MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, FEBRUARY 6, 1998 (5)
KERM'S TOP 21 - SPEC 15 - SERV 9 COMPANIES IN THE NEWS
Northrock Resources Ltd. announced that all of the conditions to its bid for common shares of Paragon Petroleum Corporation have been met, and that it has taken up all of the shares deposited under the bid. Shareholders of Paragon will receive, at their election and subject to certain adjustments, $4.10 in cash or 0.19 Northrock common share for each Paragon common share deposited. The take-over bid, announced on January 7, 1998, expired at 5:00 p.m. (Calgary time) on February 5, 1998. Northrock will be directing the depositary, CIBC Mellon Trust Company, to promptly mail cheques and share certificates to pay for the Paragon common shares deposited under the bid. CIBC Mellon expects that such cheques and shares certificates will be mailed on or about Monday, February 9, 1998. Northrock is reporting that 30.0 million Paragon common shares were acquired, representing approximately 94 percent of the Paragon common shares subject to the bid. Northrock intends to exercise its statutory right of acquisition to acquire all Paragon common shares not tendered to the bid for the same consideration paid pursuant to the bid.
Talisman Energy (see top story)
KERM'S WATCHLIST OF COMPANIES IN THE NEWS
None
OTHER COMPANIES IN THE NEWS
PanOil Resources announced the following information regarding its PanOil Ramarro Crestar b-81-I well at Orion in N.E. British Columbia. The well spudded on January 9, 1998, has drilled to projected total depth of 2039 meters, and has been cased to the Slave Point Formation as a potential gas well.
The drilling rig was released as of February 3, 1998. A service rig will be on location to test and complete the well during February. A successful completion will prove up a number of locations which are defined by geology and seismic.
The d-80-E well, located approximately 6 miles from b-81-I well in N.E. B.C. remains in a suspended status until a rig can be contracted to complete the well. PanOil is actively seeking a rig and the appropriate horizontal drilling equipment to complete this well.
Cascade Oil & Gas Ltd. announced that it has signed both an Access Agreement and a Benefits Agreement with the Tulita District Land Corporation ("representing Tulita District Land Corporation, Fort Norman Metis Land Corporation, and Ernie McDonald land Corporation") covering 116,845 acres near Norman Wells in the Northwest Territories. These agreements provide the framework under which exploration activities are to be carried out on the lands over the eight year term of the Licence.
The lands adjoin the Norman Wells Field, one of the largest producing oil fields in Canada today. The Norman Wells pipeline to northwest Alberta crosses this Licence, and currently has capacity available to allow rapid development of a commercial discovery.
Cascade and its managed affiliate, Canadian Abraxas Petroleum Limited ("CAPL") own 20% and 80% respectively of the mineral rights on the Licence.
A 90 kilometre seismic program is scheduled to commence in the next two weeks. Future plans over the next twelve months include the acquisition of additional seismic data and the possible drilling of a test well.
INTERNATIONAL
COMPANIES
None
COUNTRIES
A Country Analysis Brief on East Asia is now available. To access this report, the World Wide Web address is: eia.doe.gov
A Country Analysis Brief on Vietnam is now available. To access this report, the World Wide Web address is: eia.doe.gov
SERVICE SECTOR
Plains Energy Services Ltd. announced that it has closed the qualification of 4,200,000 special warrants issued on October 8, 1997 at a price of $12.00 per special warrant. As a result of closing the offering, Plains will receive $25 Million of proceeds in addition to $25,400,000 of proceeds, net of underwriting commissions related thereto, received previously. The proceeds from the special warrant offering will be utilized to fund construction of three coiled tubing drilling units by Fleet Coil Technologies Corp., a 100% subsidiary of Plains, as well as to fund the construction of a 75,000 sq. ft. machining, manufacturing and R&D facility for Polar Completions Engineering Inc. and Plains Perforating Ltd., also 100% subsidiaries of Plains. Finally, a portion of the offering will be utilized to construct additional underbalanced drilling surface control systems for Entest Corp., adding to their present fleet of 9 true underbalanced surface control systems.
Operations for all the Plains' group of companies continue strong with final engineering specifications for Fleet Coil Technologies Corp. patented coiled tubing drilling unit having been completed, and construction to commence imminently. Delivery of the first three units is expected in May-June, 1998.
Plains Energy Services Ltd. is an integrated oilfield service company providing cost-effective services in all aspects of the completions and production areas of the oilfield services business. Plains operating subsidiaries include Entest Corp., Fleet Cementers, Inc., Fleet Coil Technologies Corp., Plains Perforating Ltd., Polar Completions Engineering Inc., Round-Up Well Servicing Corp., Challenger Wireline Services Ltd. and Silverline Pressure Control Ltd.
Enerflex Systems Ltd. Quarterly and Annual Earnings Report
Message 3366963
Equipment Market Heats Up In U.S.
Rig builders and equipment suppliers, taking advantage of the rising drilling rates, stole the stock limelight from the drillers this week.
A big beneficiary was Friede Goldman (FGII:Nasdaq), which shot up nearly 25% to 33 7/8 between Tuesday and Thursday. It was up another 9/16 Friday, to 34 3/4.
Friede is winning jobs away from big international shipyards, which is just one of the reasons its contracted backlog of orders is $320 million, up from $132 million at the end of third quarter. Included in that backlog is an $87 million rig-refurbishment contract from Marine Drilling (MDCO:Nasdaq), and $264 million ($127 million of which is a letter of agreement, not quite a contract yet) to outfit two huge bare hulls as North Sea-capable deep-water rigs for Ocean Rig ASA, the big Norwegian driller.
Jackson, Miss.-based Friede has recently completed its purchase of the Marystown Shipyard in Newfoundland, which will focus on building for the North Sea and Canadian markets. It also is on schedule with its new, state-of-the-art, 85-acre facility in Pascagoula, Miss., which will at least double its capacity. In an interview Wednesday, John Alford, Friede's executive vice president and CFO, hinted at an acquisition announcement early next week before the company releases year-end earnings.
But Friede wasn't the only stock that benefited. EVI (EVI:NYSE) and Varco International (VRC:NYSE) also had strong showings. EVI jumped 21% between Tuesday and Thursday, while Varco climbed 20%.
"In the case of each one of those stocks, there is an extremely strong backlog of orders, all of which are tied to deepwater floating upgrades or new-builds," says Joe Agular, an oil services analyst at Johnson & Rice in New Orleans. "Their business is secured by contracts with oil companies -- the commodity price is not going to change that."
Agular, whose firm co-managed Friede's July IPO but has not performed underwriting for Varco or EVI, just upped his 1998 and 1999 earnings estimates for EVI to $3.25 and $4.40 from $3.15 and $4.15, respectively, based on the strength of its present business and backlog, and the acquisition of Ampscot Limited, a Canadian manufacturer of oil well equipment.
To be sure, there was some profit-taking Friday. EVI slipped 7/8 to 47 3/4, while Varco fell 3/16 to close at 24 7/8. But industry observers say its tougher to sustain rallies in this sector because investors often decide to grab profits with every jump.
But expansion of the rig-building industry is imminent, says Matt Simmons, president of Simmons & Co., the Houston investment bank and research firm specializing in the oil industry. Simmons estimates that 450 rigs may be needed just in the offshore market over the next decade to develop the deepwater tracts currently under lease throughout the world. In a January article in The American Oil and Gas Reporter, Simmons examines the world's rig-fleet capability compared with the offshore acreage with commitments to be explored and developed, and finds the rig count comes up woefully short.
Crude Prices Still a Big Factor
Don't break out the champagne just yet over this week's rally in the oil service sector. Crude futures inched closer to $17 a barrel this week, but the main catalyst is the continued uncertainty in Iraq. Barring the U.S. military buildup in the Gulf, traders see a weak futures market. After trading up as much as 34 cents at midday, crude futures for March delivery settled at $16.71, up 13 cents.
"Unless something happens in Iraq there is no tangible reason why it should go up," says Peter Bisani, a futures and derivatives trader at Prime Charter in New York. Bisani just returned from a trip to Europe, and reported that the weather is just as warm over there as it is has been stateside, a definite negative for oil futures.
Even with the warmer-than-usual weather and lowered demand from many Southeast Asian markets, for the past few weeks the market has been fixated solely on Saddam Hussein's blustering on the weapons inspection issue, with the outcome of the current oil-for-food-deal negotiations coming in a close second.
"The market's been held up by the threat of military action," says Scott Ryll, an analyst and trader at GSC Energy in Atlanta. "Other than that, prices would be weak." What is needed to set any new pricing trend for the crude market is a resolution of the situation with Iraq, positive or negative, Ryll added.
American Eco Corp., the U.S. construction group, said on Friday confirmation of acceptance of its US$93-million offer for embattled Dominion Bridge Corp. has been delayed again. "We're still evaluating the situation, but we expect to issue a release, hopefully, next week," said Cindy Jackson, director of investor relations for the Houston-based company, which is listed on the Toronto Stock Exchange.
In Montreal, Dominion's chief operating officer Nicolas Matossian said he could not say if or when a statement about the American Eco bid or a rival offer from Roxco Ltd., another U.S. construction group, might be made. He declined to comment on market reports two Dominion directors resigned this week, leaving the board's independent members in the majority.
Dominion shares (DBCO/NASDAQ) fell back 3/32 to US$2 1/32 Friday. They had risen on expectation the American Eco bid would be confirmed publicly after last Tuesday's Dominion board meeting in Montreal. Dominion is incorporated in Delaware but run from Montreal.
American Eco was to come up with US$5 million by late Friday and a further US$25 million on signing of a definitive agreement to ease Dominion's cash squeeze.
Sources near the negotiations said further legal hurdles had arisen.
Under the bid, American Eco chairman Michael McGinnis would lead a radical shakeup of Dominion's senior management, now led by chief executive Michel MarengŠre.
PIPELINES
Pipeline Throughput Higher In 1997
Canadian oil and gas pipelines continued to experience growth last year, while proceeding with strategic expansion plans.
Following a 10-year streak, NOVA Gas Transmission Ltd. broke yet another record in 1997, shipping total deliveries of 4.5 tcf compared to 4.4 tcf in 1996. Daily deliveries increased to 12.26 bcf from 12.08 bcf in the prior year. The system was jump started Jan. 11, when the highest daily average of 13.85 bcf was recorded for 1997.
Export deliveries were up 2.7% at 3.8 tcf from 3.7 tcf the previous year, while gas used in Alberta, including NOVA volumes, was slightly lower at 655 bcf versus 688 bcf, the NOVA Corporation subsidiary reported.
TransCanada PipeLines Limited's mainline gas transmissions totalled 2.51 tcf last year -- 1.33 tcf in domestic shipments and 1.18 tcf in exports -- in topping the 1996 throughput volume of 2.44 tcf.
"Throughput has set new records every year for at least the last four to five years," Tony McCallum, TCPL spokesman, told the Bulletin. With plans in place to build $824.9 million in new facilities this year, TCPL's forecasted throughput is 2.59 tcf for 1998.
Completion of expansion construction by November will provide an additional 352 mmcf per day of new firm service from Empress, Alberta, and another 65 mmcf per day of new short-haul firm service from St. Clair, Ontario. About 83% of the new capacity is reserved for exports, while the rest will be free to serve domestic markets.
Movement through Foothills Pipe Line Ltd. continued to exceed past volumes as total deliveries rose to 934 bcf in 1997 from 927 bcf a year ago. The eastern leg of the line, which runs from Monchy, Saskatchewan into the Northern Border Pipeline Company system bound for the U.S. Midwest, reported exports of 1.53 bcf a day.
Anticipating a 700 mmcf per day Northern Border expansion in late 1998, the company expects to increase its eastern line capacity to 2.20 bcf a day by November 1.
In British Columbia, Westcoast Energy Inc. once again toppled old records, shipping 687 bcf compared to 665 bcf in 1996, with 356 bcf leaving the province and 331 bcf flowing within. The western pipeline giant has experienced an average growth rate of 4.1% per annum over the last five years.
Between 1990, when deliveries were around 400 bcf, and 1996, looping and installation of compression led to an almost 70% jump in throughput, said pipelines division President Al Edgeworth.
"The system's still growing," he added. "It's just not growing as quickly as it did earlier in the decade because at least for this past year we haven't had any increase in our mainline capacity."
Head of market research, Philip Carter, said Westcoast is projecting a growth rate of 3.3% per annum on all system deliveries over the next 10 years. The company plans to invest $13 million this year on the capacity expansion of its Fort Nelson northern mainline.
On the oil side, IPL Energy Inc.'s Interprovincial transported 1.44 million bbls a day this past year, down slightly from 1.45 million bbls in 1996. Its daily high was set Nov. 30 with 1.63 million bbls.
"Our 1998 daily throughput forecast is 1.54 million bbls per day," said IPL spokesman Jeff Mann. IPL plans to invest approximately $120 million (Cdn.) and $278 million (U.S.) on infrastructure expansions this year.
Trans Mountain Pipe Line Company Ltd. shipped 83.85 million bbls in 1997 or approximately 229,730 bbls a day, an eight per cent drop from last year's volumes of 91.08 million bbls or 249,593 bbls a day.
In the past year, Trans Mountain moved 45.48 million bbls within B.C. and 38.37 million bbls in exports offshore and to the U.S. Its 1998 forecast stands at 89.26 million bbls.
Express Pipeline, owned by Alberta Energy Company Ltd. and TCPL, started exports from Hardisty to Wyoming in April 1997. Designed for a capacity of 172,000 bbls per day, the line flowed committed volumes of 146,000 bbls per day during the year.
|
