MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING THURSDAY APRIL 23, 1998 (6)
IN THE NEWS, Con't
Tappit Resources Ltd. announced that it intends to make an offer to purchase all of the issued and outstanding common shares of Goal Energy Inc. of Calgary, including any common shares issuable upon the exercise of outstanding options. Tappit is offering as consideration for each common share of Goal, at the election of the shareholders of Goal, either: (i) $0.07 in cash and 0.75 of a common share of Tappit; or (ii) one common share of Tappit.
Tappit will finance the cash portion of the transaction with additional term debt currently available through its banker.
Based on the trading price of Tappit common shares on The Alberta Stock Exchange on April 22, 1998 of $0.35, the Offer represents between a 75 percent and 84 percent premium over Goal's closing price of $0.19 on the same date.
Tappit will request today from Goal a copy of its shareholder's list and expects to mail its formal offer and takeover bid circular to Goal shareholders by mid May, 1998. The offer period will last 21 days and will be subject to typical conditions including a minimum of 66 2/3 percent of the common shares of Goal being tendered into the offer and the receipt of all necessary regulatory approvals.
Goal Energy Inc. has current production of 500 barrels of oil equivalent (boepd) per day comprised 85 percent of gas production primarily in Alberta, and 15 percent oil production mostly in S.E. Saskatchewan. Average sales price for their gas is currently $2.20 per thousand cubic feet.
Tappit Resources Ltd. is a Regina based oil and gas company currently producing 600 barrels of oil per day comprised almost entirely of oil production from 74 company operated wells in southeast Saskatchewan.
Tappit's post acquisition production will be 1100 boepd. In May 1998, following spring breakup, as wells currently being completed at Tappit's Red River deep play in southeast Saskatchewan are brought on production and Goal's shut-in gas is brought on stream, Tappit expects that production will increase. The combined companies production will be comprised of 46 percent gas, 54 percent oil.
The acquisition of Goal will position Tappit with the upside that comes with exposure to gas production and allow Tappit to pursue further light oil opportunities in our core area of southeast Saskatchewan.
INTERNATIONAL
Companies
Odyssey Petroleum (NASDAQ:OILYF) has commenced its evaluation of the Qantara concession on the onshore Nile Delta in Egypt. The Company has received a copy of the Qantara technical data, which includes well logs, test results and engineering data from the three wells drilled and tested in 1976 through 1982. In addition, 500 kilometers of processed seismic data has been received and has been scanned into a workstation for re-interpretation.
Earlier seismic interpretations mapped a 2000-hectare structure and several smaller structures on the concession. The larger structure contains a suspended well that was definitively production tested in 1982, and flowed at a rate of 19.2 MMcf/d gas and 2,730 Bbl/d of 55 degree API condensate.
In cooperation with its joint venture partner, Merlon Petroleum Company ("Merlon"), Odyssey will re-interpret the existing seismic data and plan and conduct new seismic programs where required. The Company expects to define initial drilling plans by early next year, subject to approval of the Egyptian authorities. In the first three year exploration period the participants have committed to spend US$3 million on this concession.
Achieving near-term production from Qantara is a high priority for Odyssey. Using existing data, Odyssey is preparing risked production scenarios for Qantara, which will be upgraded as new information becomes available.
Odyssey, a Canadian-based energy resource company, was recently awarded concessions for three onshore exploration blocks in Egypt - Qantara, El Mansoura and Siwa. Odyssey and its partner Merlon each hold a 50 percent interest in the concessions. Odyssey and Merlon have established an office in Egypt and plan to begin operations in mid-1998.
Pangaea Energy International Ltd. announced that veteran oil industry executive David R. Martin has joined the company as a director and has been elected Chairman of the Board.
Pangaea Energy is a privately held Canadian company with international interests in oil and gas exploration.
The Board appointment coincides with preparations by Pangaea Energy's subsidiary, Pangaea (Peru) Energy Ltd., to drill its first exploratory well on Block 71 in east-central Peru later this year. The block is currently held by a subsidiary of NYSE-listed Murphy Oil Corporation and the Peruvian government is processing an application to transfer all rights to Pangaea. Work on the 2.5-million-acre block will be performed by a joint venture in which Pangaea holds an 88% interest, with the balance held by Murphy.
Mr. Martin, who had a distinguished, 34-year career with Occidental Petroleum Corporation, retired from Occidental in 1996 and lives in Southern California. Beginning as a petroleum geologist, he rose to become President and Chief Executive Officer of Occidental Oil and Gas Corporation, the subsidiary which had responsibility for Occidental's petroleum exploration, development and production around the world.
''Dave Martin is one of the most accomplished oil-finders in the world,'' Mr. Adolph said.
''In Peru, he guided the discovery of more than 600 million barrels of oil in 13 new oilfields and Occidental now accounts for more than half of the country's annual oil production. Dave's experience will be an important asset for Pangaea as we take this major step to increase our exploration activity.''
Pangaea's Block 71, located in the Ucayali Basin, offers reserve potential of billions of barrels of oil due to the rare combination of well-defined structures in proximity to organic-rich oil-source rocks. A well drilled on an adjoining block found 58 million barrels of oil, but was sub-commercial. Shell and Mobil are planning to develop their Camisea field, 150 kilometres south of Block 71, which contains recoverable hydrocarbons estimated at 11 trillion cubic feet of natural gas and 700 million barrels of condensate.
In an update on Pangaea Energy's activities in Peru, Mr. Adolph said that drilling of the first well on Block 71 is scheduled to start in the third quarter of this year, subject to rig availability. The initial target, the Shahuinto prospect, has upside potential for more than two billion barrels of oil recoverable from multiple reservoirs. Seismic mapping indicates an areal closure for Shahuinto of 57,000 acres. Three other large, well defined anticlinal structures have been delineated by seismic on the block.
Pangaea Energy has recently acquired 565 kilometres of 2D seismic data on Block 71. It is currently evaluating the new data, along with 220 kilometres of reprocessed seismic data that was acquired by other companies. Pangaea also has acquired new Landsat and Radarsat satellite imagery of Block 71. The company is finalizing contracts for drilling supplies and services.
Redeco Energy Inc. (RE/ASE) announced it has been awarded three exploration and production concessions in southern Romania totalling more than 3.1 million acres on lands that have proven oil and gas production. The concession, awarded by the National Agency for Mineral Resources, includes approximately 800,000 acres offshore in the Black Sea. Romanian government confirmation is expected to follow within a few months.
Redeco owns a 50% working interest in the three blocks, while HEMCO Romania Ltd., a company controlled by oilman Nelson Bunker Hunt of Dallas, Texas, holds the remaining 50%. HEMCO will be the concession operator.
With this agreement, Redeco joins a list of well-known North American
companies involved in oil and gas exploration in Romania, including Gulf Canada, Ranger Oil and Amoco.
Redeco CEO Bill Liedtke, noting that Romania is one of the oldest oil and gas producing countries in the world with production dating back to 1857, said the three concessions cover ground that currently has producing wells. The Redeco/HEMCO concession includes a small existing oil field, and within the acreage but not within the concession ownership, there are two small areas with producing gas fields drilled and developed by the Romanian national oil company. The three blocks (EP-15, EP-11 and the South Bucharest Block) are all on the Moesian Platform, a geological region that hosts approximately 60% of Romania's current oil production.
Redeco is an oil and gas exploration and development Company headquartered in Calgary, Alberta. In addition to the Romanian concessions, Redeco holds a 50% interest in the oil and gas exploration rights to an 8.3-million-acre concession covering the entire country of Moldova on the eastern border of Romania. Today, Redeco has three fields under development in Moldova.
Countries
Oil-Short Cuba Aims for Higher Output in 1998
Cuba said on Thursday it hoped to hike 1998 crude oil output to 1.55 million tonnes in a drive to replace from domestic production at least part of the subsidized shipments that used to come from the Soviet Union.
The 1998 national oil production goal, published in the weekly international edition of Cuba's Communist Party newspaper Granma, would represent a 6 percent increase on last year's production of 1.461 million tonnes.
Granma did not specify how Cuba hoped to achieve the increase. But it added there was ''more and more hope'' of new oil finds at current exploration projects.
Prior to its breakup, the Soviet Union was shipping 13 million tonnes of crude a year to Cuba from its Black Sea ports to supplement local production of around one million tonnes.
With that arrangement long gone, the cash-strapped communist government has been forced to import large quantities of crude at a heavy cost in precious hard currency. Last year Cuba imported some 6.7 million tonnes, most bought on the world market but some acquired in an oil for sugar deal with Russia.
The fuel shortage has been one of the most telling and visible aspects of Cuba's economic crisis, which the government calls the Special Period, since the Soviet collapse.
Granma said about 300 wells are currently producing or exploring in the western provinces of Matanzas and Havana. The island's production is mostly heavy, high sulphur crude, which is used to generate 30 percent of Cuba's electricity, fuel cement factories, and make some lubricants.
Oil And Gas Sector Welcomes Kiriyenko Vote
A vote by Russia's lower house of parliament, the State Duma, confirming Sergei Kiriyenko as Prime Minister was good news for the key oil and gas sector, analysts said on Friday.
"He's technically minded, he knows the industry, he's generally perceived as investor-friendly -- I think Kiriyenko is just about the best choice," said analyst Ruslan Nickolov of Nomura International in London.
"He appreciates the problems the industry has at the moment, and the fact that some type of tax restructuring is required," said analyst Jim Henderson of investment bank MFK Renaissance in Moscow.
"It's always been seen that if Kiriyenko did take over as Prime Minister it would be positive for the oil and gas industry because he's been involved in it," he added.
The energy sector is the backbone of Russia's economy. Its importance was highlighted by Kiriyenko in his speech to the Duma ahead of the key vote.
He announced then that the government would cut excise duties on oil production at the beginning of next week to 45 roubles a tonne, from the curent level of 55 roubles.
This measure is intended to help producers currently hampered by oil prices which are more than $5 a barrel below the average price for benchmark front month Brent crude futures last year of $19.30 a barrel.
Kiriyenko's only previous experience in government was in the energy sector, as deputy minister for fuel and energy under the influential Boris Nemtsov from May 1996 and then as minister from November 1996.
His predecessor as Prime Minister, Viktor Chernomyrdin, was also an energy man, the last Soviet minister of oil and gas and the first head of giant gas monopoly Gazprom before taking over as premier.
Nickolov pointed out that the choice facing Russia was to have Kiriyenko elected as prime minister by the Duma, or imposed by presidential decree. He said it was an important advantage that he had been elected. Changes to the tax code can only be made after being passed by the legislative body, he said, so had Kiriyenko been imposed, he would have been unable to make any.
Even so, Nickolov warned that the Duma may feel humiliated by having been effectively forced into accepting Kiriyenko, and may drag its feet on various issues to demonstrate its independence.
The fate of the tender to sell 75 percent plus one share in Rosneft, Russia's largest oil enterprise still in state hands, will be watched closely by observers looking for clues to government policy under Kiriyenko.
Henderson pointed out that Kiriyenko has said he will not change the terms of the auction.
"Whether the auction will go ahead is a function of whether the bidders are prepared to pay the price," he said. The Rosneft stake is on offer at $2.1 billion, well above the valuation of $1.6-$1.7 billion placed on it by Dresdner Kleinwort Benson.
Nickolov said the recently announced suggestion that it could be sold in chunks rather than as one unit would be a mistake.
"The best groups would probably be cherry picked, and the government would be left with a bunch of useless assets," he said.
Russia is the third largest oil producer in the world, with output of 297 million tonnes (around six million barrels per day) of crude last year.
It is also by far the globe's largest natural gas producer, with output of 544 billion cubic metres last year. Russian gas is sold throughout Europe, and gas monopoly Gazprom has enormous financial and political clout in Russia and neighbouring states.
The Ministry of Foreign Economic Relations was quoted by Tass news agency as saying Russian revenue from crude oil in 1997 was $14.77 billion, accounting for 17.2 percent of all Russia's export earnings.
PIPELINES
IPL Energy Inc unit Interprovincial Pipe Line Inc said on Thursday that apportionment for heavy crude oil on its Canada-U.S. pipeline system would rise in May from this month's level.
IPL said on its shipper hotline that apportionment for Line 3, which carries mostly heavy oil to Superior, Wisconsin from Edmonton, Alberta, was set at 13 percent, up from 10 percent in April.
Apportionment is the volume of oil IPL expects to move on its system subtracted from shipper nominations.
For Lines 2 and 13, which carry mostly light crudes, apportionment for May remained flat at 10 percent, IPL said.
As in April, Line 1, the natural gas liquids and petroleum products pipeline, required no apportionment for May, the company said.
TransCanada PipeLines Ltd. and Nicor Inc. , in a letter to the Federal Energy Regulatory Commission, asked that the regulator's review of the project be halted until July 31 while they evaluated alternatives to the failed US$2.4 billion proposal.
A third partner in the project, Northern States Power Co. dropped out of the consortium on Wednesday.
The partners filed their application last October, but learned this month that it was unlikely enough Canadian gas could be committed to fill the line by the 1999-2000 period.
The pipeline would have carried 1.4 billion cubic feet of gas to Joliet, Illinois from Emerson, Manitoba, serving the Wisconsin and Northern Illinois markets.
But the proposed Alliance pipeline to Chicago from northern Canada was more successful in attracting 15-year commitments to ship a total of 1.3 billion cubic feet of gas a day, leaving Viking Voyageur shy of supplies.
TransCanada and Nicor said earlier on Thursday they were still bent on serving the U.S. upper Midwest markets because they had the support of such local distribution companies as Madison Gas & Electric Co. , Wisconsin Fuel & Light Co. and Wisconsin Gas.
However, TransCanada spokesman Gary Davis said the 1999-2000 period would not necessarily be a startup target date.
Con't next page (message)
|
