MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUES., JANUARY 13, 1998 (6)
OTHER COMPANIES IN THE NEWS
TRANSGLOBE ENERGY CORP. announced that the BROG #19-1 located in Richland County, Montana has discovered oil in the Red River "C" formation and will be completed by drilling a one thousand foot horizontal section through the Red River "C" porosity zone. The operator, Burlington Resources Inc., expects to complete the horizontal section in the next two weeks. TransGlobe has increased its interest in the BROG 19-1 prospect from 25 percent to a 50 percent working interest (40 percent net revenue interest) by paying Mantaur Petroleum Corporation's 25 percent share of the BROG 19-1 well. TransGlobe has a 25 percent working interest (20 percent net revenue interest) in the remainder of the East Meridian lands.
TransGlobe has participated in seven wells on the East Meridian project resulting in five oil discoveries and two dry holes. The Company expects to drill a Tyler sand test immediately after the completion of the BROG 19-1 well.
Q ENERGY Q announced that its Sundance exploratory well has been cased to a total depth of 8800 feet as an indicated Viking gas well. During the drilling of the well, the Company, by way of a farmin, increased its working interest from 22 percent to 29 percent. Depending upon completion results,several follow-up locations are available on adjacent company lands.
The Sundance farmin also enabled, the Company to earn a 20 percentworking interest in approximately 480 gross sections (96 net sections) in a high-potential multi-zone Devonian oil play in central Saskatchewan. The first of several exploratory wells is scheduled to spud in the second quarter.
At Talbot Lake, Q Energy drilled and abandoned a 2300 foot exploratory test which encountered non-commercial quantities of gas and heavy oil.
Also, Q Energy has entered into a two year Joint Venture with a private company which has been very successful exclusively targeting light gravity Mississippian oil opportunities in southeast Saskatchewan. The potential to drill up to fourteen (14) low to medium risk horizontal wells has already been identified on eight separate prospects.
RAMARRO RESOURCES INC. and PANOIL RESOURCES LTD. commenced drilling operations January 10, 1998 on a second well on the Orion prospect, in the Fort Neson area of B.C., jointly owned by Ramarro and Panoil Resources Ltd. The partners have contracted Brinkerhoff Rig #2 to drill a 2000 meter test well. Several prospective gas horizons will be evaluated by a conventional vertical well which is expected to reach total depth at the end of January.
MAXWELL OIL & GAS closed its previously announced acquisition of a private Alberta based gas marketing and commodity trading company for a cash consideration of $1.67 million. Additionally, on January 6, 1998, Maxwell closed its acquisition of additional interests in the Mica area of B.C. for a cash consideration of $0.4 million. Collectively, the two acquisitions will generate cash flow of approximately $1.5 million net to Maxwell in 1998.
Recent drilling has resulted in a new pool gas discovery at Turin, Alberta (25 percent WI), a cased Rock Creek gas well at Blue Rapids, Alberta (33.75 percent WI) and a dryhole at the Company's West Central, Alberta prospect (75 percent WI), where an additional 2.5 sections were purchased at last week's Crown land sale. The Company is currently drilling its Wabamun Lake oil prospect (75 percent WI), with preliminary results expected in February, 1998.
The Company enters 1998 producing 500 barrels of oil equivalent per day net to Maxwell, with an additional 150 boe per day of shut-in production awaiting tie-in at the Company's Blue Rapids and Turin properties.
BEARCAT EXPLORATIONS LTD. and STAMPEDE OILS INC. have been requested by The Alberta Stock Exchange to issue a news release regarding any current operations in the Turner Valley prospect that may havecontributed to the current heavy volume of trading in the Companies' shares. Because of the "Confidential Tight Hole Status" of the drilling operations regarding the two currently operating wells in the Turner Valley project, the Companies are not in a position to divulge detailed information. The operations of both wells are ongoing at this time.
COLT ENERGY (ASE:COE) announced that the company entered into the formal farm-in/exploration agreement with ULTRA RESOURCES INC. and Ultra Petroleum (USA) Inc. (collectively known as "Ultra"), to formalize the terms of its previously announced farm-in with Ultra, pursuant to which Colt has acquired certain rights to earn interests in acreage within the Green River Basin, including the North Lizardhead, the Northeast Lizardhead, the, Antelope Ranch and the West Billy areas, all located in Sublette County, Wyoming.
HAWK OIL Hawk Oil Inc. ("Hawk Oil") is pleased to announce the results of its highly successful 1997 year end drilling program. Production has dramatically increased from 11 net barrels of oil per day in September, 1997 to current production of 275 net barrels of oil per day. The bulk of Hawk Oil's production (70%) is comprised of light 34 to 38 degree API oil and the balance is comprised of heavier 13 to 18 degree API oil.
The majority of Hawk Oil's activity has been focused on light oil in SE Saskatchewan. In Queensdale, Hawk Oil drilled and completed one (1 net) horizontal oil well which flowed during the 6 day completion period at rates in excess of 400 barrels of oil per day. In order to prevent premature water coning the production rate has been held to 175 barrels of oil per day. The company plans to drill a second horizontal well location which it has identified on this prospect. Hawk Oil also drilled a shallow vertical well (1 net) in Wapella and participated in a horizontal well (0.5 net) at Ingoldsby which were abandoned.
Hawk Oil drilled and cased an exploration well (0.5 net) in Griffin (SE Saskatchewan) in January, 1998 and anticipates completing the well later this month. Successful completion of this potentially new pool will prove up multiple development locations on company lands.
Hawk Oil made two new pool discoveries in Epping (West Central Saskatchewan) successfully drilling and completing three (3 net) oil wells. The wells are producing from three different zones (McLaren, Cummings and G.P.). Hawk Oil has identified 12 follow up locations on 100% owned Hawk Oil lands. However, the company will delay the development of these lands until the market price for heavier oil improves.
Effective January 1, 1998 Hawk Oil acquired a 50% interest in 560 acres of land and 10.5 net barrels of light oil per day in Glen Ewen (SE Saskatchewan) at a cost of $227,000. This acquisition, from a private oil and gas company, includes 4 oil wells, 1 battery, 1 water disposal facility and operatorship. The company plans to drill a horizontal well between the producing vertical wells in early 1998. One or more follow up horizontal wells may be drilled on this prospect.
Hawk Oil anticipates drilling a minimum of 3 horizontal wells and 3 exploration wells on existing company prospects in SE Saskatchewan in the first half of 1998.
Hawk Oil continues to maintain working interests in the 50% to 100% range and operates the vast majority of its production.
CIRCLE ENERGY announced that it has cased its Brazeau River Shunda well. Completion and testing of several prospective zones is expected to begin by mid-February. Circle Energy Inc. has a 37 1/2 percent working interest in this well. ''We are very pleased to have cased the first well in our ten well drilling program,'' says Circle President Bill Baker. ''We are on rig standby for our second well and are finalizing licensing of the Nisku well.''
Circle Energy Inc. is a petroleum and natural gas exploration company that holds oil and gas leases in the Brazeau, Morinville and Waskatenau areas of Central Alberta and in Guadalupe, Lea and Quay Counties in New Mexico, USA.
INTERNATIONAL
COMPANIES IN THE NEWS
SEVEN SEAS PETROLEUM INC. (Amex: SEV; Toronto: SVS.U) announced today that its wholly owned subsidiary, Seven Seas Petroleum Colombia Inc., signed two new Association Contracts with Ecopetrol, the state owned oil company of Colombia, for prospects in the Middle Magdalena Basin in north central Colombia, South America. The Rosablanca contract contains 317,000 acres and the Montecristo contract contains 375,000 acres in the Cesar, Bolivar and Santander Departments. Years one and two of each contract require the reprocessing and shooting of 2-D seismic and both contain the option to drill one well in year three.
Seven Seas has also entered into an agreement to assign an undivided 25% interest in the Rosablanca and Montecristo contracts to Potomac Energy (Bermuda) Ltd., subject to the requisite governmental approvals. Seven Seas also owns an 11.875% interest in the Tapir Association Contract in the Central Llanos Basin, operated by Heritage Minerals Inc. and with its wholly owned subsidiary, GHK Company Colombia, owns a 57.7% interest and operates the Rio Seco and Dindal Association Contracts in the Magdalena Basin. Seven Seas Petroleum now has interests in approximately 1,033,000 acres in Colombia under five Association Contracts, four of which it operates.
Robert A. Hefner III, Chairman and CEO of Seven Seas Petroleum Inc. said "These two contract areas are prospective for oil and gas from Tertiary and Cretaceous aged formations that are associated with large structures, faulting and fracturing". The new properties adjoin Harken Energy Corporation's Bolivar Association Contract, where in November 1997 it commenced drilling the first of a three well exploration program.
ALTAQUEST ENERGY CORPORATION ("AQF") has commenced its 3D seismic program over its recent Fiskerton discovery. The program is 16.5 sq. km. and will be shot, processed and interpreted by March 1, 1998. The discovery well, Fiskerton Airfield #1, is currently being completed and will be put on a 60 day production test to evaluate reserves and deliverability. An application is being submitted to The Department of Trade and Industry in London todrill six delineation wells off the Fiskerton pad for June of thisyear.
As well, AltaQuest has secured a rig for its next exploration location at Newton on Trent (20 kilometres to the west of Fiskerton) and anticipates a spud date of the second week of February. AltaQuest has a 50 percent APO working interest in Newton-on-Trent which will test a separate geologic feature from Fiskerton.
AltaQuest has applied for 100,000 net additional acres surrounding our East Midlands acreage and it is anticipated that these licenses will be awarded by February 2nd.
The company also announced that the purchase and sale agreement has been signed for a property purchase in the Sylvan Lake area of Alberta. This $9.3 million cash acquisition is effective December 1, 1997 and is anticipated to close February 19, 1998. The property acquired consists of operatorship and a 62 percent working interest in a 14mmscfd gas plant, 20 kilometres of pipeline infrastructure, 300 barrels of oil equivalent per day (BOE/d) and 1,000,000 BOE of proven plus probable reserves. The property has strategic value in AltaQuest's core area of Sylvan Lake and has upside potential that will be realized in 1998 with well recompletions, development drilling and plant optimization. With this purchase, to the end of 1997, AltaQuest has spent $12.5 million to acquire 635 BOE/d of production and 1,700,000 BOE of proven plus probable reserves as of December 31, 1997.
This acquisition increases AltaQuest's existing production to 650 boepd and will provide cash flow to supplement our ongoing exploration activities in the United Kingdom and Western Canada.
COUNTRIES IN THE NEWS
IRAQ
Iraq is set to reduce by one quarter the volume of crude it sells to United States companies in the third phase of the United Nations' oil for food exchange, trading sources said on Tuesday.
U.S. firms Coastal Corp (NYSE:CGP), Chevron Corp (NYSE:CHV), Mobil Corp (NYSE:MOB) and Phoenix lifted a total of 20.7 million barrels in the second stage of the deal which expired last December, a volume which could be lopped to about 15 million, the traders said.
Chevron's volume, for example, will be reduced to 2.7 million barrels from 3.6 million last time.
U.S. trading house Bayoil, which lifted 3.6 million barrels to take transatlantic last time, may escape the axe because it applies for Iraqi contracts from its Swiss base.
The trading sources said contracts with U.S. companies would also stipulate that they could not take Kirkuk crude, which loads from the Mediterranean, to the U.S.
Previously Coastal took two million barrels of Kirkuk transatlantic via storage in the Caribbean.
French and Russian companies, however, with extra volumes in the current contract period could be permitted to move Kirkuk to the U.S. and then sell it on to refiners.
France's Elf Aquitaine (NYSE:ELF), with 10.8 million barrels, was awarded double its previous volume, traders said.
Two new Russian companies have also won contracts for 12 in all in the third round. A lot of the Russian allocation will be handled by independent European trading companies.
Iraq has said it will favour companies from countries which have proved more friendly to its campaign to get Gulf War sanctions lifted.
British Petroleum (UK & Ireland: BP.L) and Royal/Dutch Shell (RD.AS) (UK & Ireland: SHEL.L) are also expected to be excluded by Iraq.
Some U.S. refiners said they were not unhappy at being cut back on their Iraqi allocation, made up mostly of Basrah Light, because price formulas made the crude less attractive.
But they said they were disappointed not to have the option of taking Kirkuk to the U.S.
Other European traders were holding off from signing contracts with Iraq's State Oil Marketing Organisation, preferring to wait for February liftings when reduced Iraqi prices, tied to Saudi Arab Light formulas, come into effect.
PIPELINE NEWS
ALLIANCE PIPELINE is pleased to announce that Duke Energy Corporation (NYSE: DUK) has acquired a 9.8% equity interest in the Alliance Pipeline partnerships, partly through purchase of Cordeca Corporation's equity interest in Alliance. In addition, in an unrelated intra-partnership deal, Ranger Oil Limited (TSE: RGO) and Pinnacle Resources Ltd. (TSE: PNN) have each sold their equity interest in the Alliance Pipeline partnerships to one of Alliance's founding partners, Unocal Corporation (NYSE: UCL). This increases Unocal's equity interest in Alliance Pipeline to 9.1%. Transaction details, including share and unit prices, were not disclosed. In addition, Fort Chicago Energy Partners LP (TSE: FCE.UN) announced recently that it has closed C$380 million of financings to fund its equity interest in Alliance.
Alliance President and Chief Executive Officer Dennis Cornelson says, ''We thank the companies relinquishing their equity positions for their support throughout Alliance's formative stages and look forward to their continued support through their long term shipping commitments.''
Cornelson adds, ''Duke's equity purchase and Unocal's equity increase demonstrates a continuing natural evolution and further strengthening of the ownership structure of the Alliance partnerships. These moves confirm the increasing value and viability of Alliance in the minds of two of North America's foremost large energy corporations. They contribute to Alliance's goal of improving the competitive position of western Canadian natural gas in North American markets. Alliance will become the low-cost transporter of western Canadian gas to growing midwest and eastern U.S., as well as eastern Canadian markets.
Alliance will hold a dial-in conference call at 9:30 am EST, 8:30 am CST, 7:30 am MST, 6:30 am PST, January 14, 1998. A news release will be issued later outlining the reason for the conference. Alliance Vice President of Public, Government and Regulatory Affairs, Jack Crawford will be available to answer questions.
The telephone number to access the conference is 1.800.997.8512. The conference operator will provide instructions on how to participate. The registration process will begin 15 minutes prior to the scheduled conference. No additional calls will be taken today. Thank you for your cooperation.
For those wishing to access the taped version of the conference call, dial 416.626.4100 and quote 770238 to access the tape for 24 hours following the conference call. Note: the taped call is at the caller's expense.
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