MARKET ACTIVITY/ WEEKEND EDITION OF TRADING NOTES JUNE 28, 1998 (9)
PREVIOUS PAGE (8) OF THIS COLUMN CAN BE FOUND AT; exchange2000.com
SELECTED NEWS THIS PAST WEEK
Pengrowth Corporation (PGF.UN/TSE) , administrator of Pengrowth Energy Trust, announced that drilling has been completed on its first horizontal miscible injection well in the Judy Creek Beaverhill Lake Unit and the well is now on injection.
Results of this injection are expected to increase the oil production of the adjacent producing wells by the fourth quarter of 1998. A horizontal re-entry miscible injection well has also been successfully drilled and is in the process of being completed. A third horizontal re-entry miscible injection well will be drilled prior to the end of June.
Pengrowth has concluded a farmout arrangement on an initial segment of its shallow gas rights in the Judy Creek area with a minimum commitment of three wells. Pengrowth is in the process of distributing a farmout proposal on the remaining lands (35 sections) to interested parties. Pengrowth is also negotiating an agreement to bring additional gas volumes into the Judy Creek Gas Conservation Plant for processing.
PanCanadian Petroleum Limited (PCP/TSE) announced a significant, deep water petroleum discovery in the Gulf of Mexico. The Llano discovery well, located in Garden Banks Block 386 about 220 kilometres offshore Louisiana, drilled to a record depth for the Gulf of 27,864 feet. The well encountered approximately 200 feet of hydrocarbon-bearing sands in Pliocene and Miocene sediments. These zones are equivalent to those found at Shell Oil Company's prolific Auger field located about 16 kilometres southwest of Llano. Auger has reported reserves of 220 million barrels of oil equivalent with approximate production of 100,000 barrels of oil and 300 million cubic feet of natural gas per day.
''We are very pleased with this success in our first Gulf exploration well. This sets the stage for additional drilling on the significant lands we hold in the deep water,'' said Gerry Macey, PanCanadian's Senior Vice President Exploration. ''This well proved to be highly challenging and has stretched the envelope of drilling in the Gulf of Mexico's deep water. It opens a new exploration and development frontier for PanCanadian.''
The drilling of Llano, which is located in about 2,700 feet of water, initially reached a depth of 25,340 feet when drilling was suspended due to rig limitations. In April, the larger-capacity Sedco Omega rig resumed drilling to make Llano the deepest well drilled in the Gulf of Mexico to date. The depth of the pay intervals also makes Llano the deepest hydrocarbons discovered in the Gulf.
Currently the well is undergoing final evaluation before casing, and the partners in the well are investigating suitable appraisal and production scenarios. An appraisal well on the Llano prospect is planned for later this year. Through a farmin, PanCanadian holds a 20 per cent interest in this discovery and 20 to 25 per cent working interest in three additional blocks adjacent to Llano. The other partners in the Llano well are the operator, EEX Corporation of Houston with 30 per cent, Enterprise Oil of London with 30 per cent and Mobil Corporation of Fairfax, Va. with 20 per cent.
Over the past 18 months, PanCanadian has built up a roster of strong exploration prospects in the Gulf of Mexico. The Calgary-based company holds a variety of working interests - between 20 and 100 per cent - in 31 deep water blocks covering about 178,000 acres. This includes four recently-acquired blocks that are awaiting regulatory approval by the U.S. Mineral Management Service.
PanCanadian is also participating in two other deep water exploration wells in the Gulf. PanCanadian will hold an average of 28 per cent after-earned working interest in the Sheba prospect where a well is drilling on Green Canyon Block 341, 175 kilometres south of the Louisiana coast. On the Mississippi Canyon Block 580 located about 90 kilometres offshore Louisiana, PanCanadian holds about 24 per cent in the drilling of the Elvis prospect. Sheba is drilling to a target in excess of 25,000 feet and Elvis is drilling to 23,000 feet.
Courage Energy Inc. (CEO/TSE) is in the process of testing a second zone in its exploration well at Newton, UK. This zone is flowing 100 bbls/d of light oil, but could flow up to 250 bbls/d when stimulated. Courage has yet to test two of the four prospective zones in the well. At Red Creek, in northeast B.C., the company's 100% owned exploratory well is expected to reach targeted depth within two days. This well is targeting the Belloy formation. It has already successfully drill stem tested Halfway gas uphole.
Pacalta Resources Ltd.'s (PAZ/TSE) 100 % owned Ecuadorian subsidiary, City Investing Company Limited has recently commenced production testing on its new pool wildcat discovery well, Mariann 4A. The Mariann 4A well was rig-released on April 15, 1998 and testing commenced on June 6, 1998. The well encountered a total of five potentially productive sands, in three different geological formations, which are being tested consecutively. The first of these zones, the Upper ''T'' sandstone, tested at a final rate of 2,226 BOPD of 31 degree API oil. The next test, over a separate Upper ''T'' sandstone interval, yielded 1,377 BOPD of 31 degree API oil. The Company is proceeding with its program to continue testing the Lower ''U''' sand, the Middle ''U'' sand and the ''M-1'' sand. Based on this light oil discovery, the Company is investigating options to accelerate development of this pool with the intention of adding to the total light oil productive capability of Ecuador, which is currently declining. In addition, this light oil stream may be able to access currently underutilized capacity on the Colombian Trans-Andean Pipeline (OTA). Additional light oil production available to the Trans-Ecuadorian Pipeline (SOTE) may also incrementally increase the total system capacity by reducing overall viscosity and enhancing the average API gravity.
Pacalta's other 100 % owned Ecuadorian subsidiary, City Oriente Ltd., has completed the drilling of the first exploratory well on the 494,000-acre Block 27. This new field wildcat well, Tipishca 1, was cased on May 30, 1998. Completion and testing operations for a total of six potentially productive zones in four different geological formations have recently commenced. The first zone tested was the Upper ''T'' zone, which tested at a final rate of 1,677 BOPD of 32 degree API oil. The second zone tested in this well, the ''B'' Limestone, did not yield commercial results. The well was then tested in the Lower ''U'' sandstone at a final rate of 2,322 BOPD of 30 degree API oil. The remainder of the testing program will evaluate a second interval in the Lower ''U'', the Upper ''U'', and ''M-2'' sandstones. Based on these preliminary results, the, Company is proceeding with the drilling of the exploratory well Patricia 1 (formerly Tipishca 2) from the same drilling pad. The Company is conducting a 3D seismic program on the Block and the layout of this program has been realigned to cover the Tipishca discovery to identify potential follow-up locations. The Company is also investigating various methods to bring this discovery on-stream as soon as possible which could result in initial production from Block 27 prior to the conclusion of the exploratory period of the contract. Once again, this light oil discovery may be able to access underutilized capacity on the OTA.
The Company is currently producing at a restricted rate of 17,597 BOPD from the City Block. The Dorine field development plan has been approved by the Energy Minister and the Company is waiting for new allocations into the SOTE and OTA to be fixed by the National Hydrocarbons Directorate. It is expected that these new allocations will result in a material increase in total oil production for the Company. This anticipated increase, however, will not include allowables for the two new pool discoveries mentioned above, or the now Dorine 8 development well, which is currently testing at 3,840 BOPD. In addition, the Company is awaiting new allowables for three new wells drilled on the Fanny 20 pad. When allowables have been set for these additional wells, the Company anticipates a further increase in SOTE/OTA pipeline allocation. However, there can be no assurance that the Company will be awarded increased allocations into the SOTE or OTA. Concurrent with the increase in allocations, the Company also anticipates an overall increase in SOTE capacity of between 10,000 and 25,000 BOPD as a result of a minor expansion that has recently been completed.
The ultimate production from all the Company's wells in Ecuador will be prorated to reflect the restricted export capacity available on the SOTE/OTA pipeline system.
Probe Exploration Inc. (PRX/TSE) has been informed by its banker that its line is being expanded from $100 million to $125 million. This could be expanded further to $150 million later. This assures that Probe does not need to dilute its shareholders with an equity issue in the foreseeable future. Probe committed to that theme again this week at the CAPP conference. The company is currently working on four potential transactions, beyond its core Leduc project. These include either potential property purchases, or wide-scale area farm-ins, on major companies.
High Point Energy Corp. (HPE.A/ASE) announced the commencement of drilling of its D-3 Reef (Leduc) Test Well (the "Test Well") on the Company's controlled acreage block in the Dixonville Strategic Focus Area of northwestern Alberta. It is anticipated that the well will take approximately three weeks to drill to a Total Depth of over 2100 metres. The Operator and Partner have also negotiated the option to drill a second well (the "Option Well") on High Point land within 120 days of rig release of the Test Well.
Wells in a similar geological environment which have produced or are currently producing from the D-3 (Leduc) reef located within 2 to 8 miles of the Test Well have produced natural gas at rates of 2.6 Mmcf/d to 15 Mmcf/d. Producable reserves from these wells range between 1 Bcf of natural gas with 150,000 Bbls of oil per section and 21 Bcf of natural gas per section. The primary target for the Test Well is the D-3 (Leduc) reef with secondary targets in the Bluesky, Gething , Worsley, Wabamun, and Nisku formation.
Pursuant to the Farmout Agreement negotiated by High Point, the Company will be carried through the drilling, equipping, testing and tie-in of the Test Well, retain a royalty interest through payout of the Test Well and a 19.167% working interest after payout. High Point will also be carried through the drilling, equipping, testing and tie-in of the Option Well (if drilled), retain a royalty interest through payout of the Option Well and a 20.127% working interest after payout.
Rigel Energy Corp. (RJL/TSE) has successfully tested what appears to be commercial quantities of natural gas and condensate from its deep exploratory well in the southern Alberta foothills at Burmis. The well has flow tested 10 mmcf/d from the Mount Head formation (Missippian age). Unlike Canadian 88 Energy's discoveries at nearby Waterton, the Burmis well has a strong condensate (NGL) content, and very low sulphur (H2S) content, at 0.004%. Rigel operates this well with a 33% working interest. Rigel plans to drill a second exploratory well at Burmis this summer.
Centurion Energy International Inc. (CUX/TSE) and Marathon Petroleum El Manzala Limited, a wholly owned subsidiary of Marathon International Oil Company, announce that their recent exploration well, Abu Monkar No. 1 tested at a rate of 21.6 million cubic feet of gas per day from 10 meters of pay at 4,200 feet. Well pressure was 1,342 PSI through a 56/64 inch choke.
Said Arrata, President and CEO of Centurion, said, "We are very excited about this discovery that tested in excess of 20 million cubic feet per day. Together with the successful re-entry of the El Wastani No. 1 well earlier this year that tested at 12 million cubic feet per day we have established commercial quantities of gas which we would expect to have on stream during 1999. This new production will be a significant addition to our cash flow and also significantly diversifies our production between gas and oil. The Abu Monkar discovery in the southern area of our El Manzala concession also upgrades many other leads on the concession."
The Abu Monkar No. 1 well lies within the 840,000 acre El Manzala concession and is located approximately 160 km North of Cairo, Egypt. Centurion has a 40 percent working interest in this concession, the balance of ownership is held by a wholly owned subsidiary of Marathon International Oil Company.
The Abu Monkar discovery follows the successful re-completion of the El Wastani No. 1 well, which tested at 12 mmcf/d earlier this year. Centurion and Marathon have established a 1998 development program for the El Manzala concession. The program will include acquiring additional seismic on the Abu Monkar field for further evaluation and plans for drilling two locations - a second well onEl Wastani, and an exploration well on East El Wastani. These fields are expected to be on production by the end of 1999.
Gas in Egypt will be marketed through the existing network by tieing into a pipeline which runs through the El Manzala concession. Gas prices are estimated at $2.15 Canadian per mcf and have reached $3.62 Canadian per mcf over the past 12 months.
Centurion is currently producing 4,100 bbls/d from operations in Tunisia. Natural gas production from the El Manzala concession in Egypt is expected in 1999 which will provide a diversified portfolio of oil and gas production for the company. All 1998/99 exploration and development projects are expected to be funded through working capital and cash flow.
Ulster Petroleum Ltd. (ULP/TSE) has locked in very strong gas prices for 1998. The company has locked in 45 mmcf/d for the second half of the year at US$2.60/mcf, or C$3.82/mcf. Ulster has also restructured its other gas contracts in order to sell another 80 mmcf/d into the premium North American markets. As a result, Ulster has assured its self of an average natural gas price of C$2.50/mcf for this year. Unlike most of its competitors, Ulster is holding firm to its 1998 capital expenditures budget of $125 million, financed 81% from cash flow. The company will end 1998 at below 2.0x debt /cash flow.
Pacific Tiger Energy (PTE/MSE) is pleased to announce the results of the company's first well on its 20,000 acre SW1 concession, onshore Thailand. The well, WB-A1, is currently producing 150 BOPD.
Michael Cvetanovic, Pacific Tiger's President and CEO, expects the production rate of the new WB-A1 well to soon increase to over 250 BOPD.
"While the production rate is presently 150 BOPD, a significantly higher rate can be anticipated in the near future. WB-A1 production performance is currently inhibited by solution gas breakout in the downhole pump and this has severely reduced our pumping efficiency. The present performance of the WB-A1 well has close parallels with the early production history of the producing Wichian Buri-1 well where an identical problem of gas breakout occurred."
Wichian Buri-1 was put on production in June 1995 at an initial rate of 240 BOPD. Oil production rates from Wichian Buri-1 increased progressively over the first six months of production to over 330 BOPD as the gas in the production stream declined. Wichian Buri-1 is still currently producing over 200 BOPD and has produced a total of more than 270,000 barrels of oil. This same pattern of increased production is anticipated in WB-A1.
In addition, the company is pleased that the WB-A1 results indicate that there is considerably more net pay in the Wichian Buri Field than originally calculated. "These results will lead to a substantial expansion of our reserve base. These positive implications will dramatically effect our projected cash flow and project economics," Mr. Cvetanovic said.
Pacific Tiger plans to drill up to three additional wells in the current drilling campaign. The next well, WB-A2, well is expected to commence within the next few weeks.
"WB-A1 has established reservoir parameters that were uncertain prior to drilling. Consequently our next wells carry a very high probability of success. Our target is to increase production from the current 200 BOPD from the Wichian Buri Field to over 1000 BOPD in last quarter this year," said Cvetanovic.
In addition to the current development schedule Pacific Tiger is planning a Phase II drilling program to commence after the monsoon rain season in November. The company believes the Wichian Buri Field could contain an additional 6 to 10 low risk development drilling locations.
The WB-A1 well was the first well drilled and completed by Pacific Tiger. The well commenced drilling on May 6 and was drilled to a total depth of 1020 meters. The A1 well intersected the target 'F' Sandstone at a depth of 965 meters, as predicted from 3D seismic. Petrophysical data indicates 28 meters of gross hydrocarbon column and 21 meters of net oil pay. After completion operations, WB-A1 was placed on production June 10, 35 days from commencement at a cost within the budgeted expenditure of the well.
Commenting on the firm's future plans Cvetanovic added, "Our ability to successfully drill a low cost well and place it on production in such a short time period and on budget has been very well received in Thailand. With our success in Thailand we believe there exists a very attractive environment to acquire new acreage with similar potential to Wichian Buri. Pacific Tiger has recognized up to 10 additional exploration prospects and leads with reserves of 3 million to 10 million barrels that can be cost effectively drilled and exploited with extremely attractive risk/return characteristics."
Pacific Tiger Energy is a junior exploration and development company pursuing opportunities in the Asia Pacific region. With executive offices in Singapore and head office in Calgary the company is currently focused on exploitation of reserves in SW1, Thailand and a promising exploration block in New Zealand. It trades on the Montreal Stock Exchange under the listing symbol "PTE".
Union Pacific Resources Group Inc. (NYSE/UPR) today announced details of its participation in four successful wells recently completed on the Company's mineral-rich Land Grant acreage. In total, UPR's net production from the wells is approximately 28 million cubic feet per day (MMcfd) of natural gas and 500 barrels of oil per day (BOPD). The most prolific well, the Champlin 457 A No. 5, is located in the Whitney Canyon field in Uinta County, Wyoming. The Company owns a 33 percent net revenue interest (NRI) in the well which began producing at an initial rate of 60 MMcfd. The well was drilled as part of a program which has the goal of raising the inlet volumes at the Whitney Canyon plant from the current 200 MMcfd to 250 MMcfd.
"The completion of these wells on UPR's Land Grant acreage is an excellent addition to our production profile," said Jack L. Messman, UPR's Chairman and CEO. "The wells show that there are still significant production opportunities on our 7.5 million acre Land Grant. We are looking forward to the continuation of this drilling program, not only in the Whitney Canyon area but in all areas of the Land Grant."
The second Wyoming well is located in the East Painter Reservoir Unit in Uinta County. The East Painter 14-8AH is a new horizontal infill well which is producing 2,225 BOPD and 7.3 MMcfd. This is the fourth horizontal infill well drilled in East Painter area. UPR has a 22.5 percent NRI.
The third and fourth wells are located in Utah and are both in the Anschutz Ranch area of Summit County. The Anschutz Ranch 372 C-1 is an existing well which was re-entered as a horizontal well. The well has tested at a rate of 15.4 MMcfd. UPR owns a 36 percent NRI in the well. UPR and the operator are evaluating the area for similar opportunities.
The second Utah well is located in the Anschutz Ranch East field and is a new well. The ARE 29-04 was completed in the Nugget formation and is producing 7 MMcfd and 40 BOPD. UPR owns a 17 percent NRI in the well.
"UPR expects continued success in developing its larger fields in the Land Grant," said George Lindahl III, UPR's president and COO. "We will continue to exploit the Land Grant in 1998 and for many years to come."
Union Pacific Resources is one of the nation's largest independent oil and gas exploration and production companies. Based in Fort Worth, Texas, UPR has been the #1 domestic driller for the past six years and is the #1 gas producer in the state of Texas.
PanCanadian Petroleums Ltd. (PCP/TSE) said the company participated in a significant deep water discovery in the Gulf of Mexico. The Llano discovery well, drilled to a depth of 27,864 feet, tested at a rate of 100,000 bbls/d of oil and 300 mmcf/d and is estimated to hold over 220 million BOEs of reserves. Through a farm-in arrangement, PanCanadian holds a 20% working interest in this well as well as working interests ranging between 20% and 25% in three additional blocks adjacent to the Llano discovery. A follow up well on this prospect is planned for later this year.
Triple 8 Ventures Ltd. (TVU/) reported that The company has entered into a letter of intent to purchase 50% of the vendor's working interest in certain natural gas properties located in Southern Alberta for a purchase price of $350,000. The properties include, among other things, proved producing and proved non-producing gas wells. After closing, the Company and the vendor of the properties intend to bring the non-producing gas wells into production. The Company's share of the cost is expected to be approximately $150,000. The offer is conditional upon and subject to the Company obtaining satisfactory debt financing by the closing date of September 15, 1998.
The option to purchase one of the Company's Saskatchewan properties has been exercised and closing is expected to occur in the next 30 days. The Company has entered into a letter of intent for the sale of its petroleum and natural gas properties located in British Columbia. Closing is expected to occur in the next 6 weeks.
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