MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING WEDNESDAY, JANUARY 21, 1998 (6)
INTERNATIONAL
COMPANIES IN THE NEWS
ABACAN RESOURCE CORP. announced thatit has completed drilling its Ima #9 well, an offshore development well located on the company's Ima Field in the Niger Delta. The well was drilled to the North Ima Field, to a true vertical depth of 12,940 feet (3,945 meters) and successfully logged through the "F" sand located at 11,400 feet (3,475 meters).
The well is presently being completed in the "F" sand, on the North Ima Field, which was discovered in June 1997 by the Ima #6 well. The well will be tied into the Ima Field production facility upon completion and production testing is anticipated to commence early next week.
The Ima #9 wellbore was also used to investigate a deep "X" prospect, located at a true vertical depth of 12,940 feet (3,945 meters), identified by 3-D seismic. Upon drilling into this objective, a high pressure regime was encountered which resulted in an underground blowout. For safety and operational reasons, drilling could not continue. The deeper "X" zone was controlled and cemented. Extensive sample analysis confirmed that new hydrocarbon fluids entered the wellbore from the "X" zone. The commerciality of this potential pay zone can only be confirmed by further drilling of a new well.
INTERNATIONAL ROCHESTER ENERGY announced that the formation evaluation of the Mirador, Guadalupe and Ubaque reservoirs in the Estero no. 3 well has been completed. This well located on the company's Alcaravan Association Contract in the Llanos Basin of Colombia, was drilled as a delineation well to confirm the extent of the Palo Blanco prospect and the reservoirs first discovered in the Estero no. 1 well, which tested 4000+ BOPD from only the Ubaque formation. Rochester owns a 25 percent beneficial interest in the Palo Blanco Field and similar rights to participate in the remaining area within the 210,000 acre Alcaravan Association Contract and the recently acquired 32,000 acre Miradores Association Contract.
COUNTRIES IN THE NEWS
PHILLIPINE'S
Oil companies on Thursday criticised a proposal to restore a Philippine oil subsidy fund which lawmakers say will protect consumers from recent price rises caused by the peso's depreciation.
Oil company officials said the scheme showed politics had overruled economic sense and described it as a blow to deregulation.
''This is a setback for the new bill ... We have to face the economic realities. I think we cannot continue to subsidise,'' Caltex (Phils) Inc vice-president Frank Cruz said.
Clatex is a joint venture between Texaco Inc (TX - news) and Chevron Corp (CHV - news).
''We were looking forward to immediate deregulation. Our position is that we had a transition period before, before the Supreme Court voided the previous deregulation law. We are now goingback to square one. We do not see the need for a buffer fund,'' Unioil Corp (UNI.PS) president Filomeno Santos said.
Unioil is one of about 30 new firms that expressed interest in investing in the oil sector when it was first deregulated last year. Unioil has opened two retail stations.
''We may defer our expansion plans of putting up 10 stations a year. Even with the oil deregulation bill, with the financial crisis, we have a situation of the more you import, the more you lose money. We have to wait and see,'' Santos said.
A bicameral legislative committee agreed on Wednesday night to appropriate 2.9 billion pesos ($68 million) for the Oil Price Stabilisation Fund (OPSF).
''As far as we are concerned, the subsidy has to be removed immediately. All that is needed is transparency whenever oil firms recover costs due to foreign exchange and crude oil prices,'' said Raul Concepcion, president of the Federation of Philippine Industries.
''This is yet another strong indication of unwillingness on the part of government to bite the bullet. It is quite obvious here that they are trying to remove any harsh impact on prices until after the May elections,'' University of the Philippines professor Benjamin Diokno told Reuters.
Lawmakers likewise agreed to impose a five-month transition period prior to full deregulation which can be extended for another six months by the president.
Senate energy committee chairman Freddie Webb said the panel agreed to set up a fund so that consumers could be protected from the wild fluctuations in foreign exchange and crude prices.
The fund was first set up in the early 1980s when international crude prices were high.
The transition period and the buffer fund were the last two contentious provisions agreed upon by the legislators. Congress had to work on the new bill after the Supreme Court nullified the old oil deregulation law last December.
President Fidel Ramos himself tried to convince lawmakers not to revive the fund saying the money should be channelled to social services. The legislators are eyeing the president's reserve funds as a source for the fund.
''In these times of uncertainties, we have to have some support from the government and as you very well know, when prices of oil products go up, everything goes up so we have to have some control,'' Webb said in justifying the need for the fund.
Without the buffer fund, the public will absorb the full effects of foreign exchange and oil price changes.
Any fuel price increase has historically been met by strong opposition from various groups.
The Energy Regulatory Board (ERB) and Petron Corp (PCOR.PS) offices were attacked on Monday, two days after the ERB announced a provisional price hike to cover the costs incurred by oil refiners as a result of the peso's depreciation.
PIPELINES
Rumors Rife On TCPL, Nova Deal
The Financial Post
Staffs of the two Calgary-based companies were said by industry sources to be gearing up for an announcement, perhaps today, that TCPL would take over all or part of Nova, which has assets valued at $10 billion. Both companies are based in Calgary.
Rumors of an on-again, off-again deal started circulating before Christmas. "It's the worst-kept secret in the city," one source said yesterday.
Others said the multibillion-dollar deal may have received the blessing of the two companies' boards in special meetings on Friday.
Nova would not deny the rumors. TCPL officials could not be reached for comment.
Two scenarios are in the rumor mill:
TCPL, which runs Canada's largest natural gas pipeline network outside Alberta, could buy all of Nova, then spin off its petrochemicals unit to cash in on higher valuations it might get as a "pure play."
TCPL may also be working on a takeover with another company that would take over the chemical assets.
TCPL is said to be hungry for Nova's pipeline network, a gas gathering monopoly in Alberta. Nova supplies 90% of TCPL's natural gas at the Alberta border.
In November, Nova announced plans to split itself into two to boost the price of its stock, a laggard because of the discount investors typically apply to holding companies.
TCPL is said to be interested in purchasing Nova in advance of the split to take advantage of its own stock's current high price, and to beat other potential suitors.
The two companies are already allies against a new rival gas shipper, Alliance Pipeline Ltd. Alliance plans to build a high-speed natural gas pipeline between British Columbia and Chicago. The National Energy Board is currently holding hearings on whether to approve the $3.7 billion proposal.
If Alliance is approved, both Nova and TCPL would see their market share erode.
TCPL recently proposed an expansion of its own system in competition with the Alliance project. Its proposed expansion would hook up to Nova's network and with the proposed Viking-Voyageur pipeline in the U.S. It would be be completed by late 1999.
TCPL said it plans to file an application this winter with the NEB for approval to lay pipe in Saskatchewan and Manitoba.
Meanwhile, Nova Gas International, a wholly owned Nova subsidiary, has declared its "intention to proceed" with construction for a US$400-million natural gas pipeline from Argentina to Chile. The deal for Gasoducto del Pacifico, Nova's second pipeline linking the two countries, was finalized in Santiago, Chile, during the trade mission to South America headed by Prime Minister Jean Chr‚tien.
Nova will own 30% of the pipeline and will also act as construction manager and operator.
MORE ON NOVA
Today, at a special Team Canada trade mission event attended by Canadian Prime Minister Jean Chr‚tien and Alberta Premier Ralph Klein, NOVA Gas International (a wholly-owned subsidiary of NOVA Corporation) and its partners, announced their intention to proceed with Gasoducto del Pacifico, a $400-million (U.S.), integrated natural gas project in Chile's 8th Region, known as the Bio Bio region.
Partners in Gasoducto del Pacifico are Canada's NOVA Gas International; El Paso Energy of the United States; Chile's Compania de Consumidores de Gas S.A. (GASCO); Empresa Nacional del Petroleo (ENAP) of Chile; and YPF S.A. of Argentina.
The project involves a $342-million (U.S.) natural gas pipeline from Argentina to Chile. The Gasoducto del Pacifico pipeline will transport natural gas from Argentina's Neuqu‚n province to customers in Chile's 8th Region, primarily around Concepcion, a city of about one million people, located 500 kilometres south of Santiago. The pipeline will include 530 kilometres of 20- and 24-inch mainline and 105 kilometres of 10- and 16-inch laterals. The initial delivery capacity of the system is estimated to be 4 million cubic metres (140 million cubic feet) of natural gas per day.
NOVA will own 30 per cent of the pipeline. NOVA will also act as the project manager for construction and will be the technical operator of the pipeline when it is completed.
''Gasoducto del Pacifico builds on NOVA's strong position and impressive track record in South America,'' says Gabriel Leon, NOVA Gas International's senior vice president for the South America region. ''The partners are now finalizing the commercial agreements and we expect to begin construction by mid-year.''
Commercial agreements are expected to be finalized by the end of January 1998. Gasoducto del Pacifico has in place the main environmental approvals and regulatory concessions to proceed with pipeline construction.
In addition to the natural gas pipeline, the Gasoducto del Pacifico
project includes:
- Servicios de Gas Natural (SGN) - a $44-million (U.S.) natural gas transportation and marketing company that will serve industrial customers in the region; and
- Gas Sur - a $14-million (U.S.) initial investment in a commercial and residential natural gas distribution system to serve customers in and around Concepcion.
The Gasoducto del Pacifico pipeline is expected to be in service by late 1999 with the marketing and distribution companies coming on stream at the same time.
''This project clearly demonstrates that NOVA's strategy for the South America region is right on track,'' says Kent Jespersen, president of NOVA Gas International. ''Gasoducto del Pacifico is an integrated energy project that includes gas transmission, distribution and marketing, with the potential for power generation in the future. This project has opened the door for us to become involved in gas marketing for the first time in South America. And, the project leverages our experience and investments in both Chile and Argentina to position us for strong growth in South America.''
In August 1997, NOVA and its partners celebrated the inauguration of the GasAndes pipeline, the first major natural gas pipeline to cross the Andes Mountains, and the first gas pipeline to serve Santiago, Chile. NOVA owns a 56.5 per cent interest in GasAndes, as well as a 15 per cent interest in a gas-fired power plant near Santiago, and a 10 per cent interest in Santiago's local distribution system.
NOVA Gas International is a wholly-owned subsidiary of NOVA Corporation with headquarters in Calgary, Alberta, Canada. NOVA's shares are traded on the Alberta, Toronto, Montreal and New York stock exchanges under the trading symbol NVA.
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