MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, JANUARY 5, 1998 (5)
MOST ACTIVES
Orbit Oil & Gas, Poco Petroleums, Anderson Exploration, Rigel Energy, Petro-Canada, Ranger Oil, Berkley Petroleum, Gulf Canada Resources and Chauvco Resources Int'l were among the top 50 most active traded issues on the TSE.
Cabre Exploration gained $1.00 to $20.00.
Percentage gainers included Eurogas Corp 16.3% to $2.00, TransGlobe Energy 15.0% to $1.15, Profco Resources 14.9% to $1.00, First Cagary 14.1% to $1.13, Seventh Energy 13.2% to $1.20, Black Sea Energy 8.6% to $1.90, Bow Valley Energy 8.6% to $1.65 and Torrington Resources 8.5% to $4.45.
On the downside, Canadian Natural Resources fell $1,80 to $29.00, Talisman Energy $1.60 to $42.40, Remington Energy $1.50 to $23.70, Canadian Occidental Petroleum $1.40 to $30.40, Denbury Resources $1.25 to $25.50, Paramount Resources $1.00 to $15.00, Shell Canada A $1.00 to $23.95, Penn West Petroleum $0.85 to $14.55, Baytex Energy $0.80 to $14.00, Hurricane Hydrocarbons $0.75 to $11.25 and Anderson Exploration $0.65 to $13.45.
Percentage losers included Chauvco Resources Int'l 22.2% to $1.05, Zargon Oil & Gas 11.2% to $3.02, Mercantile Int'l Petroleum 10.7% to $0.67, Petrobank 10.4% to $3.00, Torex Resources 10.1% to $1.25, Paragon Petroleum 9.2% to $3.45, Abacan Resources 9.1% to $2.40, Canadian Conquest Exploration 9.1% to $1.00, Cavell Energy 7.7% to $1.20, Archer Resources 7.6% to $6.05 and Newquest Energy 7.4% to $6.25.
Chauvco Resources Int'l and Petrobank reached new 52-week highs.
Gulf Canada Resources and Kappa Energy reached new 52-week lows.
There weren't any oil & gas service companies, including those with close ties to the industry, among the top 50 most active traded issues on the TSE.
None listed among net gainers.
Among percentage gainers, Inter-Tech Drilling gained 7.4% to 1.30.
On the downside, Enssign Resource Services fell $2.40 to $32.50, Precision Drilling $2.05 to $31.50, IPSCO $1.50 to $54.50, Tesco $0.90 to $20.50 and CE Franklin $0.70 to $11.55.
There weren't any listed percentage losers.
ATCO I and ATCO II reached new 52-week highs.
There weren't any 52-week lows.
Over on the Alberta Stock Exchange, Cubacan Exploration, Bearcat Exploration, HEGCO Canada, Oxbow Exploration, Gold Star Energy, Cirque Energy, NTI Resources, Jerez Energy, Circle Energy and Red Sea Oil were among the top 30 most active traded issues.
Stellarton Energy gained $0.20 to $4.80, Peregrine Oil & Gas $0.14 to $1.15, Endless Energy $0.13 to $0.90, Bearcat Exploration $0.09 to $0.58 and Scimitar Hydrocarbons $0.08 to $0.78.
Percentage gainers included Wild Horse Resources 25.0% to $0.30, Bearcat Exploration 18.4% to $0.58, Endless Energy 16.9% to $0.90, NTI Resources 15.2% to $0.53 and Peregrine Oil & Gaas 13.9% to $1.15.
On the downside, Hyduke Capital Resources fell $0.26 to $2.85, Bromley Marr $0.25 to $1.30, Solid Resources $0.25 to $8.00, Kensington Energy $0.20 to $1.25, Syner-Seis Tech $0.20 to $2.35, Red Sea Oil $0.18 to $3.00, Deena Energy $0.15 to $1.11, Global Link Int'l $0.15 to $1.30, Parkcrest Exploration $0.15 to $1.50, Oxbow Exploration $0.12 to $1.18, Request Seismic $0.12 to $1.23 and Draig Energy $0.10 to $1.40.
Percentage losers included Bromley Marr 16.1% to $1.30, Cubacan Exploration 14.3% to $0.48, Cherryhill Resources 14.3% to $0.30, Kendsington Energy 13.8% to $1.25, Jerez Energy 13.3% to $0.65, Deena Energy 11.9% to $1.11 and Global Link Int'l 10.3% to $1.30.
Endless Energy reached a new 52-week high.
Commonwealth Energy reached a new 52-week low.
NEW LISTINGS
MARENGO EXPLORATION LTD. announced the successful closing of its initial public offering on December 31, 1997. Marengo issued 4,647 Units at $1,000 per Unit for gross proceeds of $4,647,000. Each Unit consisted of 300 Class A shares at $0.40 each, 88 Class B "flow-through" shares at $10.00 each and 50 Warrants. Each Warrant is exercisable for one Class A share at $1.00 until June 30, 1998. Research Capital Corporation was the agent for the offering.
Marengo is a new public Alberta-based oil and gas company managed by William Petrie (President and director) and Larry Bozohora (Vice-President and director). Harley Winger and Rick Braund are also directors. The Class A shares and Class B shares of Marengo have been conditionally approved for listing on The Alberta Stock Exchange. Trading is expected to commence by February, 1998.
TOP STORY
Oil Dips Below US$17 A Barrel
The Financial Post
Oil and gas producers will have to revisit their strategies and spending plans if crude oil prices remain below US$17 for a sustained period of time, industry analysts said yesterday.
Crude prices dropped below US$17 a barrel yesterday for the first time in more than two years as warmer weather in the U.S. Northeast and Midwest reduced demand for heating fuels.
"There are people talking about US$14 or US$15 oil," John Doherty, a crude oil trader at Syntex Energy Resources in New York, told Bloomberg News.
Crude prices dropped as much as US58› to US$16.85 a barrel on the New York Mercantile Exchange, moving below US$17 for the first time since Oct. 23, 1995. It closed at US$16.89.
February heating oil fell US1.49›, or 3%, to US47.92› a gallon on Nymex, the lowest for a contract closest to expiration since July 25, 1995.
"Everything that could go wrong has gone wrong and this is the final nail in the coffin," said Peter Linder, oil and gas analyst with CIBC Wood Gundy Securities Inc. in Calgary.
The hit pulled down the Toronto Stock Exchange oil and gas index yesterday by 175 points, to close at 6451. The index reached a high of 8031 on Oct. 7.
Shares of oil services companies fell because of expectations capital spending programs would be reduced, lowering demand for drilling and other services.
Linder believes oil and gas share prices will continue to weaken through the first quarter because there won't be an improvement in the sector.
"I have been recommending to investors: 'Do not take a punch now. Patience will be rewarded. Get in in the spring at the earliest, and likely not till the summer,' " Linder said.
The industry is expected to increasingly shift gears to natural gas by this summer. Some believe the outlook for that commodity is more upbeat because of new pipeline capacity coming onstream next fall.
Most Canadian oil and gas producers based their spending plans for 1998 on oil prices in the US$19 to US$20 range for 1998.
Hardest hit will be heavy oil producers.
An increasing number is shutting in heavy oil wells because they're no longer economic, said Martin Molyneaux, managing director of institutional research at First Energy Capital Corp.
The discount applied to heavy oil, which is costlier to refine, has surpassed US$9 in recent days and is continuing to increase, he said. Heavy oil related megaprojects on the drawing boards could also be up for review.
Kevin Brown, managing director of ARC Financial Corp. in Calgary, said he expects producers to maintain their high-level spending momentum during the first quarter, but plans are likely to be revised after that.
"What's open is the plans for the spring season and the coming winter," he said.
Oil prices are weakening because of the global climatic phenomenon known as El Nino, which is pushing up temperatures, while heating oil inventories are 18% higher than a year ago.
Also pushing prices lower were expectations Iraq would resume oil exports in the next few days, contributing to a global supply glut.
"The market is overestimating oil supply and they are underestimating demand," said Molyneaux.
"I don't believe the world is going to produce 78 million barrels on a sustained basis," said Dale Tremblay, senior vice-president of finance at Precision Drilling Corp.
And world consumption, which is the other side of the energy equation, is increasing, he said.
Tremblay doesn't expect producers to change their spending plans through the winter. But a re-assessment is likely after spring breakup, if commodity prices continue to stay low.
Precision, with 204 rigs, is Canada's largest drilling company, and still expects a banner year for drilling.
"It's hard to be too depressed. This industry has withstood significantly worse than what's projected. It's still going to be very good. It's going to be down, but it's still going to be very good."
Senior energy producer Talisman Energy Inc., which is assuming oil prices of US$20 for the year, isn't changing its spending plans just yet.
"We are only five days into January. It's too soon to tell what the state of oil prices will be," said spokesman Dave Mann, adding that oil prices are unpredictable.
"Ultimately, in terms of Talisman, with its growing production and strong finances, we'll survive any downturn better than most," Mann said.
Oil Price Dip Sparks Worries
Edmonton Sun
If plunging oil prices don't recover, some projects fueling Alberta's booming economy could be cancelled, industry observers warn.
Don Currie, managing director for the Alberta Chamber of Resources, said that's bad news for some companies which have budgeted for minimum prices of $15 to $16 US per barrel on recently announced heavy-oil projects.
Don Herring, managing director of the Canadian Association of Oil Well Drilling Contractors, wasn't as worried.
"It won't mean anything in the near term because capital spending plans are already in place," he said.
FEATURE STORY
Oil Industry Activity Driving Service Sector Financial Results
Despite a year end assault on all energy sector stocks, financial and operating results continued rising for the oilpatch's service and supply industry over the first three quarters of 1997.
Twenty publicly traded stocks tracked by theDaily oil Bulletin from this category have accounted for $2.87 billion in revenue and $255.5 million in profits in the first nine months this year. That compares to revenue totaling $1.73 billion and net earnings of $86.56 million in the same period of 1996.
The revenue and profit gains for these companies can mostly be attributed to record levels of drilling activity -- from spuds and completions to rig utilization.
In November alone, rig use was at 91% for the overall fleet of 483 units, while activity was at the 84% level for the first 11 months. Last year, 82% and 68% of the rigs were working in November and the 11 months respectively.
The leader of the pack continues to be the growing Precision Drilling Corporation operation. The company had 38% of the drilling rigs, 40% of the operating days, 38% of the wells drilled and 41% of the metres achieved during the fiscal six months ended Oct. 31. Those are up from 18%, 19%, 23% and 22% respectively a year earlier.
Drilling services provided $313.67 million of the company's revenue, while other services contributed the remaining $164.63 million. This compared to revenue of $79.67 million from drilling services and $103.09 million via other sources in the fiscal period a year earlier.
Ensign Resource Service Group Inc. was another of the contractors to benefit from increased oil field activity. Along with a larger fleet, the busier atmosphere allowed it to increase drilling days by 126% and well servicing operating hours by 28% in the first nine months this year compared to 1996.
Ensign had the second biggest improvement among the companies tracked as its profit climbed to $44.31 million from $15.84 million in the previous year.
Other companies tracked in the current survey included: Computalog Ltd.; AKITA Drilling Ltd.; Artisan Corporation; Newalta Corporation; Enerflex Systems Ltd.; Alpine Oil Services Corporation; Taro Industries Limited; Foremost Industries Inc.; Pe Ben Oilfield Services Ltd.; Canadian Fracmaster Ltd.; Veritas DGC Inc.; CE Franklin Ltd.; Enertec Resource Services Inc.; Ryan Energy Technologies Inc.; Solid State Geophysical Inc.; Kelman Technologies Inc.; Tesco Corporation; and OTATCO Inc.
Pe Ben, Solid State and OTATCO put the only hint of a blemish on the financial performance of the companies tracked for the nine months this year. Pe Ben had the only decline compared to the period last year, having been affected by the limited margins available for provision of trucking services and a drop in pipeline subcontracting service. Its net income fell to $603,000 in the first nine months this year from $1.46 million a year earlier.
For Solid State, problems in Argentina caused most of the decline as unanticipated work conditions, contractual problems and the weather still resulted in a net loss for its fiscal year. But, it was an improvement as the net loss went down to $4.92 million from $11.97 million.
For OTATCO, higher indirect costs along with increased depreciation and amortization put the company into the red, but a little better off than the previous year.
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