Companies Inc. (RDC), which provides offshore oil drilling services, and bought a position in New York City-based Pfizer Inc. (PFE), the maker of the new impotence drug Viagra.
Lehman also said Monday it is replacing The New York Times Co.'s stock (NYT) with Clear Channel Communications (CCU) in the consumer cyclicals sector, but didn't state the reason.
EXCHANGE DOING'S
The following changes to the TSE 300 Composite Index are being made before the open on Wednesday, April 15, 1998:
Stock to be added:
Vermilion Resources Ltd. (VRM) Group/Subgroup - 3.2 (Oil & Gas Producers)
Stock to be removed:
Pembridge Inc. (PEM) Group/Subgroup - 13.05 (Insurance)
Vermilion Resources Ltd. (VRM) will also be added to and Pembridge Inc. (PEM) will be removed from the TSE 200 Index effective before the open on Wednesday, April 15, 1998.
MISC. NOTES ON KERM'S LISTED COMPANIES
R. Chaney & Partners III L.P. and Thunder Energy Inc. Announcement
R. Chaney & Partners III L.P. and R. Chaney & Partners IV L.P. of Houston, Texas announce that as a result of market purchases on The Toronto Stock Exchange, they have increased their ownership in Thunder Energy Inc. and now on a combined basis exercise control and direction over 1,964,400 common shares (12.8 percent) of Thunder Energy Inc. Both limited partnerships are U.S. investment funds specializing in emerging energy technology companies. It is not the current intention of either limited partnership to acquire control of Thunder Energy Inc.
EARNINGS
Lexxor Energy Inc.
Message 4051984
TriGas Exploration Inc.
Message 4051891
Bitech Petroleum Corp
Message 4051830
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