MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, APRIL 14, 1998 (4)
TOP STORIES
Gulf Canada Resources Gets French Permit For East Coast Oil Exploration
The Financial Post
Gulf Canada Resources Ltd. announced yesterday it has signed an agreement with the French government that puts it back into oil exploration off Canada's East Coast.
The deal, concluded this week, allows Gulf to look for oil in an 800,000-acre block south of the French islands of St.-Pierre and Miquelon.
The fact that Gulf is doing business with the French is ironic given that recently departed Gulf president J.P. Bryan ruffled some francophone feathers two years ago when he suggested in a message to hard-core Quebec separatists: "If a small, isolated group of you want to go back to France, we'll get you a boat."
The comments from the Texas-born Bryan sparked such a large public outcry Gulf had to install extra phone lines to handle the complaints.
But Gulf spokesman Dennis Martin said yesterday the Bryan controversy didn't surface during the current talks, which were held directly with the French government.
Under the agreement, Gulf has been granted an exclusive three-year permit to explore a block 90 miles south of the islands. It is part of a larger 5.4-million-acre exploration block, in which Gulf has a 100% interest. The area has been under an exploration moratorium since the late 1960s after being embroiled in boundary disputes between the Canadian and French governments that have since been resolved.
Gulf said the Newfoundland and Nova Scotia governments are involved in boundary discussions in the area. If negotiations are successful, Gulf will expand its drilling program. A commitment well in the French area is scheduled for 2000.
Ian Doig, the author of a Calgary-based oil and gas newsletter, said it's ironic the company is going back to Canada's offshore through an agreement with the French government after walking away from its interest in the Hibernia field in 1992 following losses of nearly $300 million. Three years later, it sold its interest in the Terra Nova field, scheduled to start producing in 2000, for $25 million.
Martin says Gulf is focusing on areas in which it can have a dominant role.
Fracmaster CEO Gets 13% Pay Hike
The Financial Post
The president and chief executive of Canadian Fracmaster Ltd. saw his salary rise by 13% in 1997 while his bonus more than tripled, according to the annual information circular released yesterday.
Les Margetak collected about $300,000 in salary last year, up from $265,000 in 1996. The big bump came from his bonus, which soared to $200,000 from $60,000.
The Calgary-based company said officers and employees can earn performance based awards. Fracmaster's profit nearly doubled in 1997 to $43.4 million from $21.9 million.
Neither Margetak nor Alfred Balm, former chairman and CEO, exercised stock options in 1997. The only senior executive to profit in this way was James Mullin, senior vice-president of Russian operations, who made $602,500 from selling 30,000 shares. He garnered $160,000 in salary and almost $92,000 in bonuses.
Enersul Smiles
Calgary Sun
Just A Few Yellow-Filled Boxcars Ago The Sulphur Industry Was A $2-Billion Business In Our Country. Now It Runs At About $250 Million A Year
Calgary Sun
Over at the Calgary Convention centre yesterday, industry analyst James Hyne of HYJAY Research and Development was telling us how one day it will again be a $2-billion business.
Sulphur is, of course, a natural byproduct of oil and natural production, and about 80% of it is used to produce sulphate phosphate and turned into fertilizer.
Some 85% of sulphur is produced in Alberta, so even though Hyne was rueful about the depressed prices in this traditionally cyclical industry, it's still a pretty big business for us.
And perhaps that's why there was little gloom on the faces of those attending a luncheon sponsored by Procor Sulphur Services in which it announced its name change to Enersul Inc.
Indeed, it was grins all over the faces of the likes of president Lorne G. Peppler, executive vice-president Terry Draycott, and vice-presidents Jim Hoover, Vic Uegama and David Brosteaux. John Price, president of subsidiary, Tiger Industries Inc., was all smiles, too, as was Irene Kaye, Enersul's executive assistant and public affairs top honcho.
Peppler, one heck of a nice fellow, said "Enersul" stood for "energy and sulphur" and more clearly identified the company's activities.
Peppler then flashed on the screen one of the best promotional commercials -- informercials -- I have ever seen.
To view it, you'd have thought Procor/Enersul was at the leading edge of the world's space-age technologists. And perhaps it is.
Procor started some 46 years ago as a small sulphur handling and processing company.
Today, its markets span the globe from Africa to South America, and from Asia to Europe. In 1970, a related company developed a process called 'slating' -- which I won't even start to try and explain -- but which drastically, or perhaps I should say dramatically, cut down on environmental and other woes association with the industry. Procor is, by all accounts, a world leader.
Peppler and his fellow-executives -- and all staffers at every level -- plan to assure it stays that way.
"Our strength is global, and so is our perspective," he said, with a confidence that wasn't at all boastful.
A very likable man, by any measure.
"If we're not growing, them we're going backwards," he said, "and this company and this industry has no intention of going backwards."
I believe him, too.
When you mention sulphur to some people, a glazed look may come over their eyes.
But there are big, and bigger wheels involved in the Canadian sulphur industry than you might imagine.
Enersul itself does about $125 million a year in business, with some $45 million in offshore sales.
Plus on the board of Alberta Sulphur Research Ltd. itself are the likes of Louis Auger, president of Shell Canada, and Pierre Simard, treasurer of Shell Canada; Lorne Friberg, vice-president of Sultran Ltd.; Doug Helgeland, vice-president of Talisman Energy, and executives Bill Armstrong of Chevron, John Hepton of Petro-Canada, Marc Tremblay of Amoco and Rick Smith of Husky Oil.
These fellows are in the oil and gas big leagues, and they are in the big leagues of the suphur industry, too.
Workers Protest Shell's Use Of 'Union Of Convenience'
Fort McMurray Today
Several tradesmen held up a delivery truck on its way to Shell Canada's pilot plant site north of Fort McMurray for about two hours Saturday.
They were protesting the use of a "union of convenience," said James Fougere, representative of the Ironworkers union local 720. He explained the Christian Labor Association of Canada is comprised of several companies banding together to block out the Alberta building trades.
Fougere said about 10 men from several unions including the laborers, pipefitters and boilermakers took part in the roadblock. The truck they stopped was delivering a module made in an Edmonton shop which uses CLAC, said Cam Stilwell, organizer for local 488 of the Plumbers and Pipefitters Union .
That is "contrary to what we like and contrary to what other places (in Fort McMurray) are doing," he said. Stilwell said the roadblock was to send the message to Shell that Fort McMurray is mostly union. "And the lads weren't overly pleased to learn this company would be making these modules and coming up under their noses," he said.
Stilwell said both Syncrude Canada and Suncor Energy used the same method of module building in the past, because there are more craftsmen in Edmonton, but they used union shops. He said the unions don't like CLAC because of its policy of non-confrontation. "If you're representing the guys how can you not be confrontational?"
Stilwell said the Alberta building trades also shun CLAC because of its policy of bargaining six months behind the rest of the unions and paying employees 25-33 per cent less. "That raises questions. Why are they allowed to do this? Why don't they try to get parity?" Shell spokeswoman Tara Black explained the module delivered last weekend is part of a small pilot plant the firm is building in preparation of a $1-billion oilsands operation. She said the protesters didn't talk to Shell about their concerns.
"Typically the union issues are between the union and the contractor," she said. "We competitively bid everything. Bidders included union and non-union. We maintain a competitive process and do not disqualify qualified contractors on the basis of their labor affiliation."
Black said the CLAC is a "registered and serious union."
She noted some union contractors declined to bid on the pilot plant because they had a high work load all ready. Black also added Shell will be using 800-1,300 construction workers a year when the main portion of the plant is built.
"We think there'll be a lot of opportunities for a lot of people," she said.
Merger Move Unnecessary
Edmonton Sun
A prospective partner in developing the former Solv-Ex Corp. oilsands project near Fort McMurray announced yesterday it has agreed to merge with its sister firm, International Reef Resources Ltd. (IRR).
United Tri-Star Resources Ltd. (UTS) said yesterday it will be the surviving company and will inherit $7 million in cash, with no debt.
Robert Hanson, senior vice-president with UTS, said his Toronto Stock Exchange company has a 31% stake in the Alberta Stock Exchange-traded IRR.
The two share the same Toronto address.
IRR has a fine coal recovery technology used to make pellets of coal dust in tailings ponds. It is finalizing coal supply agreements in Pennsylvania and West Virginia, Hanson said.
UTS has a 22% stake in a joint venture with Koch Oil Sands Limited Partnership to develop leases 5 and 52 in the Athabasca oil ands.
The partners are also evaluating techniques to extract metals and minerals from the oilsands tailings.
Solv-Ex is involved in a restructuring under the Companies Creditors Arrangement Act in Canada and under Chapter 11 of the Bankruptcy Code in the U.S.
The joint venture, which Koch will operate, is subject to court approval in the United States and Canada.
Hanson said approval of Koch's purchase of 78% of Solv-Ex and UTS purchase of a 12% stake on top of the 10% it already owns is expected to occur by the end of April.
The UTS-IRR merger is to be presented to shareholders for approval June 25.
Solv-Ex started construction on its experimental oilsands extraction plant in 1996. It filed for court protection from creditors last July.
Westfort Energy Announces Right To Earn Additional Reserves
Westfort Energy, Ltd. (WT/TSE) announced hat the company has negotiated a new farmout agreement for the rights to exploit any additional oil or gas zone which might be encountered at the intervals from 12,000 feet to 16,630 feet during drilling of its upcoming deep Norphlet development well. That well is scheduled to drill to 17,350. Whitney Pansano, President of Westfort, said with the new farmout, the company can now test, evaluate and develop any oil and/or gas zone found at any depth encountered in its initial Norphlet test well, from the surface to the center of the earth, on the same terms and conditions as the company's earlier farmout agreement.
Included in the additional zones is the prolific smackover gas reservoir, which according to a report dated March, 1996 by Tierney & Associates, independent reservoir engineers, contains calculated recoverable gas in excess of 314 billion cubic feet gas. Of this, after processing, the quantities of gas constituents available for market are estimated to be: 66.6 billion cubic feet methane; 1,068,091 long tons of sulfur and 185.9 billion cubic feet of CO-2. The product value for the methane and sulfur was estimated to be over $165,000,000, while no value was calculated for the CO-2 due to a lack of available market prices at the time of the report, although a nearby operator was known to be paying $0.53/MCF at the time. In 1969 Shell Oil Co. tested the No. 1 Mashburn well flowing at a rate of 6.8 million cubic feet gas per day with over 5,000 psi tubing pressure. Gas analysis yield was 23.5 percent methane, 65.8 percent carbon dioxide, 9.3 percent hydrogen sulfide, and 1.4 percent nitrogen. Due to a lack of market at the time, the well was completed as a shut in gas well and was never produced.
Additional terms of the new farmout agreement require Westfort to pay 350,000 shares of common stock upon signing the agreement and an obligation to commence operations to develop any new formations discovered in the intervals 12,000 feet to 16,630 feet within 36 months beginning June 1, 1998.
Barra Resources Inc. Enters Into Strategic Alliance With A Private Oil & Gas Company
Barra Resources Inc. (ASE: BAO) announced that the company has entered into a strategic alliance with a well funded private oil and gas company, the principals of which have an extensive successful track record in exploration and mineral rights acquisition.
Under the terms of the alliance, Barra and the private company will cooperate to exploit prospects identified on certain of Barra's current lands, acquire additional lands and working interests and also jointly participate in future prospects developed by either party. The intent of the alliance is that each party will share equally in the assets developed as a result of this alliance. The private company will provide the funding for the initial phase of property acquisition and drilling. Barra will be the operator for drilling and operating activities resulting from this arrangement.
The parties have until December 31, 1999 to equalize their respective contributions, which may be in the form of new drilling and land acquisition expenditures or existing assets. The alliance does not provide for specific funding commitments, however it is anticipated that a total of $1.5 to $2 million will be expended through December 31, 1999.
The alliance provides Barra with the opportunity to immediately develop opportunities in certain of its core areas and acquire complementary assets without utilizing existing banking facilities or seeking new equity financing.
Moiibus Resource Corp. Closes Production Purchase
Moiibus Resource Corporation announced it has closed the purchase of 50 Boe/d of production and 1,700 net acres of undeveloped land from a non-arms length party for 1,195,349 common shares as previously announced on March 27, 1998. The common shares were issued at a price of $0.43 per share, subject to a one year hold from the date of closing. This transaction increases the Company's production to 100 Boe/d and outstanding common shares to 8,796,606.
Renco Resources (RNRS/CDN) Announces Drilling Update
Further to the Company's news release of March 10, 1998, the Company is pleased to announce preliminary drilling results regarding the first well drilled on the Caney Unit One project in Oklahoma. This project is being developed in conjunction with Commonwealth Energy Corp., and the Company's wholly-owned subsidiary, Renco Energy Inc. (the "Subsidiary").
Well logs indicate an oil sand in excess of 80 feet thick with 17 percent porosity in the Bartlesville zone. The well was drilled to a total depth of 1414 feet.
The well is currently being completed and should be on production shortly.
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