IN THE NEWS / Lost Hills Find Sparks Stock Activity
Filed: December 9, 1998
By BOB CHRISTIE
Californian staff writer
The oil-well explosion near Lost Hills may have extinguished itself, but there's no doubt the possibility of a big find is fueling a raging sale among selected Canadian oil stocks.
Stocks in several of the Canadian oil and gas companies involved in the blown-out well tumbled Wednesday after increasing in value by leaps and bounds during the two weeks the well was blazing. Some of the stock prices increased nearly 500 percent before taking big hits — as much as half — as the news of the flameout hit the Canadian exchanges Wednesday.
"Obviously the run-up was on the expectation of a significant gas find," said Alan Knowles, an analyst with Research Capital Corp. in Calgary. "There were a lot of numbers floating out there, from 1 trillion up to 3 trillion cubic feet of natural gas, and higher."
That bubble burst with the news Tuesday afternoon that the fire had gone out after the well began spewing a greater percentage of water. Stocks in the more speculative companies fell by 50 percent in trading on the Vancouver and Toronto stock exchanges Wednesday.
There are eight Canadian companies invested in the well, one American publically traded company and two private oil and gas firms.
Two of the Canadian firms — Berkley Petroleum Corp. and Paramount Resources Ltd. — have assets of nearly $1 billion; their stock prices decreased in the past two weeks because the well isn't as significant to their potential profits as the state of the world oil market, which has grown gloomier, Knowles said.
Three lesser players — Elk Point Resources, Inc., whose subsidiary, Bellevue Resources Inc., is the well operator, Richland Petroleum Corp. and Westminster Petroleum Ltd. — are smaller companies with significant other holdings.
The stocks of these companies increased from 50 percent to 129 percent in the past two weeks before falling again Wednesday.
The really high flyers, both on the upside and on the downside, are the three Canadian companies whose main asset is an interest in the well. One in particular, Kookaburra Resources Ltd. had a stock price increase of 480 percent over the two-week period before plummeting again to about 100 percent above its price before the blowout.
Regardless of the volatility of the stocks, some investment advisers are saying they remain confident that the well could hold significant potential. At Yorkton Securities Inc. in Vancouver, vice-president Tim Bowes wrote in his daily investment report Wednesday morning that his company "still believes there are enough positive signs coming from the well (pointing) to a significant find."
The flow of water that put out the fire simply reinforces Yorkton's view that the field could be an important find, but should be considered only a possible discovery at this point.
The investment activity actually spurred a Vancouver TV station to come to Bakersfield and file reports Tuesday and Wednesday. The Californian's bakersfield.com Web site has been monitored by many Canadian investors.
The well blew out and caught fire on Nov. 23, and shot a huge flame into the sky for more than two weeks before it went out Tuesday afternoon. Water, gas and oil continues to spray skyward in an uncontrolled flow from the well, drilled to a depth greater than 17,000 feet.
At the well site Wednesday, crews from Boots & Coots International Well Control fitted a new well head to well casing.
This morning, they are expected to move in a new blowout preventer and cap the well itself, diverting the flow of natural gas and condensate, oil and water into two burn pits, said Jim Fox of Driltek of Bakersfield, who is managing the site for operator Bellevue.
In coming days, they will hook up accumulators to collect the hydrocarbon liquids and water, while attempting to burn off any natural gas.
The relief well that has been planned is now expected to begin drilling in three to four days.
That well will be drilled to more than 13,000 feet before the bit is turned to intercept the blown-out well. |
