MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING WED., MAY 13 1998 (5)
IN THE NEWS
Place Resources commented on the company's operations and outlook. The company reported tat at Elmworth and Mulligan, both in west central Alberta, the waterflood installations have been completed, and water injection commenced in the first quarter. As water is injected into the Charlie Lake formation, it will increase reservoir pressure and displace the light oil and natural gas moving it toward the producing wells in the area. We anticipate that it will take two years to fill up the reservoir and reach peak oil production rates.
Place's capital budget through the winter drilling season of 1998/1999 has been increased to $13.5 million as the result of a significant opportunity to develop and extend a liquid-rich natural gas trend at Minehead. Minehead is in the Alberta foothills, 135 miles west of Edmonton and 20 miles south of Edson. Place has acquired 3,400 net acres in the field over the last three years by swapping mature gas properties with other producers and acquiring partners' interests in the field. We now have an average working interest of 31.5% in 17 sections, and Place operates 6 undeveloped sections.
Place's Minehead acreage lies along a Cardium gas trend. The Cardium sandstone contains liquid-rich gas, carrying between 60 and 80 barrels of liquids per million cubic feet of gas. Large natural gas reserves in the Cardium sandstone have been recognized for many years. Place has an interest in 5 wells on the property which have produced liquid rich gas since 1986. These wells were drilled on 640 acre spacing (1 well per section) and the production decline rates are only 5%, typical of production from tight, low permeability rocks. We believe that to effectively drain the gas, the reservoir will need at least 2 wells per section (320 acre spacing).
Minehead has a gas and liquids marketing infrastructure already in place, with a Conoco processing plant to the east and Talisman's Edson plant to the north. In response to additional drilling and increasing production in the area, ANG has laid a 10'' line from our field compressor directly north to the under utilized Talisman Edson facility.
In the first quarter, Place participated in a three dimensional seismic program covering 26 square miles designed to highlight additional drilling locations. The application of three dimensional seismic to pinpoint the location of a thrust fault combined with horizontal drilling and other productivity enhancement techniques should significantly enhance recoverable reserves and production rates.
Depending upon the interpretation of the seismic data, accessibility during the summer months, and the availability of drilling rigs, Place plans to drill 4 wells (1.3 net) this summer, which should be on production for the fourth quarter. Using what we learn this summer, we plan to drill 12 more wells (5 net) in the winter of 1998/1999 and should have these wells on production in the second quarter of 1999.
The company anticipates that this area has the potential to significantly impact 1999 gas and liquids production and cash flow.
Best Pacific Resources Ltd. (BPG/TSE) announced the results of its second delineation well located at 7-19-22-28 W4M, offsetting its initial Okotoks gas discovery. The well encountered gas pay at virgin reservoir pressure in the Mississipian Turner Valley formation. The well has drill stem tested gas at rates of 5.9 million cubic feet (mmcf) per day plus natural gas liquids on a 3/4 inch choke. The Company is casing the well to total depth, plans immediate completion and expects the well to be tied in early in the third quarter.
Best Pacific retains an operated 50.0 percent working interest before payout, reverting to 30.0 percent after payout. Best Pacific controls two contiguous and undeveloped sections of land on this prospect.
Sterling Resources Ltd. (SLG/ASE) announced that it is considering the sale of its Canadian oil and gas assets. Sterling's strategy is to exploit fully the value of its Canadian assets to provide funding for international activities, and a sale of the Canadian assets is one possible method of achieving this value.
The assets include various working interests in 22,240 acres of land, two sweet gas plants, and seven wells in southern Alberta that produce 2.5 MMcf of gas and 18 barrels of liquids per day, net to Sterling.
Kobayashi & Associates Ltd. have been retained to prepare, a data package and solicit bids from interested parties.
Sterling has $1.4 million of cash and no debt. Proceeds from the sale of its Canadian assets will further increase capital available for high potential international ventures.
Earnings
Anderson Exploration Ltd. / Top 20 Listed
exchange2000.com
Torrington Resources Ltd.
exchange2000.com
Place Resources
exchange2000.com
Windsor Energy Corporation (reserve report)
exchange2000.com
Millennium Energy Inc.
exchange2000.com
Odyssey Petroleum Corp.
exchange2000.com
INTERNATIONAL
Companies
Cordex Petroleums Inc. (CZX.ATSE) will plug and abandon the Moralito X-2 well, located in the Santa Barbara block in northwestern Argentina.
The well, which spudded on May 3, 1998, was drilled to a total depth of 586m. The objective Yacoraite was encountered at 560 to 564m with weak oil shows. Immediately below the Yacoraite, strong water flow was encountered from 564 to 586m in Lecho and Devonian sandstones. The well was not tested because of complications related to the weak oil shows, strong water flows and thin reservoir interval. The well fulfills the group's drilling commitment on the block through May 1998. The group has one additional exploration period on the concession.
CORDEX Petroleums Inc. operates the Santa Barbara block with a 90 percent interest. First Australian Resources of Australia hold a 10 percent interest.
Chauvco Resources International Ltd. announced that the company is seeking partners which would earn an interest in its high potential exploration acreage through reimbursement of Chauvco's past exploration expenditures and by carrying Chauvco in a future multi-well exploration program. A number of international oil companies have expressed interest in Chauvco's joint venture proposal.
Snow Leopard Resources Inc. (SNW.A/TSE)reported that the Empire Auburn et al Hartaven HZ 4D14-35/1C16-35-9-9W2 well has been completed as a Mississippian Kisbey oilwell. Initial swab tests indicate a production rate of 4 m3 oil/hour while maintaining a high fluid level. Pump and rods have been run and the well has been tied into Snow Leopard's existing Hartaven battery to minimize operating costs. The well will be on production immediately at an anticipated allowable of 30 m3 oil per day. Snow Leopard has a sliding scale royalty convertible to a 50 percent working interest at payout.
Pyramid Energy Inc. announced that well Hamza X-1 on Block 22 in Pakistan has discovered gas in the Sui Limestone formation at approximately 1,200 meters. Log analyses indicate approximately 50 feet of gross pay which has been tested through two sets of selective perforations. Test results indicate total gas rates in the order of 8 MMscf/d with some water recovery. A second well is planned to be drilled prior to year end 1998 to prove up additional reserves and deliverability.
With this discovery on Block 22 and the calibration of the geological and geophysical model for the Sui Main Limestone reservoir, the Block holds the potential for some 300 Bcf of gas reserves.
Pakistan Petroleum Limited is the operator of Block 22 in which Pyramid has a 15% working interest.
Danoil Energy Ltd. (TSE/ASE: DAN.A) and Scimitar Hydrocarbons Corporation (ASE:SIY) are pleased to announce the spudding on May 6, 1998, of the second well of a two-well deep exploration program in the Deep Basin area of British Columbia and Alberta.
Shell Canada Limited is the operator for the joint venture group, which is comprised of Shell, Danoil, Scimitar, and an undisclosed private company, with each representing a 25 percent working interest.
The well, located in the northeastern British Columbia portion of the Deep Basin, is being drilled to a planned total depth of approximately 5,150 meters. The well is under tighthole status and has an expected drill time of approximately 3 to 4 months. In the advent of a commercial discovery, Danoil and Scimitar will reimburse Shell for prior exploration expenditures related to the project, and undertake follow-up development drilling and further area exploration.
Earnings
Chauvco Resources International Ltd.
exchange2000.com
SERVICE SECTOR
Ryan Energy Technologies Inc.reported that while the Company experienced substantial growth compared to the first quarter of 1997, its utilization levels in western Canada were affected by the industry's decline in heavy oil activity. In addition, intermittent warm weather in the first quarter caused scheduling challenges, again affecting utilization levels. The Company is seeing a resurgence, however, in drilling for natural gas in light of relatively strong natural gas prices. In particular, the industry is actively pursuing larger, typically deeper, reservoirs characterized by the foothills regions of northwestern Alberta and northeastern British Columbia. These wells are technically challenging and are usually directionally drilled. The Company has a number of large clients active in this area, which is expected to provide a strong revenue base during the remainder of this year.
As expected, the slow down in Canadian drilling activity related to Spring break-up has been more pronounced compared to prior years. In spite of this slowdown and a projected reduction in industry activity from 1997 levels, the Company is encouraged by its growing schedule of upcoming work.
In the United States, the Company continued to establish its Measurement While Drilling/Logging While Drilling (MWD/LWD) revenue base, although at a pace slower than originally forecasted. More recent activity levels indicate that our marketing efforts are being rewarded, specifically with the establishment of a Houston-based sales and engineering office. The Company is also broadening its operational areas into the northern United States where natural gas drilling is strong. We expect to see solid revenue growth in the United States for the remainder of the year.
The Company increased its concurrent job capacity to 28 in the three months ended March 31, 1998 compared with 27 at December 31, 1997, and 16 at March 31, 1997. In addition, the Company had four MWD/LWD systems available at March 31, 1998 for field deployment in North America or internationally.
In the first quarter of 1998, the Company continued to make significant technical and operational achievements in the evolution of its proprietary technologies. The Company successfully completed its first underbalanced well using its proprietary Electromagnetic (EM) Communication technology. In addition, the Company's Geological Steering Instrumentation (GSI) equipment was well received by its clients, resulting in a continued increase in the utilization of this technology. The Company continued development of its product lines related to the launching of its Electronic Data Recording (EDR) service in the second quarter of 1998.
Earnings
Ryan Energy Technologies Inc. / Serv 10 Listed
exchange2000.com
Peak Energy Services Ltd. / Spec 20 Listed
exchange2000.com
ENERGY TRUSTS
APF Energy Inc., on behalf of APF Energy Trust, announced that it has agreed to acquire assets for $8.8 million. The transaction is scheduled to close on June 8, 1998, following completion of due diligence.
The assets, located in the Wayne-Rosedale area of southeastern Alberta 16 kilometers south of Drumheller, are expected to produce approximately 385 boe per day during 1998, comprised of 332 bbls of oil and natural gas liquids, and 530 mcf of gas. APF has assigned reserves of 2,611 mboe (proved plus one-half probable) as of January 1, 1998.
Significant development potential exists through infill drilling, waterflood implementation and re-fracing certain wells. APF has estimated that peak production could exceed 1,050 boe per day by the year 2000.
The established reserve life index of these assets exceeds 18 years. Together with APF's recently announced acquisitions at Gleneath, Saskatchewan and Pembina, Alberta, APF's corporate reserve life index will be 11.2 years. In addition to increasing the reserve life index, APF believes that current distribution levels will be sustained, based on expected 1998 production and netbacks.
|
