MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING MONDAY APRIL 27, 1998 (4)
TOP STORIES
TransCanada Pipelines Says Merger Opposition Fades
Opposition among Canadian gas producers to a merger of TransCanada PipeLines Ltd. and NOVA Corp. (NVA.TO) has nearly disappeared thanks to an accord signed earlier this month with gas producers aimed at stopping years of bickering, TransCanada Chief Executive George Watson said on Monday.
Gas producers, represented by the Canadian Association of Petroleum Producers and the Small Explorers and Producers Association, have now submitted letters to Canadian regulators in support of the C$14 billion merger. That makes the early July completion target for the deal more achievable, Watson said.
The letters were written after TransCanada agreed to stop trying to block potential competitors, Alliance Pipeline, for instance, from entering the Canadian pipeline business and to work toward boosting pipeline capacity to the U.S.
''The spirit, I would say, between the producers and ourselves has found a new high, as opposed to the lows that have been set in our history,'' Watson told analysts in a conference call. ''We are working away on regulatory reform and all the aspects under the accord are being proceeded (with),'' he said.
The Canadian government's competition tribunal is deliberating the merits of the merger, which would create North America's third largest gas pipeline and energy services firm. The Alberta Energy and Utilities board must also approve it.
Watson said backers of the proposed Alliance project remained as the only dissenters to the merger before the Competition Bureau, but said Alliance's intervention had been ''fairly dormant'' since the accord was reached.
Meanwhile, TransCanada executives said the Express crude oil pipeline to the United States from Canada would continue to operate well under capacity, and at a financial loss, through 1998, despite the completion of refurbishments to the line in January.
TransCanada and Alberta Energy Co. Ltd. (AEC.TO - news) are 50-50 owners of the line, which is designed to carry 172,000 barrels of oil a day to Casper, Wyoming from Hardisty, Alberta. From Casper, the Platte pipeline moves the crude to Wood River, Illinois.
However, the line is only shipping about 100,000 barrels a day because of a pressure reduction on the Platte system imposed by U.S. regulators, TransCanada Chief Financial Officer Steve Letwin said.
The companies planned to test the Platte portion of the line shortly and, if tests were successful, approval could be gained to increase pressure by the end of this year, Letwin said.
Union Pacific Resources Seeks $600 Million From Properties
Canadian Press
The big U.S. multinational that bought debt-laden Norcen Energy Resources Ltd. of Calgary said Monday it hopes to raise $600 million by selling oil and gas properties. Energy giant Union Pacific Resources Group Inc. is selling a host of oil and gas fields, including 15 Canadian properties in Alberta and British Columbia.
The sale of Canadian assets is expected to be finished by early September.
Other properties for sale include packages of fields in the U.S. and the Gulf of Mexico, as well as Egypt, Australia and Argentina.
The non-Canadian properties are being sold off in phases, the company said, with Gulf of Mexico, Louisiana and Texas properties to be sold by Oct. 1.
The second phase will include properties in the Rocky Mountains, Argentina, Egypt and Australia. That phase is expected to be completed by Oct. 30.
Union Pacific Resources - which is selling properties in a bid to reduce debt incurred in its $2.5-billion takeover of Norcen, which closed in March - is also considering the sale of the U.S. company's energy gathering, processing and marketing business.
The Norcen deal also required Union Pacific to assume $900 million of debt.
Cougar Helicopters' First Year Of Hibernia Service Celebrated
The Evening Telegram
Cougar Helicopters Inc. marked its first year of service to the Hibernia project Monday with a presentation to the person identified as the 11,000th passenger within that period.
Rick Burt, base team leader for Cougar in St. John's, said 40,000 kilograms of freight have also been transported to the rig.
Total passenger transfers for the year, which includes other customers, such as AMOCO, PGS Exploration and Saipem, exceeded the 14,000 mark, Burt said.
The company has flown more than 3,000 flying hours since it began operations in St. John's.
The individual identified as the 11,000th passenger was Brian McGrath of Torbay, a telecommunications technician who has been working on the Hibernia platform since June 1997.
During a press briefing at Cougar's $4.75-million hanger and passenger facility on Airport Access Road Monday, McGrath received a number of gift items from Cougar, Hibernia Management and Development Company and Advantage Travel Management.
"We have had a very successful and safe year of operations," Burt said. "We will be continuing our work with Hibernia and we will be working with drilling companies starting in August, which will keep us quite active this year."
Burt added, "Beyond that we are looking forward to anticipated work on other offshore activity on other fields including the Terra Nova project."
He noted Cougar has three Super Puma helicopters based at its St. John's facility where there are 32 employees.
"Half of our employees are from Newfoundland and all of them are stationed here," Burt said. "They are mostly high-tech positions, resulting in a payroll of more than $1.5 million."
He said the spin-off investment is estimated t be more than $20 million for the local economy.
The helicopters, leased from Helikopter Services of Norway, have North Sea experience.
In addition to that, they are the only helicopters in North America that can be de-iced as they have specially-built rotors.
"One of the advantages of that is that it allows us to fly at times when we otherwise couldn't," Burt said.
Cougar's helicopters also have the lowest takeoff and landing limits in the world for their category.
The helicopters can carry 18, plus the two pilots, but when travelling the distance to the Hibernia platform with the fuel needed, the number of passengers is limited to 12.
The company has purchased and equipped an alternate landing site near Long Pond.
Cougar is involved as well in search and rescue, emergency medical services and flight training.
The company is also working with Memorial University's Centre for Cold Ocean Resource Engineering (C-CORE) on a number of research projects.
One project involved development of high density approach lights, which are to be installed next week, for the Hibernia platform.
In addition, a new facility has just been established in Torbay for studies on the transmission of light through fog.
IN THE NEWS - NORTH AMERICA
Canrise Resources Ltd. announced that a Special Committee of its Board of Directors has engaged FirstEnergy Capital Corp. ("FirstEnergy") to examine a number of different strategic alternatives for the Corporation. The mandate of FirstEnergy is to determine the best approach for maximizing the value of Canrise's natural gas oriented, opportunity rich asset base. No decision has been made as to the best approach. While Canrise has considered a number of different potential mergers and asset acquisitions over the past year, there are currently no bids or proposals being considered by FirstEnergy or the Special Committee. The Corporation's Directors are of the view that a larger financial, reserve and production base may be advantageous in pursuing Canrise's high impact exploration and development drilling programs.
While Canrise has not finalized its financial statements for the first quarter of 1998, Management expects that production will average just under 3,900 barrels of oil equivalent ("BOE") per day. Current production levels are approximately 4,000 BOE per day and long term debt and working capital deficit totals approximately $34.3 million. During the first quarter, Canrise participated in drilling 12 wells (6.3 net) which has resulted in 7 (3.5 net) gas wells, one (1.0 net) oil well, one (0.5 net) capped oil well, 2 (1.0 net.) abandoned wells and one (0.3 net) well is still drilling. Of the gas wells, 2 (0.7 net) are producing, 2 (1.5 net) are awaiting completion and 3 (1.3 net) are awaiting tie-in. Management estimates that first quarter drilling has added 1.4 million BOE of proven reserves and 1.9 million BOE of established reserves.
Canrise has recently revised its 1998 budget and expects capital spending of approximately $30 million. The Corporation expects production to average 4,500 BOE per day for the year. Canrise intends to participate in drilling 25-30 additional wells. Combined with strengthening Canadian natural gas prices, Management anticipates that Canrise will continue to record significant production, reserve and cash flow growth.
Canrise Resources Ltd. is an Alberta based corporation engaged in the business of evaluating and acquiring oil and natural gas properties and exploring for, developing and producing petroleum substances in western Canada. The Corporation currently has issued 17,692,431 common shares that trade on The Toronto Stock Exchange under the symbol "CRE".
Maxx Petroleum Ltd. (MXP/TSE & MMX/AMEX) announced that construction of a pipeline to tie-in a Cow Lake gas well has commenced and production should start in the second week of May.
The well was drilled in December 1997 and encountered a new gas pool. The well is expected to produce a rate of up to 15 Mmcf/d and 600 barrels per day of natural gas liquids. Maxx has a 50% interest in the well.
Maxx and its partners have 6,400 acres of petroleum and natural gas leases on the play and it is expected that additional wells will be drilled in 1998.
Sharpe Resources Corp. (MSE/SO & SGPF/OTC) announced that the company has been involved with obtaining financing with a Houston, Texas based investment bank. The $10 million credit facility is expected to close within the next 5-7 days. This transaction is subject to regulatory approval.
The company has been interviewing offshore drilling contractors for the Matagorda gas project. The indications are that rig availability is good. The company will make every effort to commence the first of three new wells on the Matagorda project in May, 1998. Initially, the projected program is expected to include three (3) new drilled wells and a two-well work-over project. Upon completion of the program the company is expected to have up to eight (8) production strings online at Matagorda. At the West Thrifty project, the company is continuing its field testing program in preparation for full field development of the waterflood project.
Sharpe is looking at several possibilities regarding its future business plans. The focus of the effort will be on the full development of the Matagorda and West Thrifty waterflood properties in 1998. Additionally, the company is aggressively evaluating acquisition possibilities within these regions.
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