MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, FEBRUARY 27, 1998 (08)
OTHER COMPANIES IN THE NEWS
Tessex Energy Inc, (TES.A/ASE) wishes to announce that the drilling of its New Field Wildcat at Haig Lake has commenced (Tessex 40%) and that Encounter Energy Inc. is currently participating in the drilling of Montney test in the Sturgeon Lake area as to a 25% interest.
Tessex and Encounter entered into a Plan of Arrangement announced on February 24, 1998 (the "Plan"). The Plan provides that the former shareholders of Encounter will receive a total of 11,857,000 shares of Tessex, which will represent 21.1% of the issued and outstanding share capital of Tessex on a fully diluted basis. As disclosed previously, the intent is to roll back the shares of Tessex on a three for one basis and, accordingly, the total to be issued to the former shareholders of Encounter will be 3,952,333 shares.
In addition to the strong management team comprised of Messrs John H. Carruthers, Paul L. Mitchell, C.A. (Butch) Bauer and Donald C, Ross; Encounter brings $5.4 million in working capital, which will be used to fund drilling and development activities in 1998.
Circle Energy Inc. (CEN/ASE) announced that they have arig booked for March 3, 1998 to drill a well at Morinville. Circle is operator and has a 50 percent interest in the well targeting natural gas inthe Ellerslie formation. Results should be available by March 16, 1997.
Circle will also complete and test its Brazeau River Shunda well within the next few weeks. Circle is very optimistic about the results based on thelogs.
Circle is still on schedule to drill its Brazeau River well to test the Nisku formation after spring break-up. A rig has been booked and based on 3D seismic the Company is very optimistic about the results.
Circle Energy Inc. is a petroleum and natural gas exploration company that holds oil and gas leases in the Brazeau, Waskatenau and Morinville areas of Central Alberta and in Guadalupe, Lea and Quay Counties in New Mexico, USA.
Tiverton Petroleums Ltd. (TIV/TSE) reported cash flow of $279,833 or $0.01 per share for the nine months ended December 31, 1997, compared with $518,809 or $0.02 per share for the prior period. Net loss was $170,117 or $0.01 per share compared with income of $67,809 or $0.00 in the prior period. Revenue, net of royalties, was $1,041,356 compared with $1,243,161.
INTERNATIONAL
Companies
See earnings
Countries
Ecuador Resumes Pumping Through Oil Pipeline
State owned Petroecuador said on Saturday it had resumed pumping oil through the TransEcuadorean pipeline, which had been damaged by a mudslide and paralysed for at least 20 hours.
Petroecuador began pumping at 0500 GMT, but it would take several hours before the normal rate was attained, a company official told Reuters.
Seven people were killed, 75 injured and 30 were left missing after the mudslide ruptured the pipeline early on Friday and sparked a massive fire near the coastal town of Esmeralda.
Petroecuador estimates the rupture cost it 8,000 barrels of crude oil, but it said exports would not be affected.
The pipeline normally handles 330,000 barrels a day of crude oil, out of Ecuador's total output of 390,000 barrels.
SERVICE SECTOR
Canadian Helicopters International will establish a new Halifax base as a result of the award today of a contract to supply helicopter services to the Sable Offshore Energy Project.
Sable Offshore Energy Incorporated announced that the contract, worth about $12 million, covers the supply of helicopter services during drilling and general development activities over the next two years. Canadian's bid has an estimated 74% Canadian content, with more than a third of this being Nova Scotian.
Canadian Helicopters International, a wholly-owned subsidiary of CHC Helicopter Corporation, is a publicly-traded Canadian company with operations across Canada, including Atlantic Canada.
SOE Inc. Project Manager Derek Owen, said the Canadian bid showed the highest level of Canadian content.
"The awarding of this contract reflects the opportunities for long term growth of an infrastructure in Nova Scotia to support a growing oil and gas industry," says Owen. "The contract will result in new jobs and services being created in the province."
PIPELINES
No News
ENERGY TRUSTS
NAL Oil & Gas Trust (NAE.UN/TSE) is pleased to report that its 1997 distributable income was $20.9 million, a 25% increase over the annualized level for 1996. Despite fierce competition for available properties and softening oil prices,1997 targets for acquisition and development activities were achieved, contributing significantly to NAL's profitability.
In keeping with the goal to acquire properties that enhance value and provide opportunities to increase distributable income to Unitholders, NAL increased its holding in Liebenthal, Alida, Nottingham and Joffre. The cost of these additional properties was approximately $32 million, including first year capital expenditure commitments, or an average of $5.12 per barrel of oil equivalent based on proven plus 50 percent of probable reserves. This is notably below the industry average paid for acquisitions.
Drilling activities undertaken during the year enjoyed an outstanding success rate in excess of 82 percent, adding 40 new wells and 671 BOE's per day in production. Together, NAL"s combination of acquisitions and development replaced 1997 production by a factor of 2.3, and contributed towards an exit production volume of 5,200 BOE's per day, an 18% increase over the prior year.
NAL's reserve life index, a measure of property longevity, increased from 9.6 years at the end of 1996 to 11.9 years, based on proven plus 50 percent probable reserves. Strategic acquisitions, development successes and fundamental geological and engineering work led to significant increases in the value of reserves.
During 1997, the high level of activity in the industry led to increased prices for supplies and services. Despite these increases, NAL achieved a modest 7% reduction in operating costs to an average of $5.47 per BOE.
In the fall of 1997, NAL successfully raised net proceeds of approximately $27 million from the issuance of 2.7 million Trust units at $10.40 each. The capital raised was used to finance acquisitions and development activities from the first half of 1997, and positioned NAL for further acquisitions. During the last quarter of 1997, NAL realized the benefits of its strong financial position and closed $22 million in acquisitions.
Based on an average 1998 WTI oil price of US $18.00 per barrel, NAL forecasts its 1998 distributions to be $1.20 per unit. On an annualized basis, for every US $1.00 deviation in the WTI oil price received, the distributions will deviate approximately $0.08 per unit.
Westrock Energy Income Fund I & II Cash Distribution
Westrock Energy Income Fund I (WRE.UN/TSE)
Monthly Cash Distribution Notice
Notice is hereby given that a Cash distribution at the rate of $0.0650 (six and one half cents) per unit will be payable on March 20, 1998, to all unitholders of record at the close of business on March 10, 1998. Consequently, the new trailing last twelve month distribution paid totals $1.45 (one dollar and forty-five cents) per unit.
Westrock Energy Income Fund II (WRF.UN/TSE)
Monthly Cash Distribution Notice
Notice is hereby given that a cash distribution at the rate of $0.0600 (six cents) per unit will be payable on March 20, 1998, to all unitholders of record at the close of business on March 10, 1998. Consequently, the new trailing last twelve month distribution paid totals $1.165 (one dollar and sixteen and one half cents) per unit.
Enermark Income Fund (EIF.UN/TSE) Cash Distribution Notice
Notice is hereby given that a cash distribution at the rate of $0.075 (seven and one half cents) per unit will be payable on March 20, 1998, to all unitholders of record at the close of business on March 10, 1998. Consequently, the new trailing last twelve month distribution paid totals $0.945 (ninety-four and one half cents) per Unit.
EARNINGS REPORTS
Canop Worldwide Corp. (CWC/ASE) reported nine month results, ending December 31,1997.
Canop's revenues for the nine month period were $190,744 and are primarily based on oil and gas production. The Company experienced a net loss ($0.05 per share) and a negative cash flow from operations ($0.04 per share) for the same nine month period. The loss is attributable to start-up, acquisition, and general and administrative costs. As of December 31, 1997, Canop had $4 million in working capital and no debt.
Seismic operations commenced in Tanzania during Canop's third quarter with initial recording at Bigwa in early January 1998. Heavy rains in December and to date in 1998 have resulted in extensive flooding of Canop's acreage in the Rufiji Delta and Kisangire thereby delaying the acquisition of seismic data in these areas until later in 1998.
During the third quarter, Canop signed a Memorandum of Understanding (MOU) for the exploration of two areas in Jordan encompassing approximately 30,000 square kilometres (7.8 million acres). Canop holds a 75 percent interest in these lands and is presently reprocessing 250 kilometres of existing seismic data to define several shallow drilling targets. The initial three month term of the MOU can be extended for an additional period of up to nine months.
Canop participated in the drilling of two wells in Canada in the third quarter. At Plato, in western Saskatchewan, Canop holds a 60 percent interest after drilling a potential Viking oil well which was cased in order that it could be re-entered and drilled as a horizontal well within the next three months. At Elcott, in southeastern Saskatchewan, Canop acquired a 20 percent interest inan existing producing oil well with the drilling of a horizontal re-entry. Drilling was completed in late December and the well is presently being completed.
Magin Energy Inc. (MGY/TSE) reported 1997 results. Magin produced record results for the quarter ended December 31, 1997. Daily production averaged 7,017 barrels of oil equivalent (BOE) for the quarter, rising to an average of 8,100 BOE in December. Average daily production in January rose a further 600 BOE to 8,700.
Magin's free cash flow for the year rose in excess of three and one-half times from 1996 and reached $15.7 million. On a per share basis, cash flow increased over 40 percent to $0.41 for 1997 compared to $0.29 in 1996. Fourth quarter cash flow per share was $0.13 in 1997, compared to $0.10 in 1996.
Operational Review
Magin's exploration and development capital expenditures for the year were just over $43 million and included $26.8 million for drilling and completions, $9.2 million for facilities, and $6.0 million for land, geological and geophysical costs. Additionally, net acquisitions were made for $104.0 million. In 1997, 8.83 million BOE of proven and probable reserves were drilled for and put on stream at a cost of $3.91 per barrel. The cost per proven BOE and per established barrel was $5.85 and $4.69 respectively. Net acquisitions added 7.93 million BOE of established reserves at a cost of $12.54 per established barrel. The Discovery West acquisition completed earlier in 1997, represented nearly 90 percent of the acquisition expenditures. This acquisition was attractive to Magin due to the high level of cash flow generated from the properties. Reinvestment of this cash flow has been highly successful. Acquisition and drilling combine to give an overall cost of $8.76 per established barrel, $10.47 per proven BOE and $7.53 per proven and probable BOE. The replacement ratio for Magin over the year has been over 10 BOEs for every BOE of production. The net asset value per share based on proven plus probable reserves at a 10 percent pre-tax discount rate is $3.25 and $2.71 on an established reserve basis.
Based on fourth quarter 1997 production, Magin's proven reserve life index is 6.7 years and its proven and probable index is 9.6 years.
Financial Review
Petroleum and natural gas revenues have increased to $36.7 million in 1997 compared to $5.8 million in 1996. This 529 percent percent increase is due entirely to higher production volumes as the price received on a barrel of oil equivalent basis is 12 percent less than in 1996. Operating costs, while increasing to $6.33 per BOE in 1997 from $5.60 per BOE in 1996, were reduced to $4.68 per BOE in the fourth quarter. Unit general and administrative expenses decreased from $1.20 per BOE in 1996 to $0.95 per BOE in 1997.
Depletion, depreciation and site restoration expense increased in 1997 to $7.75 on a per BOE basis from $5.56 per BOE in 1996.
Debt, net of working capital, was $54.7 million at year end. This provides a debt to 1998 cash flow ratio of approximately 1.8 times based on $17.50 WTI oil and $1.75 Mcf gas prices.
Magin reported a profit of $1.88 million for the year, of which $1.09 million was earned in the fourth quarter. The after tax return on average book equity in the fourth quarter was an annualized 5.5 percent.
Outlook
Daily production for the first quarter is projected to average 9,000 boe. While gas prices are strong, oil prices are lower than anticipated. Magin's hedge of 2,000 Bbls/d at $28.23 (Cdn.) represents over a third of total liquids production. A strong cash flow combined with available debt capacity and over 245,000 net acres of undeveloped land has placed Magin in a healthy position to execute the 1998 capital program.
At the May meeting, the shareholders will be asked to consider a three to one consolidation of shares. The purpose of the consolidation is to facilitate future acquisitions, make Magin's performance more easily comparable to similarly sized corporations, and improve the marketability of the common shares.
For further information and tables of data, see Message 3556918
Brigdon Resources Inc. (BRG.A/TSE) of Calgary released its operating and financial results for the nine months ended December 31, 1997.
Revenue was $2,672,000 compared to $3,471,000 in 1996. Net earnings amounted to $146,000 (basic-$0.01/share) compared to $961,000 (basic-$0.07/share in 1996. Cash flow was $1,176,000 (basic-$0.08/share) versus $2,049,000 (basic-$0.16/share last year. Daily average production was 549 boe/d in 1997 compared to 754 boe/d in 1996.
The decline in revenue, cash flow and daily production was substantially attributable to the loss of more than 3,000 mcf per day of production from one key well. Product sales for the last quarter averaged 5,000 mcf equivalent per day, with an average gas price of $1.97 per mcf and an average liquids price of $28.74 par barrel.
Sales have increased 30% since the beginning of 1998 and the company expects continuing significant increases in production. Since the beginning of 1998, Brigdon has built pipelines to and placed on production five wells. The average working interest in these wells is 72%. They include a 100 mcf per day Belly River gas well and Basal Quartz gas wells producing between 250 mcf per day and 2,000 mcf per day. The company is currently completing a Basal Quartz zone in one well and reworking the Basal Quartz and Glauconite zones in a second well. These workovers should add 500 - 1000 mcf per day of production. Three wells require further testing and pipeline connections.
At current prices and production the company's annualized cash flow would be about $2,600,000 ($0.17 per share). In addition to product income, Brigdon has begun to earn fees from the ''custom'' processing of gas at the Red Willow plant. This processing income stream is expected to grow to more than $35,000 per month by the end of the next quarter.
During the three-month period ended December 31, 1997, Brigdon drilled three wells. Two were excellent gas discoveries with combined gas flows in excess of 3,000 mcf per day and very positive engineer's assessments. One well was abandoned. These wells were drilled in partnership with a major international company. Brigdon paid an average 25% of costs and retain an average 52.5% working interest in the completed wells.
Brigdon is working on a potential fifteen drilling locations. Through the end of 1998, Brigdon plans to drill between seven and ten of these locations. A rig is contracted to drill a minimum of seven locations. This drilling program will be operated by Brigdon and substantially financed by cash flow and the participation of joint venture partners.
For further informatioon along with table data, see Message 3556745
Numac Energy Inc. (NMC/TSE - NMC/AMEX) See Kerms Watchlist Of Companies In The News
Canadian Occidental Petroleum (CXY/TSE) See Kerms Watchlist Of Companies In The News
Renaissance Energy Ltd. (RES/TSE) See Kerms Watchlist Of Companies In The News
|
