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

To: Crocodile who wrote (9401)	3/4/1998 10:06:00 AM
From: Kerm Yerman	Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, MARCH 3, 1998 (2) TOP STORY Alliance Pipeline Blocked Until Mid-2000 The Financial Post Calgary Bureau Chief Regulatory delays have pushed back the start of the proposed Alliance natural gas pipeline by up to 12 months - a blow to industry producers of as much as $3.5 billion in forgone revenue. Proponents of the $3.7-billion project said yesterday they had no choice but to delay the project's start of operation to the second half of 2000, as regulatory approval is now not expected until the end of this year. "We don't want to cling to unrealistic deadlines," Dennis Cornelson, president and chief executive officer of Alliance Pipelines Ltd., said yesterday. While the delay of between six and 12 months is not a huge loss to Alliance, the big losers are Western Canadian producers, he said. Lack of transportation capacity is costing the industry up to $3.5 billion a year, Alliance has estimated. Approval from U.S. regulators is expected this summer. Previous plans called for Alliance to be completed by the end of next year. Expectations of additional pipeline capacity have been pushing up prices for natural gas - and the stocks of natural gas levered companies - in recent weeks. Alliance plans to transport 1.3 billion cubic feet of Western Canadian natural gas daily to a hub in Chicago for distribution across North America. Two other major expansions are scheduled for this fall: the Foothills/Northern border system is adding 700 mmcf/d of capacity, while TransCanada PipeLines Ltd. is adding an additional 400 mmcf/d. Current export capacity to the U.S. is more than eight bcf/d. Alliance, a project born from producers' push for competition in an industry dominated by government regulated monopolies, has faced an uphill battle before regulators, particularly from established pipeliners. The National Energy Board is now in its third month of hearings into the project. One of Alliance's biggest opponents has been Nova Corp., the Calgary-based pipeline and petrochemicals company. Last year, the company vowed to do everything it could to stall Alliance. Nova's opposition has softened since the company announced last month merger plans with Trans-Canada PipeLines. But producers want Nova to back off completely. They have threatened to oppose Nova's own merger plans with the federal Competition Bureau unless there's competition from Alliance. "We're looking at that," said Greg Stringham, a spokesman for the Canadian Association of Petroleum Producers, which represents companies producing 95% of Canada's oil and gas. Meanwhile, the delay is offering an opening to TCPL, a proponent of the Viking/Voyageur pipe, which is proposing to transport 1.4 bcf/d of natural gas to Chicago from Western Canada. The major difference with Alliance is that it would deliver gas along the way, while Alliance is a high pressure system with no delivery points in between. TCPL spokesman Gary Davies said the delay may prompt some producers to rethink their shipping commitments to Alliance, and back Viking/Voyageur instead. Gwyn Morgan, president and chief executive of Alberta Energy Company Ltd., said a six-month delay won't be a huge problem for the industry - as long as the Foothills and TCPL expansion scheduled to be completed in November is on time. FEATURE STORY Novagas Buys $30M Stake In Rival Solex Plant The Financial Post Nova Corp. said yesterday it has thrown out plans to build a gas processing plant in British Columbia and will take a 43.3% working interest in a nearby competing facility. Nova subsidiary Novagas Canada Ltd. has reached a deal with Calgary based Solex Gas Liquids Ltd. to buy into the small company's liquids extraction plant for $30 million rather than build a plant in Taylor, B.C. With the agreement, Novagas will become the largest voting interest in the plant. Taylor Gas Liquids Fund, an income trust Solex administers, and PanCanadian Petroleum Ltd. will own the other 56.7%. PanCanadian currently purchases liquids from the plant. Novagas has also agreed to pay a share of expansion costs to boost processing capability to 750 million cubic feet a day of natural gas from 400 million cf/d. Novagas had halted construction on its $50-million plant in what had become a lengthy tussle with Solex over the competing facilities. Novagas will transport its extracted liquids from the plant to its Redwater, Alta., processing and storage facility. Kevin Jabusch, president of Solex and the income trust, said the deal is a win for all sides. The plant is the sole asset of the income trust. It was built by Westcoast Energy Inc. for $65 million and purchased by Solex for $10.3 million in 1995, according to the income trust's prospectus. With the expansion, expected to be completed by May, the plant will be the largest of its kind in B.C., with natural gas liquids capacity exceeding 17,000 barrels a day of propane, butane and condensate and 16,000 barrels a day of ethane. FEATURE STORY Crown Well Servicing and Petro Well Services Merger Fall Through The Financial Post A friendly merger between Petro Well Energy Services Inc. and privately owned Crown Well Servicing Ltd. has fallen through, the companies said yesterday. Under the terms of the deal, Calgary-based Petro Well, which has a fleet of 12 rigs operating in Western Canada, was offering to exchange 9.5 million treasury shares for all outstanding shares of Crown, an Edmonton-based oil and gas servicing company. One of the conditions was the successful completion of a secondary offering by Crown shareholders of 7.5 million Petro Well shares. But Petro Well said yesterday Crown shareholders weren't able to get a satisfactory bid for the secondary offering. However, the two companies said they are looking at making alternative arrangements to complete the deal. The combined companies would have boasted a fleet of 23 service rigs, making it a significant operator in the West. FEATURE STORY Years Of Success Calgary Sun Barber Engineering and Controls Ltd. is 60 years old this year, but reaching its sixth decade doesn't mean a retirement party is planned anytime soon. "We will hosting customer appreciation celebrations," says Darryl Edinga, Barber's general manager and co-owner with president Sam Mozell and director Eric Connelly. But otherwise, it's business as usual for Barber, which means Edinga expects another very busy year. Barber's main market for its line of gas and crude oil measurement instruments, safety relief valves and steam traps is the oil and gas sector, which means Barber's products are in high demand. "Anything where they are flowing product -- liquid, steam or gas," explains Edinga of his company's business focus. "We're in the control and measurement of the flow." Through its subsidiary companies, Barber's been expanding its market reach to include non-oil and gas equipment and manufacturing of measurement equipment, while still maintaining its focus on the petroleum market. "Sales for our subsidiary, North Star Flow Products Inc., which manufactures gas flow measurement equipment, have almost doubled over last year," says Edinga. Through another subsidiary, Edmonton-based Besco Industrial Products, Barber is venturing away from the oil and gas sector. Besco sells small and large packaged water treatment systems for industrial, municipal or rural use, such as remote communities in northern Canada or construction camps. Ten years on the Arthur Andersen Private 100 listing, which Edinga says have been very good years, means Barber and its subsidiaries are all doing well. "Business overall is up 16% over last year," says Edinga. "We're doing things much more smartly -- we're using more automation." Edinga says Barber is in the process of installing a new computer system with Internet access which will allow North Star to market its products online through a web home page. "We hope to reach people who are looking for product information and availability," says Edinga. FEATURE STORY Shell Chemicals Gets Green Light For New Plant Edmonton Sun Shell Chemicals Canada Ltd. was given regulatory clearance yesterday to build a new petrochemical complex worth up to $400 million near Fort Saskatchewan. The plant, to begin operation in 2000, is to produce up to 443,000 tonnes of ethylene glycols - a main ingredient in polyester and a raw material in resins and antifreeze. "In its decision, the (Alberta Energy and Utilities) Board found Shell Chemicals plant to be an efficient use of Alberta's resources, with significant economic and employment benefits for both the municipality and the province," a release said. The proposed facility was first announced in February 1997. The one-year construction period - to start this spring - is expected to employ "hundreds" of tradesmen, Harry Blair, vice-president of business development has said. Up to 20 permanent jobs will also be created at the facility, he added. Mitsubishi Chemicals Corp. is a minority shareholder in the project, to be built near Shell's existing Scotford facility in Strathcona County. The EUB release added that negotiations are proceeding to address the concerns of local residents about heavy industrial activity in the area. FEATURE STORY Oil Group Sues U.S. Interior Dept. Over Royalties A group representing independent oil producers is suing the U.S. Interior Department over a new rule that changes the way royalties are paid on natural gas found on federal lands. The lawsuit was filed in D.C. District Court on Monday by the Independent Petroleum Association of America. ''We believe the rule is illegal. It threatens future gas production because it will discourage drilling on federal lands,'' said IPAA chairman George Yates in a briefing with reporters on Tuesday. Under the rule, which took effect Feb 1, Interior's Minerals Management Service no longer allows producers to deduct the full cost of transporting gas to the marketplace. As a result, almost all marketing, storage and transfer fees are added to the wellhead price of natural gas, according to Yates. ''That drives up the cost of the gas and means producers end up paying an inflated royalty,'' Yates said. ''This is in direct conflict with the lease contract between producers and the federal government, which says that royalties are valued at the lease,'' he added. Yates also criticized the ''duty-to-market'' provision of the rule, which says a producer has an obligation to market gas at no cost to the federal government. ''In our view, the 'duty-to-market' regulation leaves too much room for interpretation and leaves a producer vulnerable because an auditor years from now can second guess a producer's decision to sell gas for one price or another, at the well head or further downstream,' he said. Yates added that the MMS rules goes against the agency's attempts to make the royalty collection system simpler and fairer. Officials at MMS could not immediately be reached for comment.

To: Crocodile who wrote (9401)	3/4/1998 10:17:00 AM
From: Kerm Yerman	Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, MARCH 3, 1998 (3) OIL & GAS WORLD Oil Wins Brief Support From US Iraq Threat Oil prices, softened by global oversupply, received short-lived support on Tuesday from a U.S. threat to attack Iraq if Baghdad failed to honour an arms inspections accord. But the glut of crude and doubts that OPEC would launch a rescue operation helped push prices back down again. World benchmark Brent blend closed 13 cents lower at $13.92 a barrel in London, more than $5 below the average price for last year and some $11 below a post-Gulf War peak about 16 months ago. The contract had languished under $14 for most of the day before rising gradually to a peak of $14.22 on a U.S. statement that Iraq would face military action if it failed to honour the agreement. White House spokesman Mike McCurry said a U.N. Security Council resolution passed on Monday night and warning Iraq of the ''severest consequences'' if it did not live up to the agreement meant that Iraq would face military action. Traders and analysts said the market's leisurely rise in reaction to the stern White House comment and its later correction showed the extent to which it was reflecting excess supply. ''To see that kind of reaction to that kind of statement shows the market is dead,'' said Leo Drollas of Cambridge Energy Research Associates. Traders noted that other Security Council members, including France, Russia and China, had said the resolution stopped short of authorising military action. Iraqi Deputy Prime Minister Tareq Aziz said his country would live up to the agreement. The resolution also endorsed the agreement which Secretary-General Kofi Annan brought back from Baghdad a week ago providing access to ''presidential sites'' that had previously been off limits to U.N. weapons inspectors. The market has crumpled under the strain of a resumption in January of Iraqi oil exports, plans for an increase in Baghdad's sales later this year, poor Asian demand and a mild northern hemisphere winter. Further pressure on the market comes from apparent disarray inside oil cartel OPEC about what to do to shore up prices that have fallen by more than $7 a barrel since October. Cartel discussions have centred on turning a meeting of OPEC's four-man ministerial monitoring committee scheduled for March 16 in Vienna into a full meeting with the power to address output quotas. ''If OPEC turns it into an emergency meeting, it will bring up the prices and then it will drift down again as the market waits to see if the meeting delivers,'' said Drollas. Some in OPEC, having endorsed a Saudi plan to raise the limit on group output by 10 percent to 27.5 million barrels a day (bpd), now want to reverse their decision. Any output cuts would fall squarely on Saudi and to a lesser extent its Gulf Arab neighbours Kuwait and the United Arab Emirates. ''Is it fair to ask Kuwait, Saudi Arabia and the United Arab Emirates to cut back while others are overproducing at our expense?'' asked a senior Kuwaiti official. The official said Kuwait wanted to see OPEC overproducers returning to official quotas before considering any more collective measures to boost prices. But Venezuela, the largest overproducer in volume terms, last week said it would not cut by even one barrel. It pumped 3.4 million bpd in February, more than 700,000 barrels above its official quota. NYMEX Crude Oil Oil Ends Near 4-year Low On OPEC Crude oil futures settled at their lowest price in nearly four years Tuesday on sentiment that members of the Organization of Petroleum Exporting Countries would not convene an emergency meeting to cut back on oil exports. Elsewhere, the promise of large Brazilian coffee and soybean crops pressured U.S. prices in those markets. Gold also fell. Crude oil for April delivery settled at $15.27 a barrel, down 7 cents, after making a life-of-contract low at $15.17 earlier in the day. OPEC Tuesday appeared to be floundering in its bid to find a formula that might attract the group's big producers to emergency talks designed to prop up sagging world oil markets. OPEC delegates said they were concerned that without a clear agenda, talks would fail and only cause more damage to stricken oil prices. "We need an agenda," said one senior OPEC delegate said Tuesday "Just calling an emergency meeting in itself solves nothing." "We have to know in advance the purpose and result of any emergency meeting," a senior Kuwaiti oil official added. The bearish trend that began in early October has been blamed on ample crude oil supplies, with Iraq pumping more than 1 million barrels a day over the past two months and OPEC producers boosting their export quotas last fall. Natural Gas NYMEX Hub Natural Gas Ends Lower But Holds Range NYMEX Hub natgas futures ended lower across the board Tuesday in a sluggish session, with a softer physical market pressuring the complex most of the day though prices held the recent technical range. April slipped 5.1 cents to close at $2.241 after stalling early at $2.30. May ended 4.4 cents lower at $2.273. Other months finished down 0.6 to four cents. ''Technically, we're still in a sideways range, but we may be starting to break down. We could be close to coming unglued,'' said one East Coast trader, adding colder forecasts this week and next were not likely to be cold enough to trigger a buying spree. Below-normal temperatures are expected to continue in the Midwest, Texas and the Southeast through midweek. Cooler weather is also forecast for the Northeast and Mid-Atlantic this week but temperatures are still expected to remain at or several degrees above normal. Withdrawal estimates for Wednesday's weekly AGA storage report range from 30 bcf to 88 bcf. For the same week last year, stocks declined 76 bcf. Overall stocks are still 284 bcf, or 26.7 percent, above year-ago levels. Technical traders noted April this afternoon broke minor support in the $2.25 area, but most needed a break of major support at $2.19 to turn decidedly bearish. More buying was expected at $2.06. Key resistance was seen at $2.355, followed by the February high of $2.43 and the contract high of $2.46. In the cash Tuesday, Gulf Coast quotes slipped almost a nickel to the high-teens. Midcon pipes were down a couple of cents to the high-teens. Gas at the New York city gate was several cents lower in the high-$2.40s, while Chicago gate gas was five cents lower in the low-$2.30s. The NYMEX 12-month Henry Hub strip fell 3.3 cents to $2.396. NYMEX said an estimated 41,490 Hub contracts traded, down from Monday's revised tally of 37,301. U.S. SPOT GAS U.S. Spot Natural Gas Prices Off With Futures Slump U.S. spot natural gas prices drifted lower Tuesday, pressured by an early decline in the NYMEX market, industry sources said. ''It was off with the screen. The cold is not really a factor right now,'' one trader said. After opening weaker, NYMEX's April gas futures contract had reached a low of $2.23 by this afternoon. Next-day prices at Henry Hub were pegged mostly at $2.23-2.24, down about one to two cents from Monday's levels. In the western Texas market, Permian prices retreated five cents to about $2.10-2.11, while San Juan quotes were heard at $2.06-2.10. On the West Coast, southern California border prices were quoted in the mid-to-high $2.30s. Cooler weather was expected to arrive to the region by this weekend and continue into early next week. In the Midcontinent, prices eased two cents to about $2.15-2.18, while Chicago city-gate slipped to about $2.31-2.32. In the East, New York city gate prices fell into the mid-to-high $2.40s, while Appalachian prices on Columbia were quoted at $2.33-2.35. Separately, withdrawal estimates for Wednesday's American Gas Association storage report ranged from 30 to 88 bcf, versus 76 bcf a year ago. CANADA SPOT GAS Canadian Spot NatGas Eases In Alberta Despite Cold Canadian spot natural gas prices turned a little softer in Alberta on Tuesday as some pipeline maintenance backed up supply into the province, industry sources said. ''TransCanada is doing some maintenance up until the (March) 16th. It's backing about 150 million (cubic feet per day) of gas into Empress,'' a Calgary-based trader said, noting some of the excess supply in the market was soaked up by buyers trying to meet the higher heating demand. The company could not yet be reached to comment on the maintenance. Spot gas at the AECO storage hub in Alberta was talked at C$1.67-1.68 per gigajoule (GJ), down about one to two cents from Monday. April AECO was talked at C$1.705-1.71 per GJ, while summer business was reported at C$1.71-1.72. One-year AECO business starting November 1998 was still quoted around C$2.25 per GJ. Forecasts in Calgary are calling for highs of about -3 to -5 degrees Celsius throughout this week. At the export markets, Sumas, Wash., prices were quoted mostly at US$1.45-1.50 per million British thermal units (mmBtu), indicating a gain of about 15 cents. Triggering additional buying in the Northwest market were continuing below-normal temperatures and sporadic patches of snow, market sources said. Milder weather is forecast to return later this week, according to Weather Services Corp. In the eastern export market, Niagara gas prices fell about four cents to US$2.38-2.41 per mmBtu, in tandem with a decline in NYMEX natgas futures to a low of $2.23. OIL & GAS REFERENCES Charts oilworld.com oilworld.com NYMEX quotewatch.com

To: Crocodile who wrote (9401)	3/4/1998 10:56:00 AM
From: Kerm Yerman	Read Replies (21) \| Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, MARCH 3, 1998 (4) MARKET ACTIVITY U.S. stocks surged to a fifth straight record, crude oil prices fell and interest rates inched higher on Tuesday as OPEC struggled for footing and concern about the Asian economic crisis faded. OPEC appeared to be floundering in its bid to find a formula that might attract the group's big producers to emergency talks designed to prop up sagging world oil markets. OPEC delegates said they were concerned that without a clear agenda, talks would fail and only cause more damage to stricken oil prices. Oil-related stocks were also a highlight despite weakness in crude prices, helping lift both the Dow and S&P 500. Dow components Chevron (CHV) rose 1 3/16 to 83 3/4 and Exxon (XON) climbed 2/4 to 64 1/4, while the AMEX Oil Index (XOI) closed up 6.19 points to 469.74. With merger speculation continuing after last week's blockbuster announcement between Halliburton (HAL) and Dresser Industries (DI), helped send shares of oil drilling and equipment stocks soaring, with the Philadelphia Oil Service Index up 4.36 points to 111.67. Among individual names, stellar gains were registered by Cooper Cameron (RON), which jumped 4 3/16 to 60 15/16, BS Services (BJS) up 3 3/4 to 39 1/2, and Smith International (SII), which rose 3 1/16 to 58 1/4. MAJOR INDEXES The Toronto Stock Exchange 300 Composite gained 0.3% or 24.83 to 7137.93. In comparison, the Oil & Gas Composite Index fell 0.1% or 8.58 to 6550.41. The sub-components were mixed. The Integrated Oils gained 0.1% or 5.73 to 9031.33. The Oil & Gas Producers Index fell 0.3% or 19.96 to 5777.82 and the Oil & Gas Services gained 0.9% or 24.51 to 2768.24. 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. lonestar.texas.net HOT STOCKS Unusual high volume trading activity occurred yesterday in Cypress Energy (CYZ.A/TSE), unchanged at $5.10 on 714,200 shares and Badger Daylighting (BAD/TSE), down $0.20 to $6.00. MOST ACTIVES Reflecting weakness in the producer grup, Poco Petroleums (POC/TSE) fell $0.20 to $14.65 on 2,021,500 shares, PanCanadian Petroleum (PCP/TSE) fell $0.15 on 1,281,900 shares. Petro Canada was one of the few companies reversing the trend, gaining $0.30 to $26.70 on 687,100 shares. The service group per formed strongly with Dreco Energy Services leading the way, up $1.85 to $42.85. Excellent summaries of most actives covering, all four of the Canadian Stock Exchanges can be found at canoe.ca or quote.yahoo.com EXCHANGE INFO The common shares of Questor Technology Inc. were posted for trading on the Alberta Stock Exchange at the opening of business Wednesday. Questor Technology Inc. is in the business of developing environmental technologies for use primarily by the oil and natural gas industry. BUY - HOLD - SELL Acquisition Opportunities Could Lure Investors Back To Royalty Trusts Growing potential for property acquisitions at more reasonable rates in an equity market constricted by low oil and stock prices could be enough to lure investors back to royalty and energy trusts as the year progresses -- but it may take awhile. Low oil prices are difficult for all forms of energy-related investments, said Brian Ector, who tracks the royalty trust sector for CIBC Wood Gundy Inc. He noted the returns from royalty trusts have started to come down with stock prices for regular issuers. "You are going to see ... and you are seeing lower cash distributions." Royalty trusts rely on commodity prices and interest rates, pointed out Gord Currie, an oil and gas analyst with Canaccord Capital Corporation. "Prices are down and interest rates have been going up. That's a bad combination for royalty trusts." "Right now we're seeing the lows in the royalty trust market," said John Driscoll, president of NCE Resources Group. The NCE group is manager of the NCE Petrofund Royalty Trust. The oil price and the natural inclination of investors to turn away from a slumping sector is driving down energy stocks and royalty trust unit values, "when there may be a buying opportunity," Driscoll said. Commodity prices should be stronger going into the fourth quarter and interest rates will remain relatively low, he said. "We're anticipating $18 (U.S.) per bbl." "If I were an investor, I'd be looking at acquiring some positions, which we (NCE's various investment funds) are doing," Driscoll said. And "the potential is there for availability of properties," CIBC Wood Gundy's Ector noted. "For those with strong cash flow, there should be opportunities to purchase properties at prices much more reasonable than a year ago," he said. Noting that trust funds are partly to blame for driving up prices (for properties), Canaccord's Currie said there may be less new capital available to all issuers and trusts, but savings on purchases could result. Conventional or reflexive royalty trusts -- such as those operated under corporate entities like NCE, Enerplus Resources Corporation and PrimeWest Energy Trust -- grow mostly by acquisition. Investors gain from cash distributions and royalty trust acquisitions, which can lead to more unit issues, trading opportunities and value. "There are going to be opportunities (for acquisitions)," said Driscoll. "Right now, we're not being aggressive (in searching out potential purchases) ... but the time to start looking at it hard will be in the third quarter," he said. Based on the perception that commodity and stock prices will be languishing until the fourth quarter this year, Driscoll said traditional oil and gas companies will be looking for funds through property dispositions as equity issue financings become more difficult to accomplish. "I think you're going to see companies become more negotiable on prices," Driscoll said. "I believe that most non-trust companies are having a tough time," said Eric Tremblay, vice-president of corporate development at Enerplus. He anticipates first-quarter results for most equity stocks could be down significantly from last year. "It's going to be tough to go back to equity markets." Tremblay said property is going to open up as companies strive to bring in cash and keep debt down. This scrambling might see prices, restricting property acquisitions for a good part of last year, drop to more reasonable levels. The Enerplus Group includes EnerMark Income Fund and Enerplus Resources Fund and also has the Westrock Energy Income Fund I and Westrock Energy Income Fund II operating under the Westrock Energy Fund Inc. banner. During 1997, Enerplus focused its acquisition and development activities on gas properties adding 24.8 bcf of proven and 4.2 bcf of probable net reserves. This represented 77% of net 1997 reserve additions. "I think it's going to be a good year for acquisitions," said Ron Ambrozy, vice-president of business development for PrimeWest. His optimism is fueled by the commodity corrections that have occurred and "the good amount of product out there right now," he said. While the "last three years have been exceptionally strong for vendors," Ambrozy indicated acquisition prices may fall in this year's environment. Schroder Cuts Oil Price, EPS View Schroder & Co analyst Michael Mayer has cut his 1998 average oil price forecast for the benchmark West Texas Intermediate blend to $16 per barrel from $18 per barrel. Mayer also has reduced his earnings forecasts for oil majors to nine percent below the 1998 consensus and 19 percent below the actual 1997 earnings. -- Mayer said in a research report that OPEC must cut production by one million barrels per day otherwise oil prices would fall below $15.00 per barrel. -- He said that shares of oil majors were still discounting $18.40 per barrel and is continuing to recommend an underweight position as they do not yet reflect lower crude prices. -- His current weighting for oil majors is 80 percent of market weight and he expects underperformance for the sector of 5 to 10 percent relative to the wider market. -- Mayer added that the outlook for oil prices in 1999 and even 2000 may not be better as oil supply will remain strong without OPEC cutbacks. Here are the revised forecasted 1998 EPS numbers; Amoco $4.10 from $4.50, ARCO $3.80 from $4.35, Chevron $3.60 from $3.80, Exxon $2.75 from $2.85, Marathon $1.90 from $2.05, Mobil $3.65 from $3.90, Phillips $2.80 from $3.10, Royal Dutch $2.15 from $2.35, Shell $1.65 from $1.80, Texaco $2.70 from $3.00 and Unocal $1.80 from $2.05. Gordon Capital Petro-Canada (PCA-T:$26.40) BUY Company Bucks The Industry Trend and Raises Capital Program Petro-Canada has increased its capital budget for this year by $55 million to a total of $1,190 million. The increase is allocated to its international division and will be spent drilling three additional wells in Algeria. The company has recently announced two discoveries on its Tinrhert Block in Algeria. The first discovery was the HIM-1 well which flowed at a cumulative average rate of 55 mmcf per day of gas and 4,650 barrels of condensate. The second discovery was the TMLS-1 well which flowed at a cumulative rate of 117 mmcf per day of gas and 5,280 barrels per day of condensate. The three new wells that Petro-Canada plans to drill will not include any delineation work on these discoveries, rather they will focus on new exploratory prospects. While the company does not have any firm development plans for the existing discoveries, the Tinrhert block is located close to significant pipeline infra-structure and it is expected that the discoveries could be connected fairly easily and quickly. The large capital program that has been announced will be financed from cash flow and the proceeds of asset sales, including the announced proposed sale of the company's propane assets. We are maintain our BUY recommendation on Petro-Canada with a target price of $30 per share. Goepel Shields Westcoast Energy Inc. (W-T, $36.00) Stock Fully Valued Westcoast reported earnings before non-recurring items and weather effects of $0.76 vs $0.64 in Q4 and $2.04 vs $1.94, about in line with expectations. Reported earnings were $0.72 vs $0.54 in Q4 and $2.06 vs $1.96, the differences due to the impact of weather and a $0.15 provision taken in Q4/96 for pipeline restructuring. Looking forward, we estimate normalized earnings of $2.15 and $2.35 in 1998 and 1999. However, warm weather has likely hurt heating loads at Westcoast's distribution operations and has reduced gas prices, which affects the incentive return at Westcoast's gas processing operations. Consequently, the $2.15 earnings base in 1998 may be negatively affected by possibly $0.10 or more. However, a return to normal weather and gas prices later in the year could see a significant recovery. Normally, investors ignore weather-induced earnings swings, as they tend to balance out over time. Stock Outlook The shares of Westcoast have appreciated significantly over the last year. The stock is up 57% from the end of 1996, up 25% since the end of Q3/97 and up 9% from the end of 1997. The rise has been fueled both by lower interest rates and a recognition that the Company has transformed itself from a B.C. pipeline company into a significant North America energy player with international interests. Longer term, new projects should increase earnings by one third over the next few years, complementing internal growth and the recent entry into retail service operations. Therefore, it appears the Company can achieve its target of $3.00 in earnings by 2001. The expected 10% annual earnings growth, combined with a current 3.5% dividend yield should equate to a 13.5% total annual rate of return for investors. While attractive longer term, note that earnings growth will be slower in 1998 as most projects only begin in 1999 or 2000. In addition, after such a rapid run-up in price, the stock may consolidate near term. Consequently, we now rate the stock a HOLD. END - END

To: Crocodile who wrote (9401)	3/5/1998 1:20:00 AM
From: Crocodile	Read Replies (2) \| Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING WEDNESDAY, MARCH 4, 1998 (1) Thursday, March 5, 1998 Wall Street took a breather after setting five-straight records as forecasts dimmed for U.S. earnings. Bay Street fought back under the weight of troubled bank shares to post a slight gain U.S. stocks slipped from their record pace on concern that first-quarter earnings will fall short of forecasts. ÿ The Dow Jones industrial average fell 45.59 points, or 0.5%, to 8539.24, after setting five-straight records. ÿ More than 649 million shares changed hands on the Big Board, up from 615.1 million shares traded Tuesday. ÿ The Standard & Poor's 500 composite index lost 4.69 points, or 0.5%, to 1047.33. The Nasdaq composite index rose 2.56 points, or 0.2%, to 1759.70, as semiconductor makers rebounded from three days of losses. ÿ Intel Corp. (INTC/nasdaq) rose US$11 1/88 to US$86 7/16 to pace the advance. However, after the market closed the semiconductor giant said shocked the Street when it warned its first-quarter net income and revenue would fall well short of expectations. It now expects its first-quarter revenue to be about 10% below fourth-quarter revenue of US$6.5 billion. ÿ Analysts predict the warning could have a devastating impact on high-tech shares when the market opens again this morning ÿ Reaction in after-hours trading was quick and savage. Intel did not trade immediately, but Dell Computer Corp. (dell/nasdaq) fell US$8 to US$1311 1/82 after climbing US$73 1/84 to US$1387 1/88 earlier in the day. ÿ Walt Disney Co. (DIS/NYSE) led the Dow's decline, falling US$3 3/16 to US$1067 1/88 after analysts cut earnings estimates for the entertainment company. ÿ American Home Products Corp. (AHP/NYSE) fell US$2 13/16 to US$913 1/84, dragging other drugmakers down with it, after safety concerns caused it to withdraw its application for federal approval of its new hypertension drug. Merck & Co. (MRK/NYSE) fell US$11 1/84 to US$125 1/16. ÿ Canadian stocks fell, led by the country's largest banks, on expectations that robust economic growth may spark an interest-rate hike. ÿ The Toronto Stock Exchange 300 composite index rose 4.85 points to 7142.78, after tumbling as low as 7099 earlier in the session. The index is now 67 points short of its record high, reached Oct. 7, 1997. ÿ About 112 million shares changed hands on the TSE, up slightly from 111.6 million shares traded Tuesday. ÿ Canadian Imperial Bank of Commerce (cm/TSE) fell 85› to $44.50, Royal Bank of Canada (RY/TSE) slid 25› to $82.20 and Bank of Montreal (BMO/TSE) slipped 75› to $75.45. ÿ "The banks trade off bond yields and with bond yields creeping up, there is a tendency to see bank stocks underperform relative to other areas of the market," said Steve Bokor, a portfolio manager with Canadian Western Capital Corp. ÿ Petro-Canada (PCA/TSE) fell 55› to $26.15, and Canadian Occidental Petroleum Ltd. (Cxy/TSE) slipped 55› to $27.55 to lead energy issues lower, even as the Organization of Petroleum-Exporting Countries invited all 11 members to a committee meeting scheduled for March 16 in Vienna to discuss slumping oil prices. ÿ Nova Corp. (NVA/TSE) was the most actively traded stock on the TSE. It climbed 5› to $15.65 with more than 2.1 million shares changing hands. Nova has stretched out regulatory hearings on the proposed Alliance Pipeline project until at least mid-2000. Before the delay, completion was expected by the end of 1999. ÿ TrizecHahn Corp. said yesterday it plans to build a 50-storey office tower in downtown Toronto, the first new high-rise building in Canada's largest city in the past decade. ÿ TrizecHahn shares (TZH/TSE) fell 25› to $34.85. Other Canadian markets fell. ÿ The Montreal Exchange portfolio lost 3.38 points to 3653.83. The Vancouver Stock Exchange fell 1.34 points, or 0.2%, to 629.31. ÿ Major overseas markets ended mostly lower. ÿ London: Concern over a rise in British interest rates dragged down Europe's biggest stock market. The FT-SE 100 index lost 74.6 points, or 1.3%, to 5733.1. Frankfurt: Germany's blue-chip Dax index lost 47.56 points, or 1%, to 4709.58. ÿ Tokyo: The 225-share Nikkei average dropped 72.73 points, or 0.4%, to 17,095.6. ÿ Hong Kong: The Hang Seng index fell 74.65 points, or 0.7%, to 11,350.81. ÿ Sydney: An 8% surge in the share price of resources giant Broken Hill Pty Co. Ltd. propelled the Australian share market above 2700 points for the first time in five months. The all ordinaries index rose 21 points, or 0.8%, to 2705.4. **************************************************************************************** Foreign reserves near record level - By DAVID THOMAS - Economics Reporter The Financial Post ÿ A US$2-billion bond issue and a halt in the four-month tumble in the C$ allowed the Bank of Canada to increase its foreign reserves to a near-record level in February, the Finance Department said yesterday. ÿ Canada's foreign reserves increased by US$3.31 billion to reach US$21.31 billion, close to the record US$21.6 billion in March 1997. They hit a recent low of US$17.97 billion in December. Last month was the first since September in which the central bank did not draw on its reserves to defend the currency in the open market. ÿ After running a C$ defence tab of US$5.7 billion in the previous four months, the bank actually added US$197 million through its official operations, which are primarily market interventions. ÿ The C$ gained about US1 1/2› in February after falling from nearly US73› in October to a record closing low of US68.25› in late January. ÿ The C$ closed yesterday at US70.34›, up US0.03›. It traded as high as US70.67› on Monday when Daniel Johnson announced he would step down as leader of the Quebec Liberal party. ÿ Currency traders said the C$ could come under renewed pressure in the lead-up to the next election and possible referendum in Quebec. ÿ The prospect of Johnson's replacement with a more effective challenger to Premier Lucien Bouchard's sovereignty plans would be seen as a big plus for the currency. ÿ The market's top pick, federal Progressive Conservative leader Jean Charest, has said he is not interested in the job. ************************************************************************************** ****************************************************************************************