MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, FEBRUARY 23, 1998 (3)
MARKET ACTIVITY
Canadian oil and gas stocks shed over one percent of their value on Monday after news of a deal between Iraq and the United Nations on the long-running dispute over weapons inspections sent crude oil prices tumbling.
Canadian energy shares had already been battered as companies tried to cope with low prices for crude oil, especially heavy oil, which has recently traded at an increasingly deep discount to light crude.
"There's no war, no jump in oil prices and pessimism in the ranks of oil traders," said analyst Martin Molyneaux of FirstEnergy Capital Corp.
"There's lots of people who now believe that 14 bucks (a barrel) is achievable."
The NYMEX April West Texas Intermediate crude oil contract traded down 87 cents to US$15.37 a barrel on Monday, with traders saying the U.N. - Iraq agreement had heightened already-bearish sentiment.
Stopping a further slide, however, were doubts on whether the Iraq crisis had blown over in the absense of details in the pact and a concrete responsee from the United States.
Amid the softening oil prices, the Toronto Stock Exchange's oil and gas subindex fell 81.89 points, or 1.3 percent, to 6,214.11 points on Monday. That was down almost 23 percent from its high set last October.
Companies with high exposure to oil prices were the hardest hit, including Talisman Energy Inc , down 0.85 to 39.60,Canadian Occidental Petroleum Ltd, down 0.80 to 28.20, Crestar Energy Inc , down 0.70 to 20.70 and Shell Canada Ltd , down 0.60 to 23.30.
Firms that have emphasized heavy oil production have been doubly hit because prices for the black, gooey crude have remained at a deep discount as light oil prices have fallen.
About 20 percent of Canada's total oil output is heavy with gravity of 18 degrees API or lower. The figure does not include bitumen.
Heavy oil trades at a deep discount because of a major increase in supply over the past few years amid limited capacity in key markets to refine it.
One analyst said the oil price drop was a blessing in disguise for Canadian oil companies and their investors.
"Now, virtually all the negatives for the industry are out and over the next three-six months it could only get better," said CIBC Wood Gundy's Peter Linder.
"The concern about Iraq being bombed supported prices. Now these issues have effectively disappeared and what we need to see is OPEC get together, smarten up a bit and adjust the quota," Linder said.
The deal, following U.N. Secretary-General Kofi Annan's meeting with Iraq President Saddam Hussein on Sunday, was seen has having the potential to head off U.S.-led air strikes against Iraq in the standoff over access for U.N. arms inspectors to sites suspected of holding chemical or biological weapons.
Already, several Canadian companies had shifted their emphasis -- and sales pitches to analysts and investors -- to natural gas, as predictions for that commodity have become increasingly rosy.
Analysts Molyneaux and Linder said an expected short winter drilling season this year could make it difficult for producers to fill new export pipeline capacity when it comes on stream in November, which would be bullish for prices.
"I could now see a winter price next year as high as between C$2.50 and C$3.00 (per gigajoule Alberta spot price)," Linder said.
Monday's Alberta spot gas price was about C$1.62 per GJ.
MAJOR INDEXES
The Toronto Stock Exchange 300 Composite Index gained 0.3% or 21.45 to 6942.19.
In comparison, the Oil & Gas Composite Index fell 1.4% or 90.67 to 6205.33. Among the sub-components, the Integrated Oil's fell 1.4% or 126.54 to 8799.92.The Oil & Gas Producers fell 1.2% or 67.65 to 5418.88 and the Oil & Gas Service Index dropped 3.1% or 82.65 to 2574.63.
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.
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HOT STOCKS
MOST ACTIVES
Kerms Top 21 - Spec 15 and Serv 9 listed companies appear in bold print.
Norcen Energy Resources, Canadian Occidental, Gulf Canada Resources, Renaissance Enegy, Petro-Canada, TriGas Exploration, Anderson Exploration and Carmanah Resources were among the top 50 most active traded issues on the TSE.
Seven Seas Petroleum gained $0.50 to $26.50.
Percentage gainers included Vintage Resources 20.0% to $1.20,Pan East Petroleum 15.4% to $1.80, Petrobank 7.7% to $2.80 and TriGas Exploration 5.3% to $1.19.
On the downside, Imperial Oil fell $0.95 to $82.50, Crestar Energy $0.80 to $20.60, Canadian Occidental Petroleum $0.70 to $28.30, Canadian Natural Resources $0.65 to $25.60,Talisman Energy $0.65 to $39.80 and Chieftain International $0.50 to $31.00.
Percentage losers included Compton Petroleum 10.7% to $1.25, Black Rock Ventures 9.1% to $1.00, Cavell Energy 7.8% to $1.06, Purcell Energy 6.7% to $0.98, Gentry Resources 6.5% to $1.00, Windsor Energy 6.5% to $5.05 and Kappa Energy 6.1% to $1.55.
No new 52-week highs.
Beau Canada Exploration, Kappa Energy, Pinnacle Resources and Seventh Energy reached new 52-week lows.
Precision Drilling was the only service listed company among the top 50 most active on the TSE.
Enertec Resource Services gained $0.70 to $10.30 and IPSCO $0.65 to $63.00.
Percentage gainers included Iner-Tech Drilling 16.7% to $1.40 and Enertec Resource Services 7.3% to $10.30.
On the downside, Dreco Energy Services fell $2.40 to $37.60, Enerflex Systems $1.10 to $37.00, Precision Drilling $1.10 to $23.85, CE Franklin $1.00 to $10.25, Tesco $0.65 to $19.05, Ensign Resource Services $0.55 to $27.50, ATCO I $0.50 to $37.50 and Canadian Fracmaster $0.50 to $18.00.
Percentage losers included Geophysical Micro-Computer 16.7% to $1.25, CE Franklin 8.9% to $10.25, Computer Modeling 8.7% to $1.05 and Dreco Energy Services 6.0% to $37.60.
Atco I gained a new 52-week high.
No new 52-week lows.
Over on the Alberta Stock Exchange, AltaPacific Capital, Bearcat Exploration, Stampede Oils, Doreal Energy, Hampton Court, HEGCO Canada, Raptor Capital, Green River Petroleum, Red Sea Oil, Dalton Resources, Scarlet Exploration, Burner Exploration and First Star Energy were among the top 30 traded issues.
Niko Resources gained $0.25 to $5.00, AltaQuest Energy $0.20 to $2.35, Danoil Energy $0.19 to $1.49, Doreal Energy $0.15 to $2.80, Foothills Oil & Gas $0.15 to $0.25, Hampton Court $0.15 to $2.80, Canadian Crude Separators $0.10 to $1.10, Draig Energy $0.10 to $1.35, Invader Exploration $0.10 to $1.20, AltaPacific Capital $0.09 to $0.59.
Percentage gainers included Foothills Oil & Gas 150.0% to $0.25, Para-Tech Energy 20.0% to $0.30, Canadian Blackhawk 16.7% to $0.35, AltaPacific Capital 15.7% to $0.59, Danoil A 14.6% to $1.49 and Dundee Petroleum 13.3% to $0.34.
On the downside, Arrival Energy fell $0.20 to $1.55, Solid Resources $0.20 to $6.30, Gronartic Resources $0.15 to $0.50, Palmetto Resources $0.15 to $0.80, Devlan Exploration $0.14 to $0.43, Avid Oil & Gas $0.10 to $1.10, HEGCO Canada $0.10 to $2.90, Red Sea Oil $0.10 to $3.15, Underbalanced Drilling $0.10 to $2.25 and Energy North $0.09 to $0.45.
Percentage losers included Devlan Exploration 24.1% to $0.43, Gronartic Resources 23.1% to $0.50, Crispin Energy 16.7% to $0.25, Energy North 16.7 % to $0.45, Tribute Resources 16.7% to $0.25, Palmetto Resources 15.8% to $0.30, Tappit Resources 14.3% to $0.30, Scimitar Hydrocarbons 11.5% to $0.54, Arrival Energy A 11.4% to $1.55 and Cascade Oil & Gas 11.1% to $0.40.
Doreal Energy and Hampton Court reached new 52-week highs.
Avid Oil & Gas, Coachlight Resources, NTI Resources, Oxbow Exploration, Tappit Resources and Texalta Petroleum 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
EXCHANGE INFO
Nevis Petroleum Corporation (the "Corporation") a junior capital pool company announced today that it has signed a Purchase and Sale Agreement with Suncor Energy Inc. The Purchase and Sale Agreement contemplates the acquisition of an 18% working interest in the Boundary Lake South Triassic "C" oil Unit, in Northwest Alberta. This arm's length transaction is proposed to be the Corporation's Major Transaction, as contemplated by Alberta Securities Commission Policy 4.11 entitled, Junior Capital Pool Offerings ("Policy 4.11") and Circular No. 7 of The Alberta Stock Exchange ("Circular No. 7").
Pursuant to the Purchase and Sale Agreement, the Corporation would be required to make a payment of $ 793,000.00, which will be financed by a combination of cash from the treasury and a production loan from a Canadian Chartered Bank.
In addition, and in conjunction with the Corporation's Major Transaction, the Corporation intends to complete a private placement of approximately 1,300,000 common shares to be issued at 0.25 per share.
The property yielded an estimated net average production of 21 barrels per day in 1997. Proven developed producing and undiscounted probable oil reserves net to the Corporation before royalties are estimated to be 103,900 barrels. The probable oil reserves after discounting by 50% for risk are estimated to be 19,300 barrels.
KERMS TOP 21 - SPEC 15 - SERV 9 LISTED COPMPANIES IN THE NEWS
Carmanah Resources Ltd. (CKM/TSE) reported that two of its wholly owned subsidiaries, GFB Resources (Java) Limited and GFB Resources (Natuna) Limited, have now completed final contracts to secure rigs for proposed 1998 drilling, completion and tie-back programs scheduled for the Bawean and Northeast Natuna PSC's located offshore Indonesia.
GFB Natuna has entered into a contract with P.T. Hitek Nusantara Offshore to secure the Sedco-600 semi-submersible rig for a scheduled exploratory well on a large reefal feature on its Northeast Natuna PSC. This rig is expected to arrive at Natuna onor about April 15, 1998 and, depending upon results, the well is expected to take 30 to 45 days to drill and test.
In the interim, GFB Natuna has completed the acquisition of a 1,500 kilometre 2-D marine seismic program on the block, utilizing the Geco-Prakla vessel "Echo", to detail various anomalies identified from an earlier 1996 program.
The costs associated with the seismic and drilling program are being borne by Esso Exploration and Production Durian Besar Ltd., an affiliate of Exxon Corporation, pursuant to an Option/Farmout Agreement signed in May, 1997. GFB Natuna is the operator of the Northeast Natuna PSC. Results of the well will determine the future course of exploration and drilling on the block.
GFB Java has contracted the Pride Pennsylvania jack-up rig from PTPatra Drilling Contractor for scheduled activity in the Camar Field, located in the Java Sea. The rig, which is in the final stages of a refurbishment in Singapore, is presently forecast to be on location on or about March 17, 1998 and drilling is expected to commence shortly thereafter. The primary term of the contract is four months, with options to extend the contract for a further six months. The scheduled program includes completion and tie-back of CN-3; installation of a monopod and tie-back of Camar-6, which was drilled in 1997 and tested significant volumes of light-gravity crude oil; drilling of MPA-1, a new development well, which will also be tied-in to the monopod and processing facilities; and a new vertical development well, Camar-8. All these locations are on the north lobe of the Camar Field and are expected to add significant new production volumes by mid-year, 1998. GFB Java is the operator of and holds an 84 percent workinginterest in the Bawean PSC and Camar Field.
Subsequent to completion of the Bawean/Camar development program, the Pride Pennsylvania may be utilized at Carmanah's Langsa Block, in which an 80 percent interest is held, to complete existing wells and install production facilities to enable startup of up to10,000 BOPD of new production by October, 1998. A final decision in this regard will be made later this year once tender documents have been assessed and reviewed.
Carmanah Resources is a Calgary-based oil company with primary operations offshore Indonesia and onshore Venezuela at the Onado Field.
KERMS WATCHLIST OF COMPANIES IN THE NEWS
Computalog Ltd.(CGH/TSE - CLTDF/NASDAQ) of Calgary, Alberta, announced today that for the year ended December 31, 1997, it generated a net income of $19,726 ($1.49 per share on a fully diluted basis) from revenues of $223,056. Cash flow from operations totalled $38,117.
During 1997, Computalog experienced revenue increases in all three of its geographic segments. The increase in the Company's Canadian revenue was primarily the result of the increase in drilling activity and the inclusion of a full twelve months of revenue from the acquisition of Norjet Geotechnologies Inc., which occurred on March 7, 1996. The western Canadian average drilling rig count increased by 148, or 46%, and the number of well completions increased by 3,140, or 32%, in 1997 compared to 1996. Canadian operations comprised 64% of the Company's total revenue for the period, as compared to 65% during 1996.
The remainder of the Company's revenue is derived from the United States and international markets. These two geographic areas contributed 21% and 15% of the total revenue of Computalog, respectively, in 1997 compared to 18% and 17%, respectively, in 1996.
The increase in revenue in the United States primarily occurred in the Company's wireline and directional drilling activities. The increase in wireline services revenue occurred primarily as a result of the acquisition strategy followed by Computalog during 1997. Through this effort, the Company increased the size of its wireline operations from four stations operating 31 units in three states to 21 stations operating 70 wireline units in eight states. Activity increases in the Gulf Coast region of Louisiana and in Texas also had a positive impact on revenues. The Company's directional drilling service experienced increased revenue as a consequence of recording a full yearŠs revenue from The Bob Fournet Company, which was acquired in May 1996. Revenue from wireline product sales in North America also increased as independent wireline companies increased their purchases of products as the demand for their services increased during the year.
The increase in revenue from international sales was the result of the Company's success in obtaining directional drilling contracts outside North America and the continued expansion of the Company's wireline operations in Venezuela and, through a 49% interest in a joint venture to provide wireline services, in Argentina. These revenue increases were offset by lower product sales to international markets. Although South American wireline revenues are increasing, the Venezuelan market has suffered a reduction in activity which has been attributed to the reorganization of the state-owned oil company. The Company believes that this reorganization will continue to effect revenues in 1998.
The increase in operating expenses in 1997 was consistent with the increase in revenue although fixed cost efficiencies were gained
through the higher levels of activity experienced during the year. During 1997, revenues increased 51% and operating expenses increased 43%. Operating expenses are approximately 64% of operating revenues during 1997 as compared to 67% during 1996. In preparation for new segmented reporting standards the Company has more closely defined operating, selling, general and administrative, and research and development expenses. Certain comparative figures have therefore been reclassified to conform with the current year's presentation.
In 1997, selling, general and administrative expenses increased by $6.1 million, or 37%, to $22.3 million. These expenses represented 10% of revenue in 1997 compared to 11% of revenue in 1996. During 1997, the Company increased its sales and administration efforts in the United States to take advantage of Computalog's expanding operation. Selling, general and administration costs increased in Canada as a result of increased activity and the initiation of a financial accounting and information system replacement project. Internationally, the Company focused its efforts to complement the expansion of services into Venezuela and Argentina.
In 1997, depreciation and amortization expenses increased $5.2 million, or 49%, to $16.0 million as compared to 1996. This increase was due to the amortization of goodwill acquired of $1.6 million, the depreciation on assets acquired through acquisitions and on new asset additions of $2.9 million, lower gains from the disposal of certain assets of $0.5 million and asset writeoffs during 1997 of $0.2 million.
During August of 1997, Computalog completed the private placement of U.S. $35 million in unsecured senior notes which bear interest at 7.78% payable semi-annually. The notes have an average term of 6.08 years and require annual principal repayments of U.S. $7.0 million commencing on September 1, 2001. The funds from this borrowing were used primarily to repay bank debt, fund business acquisitions and purchase new capital assets for market expansion and new international ventures. Excess cash balances were held in United States dollars and were invested in low ris short term deposits of less than 90 days.During January 1998, United States dollar denominated short term deposits held by the parent company were converted into Canadian Dollars.
Cash flow from operations before working capital changes totalled $38.1 million in 1997, an increase of $15.7 million, or 70%, from 1996. Working capital changes resulted in a source of cash totalling $0.7 million in 1997. In 1996, working capital used additional funds of $11.3 million. The fund provided by working capital during 1997 were a result of higher accrued liabilities offset by increased accounts receivable resulting from increased revenues.
Computalog provides wellbore knowledge and solutions through its electric wireline and directional drilling services. These services enable oil and gas producers to manage risk and maximize production. For full report with table data, see Message 3510274
OTHER COMPANIES IN THE NEWS
Vision 2000 Exploration Ltd. (VNN.A/ASE) is pleased to announce that two wells are scheduled to be drilled prior to breakup on company held lands in the Pine Creek area of northern Alberta.
Vision 2000 has entered into a Farmout Agreement with an industry partner covering two sections of land in which the company holds a 50% working interest. Vision 2000 will retain a net 7.5% gross overriding royalty in the test well convertible to a 25% working interest after payout and retain a 25% working interest in the undrilled Farmout lands. A twenty (20) section Area of Mutual Interest ("AMI") has been established surrounding the Farmout lands in which Vision 2000 willretain a 25% working interest.
Vision 2000 will also participate with a 7% working interest in the deepening of a currently suspended well targeting the deeper gas potential in the area.
Meridian Energy Corporation (MDG/ASE&VSE) provided an update of operations at Paddle River. The Company expects to drill three development wells offsetting its new pool oil discovery announced earlier. All three locations have been licensed and the first well is expected to spud sometime this month.
In the case of the Company's other new pool oil discovery in Southern Alberta, the well was placed on continuous production on February 10, 1998 and is presently producing medium gravity oil at a rate of 195 barrels per day. Approvals have been obtained to conduct a two square mile 3-D seismic survey. Permitting is expected to commence by early March with the seismic shot prior to spring breakup.
GHP Exploration Corporation (CDN/GHPX.U) announced today that drilling operations have begun on the Winfield Ranch 17 No. 1-E well located on the Company's South Fort Stockton prospect in the highly productive Delaware Basin of West Texas (News-July 9, 1997). The well is being drilled under a "turnkey" contract and will take approximately nine months to reach total depth. The Company has a 10% working interest in the prospect.
The primary objective is the Lower Ordovician Ellenburger Formation at a depth of 26,000 feet. The prospect was identified by interpretation of a 1996 high quality 3-D seismic survey covering 40 square miles. The prospect is on trend and in-between Gomez field (cumulative production of 4.7 trillion cubic feet of gas (TCFG)) and Puckett field (cumulative production of 3.8 TCFG). Additionally, the prospect is immediately south of the McComb field which has estimated recoverable reserves of 160 billion cubic feet of gas. The 3-D seismicinterpretation over the prospect leasehold indicates that there are multiple large structural closures which present several drilling opportunities on the prospect acreage.
Automated Transfer Systems Corporation (OTC BB:ATNY) has announced that Stone Canyon Resources Inc., its wholly owned subsidiary, has entered into negotiations to acquire an interest in a drilling prospect in Alberta, Canada.
Stone Canyon Resources Inc. (Stone Canyon) currently owns promising oil & gas leases in Wyoming and Colorado.
Should the negotiations be successful the Company expects to be drilling in early March/98. This prospect will be the first Canadian project for the Company and will allow the Company to establish a presence in Canada.
The Company will update its progress as negotiations continue. |
