MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING THURSDAY, JANUARY 22, 1998 (5)
FEATURE STORY
Saskatchewan Looking To Deep Rights To Help Partly In 1998
Deep rights reversion, scheduled to come into effect April 1, holds some promise for oil and gas exploration in Saskatchewan this year, but the effects will have more of an impact in 1998-99 fiscal period, a government official has predicted.
"We've built a bit of an increase into the 1998-99 period," said Gordon Hutch, director of geology and petroleum lands with the Saskatchewan Energy and Mines. "It's going to be awhile before we see much (impact) because it's going to take several months to sort through the paper work ... I think it'll be October before you see the effects."
He said it is unlikely calendar 1998 would match levels achieved last year, when Saskatchewan set records for wells drilled and licensed, oil production and energy industry investment.
The low commodity prices are the primary reason for expected lower totals this year and less of an impact from deep rights reversion, Hutch said.
With deep rights reversion, companies will be able to license wells going into horizons below currently producing levels. About 8,000 petroleum and gas leases -- fitting this criteria are set to expire on March 31.
"There are certain areas that may be more active than others," he said in noting the available leases are about 40% of the total in the province.
The most active companies in Saskatchewan last year could keep up the pace this year and neither firm seems overly concerned about deep rights reversion.
The Canadian Occidental Petroleum Ltd.- Wascana Energy Inc. combination, at 472 wells drilled and 658 drill sites licensed, and Renaissance Energy Ltd. with 389 and 501 respectively, were by far the busiest firms in the province in 1997.
"With deep rights, we've still got quite a lot to do," said Kevin Finn, spokesman for CanOxy, while indicating the company is studying properties that might be affected. "We don't want to give anything away."
Renaissance, which will continue to be active in southwestern and southeastern Saskatchewan doesn't anticipate any problems with deep rights reversion, said Sheldon Steeves, the company's vice-president of exploration. "We see deep rights reversion as a positive not a negative for us," he added.
"We're not really affected, our land base is relatively new," Steeves said of deep rights. He indicated Renaissance checks all the property data when it is exploring in a particular area. "We drilled (last year) 10 what we call deep targets of about 2,000 metres looking at the Devonian and Ordovician," Steeves said.
CanOxy hasn't really firmed up plans for Saskatchewan yet, but "we will continue to be very busy," Finn said.
While low oil prices might have an influence on CanOxy's heavy oil activity in Saskatchewan, "there won't be much impact in shallow gas or the Williston Basin," Finn said. "You will continue to see significant production growth."
CanOxy expects production from its Plover field will be larger than that from the medium oil business unit sold last year. Production from that unit was about 11,200 bbls of oil equivalent per day, comprised of about 98% medium gravity oil and two per cent natural gas.
Renaissance expects the number of wells drilled in Saskatchewan this year will "probably be fairly similar," Steeves said. "We have no big changes planned." Additional land purchases are probable for Renaissance in Saskatchewan this year, he said.
As Wilson, the provincial official, said Saskatchewan will be hard pressed to surpass totals achieved in 1997.
Oil production from 1997 drilling at 145 million bbls, topped the 1996 record of 131 million bbls. Industry investment totaling about $1.8 billion, is a significant gain from the $1.4-billion record set in 1996.
Statistics from the provincial government show the 3,869 wells drilled and 4,646 licensed last year, topped the previous highs of 3,851 and 3,971 respectively set in 1985. And, that wells drilled total does not include 42 re-entry and five potash-related holes started in 1997.
Drilled and licensed wells were mostly secured in four areas, with the Estevan region in the southeast leading the way at 1,190 and 1,447 respectively -- topping previous highs of 1,182 and 1,274 set in 1985.
The Lloydminster and Swift Current regions in the northwest and southwest portions of the province also established new highs for drilling and licensing activity. The 910 wells drilled and 1,147 licences issued for the Lloydminster region topped the 811 and 852 respectively in 1985. Swift Current area totals of 800 wells drilled and 942 licences topped previous highs of 634 and 647 respectively set in 1985.
KERM'S TOP 21 - SPEC 15 - SERV P COMPANIES IN THE NEWS
None
KERM'S WATCHLIST COMPANIES IN THE NEWS
PANCANADIAN PETROLEUM reported fourth quarter net income of $69 million or $0.27 per share and cash flow of $254 million or $1.01 per share. During the fourth quarter of 1996 the Company reported net income of $122 million, or $0.49 per share, and cash flow of $338 million, or $1.35 per share. The 1996 fourth quarter results included $21 million of income tax related gains.
PanCanadian's financial results for the year continued to show solid performance. Net income was $330 million, or $1.31 per share, and cash flow was $961 million, or $3.82 per share, compared with 1996 net income and cash flow of $346 million and $1,001 million, respectively. Production of conventional crude oil and natural gas liquids averaged 140,023 barrels per day for 1997, compared with 146,331 barrels per day in 1996. Natural gas production averaged 744 million cubic feet per day for the year, up from 722 million cubic feet per day in 1996. Capital expenditures totalled $1,136 million for the year resulting in the drilling of 1,820 wells. Proved oil and gas reserve additions totalled 122 million barrels of oil equivalent, replacing 156 percent of 1997 production.
For more detail with tables, go to techstocks.com
OTHER COMPANIES IN THE NEWS
ENDLESS ENERGY CORP.(EEC/ASE) announced that it has closed on January 16, 1998 the previously announced purchase of certain oil and gas interests (the "Assets") located in the provinces of Alberta and British Columbia from a third party (the "Acquisition"). To close the Acquisition, the Corporation has entered into an agreement with an unrelated oil and gas corporation who funded 100% of the purchase price. Pursuant to the agreement, Endless has agreed to hold 100% of the Assets in trust for the unrelated oil and gas corporation and was granted the option to acquire on or before March 31, 1998 beneficial ownership of either an undivided 10.77% interest or an approximate 60% divided interest in the Assets in consideration of the payment of $400,000 or $2,208,800 respectively. The Corporation has the funds necessary to exercise the 10.77% option but intends to raise Sufficient funds to exercise the 60% option.
WILLOW CREEK EXPLORATION LTD. announced that, pursuant to agreed upon work commitments in the Gillsburg Field, Amite Co., Mississippi, the re-equipping of the Calhoun Well #1 and Fleet-Miller #2 wells have been completed, and the wells are currently pumping. The Miller #4 well has been successfully re-entered and pumping equipment is being installed. Due to the depth of the wells (11,500 feet) and reservoir conditions, a period of 1 to 2 weeks of steady pumping is required to achieve a stabilized production rate. Initial oil rates will be reported at that time. Willow Creek has a 50% working interest ("WI") in this field.
Upon completion of this work, the re-entry of the Sowell #2 well in the Pelahatchie Field, Rankin Co., Mississippi, will be commenced.
In addition, Willow Creek is awaiting the preparation of cost estimates for the drilling of two new wells. These are the Williams well in Gillsburg (50% WI) and the Johnny Rhodes 7-6 well in Pelahatchie. Dependent upon final cost figures, Willow Creek will participate for 25% in the Johnny Rhodes 7-6 well, but has initiated discussions towards an increased participation.
The new drilling is anticipated to commence in the first quarter of 1998.
BENZ ENERGY LTD. (BZG/vse) announced the purchase of 24.28 billion cubic feet of gas and 149,641 barrels of oil and condensate in proved reserves as estimated by independent petroleum engineers. The purchase includes substantial probable reserves and 21 development drilling locations and is effective as of December 1, 1997. The purchase price of $15 million is in the form of a note, convertible into $3 million of common stock, based on an average stock price over the last 30 days, plus $12 million of a new issue of non convertible preferred stock. Benz can elect to pay the preferred dividend with common stock for the first two years.
Prentis Tomlinson, Chairman of the Board, commented, "This transaction more than doubles our proved reserves and increases near term cash flows. Further, the Company is strengthening its balance sheet with new equity without significantly diluting our existing shareholders."
CALVALLEY PETROLEUM INC. announced its participation as a fifty percent (50%) working interest partner in a drilling and seismic joint venture arrangement in the Standoff area of S.W. Alberta. This contiguous block of petroleum and natural gas rights (4,320 acres) is located 100 miles south of the City of Calgary and is accessible on a year round basis. It is intended that the initial exploration
well will be drilled within the next 45 days to a depth of approximately 1800 metres, where it is anticipated that significant natural gas reserves will be encountered in the Bow Island Formation of the Mannville Group, similar to the Blood-Magrath pool which to date has produced in excess of 40 BCF of gas. Within the next few weeks, new 2-D seismic will be acquired by the parties.
MONALTA RESOURCES INC. announced that they have entered into negotiations with Canyon Financial Group for acquisition and joint venture opportunities. Canyon Financial has a portfolio of oil and gas properties in Texas, Montana, Oklahoma and Tennessee.
Monalta recently completed a private placement and are aggressively seeking opportunities in the oil and gas resource sector. Monalta will be following up last year's encouraging results on their mineral properties in Utah when the weather permits.
|
