MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY DECEMBER 11, 1997 (4)
The Toronto Stock Exchange 300 Index fell 1.6% or 109.60 to 6644.93.
Oil related shares got clobbered. In comparison, the Oil & Gas Composite Index fell 2.7% or 186.85 to 6630.25. Of thesub-components, the Integrated Oils lost 1.5% or 136.30 to 8885.63. The Oil & Gas Producers fell 3.0% or 178.82 to 5849.05. The Oil & Gas Services lost 5.0% or 164.42 to 3108.20.
Ranger Oil, Beau Canada Exploration, Alberta Energy, Gulf Canada Resources, Poco Petroleums, Petro-Canada, Renaissance Energy, Amber Energy, Startech Energy, Abacan Resources, Orbit Oil & Gas, Talisman Energy and Canadian 88 Energy were among the top 50 most active traded issues on the TSE.
Comstate Resources gained $0.40 to $2.75 and Poco Petroleums $0.40 to $11.70.
Percentage gainers included Comstate Resources 17.0% to $2.75, Pjoenix Oil Canada 6.7% to $1.60, Optima Petroleum 6.1% to $1.75, Newstar Resources 4.0% to $5.20 and K-2 Energy 3.8% to $1.35.
On the downside, Gulfstream lost $3.25 to $6.55, Amber Energy $2.20 to $19.80, Chauvco Resources $1.25 to $19.75, Pinnacle Resources $1.25 to $17.95, Alberta Energy $1.05 to $27.35, Petro-Canada $0.95 to $26.00, Pacalta Resources $0.90 to $16.50 and Canadian Occidental Petroleum $0.85 to $33.15.
Percentage losers included Gulfstream Resources 33.2% to $6.55, Seventh Energy 21.7% to $0.90, Tethys Energy 16.0% to $2.10, TUSK Energy 14.3% to $0.90, Abacan Resources 12.0% to $1.98, Amber Energy 10.0% to $19.80, Oiltec Resources 9.5% to $2.85, Bellator Exploration 9.3% to $2.45, Post Energy 8.9% to $3.60, Suymmetry Resources 8.7% to $1.05 and Canrise Resources 8.3% to $5.50.
There weren't any service companies listed among the top 50 most active traded issues on the TSE or among the top net gainers and percentage gainers.
On the downside, Precision Drilling dropped $3.15 to $34.85, Dreco Energy Services $2.90 to $46.00, Ensign Resource Services $2.10 to $37.00, American ECO $1.20 to $14.00 and Enerflex Systems $1.00 to $33.00.
Percentage losers included Geophysical Micro 21.1% to $1.20, Precision Drilling 8.3% to $34.85 and American ECO 7.9% to $14.00.
Out west on the ASE, Meota Resources A, red Sea Oil, NTI Resources, Bearcat Exploration, Stellarton Energy A, Pason Systems, Cirque Energy, Gold Star Energy, Oilexco, Electra Energy, Bolt Energy, Scimitar Hydrocarbons, Enterprise Developement and Jerez Energy were among ther top 30 most active traded issues.
Hyduke Capital Resources gained $0.40 to $3.50, Stellarton Energy A $0.25 to $5.00, Sunburst Oil & Gas $0.21 to $1.00, Red Sea Oil $0.12 to $2.90, Cubacan Exploration $0.10 to $0.41, Green Maple Energy $0.10 to $0.40, Kensington Energy $0.10 to $1.55, Proprietary Energy $0.10 to $2.45, Veteran resources $0.10 to $0.70, Algonquin Petroleum $0.09 to $0.19 and ICE Drilling $0.09 to $0.99.
Percentage gainers included Green Maple Energy 33.3% to $0.40, Cubacan Exploration 32.3% to $0.41, Sunburst Oil & Gas 26.6% to $1.00, Enterprise Developement 20.0% to $0.20, Veteran Resources 16.7% to $0.29, Cascade Oil & Gas 14.3% to $0.40, Hyduke Capital Resources 12.9% to $3.50 and Canadian Talon Resources 12.2% to $0.46.
On the downside, Pason Systems fell $1.15 to $6.35, Capco Resources $1.00 to $4.00, Raider resources $0.46 to $0.80, Arrival Energy B $0.25 to $2.00, Newquest Energy $0.25 to $5.40, AltaQuest Energy $0.20 to $2.50, Venator Petroleum $0.20 to $1.75, Arrival Energy A $0.15 to $2.20, Colony Energy $0.14 to $2.15, Bolt Energy $0.13 to $0.60, Scarlet Exploration $0.13 to $1.14 and Brandon Energy $0.10 to $0.70.
Percentage losers included Raider Resources 36.5% to $0.80, AC Energy 34.0% to $0.16, Capco Resources 20.0% to $4.00, Bolt Energy 17.8% to $0.60 and Pasin Systems 15.3% to $6.35.
HOT STOCKS
Gulfstream Resources Canada Ltd. (GUR/TSE), down $3.25 to $6.55, on volume of 123,620 shares. The Toronto Stock Exchange halted trading of Gulfstream shares after they lost almost one-third of their value.
Ranger Oil Ltd. (RGO/TSE), down 50› to $9.90, on volume of 4.7 million shares. A glut of heavy oil is depressing prices and causing producers to shut down higher-cost facilities. This is bad news for Ranger, which earlier this year acquired major heavy oil assets. The price differential between light and heavy crude has widened to more than $8 a barrel from $6.50 in October. Shell Canada Ltd. and Gulf Canada Resources Ltd. are expected to decide next year whether to build heavy oil upgrader plants in Alberta.
Westcoast Energy Inc. (w/TSE), down 5› to $33.20, on volume of 429,788 shares. Westcoast said Wednesday that two of its units, Union Gas Ltd. and Centra Gas Ontario Inc., will amalgamate. The new company will be called Union Gas Ltd.
I will take credit for identifying weeks ago that the following situation outlined in todays edition of the Financial Post was going to take place. Actually, street talk passed on to me from several sources deserve the credit. I also feel problems with Abacan go much
deeper than working capital as it becomes more apparrent there is lack of financial backing.
TOP 20 - SPEC 12 - SERV 7 COMPANIES IN THE NEWS
GRANGER ENERGY CORP. announced that it has received approval from the Alberta and the Ontario Securities Commissions to issue up to $3,000,000 Class A and Class A flow-through shares. Regular Class A shares are offered at a price of $1.65 per share and Flow-through Class A shares are offered at $1.85 per share. Flow-through purchasers will receive a tax deduction of 100 percent of the purchase price effective for1997. Closing is tentatively scheduled for December 19, 1997 but in any event not later than December 31, 1997. Approval of the Prospectus also qualifies the Special Warrants previously issued by private placement on August 8th, 1997 to be exchanged for Class A shares and share purchase warrants.
COLONY ENERGY LTD. announced that Griffiths McBurney & Partners has agreed to underwrite the issue and sale on a private placement basis, of an aggregate of 6 million special warrants at a price of $2.10 per special warrant. The underwriters will also have an over-allotment option for additional special warrants at the same price. Griffiths McBurney & Partners will lead a syndicate which will include Newcrest Capital Inc., Peters & Co. Limited, Midland Walwyn Inc. and Canaccord Capital Corporation. The special warrant offering is scheduled to close on January 8, 1998. Colony also announced that it intends to issue on a private placement basis, up to 2.5 million flow through common shares at $2.50 per share to close on December 18, 1997. Colony will use the net proceeds from the issuance of these securities to fund a portion of its proposed capital expenditures.
WATCHLIST COMPANIES IN THE NEWS
AMBER ENERGY INC. announced that it has acquired 100% working interest in 102 sections of Crown Oil Sands Development Leases in the Wabasca/Pelican Lake area of Alberta for $16,907,000. Amber now owns an average 98% working interest in 313.5 sections (305.7 net sections) of contiguous Crown Oil Sands Development Leases in the Pelican
Lake area.
CHIEFTAIN INTERNATIONAL INC. has a 25% interest in the East Cameron 349/350 field in the Gulf of Mexico, where Enserch Exploration, Inc., with a 37.5% interest, has announced the commencement of production. In the East Cameron 349/350 field, which also produces from Block 356, gross production is expected to reach 35 million cubic feet of gas and 3,200 barrels of oil and condensate per day when the fourth well in the field is brought online later this week. A fifth well is currently drilling. The initial discovery well was drilled in March 1996 and the production facility was installed in August 1997.
Under a farmout arrangement with Mobil Exploration and Producing U.S. Inc., drilling of a deep test has commenced on Mobile Bay Block 914. The well will be drilled to 24,000 feet to test the Norphlet sandstone and is expected to reach total depth in approximately 140 days. Chieftain will retain an 18.75% interest in the well and the project.
The U.S. Minerals Management Service has awarded Chieftain interests in all of the 13 offshore blocks for which the Company, either solely or with partners, submitted the high bid at the western Gulf of Mexico lease sale held in August 1997. The newly acquired leases are located on the Continental shelf and in the deep water of the Gulf of Mexico and bring the total number of blocks in which Chieftain has interests in to 147.
Chieftain now anticipates that 1997 cash flow will decrease slightly from its initial estimate of US$58 million (C$83 million), to US$55 million (C$78 million), before dividends on preferred shares. The primary reason for the decline is delayed completion of pipeline connections to the Main Pass area. The pipeline construction project, designed to add additional capacity, is expected to be completed by mid-January 1998.
BONAVISTA PETROLEUM LTD. ("Bonavista") announced that it has closed the previously announced offering of 2,500,000 Special Warrants. The Special Warrants were issued at $4 each for aggregate gross proceeds to Bonavista of $10,000,000. Each Special Warrant entitles the holder to receive one common share of Bonavista at no additional cost. Newcrest Capital Inc., FirstEnergy Capital Corp., RBC Dominion Securities Inc., First Marathon Securities Limited, Nesbitt Burns Inc., and Peters & Co. Limited acted as underwriters for this financing. The proceeds of this offering will be used to expand Bonavista's 1998 capital program to $25,000,000 and to fund the acquisition of certain operated gas processing facilities in existing producing areas which will be closing on December 19,1997.
ARCHER RESOURCES LTD. announced it has completed a private placement of 845,070 flow-through common shares for net proceeds of Cdn. $6 million. The proceeds of the share issue will be used to fund ongoing exploration drilling and seismic programs. The issuance of these shares is subject to regulatory approval.
CANRISE RESOURCES LTD. announced that it has received receipts from the Alberta, Manitoba and Ontario securities commissions for a final prospectus, dated December 9, 1997. The final prospectus qualifies the distribution of 3,000,000 common shares which are issuable upon the exercise of 3,000,000 special warrants sold by the Corporation on October 7, 1997. ScotiaMcLeod Inc., FirstEnergy Capital Corp. and Peters & Co. Limited acted as underwriters in connection with the distribution of the Special Warrants. With the filing of the final prospectus, the gross proceeds from the sale of the special warrants ($24,000,900) is releasable to the Corporation. Such proceeds will ultimately be used by the Corporation to fund additional exploration, development and other capital expenditures and to fund working capital requirements. Until expenditures are actually incurred, the proceeds from the sale of the special warrants will be used to reduce existing bank debt. Unless previously exercised, all outstanding special warrants will be deemed to be exercised into common shares of the Corporation on December 17, 1997, which will increase the total number of issued and outstanding shares of the Corporation to 17,614,998.
Troubled ABACAN RESOURCES CORP. has run up a US$40-million working capital deficiency, but it is still hopeful it will secure interim financing by the end of the year. Jim Harvie, chief operating officer at the Calgary-based company with operations in West Africa, said yesterday negotiations are progressing with Morgan Stanley & Co. Inc. of New York and others to obtain a US$50-million facility.
"We hope to lock this up by the end of the year," he said.
The interim financing would help bridge the company until it links up with a strategic partner to exploit its extensive prospects in West Africa, he said.
Abacan's biggest asset is a four-million-acre concession straddling Nigeria and neighboring Benin -- one of the hottest exploration areas in the world.
Abacan's stock (ABC/TSE) sank yesterday to $1.98, down 27›, after it issued a statement at the request of the Toronto Stock Exchange in response to rumors that discussions with Morgan Stanley had fallen through.
The stock traded as high as $5.40 in late July and as high as $14.50 earlier this year, before investors found out production would fall short of its 35,000 barrels a day target.
The revised numbers caused the company to pull a US$160-million debt issue.
In Wednesday's statement, the company said it's continuing to look for strategic alternatives, including a joint venture or a business combination under appropriate circumstances.
"It's been more difficult than I expected it would be," to secure the financing, said Harvie.
"In the meantime, we are working closely with our creditors."
The company expects its ninth well in its North Ima Field to be completed next week.
Abacan now produces 21,500 barrels of oil daily from its
West African operations and plans to increase production in the new year.
In third-quarter results issued Nov. 19, Abacan posted a quarterly profit of $3.7 million, before interest and depletion expenses, on revenue of $14.6 million.
Earlier this year, it said it needed production of 30,000 barrels daily to break even.
It was then hoping to raise production to about 35,000 barrels daily by yearend, which would have made it self-sustaining on cash flow.
If negotiations for interim financing fail, Abacan would move quickly to work out a partnership, Harvie said.
U.S. TRADING NOTES
Money managers looking to lock in yearly gains abandoned oil-service and -drilling stocks again. Leading the downturn were favorites like Schlumberger (SLB), down 3 5/8 to 80 13/16; Halliburton (HAL), which lost 2 5/8 to 52 5/8; Diamond Offshore (DO), off 3 1/16 to 48 9/16; Varco International (VRC), which tumbled 2 3/4 to 25 1/8; Nabors Industries (NBR), which declined 2 1/8 to 35 1/2; and Cliffs Drilling (CDG), which slid 4 3/8 to 55 5/8.
SATCHKATCHEWAN 97 OIL & GAS LAND SALES RAISE C $131 MILLION
Saskatchewan's sales of land rights for petroleum and natural gas fields in calendar 1997 raised C$131 million (US$92 million), the third largest on record, a provincial government statement said. Sales in 1994 generated C$199.7 million and 1985 sales reached C$148.6 million, the statement said. The next sale of provincially owned petroleum and natural gas rights was scheduled for February 10, 1998, it said.
ALBERTA'S OIL & GAS REVENUE RISES OVER FIRST THREE QUARTERS
Despite slumping crude oil prices, the value of Alberta's oil and natural gas rose six per cent to $16.57 billion in the nine months ended Sept. 30 from $15.7 billion during the comparable interval in 1996.
This year's increased total was helped by a 23% hike in natural gas revenue to $6.27 billion from $5.11 billion the previous year, according to preliminary numbers from the Alberta Energy and Utilities Board. Average gas prices lifted 22% to $1.78 per gigajoule from $1.45.
Gas production during the nine-month period remained relatively flat -- dropping slightly to 124.06 billion cubic metres from 124.09 billion cubic metres in 1996. Deliveries within the province fell four per cent to 14.54 billion cubic metres from 15.19 billion cubic metres a year ago.
Gas deliveries to the remainder of Canada inched ahead slightly to 27.51 billion cubic metres from 27.33 billion cubic metres, while exports to the United States grew by 1.5% to 51.34 billion cubic metres from 50.60 billion cubic metres.
Total gas deliveries for the January to September interval improved to 93.39 billion cubic metres from 93.11 billion cubic metres.
Oil volumes in the province increased to 67.93 million cubic metres from 66.33 million cubic metres in the prior year on the strength of higher bitumen output -- up 49% at 9.95 million cubic metres versus 6.68 million cubic metres in 1996. Bitumen prices, however, plunged 19% to $94.90 per cubic metre from $117.71.
Heavy oil production improved marginally to 11.37 million cubic metres from 11.3 million cubic metres the prior year. Revenue from the commodity slid 13% to $1.38 billion from $1.58 billion the previous year as prices dropped to average $121.27 per cubic metre from $140.20.
Light and medium production fell nearly six per cent to 27.98 million cubic metres from 29.68 million cubic metres. A relatively flat average price of $167.14 per cubic metre versus $167.32 in 1996 resulted in revenue decreasing to $4.68 billion from $4.97 billion in the first nine months of the preceding year.
Synthetic yield for the nine-month period remained nearly flat in reaching 11.98 million cubic metres versus 12.06 million cubic metres the prior year. Average prices improved to $174.20 per cubic metre from $171.92, lifting revenue to $2.09 billion from $2.07 billion.
Condensate production climbed 13% to 283 900 cubic metres from 250 800 cubic metres, while pentanes plus output improved to 6.37 million cubic metres from 6.35 million cubic metres. The price for both commodities was up two per cent to $181.99 per cubic metre from $178.48. Condensate revenue increased 15% to $51.67 million from $44.76 million, while pentanes plus revenue rose to $1.16 billion from $1.13 billion the prior year.
Deliveries of crude remained nearly flat in the first nine months at 68.32 million cubic metres versus 67.44 million cubic metres in 1996. Alberta shipments rose four per cent to 18.04 million cubic metres from 17.36 million cubic metres, while exports to the U.S. lifted 15% to 39.53 million cubic metres from 34.43 million cubic metres.
Crude shipments to the rest of Canada fell 31% to 10.48 million cubic metres from 15.27 million cubic metres. Offshore exports also declined, falling 27% to 277 600 cubic metres from 379 300 cubic metres the previous year.
Sulphur production was also marginally lower for the January-September interval at 5.25 million tonnes versus 5.32 million tonnes in 1996. Total deliveries, however, improved nine per cent to 4.95 million tonnes from 4.53 million tonnes. The average North American price elevated 25% to $11.11 per tonne from $8.91, but the offshore price fell 31% to $12.12 per tonne from $17.52.
That was the day that was December 11, 1997
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