MARKET WRAP FOR DAY ENDING WED. 12/30/98 / With Focus On Canada + Oil & Gas (Page 4 of 6)
The TSE oil and gas composite added 0.2% or 11.05 points to 4498.22. Among the sub-components, the oil and gas services rose 2.4% or 32.02 to 1341.06. On the downside, the oil & gas producers fell 0.2% or 6.95 to 3913.83 and the integrated oils eeked out a loss of 1.97 points to 6954.91.
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Oil & Gas Charts - TSE 300
Oil & Gas Composite
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Integrated Oil's
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Oil & Gas Producers
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Oil and gas issues among the top 50 most active treaded issues included Petro-Canada -$0.20 to $15.95, Gulf Canada Resources +$0.55 to $4.15, Pacalta Resources +$0.25 to $4.35, Talisman Energy -$0.05 to $25.70, Fraqcmaster +$0.30 to $4.50, Canadian Occidental Petroleum -$0.55 to $15.35, Renaissance Energy -$0.25 to $16.75 and Remington Energy $0.35 to $4.95.
Gulf Canada Resources Ltd. stock got a boost after John Clarke, an energy analyst at Deutsche Bank Securities, raised his recommendation to "accumulate" from "hold." Yesterday the TSE oil & gas subindex rose 11.05 points, or 0.3%, to 4498.22. Since its 52-week low on Sept. 1, the subindex has climbed a mere 3.3%, compared with the TSE 300's 16% rise in the same period.
Among top gainers, Enerflex Systems gained $1.50 to $28.00, Northstar Energy $1.00 to $44.00, Lundin Oil AB $0.75 to $3.25, Canadian Hunter Exploration $0.60 to $10.25, Gulf Canada Resosurces $0.55 to $4.15 and Prudential Steel $0.45 to $6.80.
Net losers included westminster Resources $0.65 to $5.75, Canadian Occidental Petroleum $0.55 to $15.35 and Alberta Energy $0.40 to $32.70.
Percentage gainers included Lundin Oil AB, Rider Resources, Gulf Canada Resources, Upton Resources, Kookaburra Resources, Ocelot Energy B, Petrobank, fracmaster, Prudential Steel and Probe Exploration.
Percentage losers included Westminster Resources, CE Franklin, Newport Petroleum, Ryan Energy Tech, Remington Energy, Phoenix Canada, Summit Resources, Pason Systems, Magin Energy, Enertec Resource Services and Peak Energy Services.
There were no new highs among oil and gas issues. Canadian Conquest Exploration, Canadian Crude Separators, Computalog, Enertec Services and Ranger Oil slumped to new 52-week lows.
Other Canadian Stock Exchanges
The Montreal Stock Exchange's portfolio index fell 1.3% or 45.23 to 3311.45 on slow volume of 7.7 million shares worth a value of $66.1 million. Advancing issues outnumbered decliners 173 to 149 with 319 unchanged. Twelve issues reached new highs while 2 issues reached new lows. The MSE oil and gas portfolio fell 0.3% or 5.03 to 1947.42.
Five issues traded over 100,000 shares and included Bombard B -$0.35 to $21.65, DTM Info Tech +$0.25 to $2.00, Cambridge Shp $-0.40 to $12.60, Domtar +$0.20 to $8.55 and Molson A, unchanged at $21.50.
Among oil & gas issues, Gulf Canada Resources +$0.46 to $4.10, Crestar Energy -$0.85 to $12.25 and Talisman Energy +$0.25 to $25.90 were among the most active traded issues.
Top gainers included Suncor Energy $0.55 to $44.40, Gulf Canada Resources $0.46 to $4.10 and Poco Petroleums $0.35 to $12.25.
Among the net losers were Crestar Energy, down $0.85 to $12.25 and Canadian Occidental Petroleum $0.30 to $15.45.
Top percentage gainers included Ocelot Energy B, Gulf Canada Resources and Fracmaster. Crestar Energy made the percentage losers list.
The Vancouver Stock Exchange's composite indicator index gaained 0.9% or 3.26 to 383.04. The mining indicator index also rose 1.0% or 2.86 to 288.50. Volume was a moderate 17.5 million shares worth $10.3 million. Advancing issues outnumbered those that declined, 220 to 197 and another 224 issues were unchanged. Six issues reached new highs while 25 sank to new lows.
Four issues traded over 200,000 sharesand they were Winspear Resources +$0.09 to $3.94, Polymet Mining +$0.28 to $1.35, Argentina Gold -$0.05 to $5.10 and Morgain Minerals +$0.01 to $0.37.
The most active traded oil & gas issues included Equatorial Energy, unchanged at $0.40 and Ultra Petroleum +$0.06 to $1.22.
Humbolt Capital gained $0.29 to $0.95, BPI Industries rose $0.21 to $1.38. Oil & gas issues were not among the top net losers.
Percentage gainers included Humbolt Capital, Osprey Energy an AB Geoscience. Shamrock Resources made the list of percentage losers.
The Alberta Stock Exchange's combined total index gained 1.5% or 24.96 to 1725.28. This gain came on the heels of Tuesday's healthy gain of 1.5% or 24.63 points to 1700.82 on volume of 11.7 million shares. On Wednesday, 9.5 million shares traded worth a value of $3.1 million. A total 346 issues traded with 126 advancing, 96 decflining with another 124 unchanged. There were seven new highs and ten new lows.
Six issues traded over 75,000 shares and included Sepik Gold -$0.02 to $0.28, TCR Environmental -$0.09 to $0.80, Prize Enrgy -$0.05 to $0.35, Comac Food B unchanged at $0.25, Bluestar Battery +$0.25 to $1.85 and KeyWest Energy unchanged at $0.70.
In addition to Prize Energy and KeyWest Energy, Anvil Resources +$0.01 to $0.46, Parkcrest Exploration +$0.05 to $0.28 and Bakrie Minarak Energy +$0.10 to $0.75 made the top 25 most active traded issues listing.
Among top net gainers were Redwood Resources $0.20 to $0.70, Edge Energy $0.19 to $2.45, Westlinks Resources $0.15 to $0.45, red Sea Oil $0.13 to $1.23, Bakrie Minarak Energy $0.10 to $0.75, Lexxor Energy $0.10 to $0.35 and Northline Energy $0.10 to $1.35.
Net losers included Solid Resources $0.30 to $6.75, Surefire Energy $0.07 to $1.00, Mera Petroleum $0.05 to $0.90, Prize Energy $0.05 to $0.35, Reliance Services Group $0.05 to $0.70 and Scarlet Exploration $0.05 to $0.32.
Top percentage winners included Westlinks Resources, Lexxor Energy, Redwood Resources, Circle Energy, Parkcrest Exploration, Bakrie Minarak Energy and Delaney Energy.
Percentage losers included Scarlet Exploration, Reliant Services Group and Sunfire Energy.
Hot Stocks
Jeweller's Internet play adds sparkle to stock
OnLine shopping: D.G. Jewellery president 'shocked' by market reaction
By Kim Hanson - The Financial Post
Toronto-based D.G. Jewellery of Canada Ltd. raised a few eyebrows yesterday after its stock price surged on news it plans to sell jewelry on the Internet by next February.
D.G. Jewellery, which is listed on Nasdaq and the Boston Stock Exchange, and markets mostly mainline discount jewelry, was flooded with calls after its share price briefly soared to a high of $9 1/2 (all figures in U.S. dollars) in early trading.
The shares of the company, little known to the Canadian investment community, closed at $5 on heavy volume of about 515,100 shares. Tuesday's close was $4 1/2.
"I was shocked," said Jack Berkovits, D.G. Jewellery's president and chief executive. "We did not expect this market reaction.
"In the last four months not one of our announcements have created a stir and this announcement was supposed to be a goodbye kiss for the year," added Mr. Berkovits, who is on vacation in Florida.
The Web site, which should be up and running by Feb. 1, is expected to attract everyone from department store shoppers to high-end jewelry buyers, he said. Online shoppers will also be able to choose the size, style, and price they want.
About 90% of D.G. Jewellery's sales are generated through two of its U.S.-based subsidiaries, but the company has been busily expanding its presence in Canada and will apply for listing on the Toronto Stock Exchange in 1999, Mr. Berkovits said.
The company has posted record profit in the last quarter and signed a six-year contract in November with Zellers Inc. to market rings and other fine jewelry.
D.G. Jewellery joins other online retailers that have watched their share price rise because of the perceived potential to benefit from online shopping services.
But some industry watchers say e-commerce or online shopping may be just a fad that could eventually become passe.
"E-commerce or shopping on the Internet is the Viagra for retail marketing. All of a sudden it's a magic drug," said retail consultant Len Kubas of Kubas Consultants in Toronto.
"Online shopping might not have long-lasting effects as more and more retailers go online. But it is certainly indicative of this unusual interest and value being placed on going online."
But Mr. Kubas anticipates other Canadian retailers will feel compelled to create online services.
"If they're not online they will be. I don't think that there will be one retailer in Canada that won't have a Web presence in 1999," he said.
Forrester Research Inc., a Massachusetts-based technology research firm, says online retail revenue in North America will grow to $17.4-billion by 2001 and Internet sales of jewelry will grow from $78-billion in 1999 to $140-billion by 2001.
Market Stories
Heady Valuations Coming To An End
Consolidation ahead: Research group sees mergers of portal and media firms
By Ian Karleff - The Financial Post
The era of gravity-defying Internet stock valuations will come to an end in 1999, information technology research firm International Data Corp. predicted yesterday.
At the same time, another firm noted a new batch of Internet stocks will make their debut early in the new year.
IDC's prediction proved to be self-fulfilling -- if a few days early -- as investors bailed out of the high-flying sector.
Even America Online Inc. (AOL/NYSE) -- the newly crowned Internet bellwether that come January will be a member of the Standard & Poor's 500 -- fell $5 1/4 to $148 (all figures in U.S. dollars).
Internet auction companies suffered the largest losses, with eBay Inc. (EBAY/NASDAQ) falling 8% to $252 7/8, uBid Inc. (UBID/ NASDAQ) losing $24 1/2 to close at $119, and Toronto based Bid.com International Inc. (BII/TSE) shedding 30c to $3.80 (Cdn).
Online auctioneers' stocks have been market wonders since going public, with eBay rising as much as 1,627% from its initial public offering price of $18, and uBid hitting a December high of $189, which was 1,160% higher than its $15 IPO. Both are among the top 10 biggest gainers recorded by U.S. stocks on their first day of trading, according to Securities Data Co.
Securities Data also said that 14 initial public and secondary offerings are registered with the U.S. Securities & Exchange Commission. Some of these are equity carve-outs by established firms, including Marketwatch.com, 50%-owned by CBS Corp., and ZDNet, which is now owned by publisher Ziff-Davis.
In its fourth annual report of Internet predictions, IDC said the impending market correction will create winners and losers in the Internet market, intensifying competitive pressure and forcing companies to consolidate.
Frank Gens, IDC's senior vice-president of Internet research, thinks likely mergers could include leading Web portal Yahoo Inc. (YHOO/NASDAQ) joining media companies such as Time Warner Inc. or CBS.
As recently as July, Time Warner chairman Gerald Levin said the company had no interest in buying Internet companies such as Yahoo. A CBS spokesman said the company does not comment on speculation.
Portal or search engine stocks lost a substantial amount of ground yesterday, with Yahoo topping the net loss leaders, down $25 3/8 to $244 5/8 and Excite Inc. (XCIT/NASDAQ) off $4 1/16 to $44 1/4.
Mr. Gens also said online broker ETrade Group Inc. could sell out to a large financial firm such as Citigroup Inc. or Wells Fargo & Co., and software giant Microsoft Corp. might buy a major Web portal. Spokesmen for the companies in question were not immediately available for comment.
ETrade (EGRP/NASDAQ) fell $9 5/16 to $50 13/16 , after earlier this week lighting a fire under the stocks of brokerages with online affiliations -- including Toronto-Dominion Bank, owner of Waterhouse Securities -- with news it had attracted 500,000 members to its information Web site.
The Internet will change dramatically in the way it affects day-to-day life, IDC said. The firm predicts that many retailers will provide Web access through kiosks in their stores, while live salesmen will be available on retail Web sites.
"Not having an Internet presence and an Internet commerce strategy is a recipe for market share loss," Mr. Gens said. "In the U.S. market, starting in 1999, the virtual market is reality."
"E-tailer" stocks were not spared yesterday's carnage, with book retailer Amazon.com Inc (NASDAQ) down $11 1/16 to $32 11/4. One of the newest entrants to the Internet party, airline catalogue firm SkyMall Inc. (SKYM/NASDAQ), plummeted $13, or 32%, to $27 3/4.
Going against the grain of losing Internet plays was infrastructure software developer Inktomi Corp. (INKT/NASDAQ), up $5 to $132. The firm said it had approved a two-for-one stock split for shareholders of record as of Jan. 12. Since going public on June 10, 1998, at $18 a share, the stock has appreciated 715%.
IDC predicted PC prices would drop to the $400 range and be present in over half of U.S. households, Internet use would jump to 147 million users, and Internet commerce would more than double to $68-billion. Demographics would change in 1999 as women broke through the 50% mark, and for the first time more than half of Internet users would live outside the United States.
The Bubble May Be About To Burst, Experts Warn
Internet roulette: Small investors 'taking a big risk playing this market'
By David Akinv- The Financial Post
All year long, sober, reliable financial advisors have been telling whoever cared to listen that the Internet bubble surely had to burst and it would do so very soon.
But like children ignoring admonitions to stay away from the cookie jar, investors in 1998 couldn't get enough of anything connected with the Internet.
The experts are still forecasting a falling out in the new year. Surely, they say, there must be a coming to terms with the nosebleed valuations of firms such as eBay Inc., Amazon.com, and Yahoo Inc.
Dan Gillmor, an influential Silicon Valley columnist with the San Jose Mercury News, said as much in his year end wrap-up: "If you are a small investor and playing this market with money you really can't afford to lose, you are nothing but a gambler. You may win. But you are playing a fool's game. Don't expect much sympathy if you lose."
OK. But how can you resist a sector where prices are doubling every month?
Take eBay (EBAY/NASDAQ), operator of a wildly successful online flea market. It went public on Sept. 24 and three months later investors have taken the stock up as much as 1,627%. The company, now worth $11-billion (US), has almost caught up to that of 91-year-old Kellogg Co.
Sales at Kellogg for the first three quarters of 1998 were $5.2-billion (US). EBay had sales for the first nine months (its yearend 1998 results will be released on Jan. 26) of only $12.9-million (US).
Meanwhile, Amazon.com (AMZN/NASDAQ), an online bookseller, just kept rolling along. Even though the company has not made a penny for its investors, its stock is not quite 1,000% higher than a year ago.
The market cap of America Online Inc. (AOL/nyse) is about $70-billion (US), making it bigger than Walt Disney Co. AOL shares gained more than 550% in 12 months.
Yahoo (YHOO/NASDAQ) was up 606%, Excite Inc. (XCIT/NASDAQ) was up 198%, and even Microsoft Corp. (MSFT/NASDAQ) rose 115% in the year, despite its legal troubles.
Some Canadian high-tech firms also did well this year.
Investors warmed back up to Corel Corp. (COS/TSE) giving its share price a 165% jump to date. The stock rose 10c to close at $6.10 yesterday.
SoftKey Software Products Inc. (SSK/TSE) jumped 51.8%; and Bid Com International Inc. (BII/TSE) was up 24.6%.
CGI Group Inc. of Montreal (GIBa/ME) is a favourite of Josef Vejvoda, technology analyst at Levesque Beaubien Geoffrion Inc. in Toronto. Its share price soared 144% in 1998 to close yesterday at $29.75, up $1.30. Despite a high multiple, he has a 12-month price target of $38.
"Look at how much CGI has in backlog. It's like $4.5-billion. From this year to next year, it's guaranteed to double revenue and earnings. People say, 'That's a little aggressive, Joe' but no, it's not. If you look at the backlog, work is guaranteed for five- or 10-year contracts.
"Worst-case scenario here is if someone cancels one of those contracts, they would have to pay CGI a one-year penalty. So if everyone cancels CGI still doubles their revenue and earnings."
Still, it wasn't all sunshine and roses for everyone in high tech. Hummingbird Communications Ltd. (HUM/TSE), whose share price this week is 34.6% lower than it was during the last week of 1997, was among the losers. It closed yesterday off 40c at $30.10. Other year-over-year losers include PC Docs Group International Inc. (DXX/TSE), which was down 17.4%, and Metrowerks Inc. (MWK/TSE), which lost 54%.
Certicom Corp. (CIC/TSE) of Mississauga, Ont., had an awful 1998, losing 68% of its share value year over year.
But the company is poised for big things in 1999, Mr. Vejvoda says. It holds the patent on one of two standard cryptography methods and has contracts to supply major players like Motorola Inc. and 3Com Corp. with software tools enable computer users, for instance, to complete financial transactions over a wireless portable handheld device.
While he expects Certicom to post losses for the first two quarters of 1999, he says the royalty cheques the company will receive should add up to a healthy profit by yearend.
Mr. Vejvoda has a 12-month target for Certicom of $30. The stock closed trading yesterday down $1.20 to $13.80, rebounding from a 52-week low of $8 hit on Dec. 14. "The potential for now until the end of the year is huge."
The share price of giant software maker Geac Computer Corp. Ltd. (GAC/TSE) of Markham, Ont., lost almost 16% year-over-year but he thinks the company will do better in 1999 and has placed a 12-month target of $50 on its share price. It gained 25c yesterday to close at $39.85.
"Geac is one of the safer blue chips. It's Canada's largest software company. It's in the [TSE 300] index. Its earnings are real earnings. They are profitable. They have a couple of hundred million dollars in cash in the bank. Half the revenue comes from maintenance contracts which are secured," Mr. Vejvoda says. "It's a steady cash producer."
Investors looking at high-tech plays, however, should be aware that 1999 could be a watershed year for the industry as it struggles to deal with two monstrous headaches: rejigging software to account for the euro and to bypass the year 2000 (Y2K) problem. How the industry deals with these issues will largely determine the success or failure of many firms.
Oil & Gas Related
TCPL To Spin Off Stake In Pipeline
Could raise hundreds of millions by selling units of new company that holds Northern Border asset
Janet mcFarland - The Globe and Mail
TransCanada PipeLines Ltd. will spin off its stake in the giant Northern Border pipeline to the public, a deal that could raise hundreds of millions of dollars.
TransCanada said yesterday that it has transferred its 30-per-cent interest in the pipeline to a new company, TC PipeLines LP, and will sell units of TC PipeLines to the public. It will sell 78.2 per cent of TC PipeLines and retain the remaining 21.8-per-cent ownership.
The company would not disclose how much money it expects to raise by selling its stake in the Northern Border pipeline until the offering price has been determined. But a project this year, which expanded the pipeline's capacity by 41 per cent, cost $837-million (U.S.) to complete.
The share offering comes at a hot time for pipelines connecting Western Canada into the lucrative midwestern U.S. market.
Northern Border's expansion this year -- which extended its reach from Iowa into the Chicago area -- was the first of two projects aimed at moving gas from Western Canada to Chicago. The other is the $4-billion (Canadian) Alliance Pipeline project, scheduled to begin construction in 1999.
Northern Border now supplies 20 per cent of the gas used in the Chicago area, making it a key asset of TransCanada.
Spokesman Gary Davis said TransCanada does not have any specific plans for the funds it will raise from the public offering.
"It's more a matter of unlocking the value of our U.S. assets."
He said TransCanada also has important plans to use TC PipeLines LP to hold other U.S. investments, such as its 50-per-cent interest in the Tuscarora pipeline, which runs from Oregon to Nevada.
"We've decided to establish our own limited partnership for our U.S. based assets, with Northern Border being the first asset to be monetized through the LP," Mr. Davis said.
"The important thing about this LP is that we are establishing what we consider to be an excellent strategic vehicle for our U.S. assets and for our continuing activities in the U.S."
The company said yesterday that it has filed a registration statement for TC PipeLines with the U.S. Securities and Exchange Commission, and will sell 15.64 million units, with an overallotment option of another 2.35 million units.
The 1,560-kilometre Northern Border pipeline began operations in 1982 and extended from the Saskatchewan border to Iowa. The expansion project this year, which began delivering gas on Dec. 22, added another 392 kilometres to the pipeline and extended its reach to Chicago.
The other 70 per cent of the pipeline is owned by a consortium of large U.S. energy companies operating as Northern Border Partners LP. They include Enron Corp., Duke Energy Corp. and Williams Cos.
The share offerings will be underwritten by Goldman Sachs & Co., Salomon Smith Barney, Merrill Lynch & Co., Morgan Stanley Dean Witter & Co., and PaineWebber Inc.
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