MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY DECEMBER 16, 1997 (3)
OIL & GAS
Crude-oil and petroleum product futures were little changed Tuesday, with only front-month gasoline making significant gains on the New York Mercantile Exchange after word of two refinery outages.
January crude settled unchanged at $18.17 a barrel; January unleaded gasoline rose 0.67 cent to 55.51 cents a gallon on news of a catalytic cracker outage at Koch Refining Co.'s Corpus Christie, Texas, refinery. News of the 46,000-barrels-a-day cracker problem comes a day after Dow Jones reported that a 60,000-barrels-a-day cat cracker at Valero Refining and Marketing Co.'s Houston, Texas, refinery was shut down Friday. January heating oil added 0.08 cent to 51.59 cents a gallon. NYMEX Hub natgas ends higher on short covering
NYMEX Hub natgas futures ended higher across the board Tuesday in a moderate session, boosted by short covering in the face of cooler weather forecasts and expectations for a bullish stock draw tomorrow.
January rallied 10.2 cents to close at $2.409 per million British thermal units. February settled 9.6 cents higher at $2.369. Other months ended up by 0.8 to 6.6 cents.
"Technically, it was positive that January closed above the down trendline. People may not be getting long, but it was at least a signal for the shorts to take profits and get out," said one Texas based trader, noting buy stops were triggered this afternoon when January broke $2.38.
Early withdrawal estimates for Wednesday's weekly AGA storage report range from 70 bcf to 160 bcf. For the same week last year, stocks fell 53 bcf.
Traders said extended forecasts for more seasonal weather later this week and next also helped stampede the shorts.
Forecasts this week call for normal to above-normal temperatures across most of the nation. But, a cold front moving across the U.S. later this week is expected to push temperatures back to more seasonal levels by the weekend.
Chart traders agreed January's close today above $2.38 resistance and above the down trendline from mid-November helped turn the short-term technicals more positive. But most agreed only a sustained bout of Arctic air will put the market back on the bullish track.
Next resistance was pegged at $2.57 and then in the low-$2.60s, with better selling likely at the $2.81 double top from early December. Support was still seen at $2.25, which is the low for January this year, with more buying expected around $2.14 and then at $2.05.
In the cash Tuesday, Gulf Coast prices firmed about a nickel to the mid-to-high $2.20s. Midcon pipes gained more than five cents to the mid-to-high teens. Mild weather pressured New York prices down more than five cents to the mid-$2.60s, while Chicago was up a nickel to the high-$2.20s.
The NYMEX Henry Hub 12-month strip climbed 3.8 cents to $2.275. NYMEX said an estimated 40,871 Hub contracts traded, up from Monday's revised tally of 28,046.
Charts: oilworld.com
NYMEX Reference quotewatch.com
HOT STOCKS
Explogas Ltd. (XPG/ME), down 2› to 2›, on volume of 1.3 million shares. The company is 20% owned by Genoil Inc., a company in the St. Genevieve group. Its shares traded for 20› in September, 14› in October and 7› in November. Yesterday Midland Walwyn Capital Inc. bought more than one million shares for 1› each and crossed 100,000 for 1.5› each.
Comstate Resources Ltd. (CSR/TSE), unchanged at $2.75, on volume of 40,400 shares. The company said it is going to restructure because the market values it for only one of its two main assets. Comstate holds 14.1 million shares (51%) of Comaplex Minerals Corp., which it will keep. It plans to pay a dividend of all net revenue from its oil and gas properties, its other main asset, starting next year. It estimated the payment could be 25› to 30› a year, depending on oil prices and production volumes.
Tri Link Resources Ltd. (TLR/TSE), down $4.25 to $18, on volume of 810,400 shares. On Monday the energy company abandoned a reorganization plan. When the news was announced on Nov. 4, the stock gained $1.70 to $25, and it closed at $28 on Nov. 11. Yesterday's close was a new low.
Shaw Industries Ltd. (SHLa/TSE), down $3.05 to $46.20, on volume of 6,501 shares and (SHLb/TSE), down $1 to $48.50, on volume of 100 shares. The Shaw family said it had transferred its stock into Shaw Family Holdings Inc., "to solidify long-term family voting control" of the company. Shaw Family Holdings will own 3.4 million class A shares (23.9%) and 4.3 million class B shares (73.3%). Company chairman Leslie Shaw also will continue to own 260,250 class B shares (4.5% ).
"The whole oil sector is down on the perception that oil prices will be weak in the next few quarters as the Organization of Petroleum Exporting Countries ramps up supply and a slowdown in the Asian economies reduces demand for crude," said Greg Bay, director of equities at Vancouver-based M.K. Wong & Associates Ltd. "Natural gas is also a big issue on the perception that winter will be warmer here." Still, Bay said that with declining share prices, some company valuations are becoming more attractive.
In the U.S., oil-drilling and equipment stocks were also on the rise: Halliburton (HAL) rose 2 to 51, Smith International (SII) jumped 2 1/4 to 62 1/8, and Nabors Industries (NBR) closed up 2 to 33 1/2 in active trading. "Oil service and technology stocks in particular were dirt cheap and due for a bounce," said Philip Orlando, chief investment officer at Value Line Asset Management.
INDEXES
The Toronto 300 Index fell 0.3% or 17.27 to 6567.43.
In Comparison, the Toronto Oil & Gas Producers Index fell 1.4% or 93.67 to 6371.53. Of the sub-components, the Integrated Oils actually gained 0.3% or 27.83 to 8809.17. The Oil & Gas Producers fell a whooping 2.2% or 125.14 to 5555.55 and the Oil & Gas Services fell 1.5% or 44.28 to 2944.43.
INDEX CHARTS
TSE 300.............. chart.canada-stockwatch.com
O&G Composite. chart.canada-stockwatch.com
Integrated Oil's.... chart.canada-stockwatch.com
O&G Producers.. chart.canada-stockwatch.com
O&G Services..... chart.canada-stockwatch.com
MARKET ACTIVITY
Alberta Energy, Pacalta Resources, Canadian 88 Energy, Gulfstream Resources, Tri Link Resources, Anderson Exploration, Crestar Energy, Petro-Canada, Canadian Natural Resources, Talisman Energy, Berkley Petroleum, Beau Canada Exploration, Renaissance Energy and Shell Canada A were among the top fifty most active traded issues on the TSE.
Imperial Oil gained $1.20 to $89.00 and Suncor Energy $0.70 to $48.20.
Percentage gainers included Phoenix Canada Oil 10.3% to $1.60 and Courage Energy 6.4% to $1.70.
On the downside, Tri Link Resources fell $4.25 to $18.00, Denbury Resources $1.95 to $25.90, Talisman Energy $1.65 to $42.65, Canadian Occidental Petroleum $1.30 to $31.35, Amber Energy $1.25 to $18.15, Chauvco Resources $1.25 to $19.00, Pacalta Resources $1.20 to $14.00, Remington Energy $1.00 to $22.00, Chieftain International $0.90 to $0.90 to 29.80 and Crestar Energy $0.75 to $19.50.
Percentage losers included Tri Link Resources 19.1% to $18.00, Westfort Energy 10.0% to $0.90, Gulfstream Resources 9.2% to $5.45, Pacalta Resources 7.9% to $14.00, Denbury Resources 7.0% to $25.90, Windsor Energy 7.0% to $5.35, International Petroleum 6.7% to $6.30, Petromet Resources 6.5% to $2.90 and Amber Energy 6.4% to $18.15.
There weren't any new 52-week highs.
Alberta Energy, Anderson Exploration, Barrington Petroleum, Baytex Energy, Black Sea Energy, Canadian 88 Energy, Canadian Natural Resources, Canrise Resources, Cavell Energy, Crestar Energy, Gulfstream Ressources, Petrolex Energy, Pinnacle Resources, Poco Petroleums, Profco Resources, Ranger Oil, Tri Link Resources and Upton Resources reached new 52-week lows.
In the service sector, as well as those companies with close ties to the industry, none were found among the top 50 most active issues.
None were listed among the top 50 net gainers.
Percentage gainers included Solid State Geophysical 9.8% to $3.46 and Badger Daylighting 6.4% to $5.85.
On the downside, Shaw Industries lost $3.05 to $46.20, NQL Drilling $1.20 to $10.10, Ensign Resource Services $1.15 to $31.85, Enertec Resource Services $0.90 to $13.10, Canadian Fracmaster $0.80 to $19.00 and Artisan Corp $0.75 to $11.25.
Percentage losers included NQL Drilling 10.6% to $10.10, Inter-Tech Drilling 9.7% to $1.12, Enertec Resource Services 6.4% to $13.40, Artisan Corp 6.3% to $11.25 and Shaw Industries 6.2% to $46.20.
Over on the Alberta Stock Exchange, Enterprise Developement, NTI Resources, Green Maple Energy, EMR Microwave, Oilexco, Cubacan Exploration, Jerez Energy, Red Sea Oil, Colony Energy, Tessex Energy A and Bearcat Exploration were among the top thirth most active traded issues.
Parkcrest Exploration gained $0.20 to $1.60, Jett Investment $0.15 to $1.20, Kappa Energy $0.14 to $2.74, Sunburst Oil & Gas $0.10 to $1.40, Scimitar Hydrocarbons $0.10 to $0.65, Veteran Resources $0.10 to $0.80, Blue Power Energy $0.09 to $0.50, Green Maple Energy $0.08 to $0.33, ICE Drilling $0.08 to $0.90 and Alliance Energy $0.07 to $0.64.
Percentage gainers included Orion Resources 60.7% to $0.45, Green Maple Energy 32.0% to $0.33, Blue Power Energy 22.0% to $0.50, Scimitar Hydrocarbons 18.2% to $0.65, Ironwood Petroleum 16.1% to $0.36, Enterprise Developement 15.4% to $0.30, Jett Investment 14.3% to $1.20, Parkcrest Exploration 14.3% to $1.60 and Veteran Resources 14.3% to $0.80.
On ther downside, Niko Resources fell $0.35 to $4.40, Red Sea Oil $0.35 to $2.65, Burner Exploration $0.20 to $0.75, Maxwell Oil & Gas $0.20 to $1.10, Pason Systems $0.20 to $6.30, Request Seismic $0.19 to $1.06, Best Pacific Resources $0.15 to $1.10, Proprietary Energy $0.15 to $2.30 and Scarlet Exploration $0.14 to $1.05.
Percentage losers included Landmark Petroleum 33.3% to $0.20, High Point Energy 25.0% to $0.30, Esker Resources 22.2% to $0.35, Burner Exploration 21.1% to $0.75, Desmarais Energy 20.0% to $0.20 and Jerez Energy 20.0% to $0.36.
No new 52-week highs.
Burner Exploration, Desmarais Energy, Epic Energy, Gopher Oil & Gas, Green Maple Energy, Jerez Energy, Mart Resources and Tappit Resources reached new 52-week lows..
FEATURE STORIES
Oil Markets Continue Bearish Trend
Global oil markets continue to show bearish trends as we progress through this warmer-than normal Winter season. Oil values are hard hit by a plethora of supply across world markets, with no sign of a supply crunch in sight. OPEC's decision to increase production output has added to the lack of fundamental supply concerns. Analysts remark caution as Iraqi oil will not be presently delivered to global markets under the recently approved "oil-for-aid" campaign; this news could bolster a strong rally in futures markets, but nothing has happened yet.
NYMEX crude oil continues to trade in the low $18 bbl range and traders continue to tout we are in a "buyers market." Bearish crude values are putting great pressure on heating oil futures, where contracts are resisting a 52 cent per gallon top and supporting a 51 cent per gallon bottom. An ample amount of supply and warmer than anticipated weather across the Northeast and Midwest are major factors keeping commodity values down. Also, U.S. refineries operated at more than 96 percent of capacity over the last week providing additional product to undiminished inventories
U.S. cash and wholesale arenas correspondingly extend price declines, in tandem with futures markets. The national spot average is 54.45 cents per gallon, with substantial declines occurring throughout the Midwest. Chicago spot quotes dropped more than 350 points on the week (Source: DOE) off of extremely warm weather and lower demand levels. National wholesale markets accept the abundance of product supply and move down for the fourth consecutive week; the national rack average is 54.83 cents per gallon (Source: AXXIS Petroleum, Inc.). Lower wholesale values continue to lend support to declining retail pump prices with the national retail average at $1.1511 per gallon; another decrease of 122 points on the week.
Analysts suggest retail values will continue lower or remain steady off bearish underlying market trends. If futures, spot and rack markets begin to move upward, retail prices are likely to spike very rapidly. What to do now? BUY-BUY-BUY! Word on the street is that prices are near their bottom and are soon to experience a strong rally. If colder weather hits the Northeast and Midwest, prices could rebound as quickly, if not quicker, than they dropped. Fill your tanks today and secure any gallons you can at current market levels before prices decide to take back their historically high position. Continue to watch NYMEX heating oil as a price indicator for wholesale market movement.
TOP 10 - SPEC 12 - SERV 7 COMPANIES IN THE NEWS
CANADIAN 88 ENERGY (EEE/TSE) Announces Waterton Discovery and Caroline
Test Results
Canadian 88 Energy Corp. of Calgary, Alberta announced today its fourth consecutive deep natural gas discovery in the Waterton area of the foothills of Southwest Alberta.
The Company said today in Calgary that its LSD 12, Sec. 32, Twp. 6, Rge. 2 W5M well drilling to a total depth of 3,705 meters (12,041 feet) has encountered structurally high Mississippian and is currently being cased. The well was drilled approximately three miles southeast of Canadian 88's original 4-18-7-2 W5M Waterton discovery on land purchased earlier this year for $3.25 million by Canadian 88 and it delineates the southerly portion of Canadian 88's large Waterton foothills discovery.
In addition, Canadian 88 announced today the test results of its LSD 1 Sec.19, Twp. 36, Rge. 6 W5M deep foothills discovery. The 1-19 well (100 percent Canadian 88) has encountered significant natural gas pay in the Leduc formation. The well was drilled to a total depth of 3,531 meters (11,585 feet) and has been completed and tested with an A.O.F. of 37.4 mmcf/d with significant associated condensate production. Tie-in operations are underway and the well will be onstream within the next 30 days. Canadian 88 is currently drilling another Leduc test in the immediate area at LSD 5, Sec. 5, Twp. 37, Rge 6 W5M. Intermediate casing is currently being set on this well. The Company was also successful at last week's Alberta Crown lease sale in acquiring further acreage in the area which will be drilled early in the new year.
REMINGTON ENERGY To Be Supported By New Novagas Gas Plant at West Stoddard
Novagas Unviels Gas Plant Plans
Novagas Canada Ltd. yesterday unveiled plans for a $92-million natural gas processing plant and ancillary pipelines in northeastern B.C., about 50 km northeast of Fort St. John.
NCL, a fast-growing unit of Nova Gas International Ltd., and ultimately of Calgary-based Nova Corp., said it has submitted plans for the West Stoddard facility to the B.C. Environmental Assessment Office for review.
If the project goes ahead as expected, it will bring NCL's natural gas extraction plant at Taylor, B.C., to full capacity and lift the company's investment in the coastal province to about $300 million over the past two years.
"This plant is a significant step in NCL's plan to position itself as a major player in the Canadian natural gas mid-stream business," said company president Randy Findlay. NCL expects the new plant to spur exploration activity in the region as well as provide gas to nearby residents and light industry.
"We have confidence in the future of the natural gas industry in Canada, including the natural gas industry of British Columbia," said Findlay.
Under the proposal, NCL will build a processing plant with a capacity of 160 million cu. ft. per day of gas at West Stoddard and two 69-km pipelines, one 16-in.h line for gas and the other six inch for gas liquids.
The pipelines will transport the gas and liquids to NCL's new facility at Taylor.
The West Stoddard facility will process raw sour gas from the Stoddard and Buick Creek fields and sweeten gas from operations of Canadian Natural Resources Ltd. and Remington Energy Ltd., both of Calgary.
Construction is set to begin in the spring and last three months.
PEAK ENERGY SERVICES LTD. (PES/TSE) announced the appointment of Mr.
Lloyd C. Swift and Mr. Lyle Kallis to the Board of Directors. Mr. Swift is a Calgary businessman who is involved at the board level of numerous public and private companies. Prior to October 1995 Mr. Swift was Vice President and Director of Nesbitt Burns Inc. Mr. Lyle Kallis is President of Lykal Sales and Oilfield Rentals Ltd., and
brings twenty-five years of oil and gas experience to the board. Peak Energy Services Ltd. is a diversified energy services company providing oilfield rental equipment and related services to the energy industry in Western Canada.
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