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

To: BigBull who wrote (68714)	6/23/2000 6:35:00 PM
From: BigBull	Read Replies (1) \| Respond to of 95453

Norway Oil Strike Ends But Unions Vow to Carry on slb.com

To: BigBull who wrote (68714)	6/23/2000 8:28:00 PM
From: Big Dog	Respond to of 95453

On EEX, by John S. Herold, Inc. EEX?S SWING FOR THE FENCE Badly lagging its peers in stock market performance through much of 2000, EEX common share price has nearly tripled from its 4-20-00 low of $2.12/share. The stock market had been expressing concern over the difficulties being encountered in drilling their Llano prospect (30% EEX) in the deep water GOM and the indicated $60MM cost of the Llano 3 delineation well underway since last fall. The well is currently drilling below 23,000 ft. and has been cased to this point. The stock seemed to come to life in the wake of the NAPIA meeting in Halifax, Nova Scotia, in mid-May when Pan Canadian (20% interest in Llano), during its presentation, affirmed its belief that the field could contain 200MMbbl (gross) of oil and be on production by early 2002. Although EEX gave a limited update on Llano on 5-2-00, including a statement that ?they observed hydrocarbon-bearing sands that appeared to correlate to, be thicker than, and be structurally high to the uppermost pay sands observed in the Llano 1 well?, the stock market remained sceptical about the economic viability of this project. The market also seemed to ignore 16 of 17 natural gas drilling successes during the first quarter on properties acquired from Tesoro and the $0.69/share of CE generated during that period. Currently, EEX is producing 150-155MMCF/d of gas (about one-half at $2.50/MCF due to earlier hedge) and 2,000 b/d of oil in the U.S. plus 5,500 b/d of oil in Indonesia. These production figures are expected to improve by upwards of 5% by year-end and lead to year 2000 CE of $3.50/share, if not better. The market is also awaiting a definitive decision on their 60%-owned, currently idle, floating production and 54-mile pipeline system (FPS). Approval has apparently been given by 40% partner Exxon Mobil to offer it for lease (estimated gross day rate $60,000/day). This would substantially offset a current drag on income for them. However, most important to the market will be an update of results from Llano, which should be forthcoming by early July. Meanwhile, the deeper ?miocene? sand target is expected to be reached in late July. Depending on these results, three 30% EEX interest offsets to Llano (Travis, Bowie and Devils Island ? 390MMbbl gross potential) are in their drilling sights, with one or more expected to be drilled this year. At the same time, in a separate mini-basin 10-miles to the south of Llano, EEX?s Mason prospect (40% interest) will be farmed out. Here, an interest has reportedly been expressed by Murphy Oil. With EEX?s capital expenditures now expected to be largely met from CE of $150MM in 2000 ? courtesy of strong U.S. gas prices ? the stock market currently appears to be a bit more comfortable with EEX?s ?swing for the fence? approach to build shareholder value from the deep water GOM. As usual, time and tide will tell. -- John B. Parry