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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Scott Mc who wrote (3991)	10/28/1997 11:01:00 PM
From: sPD	Read Replies (1) \| Respond to of 24934

Boom year forecast for energy exploration Tuesday, October 28, 1997 By CLAUDIA CATTANEO Calgary Bureau Chief The Financial Post Western Canada's booming energy industry is headed for even higher levels of drilling in 1998, according to a forecast compiled for the Petroleum Services Association of Canada. The survey, released yesterday, estimates 16,300 oil and gas wells will be drilled next year, up from this year's record of 14,700. Sector revenues are expected to swell to $6.2 billion, up from $5.1 billion this year. While heightened activity is a bonus for already buoyant services companies, it is also fueling a level of "oilfield inflation" that could make higher-cost oil and gas producers more vulnerable. "Producers that are likely going to be weakest are the ones that can't control their costs, and even those that are, are going to experience higher costs," said Robert Hinckley, a Canadian oil and gas producer analyst with Merrill Lynch & Co. in New York. "You have already seen some companies disappear from the scene. Those were the early casualties. "Unless we get at least a dollar increase in oil prices and increasing gas prices, there will be companies that get into problems next year." The forecast predicts that the industry will drill 9,061 oil wells, 3,957 natural gas wells, 2,782 dry wells and 500 service wells in 1998. Drilling focused on natural gas is up only moderately at this point, but activity could escalate late in the year, and into 1999, if plans to build new pipelines are approved, said association president Roger Soucy. It will be a challenge for the sector, already struggling with equipment and staff shortages estimated at 1,000 to 2,000 unfilled positions, to keep up with industry demand. "Right now, we have jobs open for warm bodies and we can't find them," said Soucy. "And these jobs are paying $40,000 to $50,000 a year, if you are prepared to put in the time," he said. More drilling doesn't mean an increase in overall production because of aging oilfields. However, it allows the industry to maintain production at current levels, against earlier forecasts calling for declines, Soucy said. The boom should mean a continuation of the strong results posted by services companies this year - unless prices increase to a level where producers will simply hold back and look at growth options from other sources. It also means oilfield services firms, in need of capital to fund expanding programs, will tap the markets for more equity, Soucy added. ======= Note: some Canadian companies have costs at $2/barrel and as a bonus, have their income in US$. Check out Sharpe Resources' latest release at exchange2000.com