MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, FEBRUARY 13, 1998 (7)
KERM'S WATCHLIST OF COMPANIES IN THE NEWS
Seven Seas Petroleum Inc. (SEV/AMEX - SVS.U/TSE) announced it successfully completed drilling operations on the Tres Pasos No. 2-E well, the seventh well drilled on the Emerald Mountain project in Colombia, South America. The Tres Pasos No. 2-E well is located approximately 9 kilometers north from the surface location of the previously announced El Segundo No. 1 discovery well and reached a total depth from the surface of 6,054 feet. Preliminary analyses while drilling indicate the well should be productive. Over 290 feet of the Upper Cretaceous Cimarrona formation was encountered approximately 2,326 feet structurally low to the El Segundo No. 1-E discovery well. There was no apparent oil-water contact in the well, indicating a total oil column in the Emerald Mountain field of at least 2,500 feet. Production testing is expected to begin within a week.
The company further stated that it expects to resume completion operations on the El Segundo No. 3-E well next week.
GHK Company Colombia, a wholly owned subsidiary of Seven Seas, is the operator of the Emerald Mountain project. Seven Seas holds a 57.7% interest in the Emerald Mountain project which encompasses the Dindal and Rio Seco Blocks.
OTHER COMPANIES IN THE NEWS
TUSK Energy Inc. (TKE/TSE) announced that drilling commenced at the Strachan 3-22-38-9 W5M location on February 13, 1998. TUSK holds interests in 16 1/2 sections on the Strachan prospect (50 percent in 6 sections and 25 percent in 10 1/2 sections).
The 3-22 well, a 4,479 metre Swan Hills test will evaluate numerous potential zones in a prospect defined by both 2-D and 3-D sesimic. Primary targets are the Leduc and the Mississippian, both of which produce in the area.
The well is being drilled on TUSK 50 percent lands. TUSK will participate for 10 percent and farm out 40 percent (subject to a net 6 percent GORR to TUSK) to hold a 30 percent after payout interest in the four section earning block. TUSK is the largest after payout working interest owner in this block.
Loon Energy Inc., (???/AQSE) a public company of which TUSK is the largest shareholder, will participate for 10 percent of the well (5 percent APO).
TUSK will participate in wells at Meekwap (17 percent - Nisku oil), Pine Creek (20 percent BPO and 40 percent APO - Bluesky gas) prior to the end of the first quarter. In addition, a third party has committed to drill a well on 3 1/2 section TUSK prospect at Entwistle (TUSK - 60 percent BPO).
United Tri-Star Resources Ltd. (UTS/TSE) announced today that it has entered into a binding agreement with Solv-Ex Corporation, Solv-Ex Canada Limited and Solv-Ex Canada Limited Partnership (collectively, "Solv-Ex") to acquire from Solv-Ex its 12 percent working interest in certain properties and interests, principally Alberta oil sands leases and certain technology, on certain conditions. Solv-Ex is presently involved in a restructuring under the Companies Creditors Arrangement Act (Canada) and under Chapter 11 of the Bankruptcy Code in the United States. As part of the restructuring proceedings, Solv-Ex has entered into an agreement with Koch Exploration Canada, Ltd. ("Koch") pursuant to which Koch will acquire a 78 percent working interest in those properties and Solv-Ex will acquire a 12 percent working interest in the properties. UTS has previously announced that pursuant to that agreement it would retain a 10 percent working interest in those properties. UTS and Solv-Ex have now agreed that UTS will acquire Solv-Ex's 12 percent working interest, for an aggregate of a 22 percent working interest in those properties. UTS will also acquire from Solv-Ex certain participation rights with respect to metal extraction technologies and hydrocarbon extraction technologies developed by Solv-Ex. The consideration payable to Solv-Ex will be 5,000,000 common shares of UTS and a cash payment of Cdn. $4.4 million.
The transaction with Solv-Ex is subject to a number of conditions including receipt of necessary court approval in the United States and Canada.
The arrangements between Solv-Ex and Koch require, among other matters, that Koch, Solv-Ex and United Tri-Star enter into a joint venture agreement relating to the properties. The joint venture agreement is presently being negotiated but is expected to include a right of first refusal among the parties. UTS has agreed to issue to Koch a warrant entitling Koch to acquire 2,000,000 common shares of UTS at Cdn. $0.65 per share in consideration of Koch allowing UTS to enter into the binding agreement with Solv-Ex as noted above.
Along with its interest in the Athabasca tar sands project, UTS also maintain a 37 percent interest in International Reef Resources Ltd, which is actively pursuing development of Coal Oil Agglomeration projects in the United States. As well, UTS holds a 36 percent interest in Tri-Star Gold Corporation which has one of the largest mineral property holdings in the Ghanaian gold belts of West Africa.
Extreme Energy Corp. (EXT/ASE) announced that it has entered into a letter of intent dated February 10, 1998 (the "Agreement") to acquire a 0.36775 percent working interest in certain oil and gas reserves in the Cyn-Pem Cardium "D" Unit No. 1 in the Province of Alberta (the "Cyn-Pem Interests") in an arm's length transaction. The Agreement states that the Corporation will acquire the working interest of the Vendor in the Cyn-Pem Interests in consideration for the issuance of 210,000 Common Shares of the Corporation at a deemed price of $0.60 per Common Share and $210,000.000 in cash. Upon completion of the proposed acquisition, the Corporation will hold a total working interest of .66485 percent in the Cyn-Pem Interests.
INTERNATIONAL
Companies
Mercantile International Petroleum Inc. (MYP.U/TSE announced that it is maintaining production on Block III in Peru at approximately 1250 bbls/d and on Block IV at approximately 450 bbls/d in the face of extreme operating difficulties presented by the flooding conditions resulting from excessive rainfall in the area. Production from its Colombian properties remains at similar levels to that reported in December of 1997 with gross production of approximately 1500 bbls/d and net production of approximately 1,060 bbls/d.
At the current reduced production levels and low oil prices, the Company is cash flow negative at $150,000 per month before insurance recovery. The Company currently has available cash reserves of approximately $9 million to cushion the negative drain, if any, on the Company from lower oil prices and reduced production levels prior to the Company utilizing its insurance protection. If conditions prevail for any length of time, steps will be taken to reduce operating and G & A costs accordingly. Mercantile also announced that its insurance coverage provides property damage and business interruption protection for the impact of ''El Nino'' which will, if utilized, mitigate any negative impact on the Company resulting from the lower production rates. I addition to covering property damage and extraneous costs related to the flooding, the insurance will replace revenues, otherwise lost, which would normally accrue from wells which have been shut-in due to flood conditions.
Mercantile management stated that it was a result of the tremendous support and extraordinary efforts of its field operating staff that the Company is able to keep production at current levels under such extreme conditions. Normal access to the Puertochuelo field via paved road is not currently available due to washed out areas and alternate access roads from the Pan American highway and along the Chiura river via Mirador are also not passable. Field personnel are transported to and from the main battery site by four wheel drive vehicles which travel along a series of quebradas or ravines. Operators are living at the site using the warehouse as living quarters and alternating on seven day shifts. Supplies and food is being transported by burros from the nearby town of Mirador. Approximately three-quarters of the field is under water which is anywhere from one foot to three feet deep and approximately 30 wells are currently shut-in due to flooding. Operators are reaching some sites traveling by burro, horseback and boat.
Access to Block IV is via the Pan American highway which crosses the Parinas river north of the town of Talara. The bridge itself over the river is sound, however, the access approaches to the bridge have been washed out several times and there is currently only one lane feeding traffic onto the bridge. If the access to the bridge is washed out permanently, there will be no way to reach the field. The access road via the north end of the field is completely washed out and therefore, only 50% of the wells are currently producing. The majority of the pumps in the field are driven by electrical motors and some production has been lost due to power outages in the area.
The nature of the terrain in Block IV is such that, once the rain stops, drainage of the area should be relatively quick and the Company anticipates achieving full access to the field sooner than what may be possible on Block III. The northern portions of Block III, known as Zone A, where the La Boca and La Brea fields are located, should drain before the southern Zone C area and the Company anticipates gaining access to these fields in order to continue its work-over program before it will be able to regain access to the Puertochuelo area which is further to the south. At this time, the Company is unable to predict if future access to the fields will be available and whether or not it will be able to continue with production rates at the current levels. However, should it become necessary to shut-in the field completely, the Company expects its insurance coverage to provide protection from lost revenues for a period of time up to a maximum cap of six months. The business interruption coverage may be started and stopped at the discretion of the Company with the overall proviso that the total coverage is limited to a time period aggregating six months. The Company is currently assessing its options to determine the optimum time to trigger the commencement of the insurance coverage.
Chauvco Resources International Ltd. (CHV/TSE) has completed the exploratory well ReRe-16 FP which was drilled to test the potential of the Fourou Plage sands beneath the producing Gamba pool in the Remboue field. ReRe-16FP reached a total depth of 4,570 feet after penetrating a 17 foot net pay zone as anticipated in the Gamba sand at 1,273 feet and an 18 foot net pay zone in the Fourou Plage at 4,074 feet.
The well was completed in the Fourou Plage sand, and put on production test using the existing Remboue facilities. After pumping the well for forty-eight hours, the Fourou Plage zone was producing at a rate of 75 barrels of oil per day and one barrel of water per day together with 260 cubic feet of natural gas per barrel of oil produced. Chauvco plans to test this well for approximately two weeks to determine the potential for stimulation and to optimize the pump configuration. As planned, Chauvco has released the drilling rig as of February 11, 1998.
SERVICE SECTOR
Circa Enterprises Inc. (CTO/TSE) announced today that the United States based organization with whom it was negotiating a disposition of its Tri-Ener-Tech Petroleum Services Ltd. subsidiary has provided notice of its intention not to proceed with the transaction. Circa Enterprises Inc. is currently assessing its options and remedies arising from such notice, and reviewing alternatives in connection with the disposition of its Tri-Ener-Tech Petroleum Services Ltd. subsidiary.
McCoy Bros Inc. (MCB/TSE) announced that, in order to accommodate heightened customer demand, it has completed the purchase of new facilities to house the engineering, manufacturing, marketing and distribution operations of McCoy's wholly-owned subsidiary, Farr Canada Ltd.
Farr has been a highly successful international manufacturer and marketer of hydraulic power tongs and associated equipment for more than 12 years. Power tongs are used on drilling rigs to spin and torque either drill pipe, well casing or tubing. Related products also supplied by Farr include a proprietary computerized torque-turn monitoring and control system and hydraulic power units.
Kerry Brown, McCoy Chairman, said the move from the Company's old facility, which was operating at full capacity, was necessitated by Farr's vigorous growth. Based on orders in hand, Farr is expected to increase revenues significantly in 1998, up from a very strong performance in 1997. The new facility will greatly increase production capacity, improve productivity and result in shorter delivery times to our customers, he added.
The new 43,000 sq. ft. facility is located on 3.3 acres in an industrial district in Edmonton and was purchased for $1 million. It has many features that make it an ideal location for Farr, including service bays, craneways, overhead doors and a sand blasting room. The move to the new location has already begun and is expected to be completed this summer.
McCoy has a profitable history dating back to 1914. The Company's businesses include truck services and sales, oil field products manufacturing, and distribution. It has four facilities at Edmonton, and operations at Grande Prairie, Calgary, Red Deer in Alberta as well as Rancho Cucamonga, California.
American Eco Corporation announced that its purchase of USD$5.0 million of Dominion Bridge securities was breached by deceptive practices and bad faith of Dominion Bridge management. American Eco deposited USD$5.0 million and met on a timely basis all other conditions, as the first step in a proposed acquisition of 100 percent of Dominion Bridge of Montreal, Quebec.
Dominion Bridge management aborted the closing by falsely stating that the authorization for the issuance of the shares of Dominion Bridge was not approved by the Vancouver Stock Exchange. American Eco confirmed with officials of the VSE that the management of Dominion Bridge withdrew its application to list the shares, which is a breach of the agreement with American Eco. Unanimous approval of an American Eco Letter of Intent to acquire Dominion Bridge was given at the February 3rd meeting of Dominion Bridge Board upon the recommendation of Legg Mason Wood Walker, Incorporated.
As part of the placement, Michael E. McGinnis, the Chairman, President and CEO of American Eco was to have been immediately appointed to the Board of Directors and Executive Committee of Dominion Bridge.
The arrangement had included for American Eco to provide a USD$25.0 million working capital facility and to provide management services to Dominion Bridge pending consummation of a merger which was to be pursuant to a definitive merger agreement to have been entered into by March 6th. American Eco management of Dominion Bridge business activities is expected to benefit the welfare of Dominion Bridge's employees, suppliers and shareholders.
Michael McGinnis, Chairman, President and CEO of American Eco, stated, "As a Canadian Company, American Eco will continue to work towards a transaction. However, continued resistance by Dominion Bridge management will most likely result in damage to the value of Dominion Bridge and could substantially reduce the ultimate purchase price".
American Eco is a leading Canadian provider of single-source construction, management, maintenance, specialty fabrication, engineering and environmental remediation services in the refining, petrochemical, utility, forest products and offshore manufacturing industries including facilities in Halifax, Edmonton and Vancouver.
Sator Capital Inc. (LWT/ASE), in an effort to enhance LWT's communication with shareholders and other interested parties, will endeavour to publish operating highlights on a regular basis.
Since our WALS testing period in November/December 1997, LWT has made daily improvements in its operating system. Our threefold plan since January 1998 has been to:
1. Move Commercial with the compensated Neutron/Gamma Ray
- After initial difficulty with upgraded firmware for the CN/GR tool, we are on line with jobs for three Calgary based companies. All jobs should be completed by the end of February, 1998.
- We plan to have two job capability by March 1, 1998 and will beadding a field engineer to our team. Petrophysicist, Chris Taggart of Calgary, has been contracted to assist in sales and logquality control issues.
2. Continue with development of drill collars
- We now have 4 3/4" and 6 3/4" steel drill collars for neutron/gamma ray logging. Our composite collar is currently being tested in Canada with final testing to be done on a test well to be drilled in Oklahoma, March 10, 1998.
- Our composite leader, Brian Spencer, was awarded the CMA/SME J.H. "Jud" Hall Composites Manufacturing Award for outstanding advances in composite manufacturing.
- With our advances in the composite drill collar, we have been asked to evaluate the feasibility of building a composite casing for monitor wells in a Middle East flooding project.
3. Continue with development of a 1-11/16" tri-induction tool
- Presently we are interfacing a medium induction tool to our downhole power and memory module for testing with our transparent drill collar by April 1, 1998. The tri-induction will follow.
- We have been selected to present an LWT technology paper at theWorld Oil Symposium in Houston and the 49th Technical Meeting of the Petroleum Society in Calgary.
- Our LWT depth system has resulted in some rig sensor technology that accurately measures weight in the block or on the bit. Thus far fifty-five sensors have been purchased by drilling contractors.
The next round of Western Altas testing for the LWT system is scheduled for May/June, 1998.
FINANCIAL
Vantex Oil & Gas Minerals Ltd.
Message 3427918
Fairlady Energy Inc.
Message 3429278
Cypress Energy Inc.
Message 3431653
MISC.
K2 Energy Corp. (KTO/TSE) announced today the adoption of a shareholder rights plan (the ''Plan'') by its Board of Directors. The Plan is intended to address deficiencies which the Corporation believes exist in current take-over bid legislation. Because of the Corporation's unique circumstances, namely that of a small company in a preliminary exploration phase with a vast land holding of virtually unexplored acreage in an area seen to have the potential for significant natural gas reserves, the Board of Directors does not believe that the shares of the Corporation can be readily valued by conventional methods. Accordingly, the
Neither the Board of Directors nor management of the Corporation is aware of any interest by any third party in acquiring control of the Corporation.
Para-Tech Energy Corp. (PTY/ASE) announced the appointment of Robert G. Farquharson to the Board of Directors. Mr. Farquharson is Chairman of Alconsult International Ltd., which is working in many petroleum basins around the world. He was President and C.E.O. of Murphy Oil Company Ltd., a Director of CS Resources Ltd,, ELAN Energy Inc. and several other companies and organizations. Mr. Farquharson brings over 40 years proven oil and gas experience and will be a tremendous asset in introducing the ''Enercat'' Technology in many new areas around the world.
Beaufort Energy receives approval for consolidation and a name change to Venstone Ventures Corp. (VVCC/CDN). The Company said it has received shareholder and applicable regulatory approval to the consolidation of its issued shares, on a basis of one (1) new share for each three (3) old shares, and the concurrent change of its name to "Venstone Ventures Corp." The company's issued capital, on a pre-consolidated basis, consists of 11,292,697 shares. |
