MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING THURS. JUNE 25, 1998 (6)
TOP STORIES, Con't
TSE Pulls Camberly Energy Listing
The Financial Post
Shares of Camberly Energy Ltd., a troubled oil and gas junior, have been suspended from trading on the Toronto Stock Exchange.
The exchange said yesterday this was because the company has not met its continued listing requirements
Spokesman Steve Kee said the exchange considers Camberly to no longer have an active business.
"The TSE doesn't list inactive companies," he said.
Calgary-based Camberly has been beset by failed exploration projects, bad loans and several resignations from its board of directors.
Chief executive Michael Duggan could not be reached for comment.
Last year, Camberly sold its Alberta oil and gas wells for $27 million. At yearend, it wrote off its entire investment in an exploration project in China.
The company was recently cited by the British Columbia Securities Commission for failure to file yearend and first quarter financial statements.
Shares of Camberly (CEL/TSE) last traded on Wednesday, when they closed at 40›.
Offbeat News From NOIA '98
St. John's Evening Telegram
The 14th NOIA conference in St. John's lacked a knock-out punch of the type delivered by the inimitable John Crosbie at this event in 1996, but as one speaker put it Wednesday "we're talking about what we're doing, not what we're planning to do."
Here's a brief look at what else transpired at NOIA `98.
PanCanadian's Larry Leblanc announced the company plans to drill a well at Shoal Point on the west coast as soon as they secure a partner, but warned the region lacked an infrastructure.
"We have to mobilize and demobilize drilling equipment every time we put a well up there and we don't believe this is good business," he said.
Whiterose will be drilled twice by this time next year and the smaller Cape Race property could be drilled "as early as late in 1999," Husky vice-president Jamie Blair said.
"We have initiated preliminary engineering feasibility studies in search of development facilities which would allow for exploitation of fields of (the Cape race) order of magnitiute of 50-100 million barrel reserve potential," he said.
Norsk Hydro Canada president Ivar Ramberg told the audience the company's horizontal drilling technology allowed it to drill a hole nearly three kilometres in a straight line. He won the unofficial "best slide of the conference award," with an image of two geologists wearing 3-D goggles and walking around inside a virtual reservoir, discussing drilling plans as they felt their way around the oil field at a new facility in Bergen.
Petro-Canada's Gary Bruce couldn't dodge the engineers in Leatherhead issue but won some reprieve thanks to a Halliburton Company announcement that its Shawmont/Brown and Root team of Terra Nova engineers will grow to 100 and will bid on international contracts when Terra Nova work winds down.
"They're going to have a sustainable job here, and that's what the Terra Nova alliance has been trying to do. We're not interested in you're-here-for-three-months-and-you're-gone-again, there's no value in that," Bruce said.
Minister of Energy Chuck Furey appeared resigned to the fact the 250 Terra Nova engineering jobs would remain in Leatherhead for the summer, despite a CNOPB requirement that Petro-Canada move the jobs here "as soon as practicable."
"The wording in the recommendation (sic) by CNOPB was vague and weak," Furey said in an interview Wednesday. "We will have to look at that. I discussed it with board this morning."
The prospect of tapping all that natural gas from Hibernia and other Grand Banks fields was brought up twice. Mobil's Miller said liquid natural gas conversion appeared a good option and suggested they could begin looking at planning a Hibernia gas strategy in four to five years.
Husky's Jamie Blair appeared to lean more toward a pipeline.
"We also envision gas opportunities in the medium to long term," Blair said. "Natural gas exploitation will require substantial pipeline and related infrastructure development. We believe it is timely to put significant effort to project planning now."
Finally, questions from the floor were few and far between at NOIA `98 but organizers stuck to their guns and maintained the so-called Gavin Will rule, which was spelled out in a press release that stated the question period was reserved for delegates only. Offshore Oil Canada reporter Gavin Will was spotted raising his hand after Dick Lyon's address, but organizers politely declined.
Atlantic Riches
Mobil Oil Set To Beef Up Exploration
There could be as much as 43 billion barrels of oil and gas lying offshore and underground in Atlantic Canada, Mobil Oil Canada said yesterday.
And the Calgary-based company plans to spend more than $600 million in the region this year to develop existing fields and continue exploration, said Ken Miller, Mobil's Eastern Canada vice-president.
"Our assumption today is that there is potentially about 43 billion barrels in the future, about half of which is economicallydevelopable in the medium-term future," said Miller.
The latest assessment, which includes the Hibernia, Sable Island and Terra Nova fields, improves upon the company's previous survey. That pegged the reserve potential at less than 40 billion barrels.
Mobil is proving its faith in its figures with the establishment of two new offices in Halifax and St. John's
While the company has holdings off the west coast of Newfoundland and in an area known as the Laurentian sub-basin, it plans to keep its focus on the Grand Banks east of Newfoundland, said Miller.
Mobil, along with partner Chevron Canada Resources, is working to establish a plan to pursue 13 new parcels of offshore territory that will become available this fall.
And Mobil has contracted a drilling rig to begin exploration work on the Grand Banks this fall that could continue for at least a year, said Miller.
Mobil, the lead partner in the Hibernia project, hinted Wednesday there could be further increases in Hibernia's recoverable oil estimates beyond the 135-million barrel increase the company announced last year.
The six-member Hibernia consortium has held steadfast to its original conservative estimates of 615 million barrels in its two main reservoirs.
But Mobil increased its estimate to 750 million barrels.
"It's very possible the reserves could go higher than that," said Miller.
Some industry observers have said the total could reach one billion barrels, depending on technological advances.
Miller said the company will be watching how the installation of new water and gas injectors improves the oil flow before reassessing its estimate.
Mobil Moving Offices East
The Evening Telegram
Mobil is planning to open new offices in St. John's and Halifax in the next couple of months, Mobil Oil Canada vice-president Ken Miller said at the NOIA conference Wednesday.
Each office will likely have a staff of eight to 10, Miller said in an upbeat address.
Miller told the 500 delegates at the 14th annual conference the Hibernia story has a happy ending.
"I am pleased and excited to say it's a very happy ending for Mobil, (the) industry and Newfoundland in particular," Miller said.
By 2005, Mobil's share of production on the East Coast will exceed 250,000 barrels of oil equivalent a day, or six per cent of Canada's current production, Miller said.
The estimate for total East Coast production is the equivalent of more than 800,000 million barrels a day, he said.
"And, there is potential to go beyond that."
Miller also spoke of the potential gas development and welcomed a study being conducted by Newfoundland Ocean Industries Association..
Stephen Henley, NOIA president, told delegates earlier, a natural gas utilization study is well under way, with the first phase on target for completion in early July.
He said it will provide a document describing the volume, composition, location and geophysical characteristics of the natural gas reserves offshore Newfoundland and Labrador; current and possible future options for producing and transporting the resource; and detailed terms of reference for recommended research and analysis in the study's second phase.
"We're interested in participating in the comprehensive follow-up study," Miller said.
He said it is important to consider all options for delivery of the gas.
"Pipelines lines may not necessarily be the most economic way and other alternatives should be explored." He noted, for example, Mobil is currently studying the idea of transformation of gas to liquid natural gas.
Miller described Canada's East Coast activity as "one of Mobil's seven crown jewels."
"It's getting the largest single share of capital investment of our upstream activity worldwide."
Mobil could possibly spend some $2 billion to $3 billion over the next few years in all its activity, including exploration, development and production and the total could be some $6 billion to $8 billion by the
industry as a whole, Miller said.
The forecast for the entire oil sector over the next 10 years is $30 billion, he said.
However, that level of investment can only be made if there is going to be a satisfactory return, he said. There is a need for co-operation among all players to use existing infrastructure to ensure lowest possible costs; a regulatory regime which operates in a timely fashion; and stable business environment.
Hibernia Crude Better Oil
The Evening Telegram
Tests have confirmed that Hibernia crude oil is of a better quality than had originally been expected, says Harvey Smith, president of Hibernia Management and Development Co. (HMDC).
Smith provided a review and update of the Hibernia project Tuesday at the opening session of the 124th annual International Petroleum Conference in St. John's. The two-day conference is being presented by the Newfoundland Ocean Industries Association.
Smith told the 450 delegates the Hibernia crude is approximately 12.5 per cent lighter than was originally thought. That means the oil will burn cleaner and will brings a better price in the marketplace.
Today, Hibernia is producing approximately 95,000 barrels of oil a day from three wells, he said.
That will be reduced to 60,000 barrels a day when one of the wells is shut in later this week. However, that well is expected to produce significant volumes when a water injector has been completed in its fault block in late August or early September.
"To date, we've produced more than seven million barrels of oil and we've shipped eight cargos of oil to market," Smith said. "A ninth cargo will be loaded later this week."
He added, "These initial cargos go directly to market until the fourth quarter of this year when the transshipment terminal at Whiffen Head is completed and operational."
Harvey Mott, president of Newfoundland Transshipment Ltd., told the delegates that project is moving ahead on schedule and the terminal will be operational by Oct. 1.
Smith also said five wells - four oil producers and one water injector - have been completed at Hibernia and an additional six wells are scheduled for completion by year end. Two of those will be oil producers, one a water injector and one a gas injector.
He said Hibernia is on track to meet its business plan target of 25 million barrels for 1998.
Smith said in order to increase production, HMDC plans to "look for bottlenecks in the production train and remove them, thereby increasing their production rate over the design capacity."
He added, "If we can increase our production levels by only 10 per cent, it will translate into an estimated $80 million increase in annual after tax cash flow."
Smith also talked about increasing the business use of infrastructure facilities.
"As other operators come on stream, they will require the same support services as Hibernia," he said. "The effective utilization of existing infrastructure is especially crucial given the low price crude oil scenario that we are now facing for the next few years."
Meanwhile, Bob Dunsmore, project manager for the Terra Nova project, told delegates about the importance of bringing in the project on time and on budget.
"In fact, it is probably the most important factor that will determine the pace of future developments in the area."
Dunsmore noted the conference theme is Energizing our Future.
"With the help of all participants and stakeholders, Terra Nova is on track to play its part in delivering this bright and exciting future."
Dunsmore outlined the project's schedule of activities over the coming months.
He said fabrication of subsea components will begin in the fourth quarter of this year.
"Terra Nova is currently exploring how to effectively facilitate a transfer of subsea fabrication technology to Newfoundland to support the development of a subsea industry here in the province," he said.
"We are confident that this can be done and expect to be able to make a positive announcement on this in the near future."
The drilling of Terra Nova's wells will begin in June 1999, Dunsmore said.
"The total cost of the project up to first oil is estimated at $2 billion," he said. "This is a competitive development cost in the offshore industry today."
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