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

To: Kerm Yerman who wrote (8664)	1/24/1998 11:12:00 PM
From: Kerm Yerman	Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, JANUARY 23, 1998 (4) OIL & GAS PRICE REFERENCES Charts: oilworld.com NYMEX Reference quotewatch.com CANADA INDEXES The Toronto Stock Exchange 300 Composite Index gained 1.6% or 103.83 to 6490.99. In comparison, the Oil & Gas Composite fell 1.8% or 106.73 to 5925.12. The Integrated Oil's fell 0.9% or 74.67 to 8433.78. The Oil & Gas Producers fell 2.1% or 111.12 to 5162.58. The Oil & Gas Service group fell 2.3% or 59.04 to 2463.14. For the week, the TSE 300 Composite Index gained 1.1% or 72.31. The Oil & Gas Composite fell 1.5% or 93.12. Sub-components were mixed. The Intregrated Oil's gained 0.9% or 77.12. Oil & Gas Producers fell 2.7% and the Oil & Gas Services fell 0.5%. 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 NEW PHLX OIL SERVICE SECTOR bigcharts.com. The Oil Service Sector is a price-weighted index composed of the common stocks of 15 companies that provide oil drilling and production services, oil field equipment, support services and geophysical / reservoir services. Since companies in this industry tend to be involved mainly in the production of oil, unlike their more diversified "bigger brothers," their stock prices tend to be much more sensitive to the prospects of oil discovery and continued production. This increased volatility calls for a hedging product that can protect investor portfolios. OSX options also relieve the indecision presented when investors simply wish to gain entry to this industry - the question of which stocks to buy is answered by a product that grants exposure to the industry with a single purchase. The OSX was set to an initial value of 75 on December 31, 1996; options commenced trading on February 24, 1997. Component Issues consist of Baker Hughes Incorporated, Cooper Cameron Corp., Dresser Industries, Inc., Falcon Drilling Company, Inc., Global Industries Ltd., Global Marine Inc., Halliburton Co., Noble Drilling Corp., Reading and Bates Corp., Rowan Companies, Inc., Schlumberger Ltd., Smith International Inc., Tidewater, Inc., Transocean Offshore Inc. and Varco International Inc. MOST ACTIVE Gulf Canada Resources, Canadian Occidental Petroleum, Abacan Resources, Renaissance Energy, Canadian Natural Resources, Suncor Energy and Talisman Energy were among the top 50 most active traded issues on the Toronto Stock Exchange. No net gainers among the top 50. Percentage gainers included Southward Energy 20.0% to $1.20, Profco Resources 16.7% to $1.05 and First Calgary Petroleums 13.1% to $1.12. On the downside, Pacalta Resources fell $1.95 to $9.55, Imperial Oil $1.35 to $82.60, Renaissance Energy $1.20 to $26.60, Berkley Petroleum $0.95 to $13.05, Chieftain Developement $0.95 to $26.00, Penn West Petroleum $0.70 to $14.00, Canadian Natural Resources $0.65 to $26.25 and Talisman Energy $0.65 to $37.60. Percentage losers included Pacalta Resources 17.0% to $9.55, Abacan Resources 10.7% to $2.00, Bellator Exploration 7.7% to $1.20, Black Sea Energy 7.7% to $1.20, OGY Pettroleum 7.1% to $1.30, Berkley Petroleum 6.8% to $13.05, Westfort Energy 6.7% to $0.98, New Cache Petroleum 6.4% to $5.15, Petromet Resources 6.1% to $2.95, Canadex Resources 5.7% to $1.32 and Startech Energy 5.7% to $7.50. No new 52-week highs. Black Sea Energy, Centurion Energy, International Rochester, Mercantile International Petroleum, Pacalta Resources, Pendaires Petroleum, Pinnacle Resources, Snow Leopard and Triumph Energy reached new 52-week lows. Service companies were absent among the top 50 most active traded issues on the TSE. ATCO I gained $0.75 to $35.25. Geophysical Computer gained 13.8% to $1.65. On the downside, Dreco Energy Services fell $3.50 to $34.50, Ensign Resource Services $0.75 to $26.00 and NQL Drilling $0.65 to $10.00. Percentage losers included Dreco Energy Services 9.2% to $34.50, Alpine Oil 8.0% to $1.15, Bromley Marr 7.8% to $1.06 and NQL Drilling 6.1% to $10.00. ATCO I reached a new 52-week high. Bromley Marr and Tetonka Drilling reached new 52-week lows. Over on the Alberta Stock Exchange, Bearcat Explorations, Jerez Energy, Esker Resources, Colt Energy, Red Sea Oil, Redeco Energy, Draig Energy, DeTech, Willow Creek, Aspen Energy, Commonwealth Energy, Granger Energy and Tessex Energy were listed among the top 30 most active traded issues. Solid Resources gained $0.25 to $7.25, Palmetto Resources $0.20 to $1.30, Request Seismic $0.20 to $1.20, Energy North $0.14 to $0.59, Mera Petroleum $0.11 to $0.75, Best Pacific Resources $0.10 to$1.15, Canadian Crude Separators $0.10 to $4.50 and Hawk Oil $0.10 to $0.35. Percentage gainers included Hawk Oil 40.0% to $0.35, Energy North 31.1% to $0.59, Request Seismic 20.0% to $1.20, Palmetto Resources 18.2% to $1.30, Mera Petroleum 17.2% to $0.75 and Bearcat Explorations 13.2% to $0.43. On the downside, Niko Resources fell $0.15 to $4.30, Colt Energy $0.10 to $1.35, Redeco Energy $0.10 to $0.90, Sterling Resources $0.10 to $1.25, Gold Star Energy $0.09 to $0.41, Gopher Oil & Gas $0.08 to $0.70, Ironwood Petroleum $0.08 to $0.32, Fox Energy $0.07 to $0.43 and Rockport Energy $0.07 to $0.23. Percentage losers included Rockport Energy 23.3% to $0.23, Ironwood Petroleum 20.0% to $0.32, Gold Star Energy 18.0% to $0.41, Fox Energy 14.0% to $0.43, Highpoint Energy 12.5% to $0.35, Scimitar Hydrocarbons 10.7% to $0.50, Cascade Oil & Gas 10.3% to $0.35 and Gopher Oil & Gas 10.3% to $0.70. New 52-week highs included Esker Resources, Hawk Oil and Willow Creek. AC Energy, Circle Energy, Lexxor Energy, Redeco Energy and Sator Capital reached new 52-week lows. An excellent summary of most actives covering all four of the Canadian Stock Exchanges can be found at quote.yahoo.com BUY/SELL/HOLD - ANALYSTS - RESEARCH Gordan Capital Friday Jan 23 PanCanadian Petroleum Limited (PCP-T:$20.20) SELL For the year CFPS was $3.82 vs. $3.99. In Q4 CFPS was $1.01 vs. $1.35 in 1996. Liquids production for the year fell 4% to average 140 mbbls/d. Gas production for the year was up 3% to 725 mmcf/d. In 1997, capital spending program (net of acquisitions) was $1.1 billion and included 1,820 wells. PanCanadian's 1998 capital budget is currently $1 billion (1,400 wells), however, we speculate that this budget will likely be decreased due to lower commodity prices. Due to the lack of corporate disclosure we are unable to determine the company's finding and development costs for 1997. This is a critical component to measuring a company's success. We have lowered our 1998 liquids forecast from 160 mbbls/d to 145 mbbls/d. Our 1998 gas production forecast remains 800 mmcf/d. We are forecasting fully diluted CFPS in 1998 of $3.30. Our 12 month stock price target is $18.00. SELL

To: Kerm Yerman who wrote (8664)	1/24/1998 11:22:00 PM
From: Kerm Yerman	Read Replies (1) \| Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, JANUARY 23, 1998 (5) Untitled Brokerage TARRAGON OIL & GAS (TN/TSE) Jan 14 Price $10.00 Recommendation: BUY When commodity prices decline, everything unravels for the oil industry. Lower oil and gas prices adversely impact the economics of the industry's activities. In the normal course of events, these new economics will lead to a slowdown in the industry's capital spending as various projects are shelved. Reduced spending, in turn, lowers the industry's production levels. Lower production levels, in combination with lower commodity prices, dramatically alter and lower the industry's cash flow. This whole process then becomes a vicious circle, as the lower levels of cash flow reinforce the industry's need to cut spending, particularly for those companies that entered this commodity price cycle with an already high degree of financial leverage. The need to cut spending has become the most pressing problem that individual management teams within the oil industry are having to deal with currently. Tarragon Oil and Gas is no exception. The Company's original plan was to spend $200 million on exploration and development in 1998. Given the lower commodity prices, this will no longer be the case. We expect Tarragon will keep capital spending in line with cash flow. Assuming WTI averages US$18.00/bbl and the Company's gas price $1.80/mcf, Tarragon's cash flow in 1998 is now forecast at $120.8 million. Accordingly, Tarragon's actual capital spending in 1998 is expected to be cut by $75-$80 million from originally planned levels. This reduction in spending is estimated to lower the Company's production levels by 3,000 boe/d from originally planned levels and this size of reduction has been built in to the cash flow estimate given above. Most of the reduction in planned capital spending for Tarragon will in fact occur in the final three quarters of 1998. First quarter spending of $60-$70 has largely been committed to and it will be pursued despite the current low commodity prices. It largely involves spending on three different gas projects in northern Alberta that will add new production volumes this spring, and, in one case, in 1999. Tarragon would not want to cut spending on these projects in any case. The three gas projects being referred to are the development drilling planned at Jean Lake and Wappau Lake in northern Alberta, and the exploratory drilling at Bitscho Lake, also in northern Alberta, that hopefully will set up another phase of gas development in the first quarter of 1999. One other project that Tarragon will pursue is the planned Phase 2 development of the Bolney heavy oil pool located in the Lloydminster area of western Saskatchewan. The $30 million cost of this program still appears well within Tarragon's financing capability despite lower estimated cash flow. This phase of development involves the drilling of another 13 horizontal producing wells, as well as 19 vertical steam injectors, into this heavy oil reservoir. This project also involves the installation of another steam plant and the expansion of the existing battery within the field so that it can handle more fluid. The drilling program at Bolney will begin in March and completed by the summer. Steaming within this new production module will begin in the summer and the incremental production from this new development will gradually build up to an estimated 10,000 b/d by year-end. At the end of 1998, Tarragon's total heavy oil production is estimated to reach the 17,000 b/d level. While the spending for the ongoing development of the Bolney heavy oil field will be maintained in 1998, it is likely that the first phase of development for the Edam property in the same general area will be deferred because of cash flow constraints. Drilling on this property was not going to get underway until after the Bolney project was completed, so this deferral will not impact Tarragon's 1998 production levels significantly. New estimates for Tarragon Oil and Gas @ techstocks.com Tarragon's net debt is expected to be around $360 million at the end of 1997. That is equivalent to approximately 3.0 times our revised 1998 cash flow estimate. Tarragon plans further non-core asset sales in 1998 and these proceeds could be used to retire debt. Barring that, however, there will only be modest improvement in the Company's debt to forward year's cash flow ratio to 2.6 times at the end of 1998 based on our preliminary 1999 cash flow estimate of $138.9 million. That cash flow estimate is preliminary and it assumes no improvement in international oil prices. Assuming Tarragon will trade at a 7.5 debt-adjusted cash flow multiple (which is below its historic average), we see a $13.10 per share price target for this stock based on our 1998 cash flow estimate and a $15.65 per share price target based on the preliminary 1999 price target. Assuming, therefore, that a US$18.00/bbl average is reasonable for WTI in 1998, this stock appears to have been oversold in the recent correction for the oil group. Credit Suisse First Boston said it initiated coverage of PETRO-CANADA with a buy rating. No further information was immediately available. In the U.S.; Lehman Brothers said on Friday it started coverage on shares of SEAGULL ENERGY CORP. with an outperform rating and 12-month $23-$24 price target. Analyst Shawn Reynolds said in research note he forecasts earnings to fall 11 percent in 1998 to $0.56 per share from $0.63 per share in 1997. ''Production is expected to grow solidly over the next few years at 9.1 percent per year,'' Reynolds said. ''1997/1998 year-on-year growth will be relatively flat but new production in Egypt and the deep Wilcox trend in 1999 could result in a 19 percent jump.'' He expects the company's two new high-impact exploration plays -- the Deep Wilcox in Wharton County, Texas and the East Beni Suef Block in Egypt -- to be a source of additional exploration success in 1998 and beyond. UK Oil Stocks Hit As Analysts Chop Estimates Shares in British oil companies skidded lower on Friday as analysts reduced their forecasts for oil company earnings and for oil prices amid a continuing slump in world crude prices. At the close, BP(UK & Ireland: BP.L) shares were down 33 pence or 4.24 percent at 746 on volume of 12 million. Shares in Shell (UK & Ireland: SHEL.L; RD.AS) also fell, closing off 16p or 3.97 percent at 387-1/4 on volume of 86 million. Shell topped the most active stocks in the market, after a single trade of 45 million shares which was said by some dealers to have been conducted by U.S. brokers Merrill Lynch. A Shell spokeswoman later said Shell ''suspected'' that the deal involved a swap of derivative positions between two shareholders. North Sea Brent crude prices came under pressure again on Friday from bulging U.S. crude supply and extra OPEC oil while mild winter weather weakened demand. The prospect that the United Nations will allow Iraq to export extra oil also weighed on sentiment. In late afternoon trade, benchmark March Brent futures were off four cents at $14.96 a barrel, after recovering from fresh 45-month lows of $14.78 touched on Thursday. Brokerage Deutsche Morgan Grenfell (DMG) in a research note downgraded its earnings forecasts for major European oil companies, reiterated its underweight stance on the sector and cut its oil price view. ''We continue to believe that refining margins in Europe will come under further pressure,'' DMG said. DMG cut its Brent oil price estimates to $16.50 from its original estimate of $18.00 for 1998 and to $17.00 barrel from $18.00 for 1999. The broker reduced Shell by 11.5 percent to 20.8p a share for 1998 and by 8.7 percent to 25p for 1999. BP was cut by 18.8 percent to 40.3p and by 11.2 percent to 49p. CSFB analyst Catherine Arnfield lowered her 1998 forecast for Brent by $1.00 to $17.75. Arnfield said she also cut her estimates for the UK oil sector, but noted current share price levels were close to average prices expected this year. Her top stock picks in the UK oil sector remain BP, Enterprise(UK & Ireland: ETR.L) Oil, Lasmo (UK & Ireland: LSMR.L) and British Borneo(UK & Ireland: BBOR.L), all of which are rated ''buy.'' Overnight shares in U.S. oil majors were hit after U.S. drilling company Schlumberger (SLB) reported lower than expected quarterly earnings. Schlumberger said that clients' plans to increase exploration and development spending may be modified when the impact of the Asian crisis on oil demand becomes clearer. Nervousness fed through to the UK sector. But Daiwa Europe analyst David Stedman said BP shares looked cheap at current prices. He maintains his ''hold'' stance on the stock, with a preference for Shell. ''I would encourage people willing to take an aggressive view that there is value at these lower levels but with the caveat that there may be bumpy ride still in the immediate future,'' he said. Stedman said his preference for Shell was based partly on defensiveness regarding the oil price, which he noted was likely to be lower in 1998 than in 1997. He highlighted Shell's new profitability targets, its recent acquisitions and willingness to look actively at the possibility of a share buyback if Dutch authorities approved it. ''U.S. oil companies which reported earlier this week are all talking about a strong performance in refining, marketing and chemicals and that also tends to favour Shell over BP,'' he added.