MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING WED., MAY 6, 1998 (3)
INTERNATIONAL
Companies
Patria Resources Ltd. (PT/ASE) reported it has received final planning approval to spud its Cropwell Butler #2A well near Nottingham, East Midlands in the United Kingdom.
Preparatory operations on the site have begun, with the initiation of the deviated drilling expected to commence shortly. Patria is presently waiting the release of the contracted rig .
The well will be drilled to a target depth of approximately 1000m. The well is a deviated re-entry of the original borehole, which tested oil in the 1980's. Patria Resources Ltd. conducted a new seismic survey over the area indicating the potential to deviate up-structure from the initial well.
Cropwell Butler #2 is located on Onshore Exploration Licence EXL216, located directly east-southeast of the city of Nottingham. The well is located in the area of the East Midlands Basin in which the new discoveries of Fiskerton and Newton have recently been made.
Patria Resources Ltd. owns a 100 percent working interest in EXL216, which covers approximately 58,000 acres. Additionally, Patria Resources Ltd. was recently awarded an additional 99,510 acres at a 100 percent working interest, contiguous to EXL216 under the 8th Round of Onshore Licencing.
Countries
Cambodia Against Thai-Vietnam Oil, Gas Exploration
BANGKOK, May 7 - Visiting Cambodian Prime Minister Hun Sen on Thursday strongly objected the start of offshore oil and gas exploration by Thailand and Vietnam in areas disputed by Phnom Penh in the Gulf of Thailand.
He also urged oil companies that have won concessions for exploration in the Thai-Vietnam areas to delay operations until an agreement had also been reached with Cambodia.
"During discussions on cooperation (with Thai Prime Minister Chuan Leekpai), I also voiced objections on behalf of the Cambodian government to the treaty which Thailand has with Vietnam (on exploration)," he told a news conference.
Thailand signed an agreement with Vietnam last August to divide overlapping oil and gas blocks along Thai-Vietnamese territory in the Gulf of Thailand.
Thailand's listed PTT Exploration and Production Plc is expected to start exploration in field B14, B15 and B16 later this month.
Hun Sen said any implementation of the Thai-Vietnam agreement would be regarded as a violation of the sovereignty of Cambodian seas.
His government had sent a protest note to Thailand and Vietnam last February and had proposed triangular talks to settle the issue.
"We suggest that this agreement not to be carried out, and wait until discussions between Cambodia, Thailand and Vietnam have been made in order to solve the problem of disputes on the overlapping areas in the sea," he said.
Hun Sen said he had told Chuan that he would bring this matter up with the Vietnamese government soon.
"I would also, take this opportunity to appeal on behalf of the government of Cambodia to any oil company which has license to operate in those areas to delay its operations until agreement is reached with Cambodia," he said.
Hun Sen said Chuan had shown a positive response to Cambodia's viewpoint.
"I feel that when I raised such questions ... Thailand seemed to show that they respect what I raise ... I feel that this will lead to triangular talks between Cambodia, Thailand and Vietnam on the overlapping areas," he said.
In response to a Reuters query, the Thai foreign ministry said Thailand's agreement with Vietnam was in accordance with a 1982 territory demarcation that Cambodia had made with Vietnam.
"So for any change in that demarcation and dispute of territory, Cambodia would have to settle with Vietnam on its own," said Kobsak Chutikul, a foreign ministry spokesman.
UK Oil Income Falls to Lowest Level in 15 Years
LONDON (May 6) - Britain's Royal Bank of Scotland said Wednesday that daily average UK oil revenues fell to only 20.5 million pounds (33.8 million US dollars) in March, their lowest level in real terms for at least 15 years.
The bank's latest Oil and Gas Index showed that daily oil revenues in March were 34 percent down on the same period last year and the lowest level since the index was first published in 1983.
The report said that the main reason for the big fall in income lies in the price slide for North Sea benchmark Brent, which averaged just 13.17 US dollars a barrel, the lowest in real terms since 1973, and the lowest in simple cash terms for ten years.
It said that falls in oil output also contributed to the drop in oil revenues as the average production of 2.58 million barrels a day in March was 0.5 percent down from a year earlier.
Finally, a 3.4 percent appreciation of the pound against the dollar, the oil industry's benchmark currency, since March 1997 further ate into the country's oil revenues.
"At current prices and exchange rates, production would have to rise almost six fold to push real term revenues to their previous peak," said the report.
"Even to reach the revenues recorded in March 1997, output would have to rise by 51 percent," the report added.
Meanwhile, gas revenues also fell by 5.3 percent to 17.8 million pounds (29.4 million US dollars) in March, but were 6.3 percent up on last year.
It said that at 40.9 million pounds (67.5 million US dollars), combined oil and gas revenues were 19.8 percent down on last year and 6.4 percent down on February.
MISC. NEWS FOR KERM'S LISTED COMPANIES
Berkley Petroleum Corp. (BKP/TSE) announced Richard M. Alexander, CMA, CFA, has joined Berkley as Vice President Finance and Chief Financial Officer. Mr. Alexander spent 17 years with a major integrated oil and gas company in various capacities including Senior Analyst, Financial reporting and Treasurer. Most recently Mr. Alexander was employed with IPL Energy Inc. where he was Vice-President, Acquisitions and Corporate Investments. Mr. Alexander is a Chartered Financial Analyst and a member of the Society of Management Accountants.
Paul Walmsley, P.Eng., joins Berkley as Vice-President Business Development. Mr. Walmsley brings 17 years of oil and gas experience to the company. Mr. Walmsley worked at Shell Canada Ltd. from 1981 to 1993 last assigned as Division Reservoir Engineer. He joined Rio Alto Exploration in 1993 where until 1995 he was Senior Exploitation Engineer. From 1995 to the present, Mr. Walmsley was President and CEO of Burner Exploration Ltd., a junior oil and gas company.
Berkley also announces John N. Woods, co-founder of the company with CEO Mike Rose in 1993, has resigned from the Board of Directors. Commitments to other endeavours lead to Mr. Woods departure.
EARNINGS
Remington Energy / Top 20 Listed
Message 4356344
Renaissance Energy
Message 4356925
Ranger Oil Ltd.
Message 4356277
Denbury Resources Inc.
Message 4356157
CrownJoule Exploration
Message 4362570
Corker Resources Inc.
Message 4356882
Tesco Corporation publicly released its Fiscal Year, 1998 earnings on Tuesday, May 5th. To discuss these results, a conference call has been set up for:
Friday, May 8th at 11:30 a.m. (M.S.T.). 1:30 p.m. (E.S.T.)
If you wish to participate in the conference call, please call 1-800-997-6788 just prior to the start of the call.
A presentation will be made by Mr. Robert M. Tessari, President and C.E.O. of Tesco Corporation. Mr. Martin Hall, Senior Vice President of Finance will also be in attendance. Following the presentation there will be a question and answer period.
The conference call and all questions and answers will be recorded and made available for review until Friday, May 15, 1998. To listen to the recording, call the telephone number indicated above.
MARKET ACTIVITY
The TSE Oil & Gas Composite Index fell 0.5% or 36.12 to 6598.33. Among sub-components, the Integrated Oil's eeked out a gain of 0.1% or 7.67 to 8708.31. The Oil & Gas Producers lost 0.7% or 43.00 to 5829.80 and the Oil & Gas Services fell 1.1% or 33.87 to 3154.57.
Petrobank, Canadian 88 Energy, Carmana Resources, Renaissance Energy, Ulster Petroleums and Petro-Canada were among the top 50 most active traded issues on the TSE.
Cheiftain International gained $.50 to $33.50.
Percentage gainers included Cavell Energy 15.0% to $1.15, Danoil Energy 9.1% to $1.20, Torex Resources 8.3% to $1.30, Bonavista Petroleum 6.6% to $6.50, Calahoo Petroleum 6.5% to $1.14 and TriGas Exploration 5.2% to $1.62.
On the downside, Canadian Natural Resources fell $0.95 to $29.70.
Percentage losers included ML Cass Petroleums 12.0% to $1.1, Petromet Resources 9.9% to $3.20, Black Rock Ventures 9.1% to $1.00, Abacan Resources 7.7% to $1.55, Rider Resources 7.1% to $3.90, Winsor Energy 6.5% to $4.30, Black Sea Energy 6.4% to $1.03, Big Bear Exploration 5.6% to $1.35 and Zargon Oil & Gas 5.6% to $3.05.
Tesco Corp. was the only service company listed among the top 50 most active issues on the TSE.
ATCO II gained $2.55 to $36.50, Dreco Energy Services $1.00 to $57.00, Enerflex Systems $1.00 to $44.50, ATCO I $0.65 to $36.25, Computalog $0.50 to $24.25 and Mullen Transportation $0.50 to $23.50.
Percentage gainers included ATCO II 7.5% to $36.50 and Canadian Crude Sep 5.4% to $4.85.
On the downside, Tesco fell $1.85 to $21.40, Ensign Resource services $1.00 to $32.00 and Precision Drilling $0.55 to $34.45.
Percentage losers included Tesco Corp. 8.0% to $21.40 and Trican Well Service 5.6% to $5.90.
Over on the Alberta Stock Exchange, Gold Star Energy, Meota Resources, Red Sea Oil, Anvil Resources, First Star Energy, EGCO Canada, Jerez Energy, Emerald Bay, Tessex Energy, Dalton Resources, AltaPacific Capital and Enterprise Development were among the top 25 most active issues.
Exchange Happenings
Oxbow Exploration Inc (OXB/ASE) common shares have been listed for trading on the Toronto Stock Exchange, effective May 6, 1998, under the symbol ''OXB''. The Company is also listed on the Alberta Stock Exchange.
Maxx Petroleum Ltd. (MXP/TSE) common shares will be consolidated on the basis of one common share for each four issued and outstanding common shares. It is expected that the common shares of Maxx Petroleum Ltd. will commence trading on The Toronto Stock Exchange and the American Stock Exchange on a post-consolidation basis during the week beginning May 11, 1998.
The International Petroleum Exchange (IPE) has rejected a costly move to bigger premises that would have guaranteed a lengthy future for open outcry trading, IPE members said on Wednesday.
The IPE's board decided on Tuesday the exchange should remain in its current home at St Katharine's Dock, at the edge of London's central business district.
The decision followed a ''finely-balanced'' vote on Friday by IPE members, an exchange spokeswoman said. The rejected options were to move to the old Stock Exchange, now occupied by LIFFE, or to the vacant Royal Exchange.
The vote reflected uncertainty over the future of the open outcry trading system, the colourful tradition of traders shouting buy and sell orders out loud, which IPE members had previously elected to retain.
But recent decisions by London's derivatives exchange LIFFE to hasten the introduction of screen-based trading to counter European competition had prompted caution, members said.
''This gives the IPE a bit more flexibility,'' said one member. ''They can wait and see how the futures business shapes up instead of rushing into an expensive mistake.''
The cost of moving to the Royal Exchange was believed to be eight million pounds sterling ($12 million).
The rejection of the move effectively rules out expanding open outcry trading because of a lack of space and was likely to place the emphasis on developing electronic trading systems, members said.
But any hasty move to a screen-based system would face strong opposition from local floor traders concerned about possible job losses.
LIFFE has recently announced a 44 million pound cut in spending this year, with the loss of 130 jobs. It has also deferred a decision on moving to a major new building in London's Spitalfields until later this year.
IPE floor managers were attracted to the idea of a move by the prospect of a more glamorous location and the implied committment to open outcry.
''Going to the Royal Exchange looked like it was going to guarantee floor trading for the next five or 10 years,'' said one member.
But senior managers feared the high costs would deplete exchange reserves and eat into fee rebates that the IPE currently gives to members.
The IPE board's decision may have been reluctant, as its invitation for members to vote seemed to indicate a preference for the Royal Exchange, some members said.
The move was first suggested in a review of the energy futures business last year prompted by concerns over falling commissions and slower growth of trade in the main North Sea Brent crude and gas oil contracts.
Dwindling returns have seen a number of high-profile companies abandon IPE membership over the past year.
The IPE, which has been trading oil futures since 1981, has already taken some steps to supplement open outcry with electronic systems.
Its natural gas contract is screen-traded and the IPE and New York's NYMEX are discussing a joint-after hours trading system, potentially including Singapore SIMEX in a global futures market.
Insider Transactions
Message 4357442
Research Notes
Talisman Energy
(TLM-T: $44.00) STRONG BUY
No Surprises In Q1 Results
Talisman reported cash flows for the first quarter of $1.51 per share versus $2.11 per share. The lower results are the result of commodity price weakness and masks the significant production gains the company has made. Oil and liquids production increased 23% to 150,758 barrels per day and natural gas production increased 14% to 762 million cubic feet per day. These significant gains were offset by lower oil prices which declined to $17.86 per barrel from $26.50 per barrel last year and lower natural gas prices which declined to $2.28 per mcf from $2.66 per mcf.
Talisman has a higher than average natural gas price due to its volumes in the North Sea which attracted a price of $4.14 per mcf for the quarter versus $3.87 per mcf last year, as well as volumes in Ontario where prices exceeded $3.00 per mcf.
Talisman continues to be a production growth story with expected gains of 20% this year and next from existing projects, including first oil from the Ross field in the North Sea and first gas from the Corridor gas project in Indonesia later this year. The company is also maintaining an aggressive exploration program focused on western Canada, the North Sea, Indonesia and Algeria.
Our cash flow estimate for this year is $7.30 per share, increasing to $10.00 per share next year.
Using a conservative multiple of 5.5 times next years, we estimate Talisman should achieve a target price of $55 per share. We are maintaining our STRONG BUY recommendation.
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