MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING WEDNESDAY, APRIL 15, 1998 (4)
TOP STORIES
Natural Gas Saving Hibernia
St Johns Evening Telegram
The massive gas flare at Hibernia is burning a little less brightly these days and Hibernia partners have a few extra hundred thousand dollars they can knock off the platform's $5.8-billion price tag.
Natural gas from the Hibernia reservoir has been diverted to two 25 megawatt generators - basically modified jet engines - which power the massive pumps, drilling motors and compression units on the 10-storey production complex on the Grand Banks.
The transfer of gas reduces the need to burn diesel fuel - which sometimes amounted to 150,000 litres a day, Hibernia offshore team leader (integration) Paul Kent said Tuesday.
With all systems running, the platform consumes about as much power as a small city such as Corner Brook.
The switch to gas was completed about two weeks ago, Kent said, though a few tests and minor adjustments must still be carried out. The platform must be capable of converting back to diesel at the flick of a switch if the flow of natural gas is interrupted.
"It needs to be set up correctly for the machines to be able to switch over, not just when they're idling (but also at full power)," Kent said. "The fuel governors need to be tuned for want of a better word."
The platform's power demand will increase dramatically in the next few weeks when the first water injection well is complete and massive electric motors pump sea water five kilometres to the bottom of the Hibernia reservoir.
The water injector well, which has been drilled about 5,200 metres towards its target of 5,600 metres, will begin operation in early May, Kent said.
Once that well is operational, oil production will increase from 15,000 barrels a day to about 60,000 barrels a day, possibly more.
"It all really depends on how things flow," Kent said. "We just need to make sure we do things as efficiently as possible, even though the reservoir might be capable of producing far more."
Production may be kept down to maintain the integrity of the reservoir and to help recover as much oil as possible over the life of the project.
Hibernia's first gas injector - a 6,800-metre well which has so far been drilled to about 1,500 metres - should be ready in June.
Once gas is injected back into the reservoir, the platform will burn virtually no gas through its flare boom and production should inch upward toward the 100,000 barrel per day mark.
Noble Affiliates, Upton Resources & Intoil Inc. Announce Montana Oil Discovery
Noble Affiliates, Inc. (NYSE/NBL) announced its wholly owned subsidiary, Samedan Oil Corporation, has made an oil discovery in Montana.
The Krogedal #21-21H well was completed as a dual lateral oil well in the Nisku formation. The well has been completed at the rate of approximately 600 barrels of oil and 330 MCF of gas per day.
Samedan is operator of the well and owns a 40 percent working interest before payout. The company also owns an interest in approximately 1,680 gross acres on the prospect. Other working interest owners are Upton Resources USA, Inc. (TSE/URC), 40 percent and Intoil, Inc., 20 percent.
Badger Dayligting Loses Out On D&K As Target Finds Another Buyer
The Financial Post
Badger Daylighting Inc. said yesterday it is reviewing its options after a takeover target found another buyer.
The Red Deer, Alta.-based diversified energy service company had signed a letter of intent last month to acquire D&K Horizontal Drilling Ltd.
But Badger decided not to match a higher price offered later by an unidentified bidder, said chief executive Ken Rose.
"We're looking to see whether we should find another one or go into the business ourselves," Rose said.
Privately owned D&K is a trenchless directional driller. It bores holes under roads, rivers or environmentally sensitive areas, then pulls a pipeline through the hole. The technique minimizes environmental impact.
Rose said lawyers are evaluating the company's legal position, but he doubted this avenue will be pursued. "We could maybe go after them, force the issue and then what? Have unhappy employees?"
The deal was expected to add about $12 million to Badger's annual revenue. Without D&K, Badger's revenue for this year is expected to reach about $74 million.
Badger is a vertically integrated service company operating in the petroleum and utilities industries. The company has developed the Badger Daylighting System, a proprietary hydrovac system designed to minimize the difficulties associated with exposing underground pipelines, utilities and other buried infrastructure.
Unocal And Tarragon Oil & Gas Swap Assets
The Financial Post
Unocal Canada Ltd. and Tarragon Oil & Gas Ltd. yesterday completed a $297 million deal swapping assets for shares.
Shareholders at Tarragon's annual meeting in Toronto approved the transaction between the two Calgary based oil and gas producers. That means Unocal now owns 28.7% of Tarragon's common shares.
In exchange for 21 million shares and a $100-million subordinated debenture, Unocal transferred most its producing oil and gas assets in Alberta and British Columbia to Tarragon.
The company also got most of Unocal's undeveloped lands in the two provinces. Unocal kept its Saskatchewan lands and an interest in the proposed $3.7-billion Alliance natural gas pipeline, now before the National Energy Board for approval.
Tarragon's new assets include proved reserves of about 31 million barrels of oil equivalent, 140,000 net hectares of undeveloped land and a considerable amount of seismic data. Net production from the properties, after royalties, averages 12,700 BOEs a day.
Unocal said it is in discussions with other firms about properties in southwest Saskatchewan. The region produces 6,200 BOEs a day for Unocal.
Investor approval of the Unocal-Tarragon deal was announced after the market closed.
Ipsco Profit Up 15% On Strong Demand
The Financial Post
Ipsco Inc. posted record first-quarter profit, up 15% from a year earlier on strong demand from the oil and gas industry.
The Regina-based steel maker reported net income of $35.1 million (86› a share) on revenue of $283.6 million in the three months ended March 31, compared with profit of $30.5 million (75›) on revenue of $228.6 million in the same period a year earlier.
The company's total shipments jumped 48% to 471.4 million tons, compared with 319 million tons in the first quarter of 1997.
"These are very, very good earnings," said Anna Sorbo, an analyst with CIBC Wood Gundy Inc. "The company has been very clever in adjusting production mix to maximize profitability."
Ipsco's operating profit per ton actually fell in the quarter to $134 from $137 a year earlier.
Sorbo said continued startup delays at the company's new minimill in Montpelier, Iowa, make it difficult to analyse the decline.
Montpelier shipped 96,000 tons of plate steel in the first quarter of 1998 but won't be profitable until it begins producing about 156,000 tons a quarter, or half its anticipated full capacity.
Chief financial officer Ed Tiefenbach said the Montpelier mill should be profitable by the third quarter.
Capital expenditures reached $34.4 million in the quarter. Ipsco spent nearly half of that on Montpelier.
The remainder was directed at expansion or modernization of facilities in Regina, Toronto and Blythville, Ark.
Golden Trend Petroleum Ltd. reported that activities in the last year have resulted in a production portfolio weighted heavily to natural gas. Currently, the Company produces approximately 5.2 mmcf per day of natural gas and 130 bopd of light oil. The current mix of 80 percent natural gas and 20 percent light oil is forecasted to continue as Golden Trend completes its 1998 capital expenditure program.
To maintain its steady growth in 1998, the Company forecasts it will:
Drill at least 9 gross wells, of which 5 are development and 4 are exploratory
Close a 200 to 500 boepd acquisition
Increase corporate natural gas production by year end 1998 to 11 mmcf/d
Increase corporate light oil production by year end 1998 to 300 bopd
Average 8 mmcf/d of natural gas production and 200 bopd of oil production in for 1998
Golden Trend Petroleum Ltd. also reports that, as of April 15, 1998, Gary J. Nazar will resign as President and CEO, but will continue with the Company as Chairman. Effective April 15, 1998, Ian R.D. Clark will be appointed the President and CEO of Golden Trend. Prior to this appointment, Mr. Clark was Vice-President ofGolden Trend, responsible for the acquisition, exploration, production, marketing and land activities of the company. Mr. Clark has 20 years of experience in the oil and gas industry, primarily with junior and intermediate producers.
Golden Trend intends to continue its steady growth through low risk drilling, core area acquisitions and production optimization, while adding a modest exploration component in 1998.
Epic Resources reports that they are in negotiations for Washington State drilling activity. Most of the test results from the Ferndale 1A core test well have been received from both Terratek Inc and Tesseract Corp. After a detailed evaluation, the results to date indicate conventional gas production from four different zones and potential production from the coals. Results also indicate a third potential, gas storage in the sands, with a detailed evaluation currently under way.
The company has shown all collected data, to date, to four major oil and gas companies. Epic has been requested to set up a technical presentation for three other major companies in Salt Lake City at the American Association of Petroleum Geologist Convention in mid-May 1998.
The company is currently evaluating letters of intent from interested parties. Negotiations have now started with a number of major companies regarding a joint venture agreement in Washington State. Any significant agreements reached will be announced in accordance with security regulations. Epic anticipates completing an agreement in principle within 60 days.
A conventional test well is currently being planned for early August 1998. This well will confirm the economic gas production from the sands only. Epic is currently setting up meetings in early May 1998 to discuss a joint venture on its conventional properties in Turkey. Epic has recently put together a technical sales package and has sent it out to four major international exploration companies.
INTERNATIONAL
Minex Minerals Inc., announced an agreement has been reached with Corpus Christi based, Manti Resources to develop the oil and gas concessions, Pampa Salamanca, in the hydrocarbon rich Gulf of San Jorge, Argentina.
Manti Resources Ltd. (mantires.com) is one of the fastest growing mid-cap oil and gas producers in the United States, and were chosen from many competitors for their thorough and talented technical team and their aggressiveness in the field. This will be their first venture in to the booming Latin American oil industry, and the companies will pursue other objectives in Argentina based on the success of this project. Manti was introduced by John Dickinson of Houston based, CoEnergy Inc. (coenergy.com), whose company specializes in gas compression and fuel driven energy cogeneration. The companies will be examining the economic viability of North American gas compression techniques and cogeneration facilities in Argentina on an upcoming trip.
The area covers more than 315 sq. km and is in the north east flank of the basin. More than 48 wells have been previously drilled on the concessions, and it is located in the ''ring of fire'' or geologically and geographically paralleled to other fields in a basin containing more than 4 billion barrels of oil equivalent. Several individual wells on the concessions had production of more than 1 million cu. ft. per day and accumulations of more than 2 billion cu. ft. of gas. Though the field is a proven gas producer, oil shows were prevalent in many wells, and several deep wells in the vicinity have indicated deeper oil horizons with production of up to 8,000 barrels of oil per day in single wells.
The first part of the development plan calls for Manti to complete an economic and technical assessment of the concessions within 60 days and to present a comprehensive exploration program upon completion.
Examination of the recently reprocessed 2D seismic by Minex's technical team have indicated that there are at least 4 separate large structures that could be drilled immediately, though the company will await the outcome of the study by Manti to release a development plan for the area. Details of the proposal will be released soon.
Ecopetrol looks for $563 mln oil investment
Senior officials at Colombia's state-run oil company said on Wednesday they were offering 36 new oil contracts and hoped to attract as much as $563 million in new risk investment over the next three years.
Ecopetrol has estimated the total potential reserves in the 36 areas up for grabs in a two-phase bidding process at between 5 billion and 9.3 billion barrels.
It said the country's total potential hydrocarbon reserves are around 37 billion barrels of crude equivalent -- much of that in hitherto unexplored areas.
In a presentation for the press Wednesday, Ecopetrol chairman Enrique Amorocho said the contracts were the first to be put up for ''auction'' -- rather than negotiated on a one-to-one basis with private sector associates.
Under the new ''auction'' system, part of an enhanced contracts package first announced last October, private sector companies will not place cash offers but instead make bids on the basis of what share of production they will offer to Ecopetrol from any given field.
In the case of contracts in currently active areas, or incremental fields, the bidder will have to offer Ecopetrol a share of output greater than that set out in the present system of fixed term contracts, starting about 50 percent.
In the case of hitherto inactive areas, the bidder will be able to offer Ecopetrol as little as a 25 percent cut of production.
''There's something for all tastes here. Something of every flavour,'' Amorocho said. ''Companies will be able to bid for the contract that suits them most. There are 36 contracts on offer that cover different activities and different levels of risks.''
Ecopetrol came up with the idea of bidding for contracts as a way of stimulating investment in Colombia's oil industry -- currently suffering from low exploration levels -- and ensuring long-term self-sufficiency in crude.
Kazakhstan Puts Oil, Gas Sell-Offs On Hold
Kazakhstan, a resource-rich Central Asian state which has attracted billions of dollars in foreign investment to its energy sector, said on Wednesday it was suspending further industry privatisation for decades.
A Western analyst said the decision could pull the rug from under the Kazakh economy, which needs funds to develop its huge but underfinanced oil and gas deposits.
President Nursultan Nazarbayev said the government had already signed enough energy privatisation contracts to last his lifetime.
''For this generation and the next we have completed all contracts,'' he told a news conference.
''For the third generation of Kazakhs there's still plenty left...we have got to think about them as well.''
The Kazakh government first said in February it was suspending oil and gas assets sales for a period of assessment, but gave no further time frame.
The analyst, who asked not to be named, said Kazakhstan should invest in the development of more oilfields to push the economy forward.
''The government has already privatised big oilfields, but Kazakhstan has a lot of undeveloped fields which need to be developed, like the ones in the Caspian Sea,'' he said.
This is what will provide the gloss in the future."
He said Kazakhstan's estimated total oil reserves were around 96 billion barrels, while proven reserves amounted to 34 billion barrels.
The Kazakh government has already sold stakes in its biggest energy projects.
Chevron Corp (CHV) and Mobil Corp (MOB) of the U.S have bought into the giant Tengiz field in western Kazakhstan, and Britain's BG plc (UK & Ireland: BG.L), Italy's Agip(AGIS.CN) and Russia's LUKoil (LKOH.RTS) are working the huge Karachaganak gas condensate field in the north.
Tengiz's development costs are put at $20 billion, while Karachaganak has reserves estimated at 2.4 billion barrels of crude and 16 trillion cubic feet of gas.
In another huge oil and pipeline deal worth around $9.5 billion, Kazakhstan last year sold several fields in the northwestern Aktyubinsk region to the China National Petroleum Company.
Kazakhstan's sector of the offshore Caspian shelf, estimated to hold 10 billion tonnes of oil and two trillion cubic metres of natural gas, is another major project in the making.
Western energy companies plan to start exploring Kazakhstan's offshore oil and gas reserves at the beginning of next century.
The exact list of what is yet to be privatised in Kazakhstan's energy sector is considered confidential.
Just hours before Nazarbayev's statement, a U.S. government official, whose country is already strongly represented in Kazakhstan's energy projects, pressed the Central Asian state to continue sell-offs of its oil and gas assets.
''We believe the privatisation process should include the oil and gas sector as it has in the past, as well as the participation of blue chip companies here in Kazakhstan,'' Jan Kalicki, the Commerce Department counsellor, said.
|
