MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, APRIL 14, 1998 (6)
SERVICE SECTOR
Questor Technologies Announces Appointment of Directors
Questor Technologies (Alberta Stock Exchange:QST.) Questor Technologies Inc. wish to announce the appointment of Gerald DeSorcy, P.Eng., Arthur Dumont, P.Eng., and Alvin Schreiner, P.Eng. to the Board of Directors.
Mr. DeSorcy is currently President of Desorcy Consulting Services and past chairman of the Energy Resources Conservation Board where he worked for 38 years. He is a director of Pursuit Resources Inc., a TSE listed company. Mr. Dumont is currently President of Hughes Christenson. During the last 10 years, he worked at Precision Drilling and Kenting Energy Services where he was COO and President, respectively. He is currently is a director of Computalog Ltd. Mr. Schreiner is President of Stream-Flo Industries Ltd. and was associated with Westburne Inc from 1978 to 1995.
The appointment of these new directors will be of great assistance to Questor as the company moves forward with its current business plan to develop the Turbo Flare incinerator.
Questor has accepted, with regret the resignation of Andrew Janisch as director and Chairman of the Board of Directors, due to ill health. Mr. Janisch has been of great assistance in building the company and his experience will be greatly missed.
Questor is also announcing the resignation of Ron Busler, Keith Laws and David Honsberger from the Board of Directors. Questor would like to thank the gentleman for their time and effort in helping Questor develop its business goals.
MERGERS - ACQUISITIONS
Energy North Inc.(ENI/ASE), Electra Energy Corporation (EEN/ASE) and Landhawk Petroleum Corporation (LHK/ASE) Enter Into Agreement To Form Single Entity.
The companies announced that they have entered into an agreement to negotiate the terms of a combination of the assets and business of the three corporations into a new entity to be known as Energy North Inc. ("the Amalgamated Corporation").
The current senior officers and management of Energy North Inc. will be retained to manage the affairs of the Amalgamated Corporation with selected management and staff positions to be filled from the other companies. The Board of Directors of the Amalgamated Corporation will be announced at a later date.
The transaction will be subject to the approvals of the respective boards of directors of the three corporations, the approval of the Alberta Stock Exchange and the approval of two-thirds of the votes cast at the respective shareholders' meetings to be called for that purpose.
If the transaction is concluded, the holders of the common shares of Energy North, Landhawk and Electra will receive common shares of the Amalgamated Corporation, with Energy North, Landhawk and Electra holding respectively, approximately 51.5 percent, 18.5 percent and 30 percent of the Amalgamated Corporation's outstanding shares. The percent ownership of the Amalgamated Corporation will be based on a combination of net asset value, cash flow and market capitalization and will be determined through arms length negotiations among management of the three corporations.
The Amalgamated Corporation will have production in Alberta and Saskatchewan in Canada and a growing production base onshore in Trinidad, West Indies. The Amalgamated Corporation's production rate is estimated to be 1200 barrels of oil equivalent per day consisting of 670 barrels of oil and 5.3 million cubic feet of gas. It is anticipated that after the amalgamation is completed approximately 100 barrels of oil equivalent per day will be sold and the proceeds used to reduce long term bank debt. Assuming oil and oil equivalent pricing of U.S.$17.00 per barrel the Amalgamated Corporation is expected to have an estimated cash flow for the twelve month period following amalgamation of approximately $3,700,000 and long term debt of $2,300,000. A capital expenditure program of $5,100,000 is forecast for the twelve month period following amalgamation.
The reserve base of the Amalgamated Corporation, based on 1997 year end independent engineering evaluations on a proven and 50 percent of probable basis is calculated to be 4.6 million barrels of oil equivalent with a 15 percent Net Present Value of $23,900,000.
The combined Western Canadian assets of the three Corporations are complimentary to each other and are expected to balance the production portfolio of the Amalgamated Corporation to 55 percent oil and 45 percent natural gas. The onshore Trinidad properties contributed will enable the Amalgamated Corporation to expand its international exposure and operations.
United Tri-Star Resources Ltd. (UTS/TSE) and International Reef Resources Ltd. (IRF/ASE) Directors Agree to Amalgamation
The companies have agreed to amalgamate, subject to shareholder and regulatory approval. An independent committee of IRF together with independent legal council and an independent valuator, Coopers & Lybrand, will advise the Directors of both Boards on the exchange ratio of IRF into UTS shares. UTS will be the surviving company with more than $7.0 million in cash and no debt.
The merger, inclusive of the exchange ratio will be presented to the shareholders for approval of both companies at their Annual General and Special Meetings on June 25, 1998.
The combination of UTS and IRF will create an operating company focused on the energy industry, with two potentially highly rewarding businesses. UTS has previously announced its proposed 22 percent interest in a Joint Venture with Koch Oil Sands Limited Partnership. to develop leases 5 and 52 in the Athabasca Oil Sands. The partners are also evaluating the economic extraction of metals and minerals from the tailings associated with oil sands production.
IRF has been developing an innovative fine coal recovery technology that has been successful in recovering and pellitizing coal from tailings ponds. The Company is currently finalizing a number of coal supply agreements in Pennsylvania and West Virginia. IRF expects to commence commercial production from its first plant by year end and to achieve its initial production goal of one million tons a year in 1999. The fine coal recovery business is expected to generate significant and growing cash flow for the combined company in the years prior to start-up of its oil sands project.
MISC NEWS REGARDING KERM'S LISTED COMPANIES
Northrock Resources Ltd. (NRK/TSE) Closes Common Share Offering
Northrock Resources announced that it has closed its recently announced common share offering of 4,000,000 Common Shares at a price of $21.50 per share.
The net proceeds will initially be used to reduce debt which will allow the Company to ensure that an aggressive exploration and development capital program would be accomplished in 1998. Drilling expenditures will represent more than 75 percent of a planned $207 million capital program with drilling activity expected to double to more than 300 wells. Up to 30 rigs will be active at certain times during the year. Particular emphasis will be placed on an aggressive program in West Central Alberta, building on recent successful drilling results and the recently announced Strategic Alliance with Gulf Canada Resources Limited and acquisition of Paragon Petroleum Corporation.
R. Chaney & Partners Updates Trican Well Service Stock Position
R. Chaney & Partners III L. P. and R. Chaney & Partners IV L.P. of Houston, Texas announce that as a result of private placements and market purchases on The Toronto Stock Exchange, they now on a combined basis exercise control and direction over 698,200 common shares of Trican Well Service Ltd. and 500,000 special warrants each excercisable for one common share of Trican, which if exercised would represent a total of 10.8 percent of the issued and outstanding shares of Trican. R. Chaney & Partners, Inc. is the general partner of R. Chaney & Partners III L. P. and R. Chaney Investments, Inc. is the general partner of R. Chaney & Partners IV L.P. Robert H. Chaney is the sole shareholder of both general partners. Both limited partnerships are U.S. investment funds specializing in emerging energy technology companies. Although the limited partnerships may make further purchases of common shares, it is not the current intention of either limited partnership to acquire control of Trican Well Service Ltd.
MARKET ACTIVITY
The Toronto Stock Exchange 300 Composite Index rose 1.6% or 125.11 to 7780.53.
In comparison, the Oil % Gas Composite Index gained 0.0% or just 1.64 to 6669.31. The Integrated Oil's fell 0.2% or 13.88 to 8751.12. The Oil & Gas Producers Index gained 0.0% or just 2.83 to 5880.37. The Oil & Gas Services gained 0.4% or 12.37 to 3283.69.
Vermilion Resources, Canadian 88 Energy, Probe Exploration, Petro-Canada, Renaissance Energy and Newport Petroleum were among the 50 most active traded issues on the TSE.
Imperial Oil gained $1.00 to $78.40.
Percentage gainers included TransGlobe Energy 13.6% to $1.25, Vermilion Resources 10.8% to $9.20, Probe Exploration 8.8% to $6.20, Place Resources 8.7% to $2.50 and Courage Energy 7.8% to $2.75.
On the downside, Seven Seas Petroleum fell $1.25 to $22.50 and Amber Energy $0.75 to $15.25.
Percentage losers included Black Sea Energy 6.7% to $1.40, Oiltec Resources 5.5% to $2.60, Seven Seas Petroleum 5.3% to $22.50, Pan East Petroleum 5.1% to $2.04, Amber Energy 4.7% to $15.25 and Upton Resources 4.4% to $3.25.
Among service issues, Inter-Tech Drilling and Badger Daylighting were among the 50 most active traded issues on the TSE.
Dreco Energy gained $1.00 to $51.50.
Among percentage gainers, Entertec Resource Services gained 10.5% to $9.50 and NQL Drilling 6.3% to $12.75.
On the downside, Enerflex Systems fell $1.90 to $41.60 and Canadian Crude Sep $0.75 to $4.25.
Percentage loser was Enerflex Systems 4.4% to $41.60.
Over on the Alberta Stock Exchange, ICE Drilling, First Star Energy, Dalton Resources, AltaPacific Capital, Parkcrest Exploration and Raptor Capital were among the top 25 most active traded issues.
Belfast Petroleum gained $0.20 to $3.10, Rock Capital $0.20 to $1.20, Hyduke Capital Resources $0.10 to $2.20, ICE Drilling $0.10 to $0.93, Lexxor Energy $0.10 to $0.65, Meota Resources $0.10 to $1.30 and Solid Resources $0.10 to $7.10.
Canadian Crude Separators fell $0.60 to $4.50, Canop Worldwide $0.18 to $0.57, Request Seismic $0.15 to $1.55, Wenzel Downhole $0.13 to $1.16, Peregrine Oil & Gas $0.11 to $0.50 and Green River Petroleum $0.10 to $0.70.
RESEARCH NOTES
Courage Energy Inc. (CEO-T: $2.55) BUY
New Pool Discovery at Newton U.K.
The initial exploration test drilled at Newton, located on-shore in the U.K., has yielded two oil pay zones. The well was drilled to a depth of 1,404 meters and encountered oil pay zones of 17 meters and 13 meters. While production testing will commence soon, drill stem tests have indicated that the initial production for this well is expected to exceed 500 bbls/d. This well was an `earning well' in which Courage paid 100% to earn 50% (after pay-out) in the well and a 50% working interest in 425,000 acres of gross contiguous land located in the East Midlands basin. This Newton exploration test well was one of eight locations which had been identified on the earned acreage. Subsequent wells will be drilled on a 50/50 "straight up" basis. Courage's partner in this area is Altaquest Energy Corporation (AQF-Y:$3.56). We reiterate our BUY opinion on Courage with a near term target price of $3.00. For more information on Courage please refer to page 15 in the March 1998 Drill Bit.
Maxx Petroleum Ltd. (MXP-T: $1.75) HOLD
Announces 4 for 1 Consolidation
Subject to shareholder vote at the annual meeting, Maxx common shares will be consolidated on a four for one basis. Maxx currently has approximately 56 million shares outstanding, post consolidation this will be reduced to approximately 14 million. On a pre-consolidation basis, using US$17.00 WTI, we are forecasting fully diluted CFPS of $0.40 in 1998 and $0.50 in 1999. We maintain our HOLD recommendation with a pre-consolidation 12-month target price of $2.25.
INSIDER TRADING
The following insider transactions were listed this morning in the Financial Post.
Anderson Exploration Ltd. - J.C. Anderson, chairman and chief executive, received more than 2.1 million shares valued at $16.64 each under a plan to hold almost 3.6 million shares.
Benz Energy Inc. - Donald Busby, sold about 850,000 shares and bought 17,500 for $1.30 to $1.68 each to hold more than 3.7 million shares indirectly.
Denbury Resources Inc. - TPG Advisors Inc., which holds more than 10%, bought more than 313,000 shares for $US$15.96 each to hold more than 8.7 million shares indirectly.
EARNINGS
Courage Energy Inc.
Message 4064225
Lateral Vector Resources Inc.
Message 406407
Newquest Energy Inc.
Message 4064088
MISC
The Energy Information Administration (EIA) is pleased to introduce a new product, Energy Supply Security Information on the Web . This page provides information on international and domestic events that affect energy security on a global basis, and provides links to information that could be used in assessing vulnerability to potential energy supply problems. Included are links to existing products on the EIA web site as well as the web sites of other federal government agencies and selected non-governmental sources. It can be accessed directly at:
eia.doe.gov.
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