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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (68708)	6/23/2000 4:30:00 PM
From: Tomas	Respond to of 95453

The oilpatch takeover fever expected to continue - Calgary Herald, June 23 By Chris Varcoe and Stephen Ewart The oilpatch spent more than $10 billion in a takeover frenzy this spring and experts are predicting a binge of bargain-hunting this summer. Since April, big names such as Ranger Oil Ltd., Renaissance Energy Ltd., Ulster Petroleums Ltd., Northrock Resources Ltd., Newport Petroleum Corp., and Plains Energy Services Ltd. have been snapped up. "There is a demand from the market to concentrate the assets," analyst Jim Huang of Altamira Investment Services said of the shopping spree worth at least $10.3 billion in cash, stock and assumed debt. "Everybody has weaknesses . . . and they can address it though consolidation." It is a trend that is running through the entire sector. On Thursday, tiny Search Energy Corp. made a $28-million bid for Palliser Energy Corp. in a deal that will boost its production by 25 per cent and improve efficiency in its core operating area. "The way the market is consolidating, running an oil and gas company is like running up a down elevator," said Search chief executive Bill Davis. "Your legs really have to be pumping . . . You have to get bigger and you have to get better." With companies pocketing extra cash from high oil and natural gas prices, the natural inclination is to expand. While most of the so-called weak sisters in the Canadian oilpatch have been bought, the experts said another round of consolidation is coming as producers continue to trade at low stock prices compared to net asset values. Companies on the auction block or looking at options to boost shareholder value include Beau Canada Exploration Ltd., Maxx Petroleum Ltd. and Westminster Resources Ltd., all of Calgary. Senior producers Crestar Energy Energy Inc. and Gulf Canada Resources Ltd. are often mentioned as possible takeover targets, but both represent big-ticket purchases that only a few larger corporations could handle. American companies continue to shop north of the border because the exchange rate makes their Canadian counterparts relatively cheap. As well, Western Canada has seen far less exploration for gas than the United States. "We feel like the potential is here to grow," said Dennis Fagerstone, executive vice-president of Pioneer Natural Resources Inc., the Texas-based independent that took over Chauvco Resources Ltd. two years ago. High oil and gas prices are also driving the mergers and acquisitions, since many energy companies now have a stockpile of excess cash. Terry McCoy, president of Burlington Resources Canada Energy Ltd., said he continues to search in Canada for natural gas acquisitions -- particularly in the western parts of the basin -- although prices are beginning to climb. "Our acquisition group is looking at various companies and assets," said McCoy, whose company bought Poco Petroleums Ltd. for $3.7 billion last year. "BR has a strong focus towards growth and Poco was used as a platform for further growth in Canada." For the most part, the depressed stock valuations mean buyers are looking at entire companies rather than assets. "It's a quick and cheap way of growing and you don't have to drill a single hole," said Jeff Fiell, oil analyst at Canaccord Capital Corp. And all the takeovers are changing the entire face of the oilpatch. As big companies disappear, one-time intermediates such as Rio Alto Exploration Ltd., Penn West Petroleum Ltd. and Canadian Hunter Exploration Ltd. have matured and joined the category of big-cap stocks. Meanwhile, fast-growing juniors such as Cypress Energy Inc. and Bonavista Petroleum Ltd. are graduating into the intermediate ranks. "It's a cycle and I'm quite confident that the number of (corporate) names and the size of names will grow again in the next stage of the cycle," said analyst Wilf Gobert of Peters & Co. "We're still in the consolidation stage." calgaryherald.com