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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Crocodile who wrote (8520)	1/16/1998 9:27:00 AM
From: Kerm Yerman	Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING THURSDAY, JANUARY 15, 1998 (2) OIL AND GAS NYMEX Crude-oil and petroleum-product futures settled lower Thursday on the New York Mercantile Exchange after bullish anticipation that Arab nations may begin to prop up sagging crude oil prices proved to be overblown. February light sweet crude oil settled down $0.11 to $16.34. Bulls had some confidence in the morning on news that an emergency meeting of the Organization of Petroleum Exporting Countries monitoring committee was most likely going to happen in late January. Players speculated before the Nymex opening that such a meeting could pave the way for OPEC production discipline to relieve the oversupplied market. OPEC's decision to raise its daily production ceiling in 1998 by nearly 2.5 million barrels to 27.5 million barrels is cited by analysts as one of the key reasons for the more-than-25% decline in crude oil futures since October. But on its way to meeting its opening call of 30-35 cents higher, February crude oil lost steam on statements from Venezuela's energy and mines minister Erwin Arrieta that there was no decision yet on the meeting. Natural gas futures, helped by colder weather and firmer physical prices, remained mostly higher late Thursday in fairly brisk trade, but prices seemed stalled in a new technical range, sources said. February settled up 7.8 cents at $2.094 per million British thermal units after rallying early to $2.12 on rumors of problems at the Hub. March was four cents higher at $2.06. Most other months were flat to up 3.9 cents. "We're stalled here. They tried to sell it off but couldn't. If we get a close above $2.10, we could break out of this range," said one Texas-based trader, noting some of the early buying today was triggered by concerns about Henry Hub. Traders said some below-normal temperatures this week and early talk about shipping problems at Henry Hub helped trigger some short covering. But Hub operator Sabine Pipe Line said this morning it was again accepting nominations Thursday after a line problem yesterday cut 60 mmcfd from the system. The line was expected back by the weekend. Despite improved technicals after this week's reversal, few expected a sustained move up without broader, more sustained cold. Forecasts this week call for below-normal weather in the East, while milder Midwest weather is expected to be replaced by lower temperatures Sunday. Six- to 10-day forecasts show normal or above normal temperatures for most of the nation. Chart traders see February stuck in a new range, with little reason to move far in either direction. Resistance was now seen at today's high of $2.12, with better selling expected at $2.25 and then at $2.34. Support was pegged at the new contract low of $1.97, with spot continuation support seen at $1.85-1.88. More buying should emerge at prominent continuation chart lows of $1.77 and $1.68, the spot low last year. In the cash Thursday, Gulf Coast quotes firmed a couple of cents to the $2.02-2.07 area. Midcon pipes were up a similar amount to the low-$2s. New York city gate swing gas gained slightly to the low-$2.50s, while Chicago was a nickel higher in the mid-teens. CANADA SPOT GAS Canadian spot natural gas prices were firmer at the export points but little changed in Alberta on Thursday as milder weather seeped into western Canada, traders said. Spot gas at the AECO storage hub in Alberta was quoted again at C$1.40 - 1.41 per gigajoule (GJ). However, some price softening was anticipated for Friday as forecasts in Calgary called for a return to about zero by this weekend, one Canadian marketer said. For the remainder of the month, AECO gas was offered at C$1.40, while February business was also quoted at C$1.40 per GJ, up about one cent from Wednesday. In the export market, Sumas spot gas was quoted in a narrower range today in the mid-US$1.90s to about US$2.05 per million British thermal units (mmBtu). Near- to slightly above-normal temperatures are forecast for the U.S. Northwest through this weekend. At Niagara, spot gas was talked at US$2.17-2.23 per mmBtu, up about five cents from Wednesday. KERM'S NOTE REGARDING NATURAL GAS IN CANADA The book on gas. The Canadian Gas Potential Committee, a volunteer group of geoscience professionals from industry and government, says there's 570 trillion cubic feet of discovered and undiscovered natural gas from conventional and unconventional sources in Canada. That means about 100 years of supply. News of all that gas is included in the committee's inaugural 280 page, $215 dollar report, Natural Gas Potential in Canada, based on 1993 data. Total undiscovered gas potential is estimated to be 80 per cent in Alberta and 15 per cent in B.C. The committee says frontier areas -- Mackenzie Valley as well as Beaufort and other areas hold 107 trillion cubic feet of potential marketable gas. OIL & GAS PRICE REFERENCES Charts: oilworld.com NYMEX Reference quotewatch.com HEADLINE STORY U.S. Rebuilds Oil Inventory Asssociated Press Lower prices and increased supply allowed the United States to rebuild a depleted oil inventory last year despite an increase in consumption. Petroleum use increased by about 1.7 per cent in the United States last year due to the booming economy, the American Petroleum Institute reported Thursday. Diesel fuel and gasoline were among the fast growers, along with aviation fuel and oil used in chemical processes. But Edward Murphy, the institute's director of finance and statistics, declined to predict oil prices and supplies for this year. "Really, nobody knows," if the Asian economic problems will affect oil use and prices worldwide, he said. But he added that most experts are reducing their predictions for increased oil demand in Asia. Even while Americans were using more oil, the country was able to rebuild inventories depleted in 1996 when prices were higher. U.S. oil imports were up 4.4 per cent in 1997, with the increases coming mainly from Mexico, Venezuela and Canada as worldwide increases in production exceeded the growth of oil use. As a result, U.S. petroleum inventories were built up at a rate of 161,000 barrels a day, ending the year at about one billion barrels. That's about 60 million barrels more than at the end of 1996, a year that saw an inventory decline of 80,000 barrels a day. "In retrospect that was a wise decision," Murphy said of the reduction in inventory when prices were high and replenishment at lower costs. Currently, the average price of a barrel - 42 gallons - of crude oil is $16.60 US, he said. A year ago it was $26.10. Murphy attributed the drop to increases in production, including the return of Iraqi oil to the world market. Other findings of the annual report: - Oil production in the 48 contiguous states increased, though slightly, for the first time in six years due to the drilling of new wells and the use of new technology on deep wells in the Gulf of Mexico. - Production from Alaska continued to decline. - Imports of crude oil and petroleum last year averaged 9.8 million barrels a day. - U.S. dependency on imported oil rose from 51.8 per cent to 53.1 per cent of supply. FEATURE STORY DIRT-CHEAP (Echoing Kerm's Komments) Calgary Sun The prognosis is short-term pain but long-term gain for Alberta's ailing energy sector. Although depressed commodity prices have sent oil and other resource stocks tumbling, experts think brighter days are not that far off. World oil prices have been in free-fall since October as the Asian currency crisis, warm weather from El Nino and a 10% increase in production by OPEC has upset the demand/supply balance. After reaching an October high of more than $22 US per barrel, oil prices dipped to 2 1/2-year lows early this month, where they've since settled. Yesterday, the benchmark West Texas Intermediate price closed at $16.43 US, down two cents from the previous day. "We've had a pretty good shellacking," said Joseph Schachter, manager of the Calgary-based Spectrum United Canadian Resource Fund. "It's very significant, especially considering it's winter, when demand is normally higher." Oil and gas stocks have taken a beating with other commodity prices -- the TSE oil and gas sub-index has lost more than 2,000 points from its September high of 8,000. The index posted a 33.68 gain yesterday to close at 5856.38, still well down from its lofty autumn levels. But the real impact of the slide won't be felt until the spring, when CASH STRAPPED producers are forced to scale back what was supposed to be record drilling activity. "They won't have access to the equity market and will have to spend something closer to their existing cash flow," said Doug Monoghan, an oil and gas analyst with Scotia Capital Markets. "There definitely won't be as much activity out there if prices stay where they are. The lower the price goes, the less drilling you'll see." Hardest hit will be the relatively costly heavy-oil production, fast becoming an uneconomical option in the face of widening differentials from light crude prices. Lynda Lo, a Calgary-based energy economist with the Royal Bank of Canada, thinks the energy industry may have seen the worst of the price crunch. Oil prices won't move much lower, Lo predicted, adding the industry is in good shape to handle prices in the $16 range.

To: Crocodile who wrote (8520)	1/16/1998 9:43:00 AM
From: Kerm Yerman	Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING THURSDAY, JANUARY 15, 1998 (3) FEATURE STORY Yemen Discovery Exciting Prospect Calgary Sun A drilling site pumped up prospects for two Calgary-based companies yesterday with the announcement of an oil discovery in central Yemen. TransGlobe Energy Corp. and Gulf Canada Resources Ltd. announced their exploration well on Block 32 hit oil in the Middle Eastern republic of Yemen after several drilling attempts. Ross Clarkson, president of TransGlobe, views the find as "very significant." In the Sayun Basin, the Tasour-1 well flowed at 3,250 barrels of oil per day and recorded a maximum pump capacity rate of 4,877 barrels a day. But the potential of the well is much higher, said TransGlobe, which holds an 8% working interest in the project. Clarkson added that it is too early to suggest the potential of the block. The project is now waiting for an evaluation of the tests to determine a reserve estimate range, said Gulf Canada spokeswoman Jennifer Martin. "Making a guess-timate of the potential of the area is pretty much impossible," said Martin. "It's only one well." Just south of the Sayun Basin, the Masila Fields, home to exploration by Canadian Occidental Petroleum, is producing over 180,000 barrels per day. This is the third well that has been drilled in the basin after the first two were unsuccessful. "Third time lucky, I guess," said Clarkson. FEATURE STORY Many Heavy Oil Searchers Standing Pat For Now Facing scenarios showing world prices at below $17 (U.S.) per bbl and a differential that reached $8.88 (Cdn.) a bbl in December, heavy oil producers are taking a mixed approach to exploration and production plans. Large firms such as Imperial Oil Limited, Gulf Canada Resources Limited, Norcen Energy Resources Limited, Talisman Energy Inc. and Mobil Oil Canada are waiting to see what happens, while others have already moved. Amber Energy Inc. plans to boost heavy oil production to 20,000 bbls per day in 1998 from about 4,600 bbls per day. "Our heavy oil (at Pelican Lake) is such low-cost production that even at current prices we're still making strong netbacks," said President Richard Lewanski. "The only concern, of course, is that lower prices mean lower cash flow in total for the company. That means to maintain our current expenditures our debt levels will increase slightly," he said. Lewanski said if WTI prices drop far enough it will squeeze the differential. "If those prices stay for any length of time, it means the heavy oil differential has to come down ... It always has in the past," he said. "We believe if WTI prices are $17 (U.S.) per bbl the highest differential you could expect is about $6 a bbl," Lewanski explained. "If it's any higher than that, then most of the standard, higher operating cost heavy oil production is cash-flow negative. So that oil gets shut in and it drives the differential down." Firms such as Pursuit Resources Corp., Numac Energy Inc., Archer Resources Ltd. and Ranger Oil Limited have already curtailed some plans. "We certainly had a number of heavy oil opportunities that we were proposing to drill. But we will not be doing so at these crude prices and the differentials we're seeing," said Nolan Blades, president and CEO of Pursuit. "It's about as ugly as it gets." The company has 12 Lloydminster-type heavy oil opportunities of which two of the more positive will be drilled. "The rest we'll defer until we see a better economic basis for going ahead. But we surely won't be giving up the leases," he said. "We've significantly shaved the program back," said Rich Coulliard, vice-president of exploration and production at Numac. He noted initial plans included spending $25-30 million on heavy oil drilling at Manatokan in east-central Alberta. "We effectively have cut that to some selective drilling on some highly productive wells just to firm up what we have," Coulliard said. Archer's management was way ahead of the game in cutting back heavy oil production with a strategy that played into today's market conditions. "We cut back in February (1997)," President Wayne Foo said. "We have a significant amount of heavy oil production we brought on-stream .... we had the right market read." He added: "In February, we (also) looked at a significant heavy oil purchase and decided not to go with it." The company's heavy oil properties, such as Bellshill, have high decline rates with narrow differentials in the $3.50 per bbl range. The strategy was to bring as much production as possible to the market at hedged prices to get high netback. Foo said Bellshill was ramped up to about 2,000 bbls per day during the low differential span in l997. That output has since naturally declined to about 1,000 bbls a day. He said Archer maintains a large inventory of heavy oil prospects, but development in the near term is not going to happen. In response to current low prices, Ranger has shut-in a number of higher operating cost wells in the heavy oil division, said John Faulds, vice-president of investor relations. Daily heavy oil production has been reduced to approximately 19,000 bbls per day. "Production and operating costs will continue to be reviewed on a well by well basis to reflect the changing economic environment," he said. Ranger got into heavy oil with its purchase of ELAN Energy Inc. "It's tough right now, there's no question," said Hart Searle, public affairs adviser with Imperial. "It's a really sour market, but we maintain that we are the low-cost producer in heavy oil." Searle said the company hasn't set heavy oil production estimates for 1998. However, he stated emphatically: "Near-term, there are no plans to shutin production." In 1997, close to 115,000 bbls per day of the heavier bitumen crude was recovered from Imperial's Cold Lake operations. He noted Imperial has done significant work to weather-proof its business through technological research and development for Cold Lake operations. Searle added postponing heavy oil developments, such as Mahkeses, would be jumping the gun. With heavy oil making up a small portion of operations overall and a generally unfavourable outlook, Gulf is keeping its plans intact. Its acquisition of Stampeder Exploration Ltd. added heavy oil assets after a CS Resources Limited takeover bid lost to PanCanadian Petroleum Limited. "We're trying to enhance our heavy oil interests," said Jennifer Martin, senior investment relations adviser for Gulf. "We have no plans at all to cut back." FEATURE STORY Syncrude Coker Repairs Continue Fort McMurray Today An unscheduled turnaround is in its second day at Syncrude Canada. Management at the oilsands plant decided yesterday to begin work to correct problems at one of the plant's two cokers. The coker is a vessel where bitumen is cracked into fractions and coke is withdrawn to start the conversion process of bitumen to upgraded crude oil. Problems with the coker were first made public earlier this week. A turnaround had been scheduled for late March. "We are going to do as much associated work as we can at the same time," Syncrude spokesperson Peter Marshall said this morning. "So in essence we have advanced the turnaround by two-and-a-half months." The turnaround is expected to last 31 days. Marshall said there won't be an extra cost to doing the work now, as opposed to March, because the cost had been factored into Syncrude's budget. He noted some work previously planned for March may have be to rescheduled. Syncrude has an idea what caused the coker problems but Marshall wouldn't reveal what it is. The turnaround means Syncrude's production will dip from 210,000 barrels per day to an estimated 130,000 to 150,000 barrels per day. "We expect this (work) will have us largely back on track. It will take us back to the first half to get us back onto our planned production and we are still estimating 80 million (barrels) for the year," Marshall said. More than 2,000 people are expected to work on the turnaround. Syncrude currently employs about 3,500 and 1,000 contractors. Syncrude will be using its 1,975-room camp facilities to temporarily house many of the workers. If there's overflow, Marshall said they'll ask Suncor Energy to use their camp. Syncrude's March 1997 turnaround lasted 41-days. FEATURE STORY Terra Nova Offshore Oil Project Approved Canadian Press Newfoundland's second offshore oil project cleared its final regulatory hurdle Thursday when its development plan was approved by the Canada-Newfoundland Offshore Petroleum Board. Petro-Canada, the lead company in the six-member consortium developing the Terra Nova oilfield, must now agree to meet 23 conditions set by the board before it can proceed further. John Fitzgerald, the board's acting chairman, said the conditions are not a drastic departure from the company's original plan. "What we've done is introduce some additional precision in terms of the information they're being asked to provide," said Fitzgerald. "We're asking for very specific submissions and for some additional research and studies to be completed." The first condition requires the companies to relocate some engineering jobs and other preliminary work currently being carried out by several hundred people in London, Houston and Paris to Newfoundland as soon as possible. "The major issue on the benefits side is always whether the local population is going to be able to participate fully in the supply of goods and services and the employment opportunities that arise from the project," said Fitzgerald. The board's decision, which followed public consultations and a report by an environment assessment panel, has also been approved by the federal and provincial governments. Petro-Canada officials were not available for comment Thursday. It could take them up to two weeks to study the conditions and assess how they might affect the cost and schedule of the project, said spokesperson Mona Rossiter. Then the company will make a final decision on whether to proceed. Production is expected to begin by 2001. Other conditions apply to more technical aspects of recovering the oil, such as how gas will be reinjected into the reservoir, reducing greenhouse gas emissions, and the handling of drilling waste. Thursday's report also outlines how the federal and provincial governments plan to respond to specific recommendations directed at them in the environmental assessment panel's report released last summer. The Canadian Coast Guard will be responsible for reviewing the transportation of oil produced on the Grand Banks from both a safety and environmental perspective. Meanwhile, it will be the Newfoundland government's task to ensure there is a coastal zone management plan along the much-travelled waters of the province's Avalon Peninsula and Placentia Bay. Discovered in 1984, the Terra Nova field is located 350 kilometres southeast of St. John's. About 400 million barrels of light, sweet crude will be recovered using a ship-shaped floating production system.

To: Crocodile who wrote (8520)	1/16/1998 9:54:00 AM
From: Kerm Yerman	Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING THURSDAY, JANUARY 15, 1998 (4) MARKET ACTIVITY Notes yesterday on US trading in the oil's. The Oil Sector continued higher, helped by the Iraq drama. Shares of oil company continued their week long upswing on Thursday, helped by Wall Street analyst upgrades and continuing tensions between Iraq and U.N. arms inspectors. The United Nations Security Council on Wednesday deplored Baghdad's decision to bar an inspection team headed by American Scott Ridder from visiting suspected weapon sites. ''Nobody can assume (Iraqi leader) Saddam Hussein will sit tight and be a good citizen,'' said Lehman Brothers analyst Paul Cheng, noting that a worsening situation could endanger Iraq's permission from the U.N. to sell oil on the world market. Shares of Mobil Corp (NYSE:MOB) were up 1-9/16 to 69-3/8, while those of British Petroleum (UK & Ireland: BP.L; NYSE:BP) rose 1-1/8 to 79-3/4 on the New York Stock Exchange. Earlier today Donaldson Lufkin (NYSE:DLJ) and Jenrette analyst John Hervey raised his rating on Mobil to a recommended list buy from buy, and upped his rating on British Petroleum to a recommended list buy from market perform. Hervey said he believed Mobil's share price was ''near its bottom and should offer substantial upside over the coming year.'' He said Mobil's management was ''among the best in the industry.'' Hervey said he upgraded British Petroleum based on his view that the oil sector had been tremendously oversold in recent weeks in an ''extreme over-reaction to falling oil prices.'' He said BP had ''one of the best fundamental stories in the industry.'' Other gainers included Chevron Corp (NYSE:CHV), up 3/4 to 76-1/2 in afternoon trading, and Texaco Inc (NYSE:TX), up 1-1/16 to 54-1/16. But Exxon Corp (NYSE:XON) was off 3/16 to 60-5/8, and shares of Royal Dutch Petroleum Co (RD.AS) (NYSE:RD) eased 1-7/16 to 51-3/16 in New York trading. Cheng said the oil sector had significantly outperformed the broader market this week, with shares of small tier integrated companies jumping about 5 percent since Friday and those of major integrated oil companies gaining about 6 percent. By contrast, he said, the Standard and Poor's 500 Index had risen only about 2.75 percent during the same period. INDEXES The Toronto Stock Exchange 300 Composite Index fell 0.4% or 24.12 to 6327.01. In comparison, the Oil & Gas Composie Index was stronger, rising 0.6% or 33.63 to 5856.38. The group was led by the Oil & Gas Producers, up 1.1% or 55.93 to 5145.12. The Integrated Oils was basically unchanged, losing just 1.86 to 8185.44 and the Oil & Gas Services fell 1.6% or 40.14 to 2432.37. INDEX CHARTS TSE 300.......... canoe.quote.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 HOT STOCKS MOST ACTIVES Among the top 50 most active traded issues on the Toronto Stock Exchange were Paragon Petroleum, Pinnacle Resosurces, Ranger Oil, Northstar Energy, Northrock Resources, Anderson Exploration, Berkley Petroleum and Petro-Canada. Net gainers included Baytex Energy $1.05 to $13.00, Berkley Petroleum $0.90 to $14.10, Paramount Resources $0.85 to $14.85, Amber Energy $0.80 to $17.00 and Talisman Energy $0.60 to $36.85. Percentage gainers included Black Rock Ventures 11.1% to $1.20, Tethys Energy 9.5% to $2.30, Bonavista Petroleum 9.3% to $3.88, Newquest Energy 9.1% to $6.00, Baytex Energy 8.8% to $13.00, Petrobank 8.8% to $3.10, Cypress Energy 8.3% to $3.90 and Berkley Petroleum 6.8% to $14.10. On the downside, no oil producers were listed as net losers. Percentage losers included Seventh Energy 9.5%, TUSK Energy 8.0% to $0.92, K2 Energy 6.7% to $1.40 and Magin Energy 4.8% to $2.00. Companies reaching new 52-week highs included TransGlobe Energy. New 52-week lows were obtained by Cabre Exploration, Camberly Energy, Canrise Resources, Pinnacle Resources and Ranger Oil. In review of oil & gas service companies, as well as those with close ties to the industry, Bonus Resource Services and IPSCO were listed among the top 50 most active traded issues on the TSE. Net gainers included Shaw Industries, up $1.00 to $40.00 Percentage gainers included Petro Well Energy Services 10.0% to $1.10 and Alpine Oil Services $9.5% to $1.15. On the downside, Enerflex Systems fell $0.75 to $27.50. Percentage losers included Badger Daylighting 5.7% to $4.95. Companies reaching new 52-week highs included Pason Systems. No new 52-week lows. Over on the Alberta Stock Exchange, Gold Star Energy, Colt Energy, Storm Energy, Jerez Energy, Red Sea Oil, Bearcat Explorations, Trego Energy, Oxbow Exploration, Scarlet Exploration and First Star Energy were among the top 30 most active traded issues. Net gainers included Pason Systems $0.75 to $6.80, Capco Resources $0.74 to $2.90, Niko Resources $0.45 to $4.50, red Sea Oil $0.19 to $3.04, Endeavor Resources $0.15 to $0.30, Total Energy Services $0.15 to $2.40, Deena Energy $0.11 to $1.11 and Scarlet Exploration $0.10 to $1.05. Percentage gainers included Endeavor Resources 100.0% to $0.30, Capco Resources 34.3% to $2.90 and Raptor Capital 20.0% to $0.48. On the downside, Canadian Crude Separators fell $0.50 to $4.00, Solid Resources $0.30 to $6.50, Kensington Energy $0.25 to $1.00, AltaQuest Energy $0.13 to $2.25, Braegan Energy $0.10 to $0.40, Devlan Exploration $0.10 to $0.50, Hawk Oil $0.10 to $1.05, Lexxor Energy $0.10 to $0.90, Palmetto Resources $0.10 to $1.00, Tribute Resources $0.10 to $0.35, Mart resources $0.09 to $0.29, Petro-Reef Resources $0.09 to $0.70 and Trego Energy $0.09 to $1.25. Percentage losers included Mart Resources 23.7% to $0.29, Tribute Resources 22.2% to $0.35, Braegan Energy 20.0% to $0.40, Kensington Energy 20.0% to $1.00, Ascot Energy Services 16.7% to $0.25, Devlan Exploration 16.7% to $0.50, High Plains Energy 14.3% to $0.30, Petro-reef Resources 11.4% to $0.70 and Canadian Crude Separators 11.1% to $4.00. Esker Resources reached a new 52-week high. New 52-week lows were obtained by Enterprise Developement, Fox Energy, Kenssington Energy and OTATCO. An excellent summary of most actives covering all four of the Canadian Stock Exchanges can be found at quote.yahoo.com

To: Crocodile who wrote (8520)	1/16/1998 10:16:00 AM
From: Kerm Yerman	Read Replies (4) \| Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING THURSDAY, JANUARY 15, 1998 (5) KERM'S TOP 21 - SPEC 15 - SERV 9 COMPANIES IN THE NEWS BERKLEY PETROLEUM announced it has made an offer to acquire all of the shares of Martel Resources Inc., an Alberta based private oil and gas company with assets in the Ft. St. John, Stoddart and Siphon areas of northeast British Columbia and the Wildhay area of Alberta. The acquisition was approved by Martel's shareholders January 14, 1998, and is scheduled to close January 20, 1998. Under the agreement, Berkley will issue 450,000 shares to Martel shareholders. Berkley estimates the acquisition will add approximately 500 boepd of production and reserves of 1.37MMBOE proven plus half probable to the company. KERM'S WATCHLIST OF COMPANIES IN THE NEWS GULF CANADA RESOURCES LTD. (TSE/GOU) announced an oil discovery at the Tasour-1 exploration well located on Block 32 in the producing Sayun Basin in the Republic of Yemen. Gulf Canada is the operator through its wholly owned subsidiary Clyde Expro Plc Yemen. The Tasour-1 well was drilled to a total depth of 2,763 metres (8,500 feet) and flowed at 3,250 barrels of oil per day of 29 degree API on a submersible pump from an 11 meter perforated interval. A maximum pump capacity rate of 4,877 barrels of oil per day was also recorded. Oil was discovered in the Qishn Clastics reservoir, the major producing reservoir in the nearby Masila Block. The discovery is located in central Yemen approximately 10 kilometres north of the Masila Fields that currently produce in excess of 180,000 barrels of oil per day. A technical and economic analysis of the well results is underway prior to deciding on an appraisal program, which could include evaluation of other prospects identified on the same trend and deeper formations from which the nearby Sunah Fields produce. The well has been suspended as a potential producer pending results of the appraisal program. Pending government approval (x), the interests in the Block 32 production sharing agreement are Gulf Canada through Clyde Expro Plc with 32.26 per cent, Norsk Hydro Yemen AB of Norway with 31.0 per cent, Ansan Wikfs Hadramaut Ltd. a private Yemeni company with 16 per cent, Oranje-Nassau Yemen BV of Netherlands with 12.74 per cent and TransGlobe Energy Corporation of Canada with 8.0 per cent. (x)Formal assignment of the 8 per cent interest to TransGlobe Energy from Gulf Canada Resources Ltd. and Oranje-Nassau is under application pending government approval. BELAIR ENERGY (ASE/BGY) noted that after acquisition of Windstar Energy, the company will have production of approximately 170 bpd of crude oil and NGL's and 2.2 mmcfd of natural gas. The company will have 850,000 oil equivalent barrels of proven reserves, 300,000 oil equivalent barrels of probable reserves and 66,500 gross (19,600 net) acres of undeveloped lands. Most of the company's properties are in central and northwestern Alberta. OTHER COMPANIES IN THE NEWS The Board of Directors of DIAZ RESOURCES LTD. announced the appointment of Mr. Robert W. Lamond as President and Chief Executive Officer and Mr. Charles A. Teare as Vice President and Chief Financial Officer of the Company. Mr. Lamond indicated that he intends to expand the Company's U. S. and Canadian exploration programs during 1998, financing the U.S. program with its current working capital and cash flow, and initially financing the Canadian program with flow through shares. In the U. S., the Cabaza Creek well in Goliad County, Texas has been cased as a potential Lower Wilcox gaswell. Completion of the well is planned for next week and if successful, the well should be on stream before the end of the first quarter, 1998. Diaz has a 33% working interest in the well. Diaz is also participating for its 8.25% working interest in a horizontal re-entry of an Edwards Limestone gas prospect in DeWitt County, Texas and a 20% interest in a deep re-entry in Cameron Parish, Louisiana. Diaz also has the right to participate as a 25% partner in a 125,000 acre exploration permit in the Llanos Basin of Colombia, South America. NU-SKY INC.(VSE/NUS) announces that it has cased its Brazeau River Shunda well. Completion and testing of several prospective zones is expected to begin by mid-February. Nu-Sky has a 10 percent working interest in this well. So far this year Nu-Sky has participated in drilling 3 wells resulting in two gas wells and one oilwell. COMMONWEALTH ENERGY CORP. (ASE/CWY) announced by way of information received from Energas Resources Inc., the operator, that operations to perforate the entire Dakota/Lakota zone in the Finley State No. 2 well began today. Geology indicates that this prolific zone discovered in the Finley State No. 1 well may exist in the Finley State No. 2. costs to the Company will be US $2,250,000 to be paid from existing cash. Further announcements will be forthcoming. DEL ROCA ENERGY INC. (ASE/DER) has withdrawn intent to purchase all of the shares of a private company with oil and gas assets in the Pembina area of Alberta. The proposed acquisition had been announced by the Corporation on November 25, 1997 with a proposed closing date of January 31, 1998. The decision was based on the results of the Corporation's due diligence process and the ensuing determination that the proposed transaction was not in the best interests of the shareholders. The Corporation is continuing to evaluate numerous other acquisition opportunities. INTERNATIONAL - COMPANIES IN THE NEWS GOLD STAR ENERGY (ASE/GSN) announced the acquisition of interests in two oil concessions in Argentina, for a total of $2.8 million U.S. Gold Star has entered into an agreement to acquire a 40 percent working interest and will be the technical exploitation operator for the Puesto Guardian concession in the Northwest basin. This 300,000 acre block currently produces 650 bopd, has 2500 km of 2-D seismic and nineteen (19) years remaining on the primary term mineral lease. Gold Star believes there is significant upside potential through horizontal re-entries. Gilbert Laustsen Jung Associates Ltd. are currently finalizing their reserve evaluation of the property. In addition, the agreement entitles Gold Star to acquire a 28 percent working interest in the La Brea block, also located in the Northwest basin. This 330,000 acre concession currently produces 30 bopd and is operated by Equitable Resources of Houston, Texas. Both acquisitions are expected to close April 1, 1998, subject to a satisfactory due diligence review by Gold Star. TRANSGLOBE ENERGY CORP. (TSE symbol TGL) (NASDAQ/TGLEF) announced today an oil discovery at the Tasour -1 exploration well located on Block 32 in the producing Sayun Basin in the Republic of Yemen. Gulf Canada is operator of Block 32 through its wholly owned subsidiary Clyde Expro plc of Yemen. The Tasour well was drilled to a total depth of 2,763 metres (8500 feet) and flowed at 3,250 barrels of oil per day of ca. 29 degree API on a submersible pump from an 11 metre perforated interval. A maximum pump capacity rate of 4,877 barrels of oil per day was also recorded. Oil was discovered in the Qishn Clastics reservoir, the major producing reservoir in the nearby Masila Block. The discovery is located in central Yemen approximately 10 kilometres north of the Masila Fields that currently produce in excess of 180,000 barrels of oil per day. A technical and economic analysis of the well is underway prior to deciding on an appraisal program which could include evaluation of other prospects identified on the same trend and deeper formations from which the nearby Sunah Fields produce. The well has been suspended as a potential producer pending results of the appraisal program. Pending government approval (x), the interests in the Block 32 production sharing agreement are Gulf Canada (Clyde Expro plc) with 32.26 percent, Norsk Hydro Yemen AB of Norway with 31.0 percent, Ansan Wikfs (Hadramaut) Ltd. a private Yemeni company with 16 percent, Oranje-Nassau Yemen B.V. of the Netherlands with 12.74 percent and TransGlobe Energy Corporation of Canada with 8.0 percent. (x) Formal assignment of the 8 percent interest to TransGlobe Energy from Gulf Canada Resources Ltd. and Oranje Nassau is under application pending government approval. EQUATORIAL ENERGY INC. and First Dynasty Mines Ltd. announced today that the definitive agreement has been signed for First Dynasty to sell its 100% interest in Energy Process Services (EPS) to Equatorial. EPS owns 80% of Genindo EPS, which operates the Sembakung Oilfield in East Kalimantan, Indonesia. The terms of the sale will result in First Dynasty receiving approximately US$40 million in cash, of which US$10 million was received in December 1997. The remaining US$30 million is comprised of a US$23 million acquisition cost, plus accumulated working capital as of December 31, 1997. A separate agreement has been signed whereby First Dynasty will sell its drill rig for US$3 million. Equatorial is entitled to all cash flow and working capital which accrues to EPS from January 1, 1998 to closing. The Sembakung field is currently producing approximately 3,700 barrels of oil per day. Equatorial intends to expand production to in excess of 10,000 barrels of oil per day through a capital investment program. CANADIAN TALON RESOURCES LTD.esources, Ltd. announced that it has entered into a letter of intent dated January 12, 1997, among the Corporation, Pacalta Resources Ltd. , TALON Resources Corporation and Taurus Petroleum Limited The company proposes to; a)complete a private placement of 1,875,000 units of the Corporation at a purchase price of $0.40 per unit or an aggregate amount of $750,000. Each unit shall consist of one (1) common share and one (1) share purchase warrant. Each share purchase warrant shall entitle the holder thereof to purchase zero point eight (0.8) additional common shares of the Corporation at a purchase price of $0.50 per common share on or before twenty four (24) months from the date of issue for an aggregate of 1,500,000 common shares; and b) acquire certain interests relating to a joint venture agreement (the "JVA") among Pacalta, TALON and Taurus which will entitle the Corporation to evaluate, upgrade and develop power generation and related infrastructure in support of Pacalta's operations in Ecuador and Columbia. The parties have agreed that the initial project will be a 10-20 Mega Watt power generation project on Pacalta's City Block in Ecuador. The Corporation intends to issue 4,125,000 common shares of the Corporation, at a deemed value of $0.40 per common share for an aggregate consideration of $1,650,000 related to the acquisition of the JVA interests. Certain directors and officers of the Corporation are also directors and/or officers of Pacalta, TALON and Taurus. The issue price per unit of the Corporation and common share of the Corporation represents the closing price of the common shares of the Corporation as traded on The Alberta Stock Exchange on January 12, 1998, less an allowable discount of 10 percent.

To: Crocodile who wrote (8520)	1/17/1998 8:33:00 AM
From: Crocodile	Read Replies (1) \| Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, JANUARY 16, 1998 (1) Saturday, January 17, 1998 Golds inspire Bay Street - By THE FINANCIAL POST Improving markets across Asia and Europe combined with positive high-tech corporate earnings reports and the strongest gold rally in a decade to boost stock prices on Bay and Wall streets The Dow Jones industrial average rose 61.78 points, or 0.8%, to 7753.55. For the week the Dow rose 2.3%, recouping about half of last week's decline - its worst in eight years. ÿ The Standard & Poor's 500 composite index rose 10.78 points, or 1.1%, to 961.51, a 3.6% gain for the week. The Nasdaq composite index rose 15.82 points, or 1%, to 1562.88, and rise of 4% for the week. ÿ About 672 million shares changed hands on the Big Board, up from 573 million shares traded Thursday. ÿ Sun Microsystems joined Intel Corp. and Motorola Inc. among large computer-related companies to report this week that profits were largely unaffected by the Asian economic crisis. ÿ Sun Microsystems shares (SUNW/NASDAQ) rose US$2 1/16 to US$451 1/88. Analysts at PaineWebber Inc. and Merrill Lynch & Co. boosted their ratings on the stock to "buy." ÿ Sun said its fiscal second-quarter profit rose 25%, spurred by strong sales of its high-performance servers and storage devices. ÿ The Morgan Stanley high-tech index rose 1.36 points to 443.81 and gained 5% for the week. The index of computer-related shares is up 98% in the past three years. ÿ Microsoft Corp. (MSFT/NASDAQ) jumped US$2 15/16 to US$1351 1/84 and International Business Machines Corp. (IBM/NYSE) gained US$1 9/16 to US$1051 1/88. ÿ Canadian stocks rose, sent higher by gold producers like Barrick Gold Corp. as bullion prices rebounded on robust demand. ÿ The demand surge was fuelled by the US$'s slide to a one-month low against the Japanese yen, making it cheaper for Japanese investors to buy the precious metal. ÿ The Toronto Stock Exchange 300 composite index rose 91.67 points, or 1.5%, to 6418.68. The benchmark index gained 2.3% on the week, but is down 4.2% so far this year. ÿ More than 133.5 million shares changed hands, up from 96.5 million shares traded on Thursday. ÿ "The big jump early was on gold and the focus is on earnings," said John Kinsey, a portfolio manager with Caldwell Securities Ltd. ÿ The TSE's gold & precious metals subindex gained almost 15% on the week, its biggest weekly advance in a decade. ÿ Barrick Gold (ABX/TSE) rose 80› to $26.70. ÿ Reassuring statements from the International Monetary Fund that countries like South Korea, Thailand and Indonesia are taking steps needed to improve their economies helped lift metals issues on expectations commodity prices and producer profits will rise. ÿ Alcan Aluminium Ltd. (AL/TSE) gained $1.30 to $39, Noranda Inc. (NOR/TSE) rose 85› to $23.70 and Inco Ltd. (N/TSE) gained $1.35 to $23.20. ÿ Newcourt Credit Group (NCT/TSE) gained $4 to $53.40 and Canadian Pacific Ltd. (CP/TSE) rose $1.20 to $35.70. ÿ Major Canadian indexes closed higher. For a scorecard of trading activity on all Canadian Stock Exchanges, go to: quote.yahoo.com . The Montreal Exchange market portfolio rose 43.8 points, or 1.4%, to 3299, for a 2% rise on the week. The Vancouver Stock Exchange climbed 9.72 points, or 1.7%, to 593.88, up 0.5% on the week. ÿ Major international markets closed broadly higher. ÿ London: British stocks rose for a fourth straight session amid an influx of cash from U.S. fund managers. The FT-SE 100 index closed at 5263.1, up 97.3 points, or 1.9%, for a gain of 2.4% on the week. ÿ Frankfurt: After an early boost by overnight Asian gains, German shares were carried to a firmer finish by a sustained rally on Wall Street. The Dax index closed at 4184.46, up 36.12 points, or 0.9%. However, the benchmark fell 1.2% from last week. ÿ Tokyo: Japanese stocks soared, with the key Nikkei average gaining more than 6% and ending above the 16,000 level on speculation that the Japanese government would announce more measures to boost the economy. The 225-stock Nikkei closed at 16,046.45, up 924.47 points, or 6.1%. It rose 7% on the week. ÿ Hong Kong: Stocks rallied to a sharply higher close as investors returned to hunt for bargains, with fears easing of increasing debt financing problems. The Hang Seng index closed at 8900.04, up 321.06 points, or 3.7%, a rise of 0.1% on the week. ÿ Sydney: Australian stocks bounced off early lows to post a strong finish after the Japanese market rocketed. The all ordinaries index closed at 2614, up 29.5 points, or 1.1%, a gain of 0.4% from seven days ago. ************************************************************************** HOT STOCKS BARRICK GOLD CORP. (ABX/TSE), up 80› to $26.70, on volume of 2.8 million shares. PLACER DOME INC. . (PDG/TSE), up 80› to $18.50, on volume of 2.6 million shares. TVX GOLD INC. (TVX/TSE), up 15› to $3.90 on volume of 1.5 million shares. TECK CORP. (TEKb/TSE), up 95› to $20.45, on volume of 729,006 shares. Gold stocks started to move on the back of a solid move in the price of bullion. The price of gold on the Comex division of the New York Mercantile Exchange closed at US$290.60 an ounce Friday, up $4.70 for the day and $12.10 for the week. The Toronto Stock Exchange gold & precious metals subindex jumped almost 15% on the week, including a 232-points, or 3.8%, gain Friday to 6299.58. ÿ"The incessant selling has stopped from the central banks and hedge funds," said John Ing, a bullish gold analyst at Maison Placements Canada Inc. Ing still predicts the average price of gold in 1998 will be more than US$375 an ounce. "The strong US$ put a lid on gold in 1997 but the US$ has now peaked and we're due for a correction," he said.ÿ"Gold is sowing the seeds of its own recovery in terms of producers reversing their hedge positions ... capturing profits and adding to the buying of bullion." ÿBut Larry Strauss, analyst at Canaccord Capital Corp. said: "I don't believe this is the beginning of a turnaround for bullion." ÿ"The strength of the US$ and lack of a comprehensive statement from the European Union central bank over gold reserves limits a sustained rally in gold," said Strauss. ÿStrauss does not see a major downside in the price of gold but predicts it still might slip below its 52-week low of US$278.30 reached on Jan. 12. ÿ ALCAN ALUMINUM LTD. (Al/TSE), up $1.30 to $39, on volume of 1.1 million shares. "The price of aluminum has held up quite well compared to other metals and the consensus is that it will go up," said Stephen Bonnyman of CIBC Wood Gundy Securities Inc. PRECISION DRILLING CORP. (PD/TSE), up $1 to $26.50, on volume of 162,204 shares. The market responded favorably to the oil and gas service company's plans to repurchase up to two million of its common shares over the next 12 months. The repurchase of up to 4.8% of its outstanding stock will take place through open market transactions from Monday. FANTOM TECHNOLOGIES INC. (FTM/TSE), up $1 to $13, on volume of 714,105 shares. ÿThe Welland, Ont., vacuum cleaner manufacturer, formerly Iona Appliances Inc., has sucked up more than 40% of the upright vacuum cleaner market in the U.S, said Peter Quitzau of Brink Hudson & Lefever Ltd. in Vancouver. ÿ"This is a real Canadian success story because of its unique technology and increasing share of the U.S market," Quitzau said. He recommends Fantom as a "buy," with a 52-week target of $16. HUMMINGBIRD COMMUNICATIONS LTD. (hum/tse), up $1.30 to $46.45, on volume of 168,441 shares, and (humcf/nasdaq), up 7 1/88 to 32 1 1/84, on volume of 161,400 shares. The stock rose after the company released strong first-quarter results Thursday.ÿIn the quarter ended Dec. 31, Hummingbird's profit rose 27% to US$8.6 million (US59›), compared with US$6.8 million (US48›) a year before. Sales jumped 23% to US$27.4 million in the quarter, not including revenue from recently acquired Andyne Computing Ltd. The company expects revenue this fiscal year to top US$150 million. NORANDA INC. (NOR/TSE), up 85› to $23.70, on volume of 2.2 million shares. The firm said in November it would implement a restructuring plan to dispose of its non-metals assets in 1998, and the markets are now responding, said Wood Gundy's Bonnyman. ************************************************************************ BUY & SELL Opportunities among overlooked small caps -- By SONITA HORVITCH (The Financial Post) Opportunities remain in the small-cap sector with a number of companies generating good earnings or cash flow growth that the market is not giving them full credit for, said Gene Vollendorf, portfolio manager at Calgary-based Bissett & Associates. ÿ "The stock market is often inefficient in pricing these companies, many of which are 'under-followed' by the investment community," he said. ÿ Vollendorf co-manages the Bissett Microcap Fund ($6 million) and the Bissett Small Cap Fund ($118 million) with chief executive David Bissett. ÿ For the microcap fund, made up of companies with market caps under $75 million, Vollendorf is highlighting companies that are "consolidation plays." ÿArmed with a strong balance sheet and strong management, they are able to acquire firms and reduce administration costs. ÿHis top stock picks include: ÿ DC DIAGNOSTICARE INC. (DCE/TSE), which closed recently at $3 and has a 52-week trading range of $3.25 to $1.90. The Edmonton-based company owns and operates diagnostic imaging clinics. At the end of 1997, it had acquired 53 clinics over two years "which is testimony to the company's growth.ÿIt has a dominant position in some of the cities in which it operates, said Vollendorf. The company recently undertook a $15-million financing to fund further acquisitions. It also began to turn a profit in the third quarter of fiscal 1997, ended September, and Vollendorf expects it to break even for the fiscal year as a whole. He estimates earnings per share will be 15› for fiscal 1998 and 27› for fiscal 1999. ÿ RAILINK LTD. (RLKa/TSE) $11.70 ($12.50-$7). The Edmonton-based regional railway company operates short-line routes throughout Canada. It buys them from the major railway companies which are, in turn, concentrating on their principal routes. RaiLink has been hard on the acquisition trail. Vollendorf said it has been able to negotiate advantageous labor contracts, with employees enjoying profit sharing plans. His earnings per share estimates are 32› for 1997, 70› for 1998 and $1.12 for 1999. ÿ For his small-cap picks, Vollendorf is focusing on the oil services sector which "has fallen out of favor and is versold." He likes: ÿ STELLARTON ENERGY CORP. (SRTa/aSE) $4.50 ($6-$2.50). The Calgary-based company is in oil and gas production and in oilfield services. ÿBissett & Associates particularly likes the company for its ability to make innovative equipment that enhances the recovery of oil reserves, said Vollendorf. Stellarton has "been very successful in its operations and acquisitions as an energy producer." ÿHe estimates that the company should earn 15› a share for 1997, 30› for 1998 and 40› for 1999. ÿ RESERVE ROYALTY CORP. (ROI/TSE) $4.15 ($5.35-$1.85). The Calgary-based company is a source of financing for junior exploration and producing companies. It has royalty interests in Canada and the U.S. Vollendorf's cash flow per share estimates are 18› for 1997, 57› for 1998 and 77› for 1999. ÿ Bissett & Associates continues to like KELMAN TECHNOLOGIES. (KTI/TSE) $1.70 ($3.25-$1.10), which was a pick in this column Dec. 4 at $2.15. The Calgary-based company provides seismic data processing and data storage and retrieval services. Another theme for the small-cap portfolio is companies that trade at low multiples but are steady earnings growers. Here Vollendorf's pick is: EAGLE PRECISION TECHNOLOGIES INC. (EGL/TSE) $14.50 ($18.50-$7.20). The Brantford, Ont.-based company designs and makes tube-bending and tube-forming machines, mainly for the automotive industry. Eagle, which "is an under-followed company," dominates its segment. Vollendorf's earnings per share estimates are $1 for fiscal 1998, ending February, and $1.30 for fiscal 1999. ÿ His "sell" is RE-CON BUILDING PRODUCTS INC. (REC/TSE) 28› ($4.50-10›), which makes a range of roofing products. ÿ"The company is having problems with its profitability." ************************************************************************** Continued

To: Crocodile who wrote (8520)	1/17/1998 8:35:00 AM
From: Crocodile	Read Replies (1) \| Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, JANUARY 16, 1998 (2) Inside the Market Taking sides in the Great Market Divide - By PATRICK BLOOMFIELD Right up to the final hour of trading Friday, the nice little bear market rally had tended to be kinder to Wall Street than Bay Street. ÿ Our stocks lagged their U.S. counterparts Monday. Then the Toronto Stock Exchange's 300-stock composite took off with a discernible flashing of golden wings, as bullion prices bounced off their recent lows. ÿ That, in turn, restored some dignity to the battered natural resource sector, though it did somewhat less for the previous stars of the market spectrum - the major banks. Come Friday's close and the TSE 300 had a somewhat better gain than the Dow. ÿ That whiff of fresh life in natural resource stocks tells a lot about today's Great Market Divide. ÿ On one side are the bears, perceiving risk on every side - understandably so. Whether one is talking about European banks or the order books of big aircraft manufacturers, the ripples of the collapse of confidence in Asia are spreading. ÿ Back on the North American ranch, for instance, mutual fund investors are digesting the message that double-digit returns are no longer an assured benefit of paying somebody else 2%-plus to manage one's money. ÿ The great wash of savings into equity mutual funds, which drove stock prices so relentlessly higher, looks to be leveling off. Money is being diverted into bonds. ÿ When buyers lose appetite, the stage is left open for routine sellers, who are also with us, with consequent stock price erosion. And that can have more than a mere market effect. It can affect consumer confidence, the current jewel in the crown of the Canadian and U.S. economies. Being human, we are all less inclined to throw our money around when the value of our retirement savings is shrinking rather than rising. ÿ On the other side of the Great Investment Divide, however, are the value players, the very people who come to every bear market's rescue. Whenever there is perceived risk, the momentum crowd and the market timers transfer it to them. ÿ After all, these oft-scorned value players have learned a thing or two in their time. They have learned to live with the perceived risk of buying stocks or stock sectors at fire-sale prices, when nobody else wants to look at them. Experience tells them that if you are prepared to stick with your fire-sale buys for 18 months or more, you generally qualify for handsome rewards. They make buying low and selling high come true. ÿ One only has to glance at natural resource stock valuations in particular to note that there is a market fire-sale on, as value investor Irwin Michael, founder and prime mover of the singularly successful ABC group of mutual funds, stresses in his latest missive to fundholders. ÿ Michael started 1997 believing that the Canadian economy was "all dressed up and ready to go" - and still holds to that view. His major concern is that if we Canadians fail to take full advantage of the sale, foreign investors will do it for us, making the most of the current buying power of the greenback. ÿ Michael notes that Canadian corporate price and balance sheet ratios are significantly lower than those of comparable companies outside our borders (hardly surprising when one looks back at the underperformance of our major market indexes). ÿ Michael points in particular to the oil and gas, forest, mining and steel making sectors. He is not the only value player to be sifting through these sectors. I noted recently that the wily folk at Trimark, who were smart enough to build up spare cash ahead of the price tumble, have been doing likewise. ÿ Michael offers another potential compensation for today's troubled times. The murkier the Asian scene, the greater potential for a massive shift of investment monies to the relative safety of this continent. If the flight to safety were to build up, then Michael can envisage Canadian and U.S. stock markets being driven to new highs. ÿ It's the old, old market story. Reward rises with risk, and the greatest rewards are earned when scared investors toss out the baby with the bathwater and send some stocks tumbling to levels that more than discount the risk. Which is what Michael believes is happening right now. **************************************************************************** Gold stocks enjoy a mini rush -- By WILLIAM HANLEY It used to be said that an ounce of gold should buy a good suit. ÿ Well, don't show up at Harry Rosen brandishing $415 and demanding to see the Armanis. But gold's rise above US$290 (C$415) an ounce on Friday, with an intraday high of US$296, capped one of gold's better weeks since dressing-down Fridays came into fashion and gold doffed its image as a bespoke investment. ÿ Gold has a long way to go to get back even to where it was two years ago (at US$410), never mind the US$800 in 1979 that would have bought you two Armanis. But the week's action no doubt has the gold bugs dreaming of updating their threadbare wardrobes. ÿ The question now: is this flurry of optimism warranted or are the bugs just being measured up for yet another disappointment? ÿ The first part of the answer lies in why bullion advanced so rapidly this week from around US$278 on Monday. ÿ There are a number of reasons, beginning with the obvious one that it went up because it had been going down to oversold regions. This is known as a technical factor. ÿ Other points to consider include: * The US$10 intraday spurt Friday was likely triggered by panicking short-sellers rushing to cover their positions and cut possible losses. To cover, shorts must buy gold, thereby driving up the price. * Some traders noted that as the Chinese New Year approaches, Asians are buying gold jewelry to give as New Year gifts. (We are not so sure about this one, but we are willing to give the benefit of the doubt.) * The Commodity Research Bureau index, which tracks a basket or hard and soft commodities and is often seen as a gauge of sentiment about inflation, rose strongly this week after declining steadily for weeks. This indicates to some observers that inflationary pressures could be reignited. * Along the same line, the feeling this week was that the worst of the Asian crisis had passed and that deflation is not as much of a threat. Figures issued Friday on U.S. industrial production in December shows a solid economy seemingly unmoved by the events in Asia. * Meantime, a mild selloff of the US$ against the Japanese yen as Asian markets advanced strongly also gave gold a boost. ÿ The appetite for gold spilled over into a burst of enthusiasm for the Toronto Stock Exchange's gold stocks, which rallied 14.7% on index in the week. And even the beaten-up base metals stocks, which could really use a healthy dose of inflation (or at least a good inflation scare), took heart from the gold "rushlet". ÿ The rush out of gold over the past few years has been largely sparked by central bank selling. But those who believe gold has bottomed say those sales are insignificant in relation to the vast amounts held by the nations, such as the U.S., that hold the biggest reserves. ÿ Another card up the gold bulls' sleeve is the argument, long presented by Quantum Research's Bob Hoye, that gold has fared well in times of deflation. ÿ Yes, the bugs have plenty of reasons that gold should be higher. And while general investor sentiment about gold might not have completely turned, further gains in the price could build a momentum play, the reverse of the play that has put the gold industry in a straitjacket. ÿ Indeed, it might go up because it's going up. But don't expect the gold bugs to be out shopping for new Armanis if gold rallies. They will do what they have always done: buy more gold. ÿ We don't particularly like gold as an "investment", preferring the more senior gold stocks. But we don't dismiss bullion and the junior explorers as a speculation. ************************************************************************** Other News First fallout from Asia financial crisis reaches Europe BERLIN (AP) - Asia's economic crisis is being felt in Europe, where financial houses face layoffs or lower ratings, investments are being put on hold and corporate executives wait nervously to see the effect on their bottom lines. ÿ But experts said this week they don't expect the broader impact to be as serious in Europe as across the Atlantic. ÿ "European companies are probably slightly less exposed to Asian markets than their American equivalents," said Peter Dixon, senior economist at Commerzbank in Frankfurt. ÿ While about 30 per cent of U.S. exports go to Asia, the figure is considerably less for Europe, he noted: "So, I wouldn't expect to see the same impact from a downturn in demand." ÿ Yet some sectors are especially vulnerable, including banks and companies working on big infrastructure projects, such as highways, dams and power plants. ÿ Asian leaders are under pressure from the International Monetary Fund and other donors to close insolvent banks and rein in government spending. ÿ Moody's Investors Service placed French state-owned bank Credit Lyonnais S.A. under review this week for possible downgrading because of its exposure to troubled banks in South Korea, Indonesia, Thailand and Malaysia. ÿ Separately, Moody's noted that some big German banks also were vulnerable because of the globalization of their business. Most big German banks have exposure of between $20 billion and $30 billion each in the region, Dixon says. ÿ Meanwhile, British-based Schroders Securities is firing about 220 people from its Asia Pacific securities division in Hong Kong. It offered no explanation, but news reports have said the company was hit by falling profits because of Asia's financial troubles. ÿ Also this week, Swiss-Swedish engineering firm Asea Brown Boveri said Asia's troubles could cost the company's German power generation subsidiary up to $550 million in orders. ÿ Siemens spokesman Thomas Weber says none of the projects his company is involved with in Asia have been cancelled or postponed - "yet." But ask me what I expect for the next half year, . . .it's very hard to say," he said. ÿ Meanwhile, the Asian crisis appears to be causing some Asian companies to rethink their plans for expansion into Europe. ÿ South Korea's Daewoo Electronics is suspending indefinitely a planned $280 million plant in eastern France because of financial problems at home. The plant would have brought at least 700 jobs to Thionville, where unemployment is at 11 per cent. But Japan's automobile giant Toyota has announced plans in the last month to build its second European car plant in northern France and to expand engine production at its factory in northern Wales. **************************************************************************