MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING WEDNESDAY, APRIL 15, 1998 (5)
MISC NEWS ON KERM'S LISTED COMPANIES
Tarragon Oil and Gas Limited (TN/TSE) announceD that at its Annual and Special Meeting held earlier today, the Company received overwhelming shareholder approval (99.9 percent of the votes cast) to acquire certain petroleum and natural gas assets from Unocal Canada Limited. An aggregate of 21 million Tarragon common shares and a $100 million subordinated debenture were issued to Unocal Canada Limited as considerations for these assets.
Unocal's share position makes it a 27 percent owner of Tarragon on a fully diluted basis. At today's meeting, the shareholders elected three new directors nominated by Unocal: Mr. Randolph L. Howard, Group Vice-President, International Operations / Geothermal, Unocal Corporation; Mr. Gregory A. Milavsky, President and Chief Executive Officer, Rothschild Quantico Capital; and Mr. Charles R.Williamson, Group Vice-President, Asia Operations, Unocal Corporation. Together with the re-election of the eight incumbent directors, Tarragon will be guided by an expanded Board of Directors of eleven members.
The completion of this transaction substantially strengthens Tarragon as a growth oriented senior producer in Canada. The Unocal properties upgrade and balance Tarragon's asset base and production mix. They enhance the Company's position in two key areas of the Western Sedimentary Basin, the Peace River Arch and West Central Alberta. Tarragon now has several years of conventional oil and gas exploitation inventory to augment its vast potential of SAGD heavy oil development. The Company's financial position is also strengthened by the structure of this transition, which will result in cash flow an earnings accretion.
MARKET ACTIVITIES
In the U.S., the oil components were also higher, with Exxon (XON) up 1 1/2 to 68 11/16, and Chevron (CHV) gaining 1 3/16 to 80 1/16. That helped push the AMEX Oil Index (XOI) up 5.88 to 481/48.
Oil drilling and services stocks were also on the rise, sending the Philadelphia Oil Service Index (OSX) up 4.64 to 112.97. Schlumberger (SLB) led the group, rising 3 15/16 to 78 1/2. Also, Smith International (SII) climbed 3 1/2 to 57, Halliburton (HAL) rose 2 3/8 to 51 3/4 and Diamond Offshore (DO) rose 2 to 46 11/16.
National Oilwell (NOI) gained 2 to 38 15/16 after producing first quarter earnings of 40 cents per share, three cents ahead of expectations.
Meanwhile, Pennzoil Co. (PZL) rose 3 to 69 13/16 on word it will merge its car products business with Quaker State Corp. (KSF) and split off the business from its oil and gas exploration and production operations.Quaker State shed 3 11/16 to 19 13/16.
The Toronto Stock Exchange 300 Composite Index gained 0.5% or 37.12 to 7817.65.
In comparison, the TSE Oil & Gas Composite Index climbed 1.2% or 77.46 to 6746.77. The sub-components were mixed. The Integrated Oil's fell 0.3% or 24.34 to 8726.87. The Oil & Gas Producers gained 1.5% or 87.84 to 5968.21. The Oil & Gas Services climbed 3.0% or 97.29 to 3380.98.
Petro-Canada, Pinnacle Resources, Probe Exploration, Anderson Exploration, Poco Petroleums, Canrise Resources, Ranger Oil and Crestar Energy were among the top 50 most active issues on the TSE.
Seven Seas Petroleum gained $1.00 to $23.50, Canadian Natural Resources $1.15 to $30.75 and Talisman Energy $0.90 to $42.30.
Percentage gainers included Calahoo Petroleum 10.0% to $1.10, Westfort Energy 8.7% to $Numac Energy 8.6% to $5.70 and Merit Energy 6.6% to $6.50.
On the downside, Suncor Energy fell $0.90 to $50.80.
Percentage losers included OGY Petroleum 12.0% to $1.10, Renata Resources 10.0% to $0.90, Black Sea Energy 7.1% to $1.30, Oiltec Resources 6.9% to $2.42, Real Resources 5.9% to $0.95, Triumph Energy 5.3% to $2.51, Richland Petroleum 4.4% to $3.25 and Symmetry Resourcesb 4.2% to $1.15.
Among service companies, Prudential Steel was among the top 50 most active traded issues on the TSE.
Dreco Energy gained $4.00 to $55.50, Enerflex Systems $2.40 to $44.00, Computalog $2.25 to $23.50, Precision Drilling $2.20 to $35.40, Shaw Industries A $1.80 to $55.05 and Ensign Resource Services $1.35 to $33.95.
Percentage gainers included Computalog 10.6% to $23.50, Trican Well 9.0% to $5.45, Dreco Energy Services 7.8% to $55.50, Peak Energy Services 6.8% to $3.95 and Precision Drilling 6.6% to $35.40.
On the downside, Tesco fell $0.70 to $24.05, Badger Daylighting $0.65 to $9.35, Prudential Steel $0.65 to $16.25 and Canadian Fracmaster $0.55 to $23.85.
Percentage losers included Badger Daylighting 6.5% to $9.35, Geophysical Micro 4.8% to $1.00 and Enertec Resource Service 4.2% to $9.10
Over on the Alberta Stock Exchange, ICE Drilling, HEGCO Canada, Green River Petroleum, First Star Energy, Colt Energy, EMR Microwave, AltaPacific Capital and Jerez Energy were among the top 50 most active traded issues.
HEGCO Canada hained $0.28 to $3.28, Tier One Energy $0.25 to $2.15, Stellarton Energy $0.20 to $4.20, Doreal Energy $0.15 to $1.35, Pacific Ranger Petroleum $0.13 to $0.50, Bridgetown $0.12 to $0.51, Hyduke Capital $0.10 to $2.30, ICE Drilling $0.10 to $1.03 and Peregrine Oil & Gas $0.10 to $0.65
On the downside, Canadian Talon Resources fell $0.16 to $0.69, AltaPacific Capital $0.15 to $3.60, Green River Petroleum $0.14 to $0.56, Maxwell Oil & Gas $0.11 to $1.00, Belfast Petroleum $0.10 to $3.00, Total Energy Services $0.10 to $2.00 and Gopher Oil & Gas $0.08 to $0.60.
EXCHANGE DOING'S
Emerald Bay Energy Inc. ("EBY") is pleased to announce that it has been notified by The Alberta Stock Exchange (the "ASE") that its shares will commence trading on the ASE on Thursday, April 15, 1998. EBY is a junior capital pool company which has recently completed its initial public offering of 2,000,000 common shares at a price of $0.15 per share.
Additionally, EBY further announces that, as its proposed Major Transaction, EBY has entered into a Purchase and Sale Agreement with Karl Oil & Gas Ltd. ("Karl") to acquire net profit interests, ranging from 25% to 50%, in natural gas and hydrocarbon liquids from 13 wells in the Edson region of west- central Alberta producing from the Cardium Formation at an average depth of 2000 meters. The acquisition also includes working interests of 37.5% and 50%, respectively, in two additional wells and a 37.5% interest in natural gas and hydrocarbon liquids on 1760 gross acres of undeveloped land in the region. Current gas production from these wells is being processed at three separate facilities operated by other producers.
Terms of the acquisition are governed by a Purchase and Sale Agreement executed between EBY and Karl. As consideration for the transfer of the interests, EBY will pay $700,000 cash in addition to issuance of 1,400,000 treasury common shares of EBY, with a deemed issue price of $0.50 per share, for total consideration of $1,400,000. The proposed acquisition will be at arms' length to EBY and the value of the consideration was determined by negotiation between the parties based on independent engineering reports prepared for EBY. Financing for the cash component of the proposed acquisition will be provided from a $2,100,000 line of credit committed by EBY's bank.
Completion of the proposed Major Transaction is subject to the approval of the ASE and the public shareholders of EBY. Pending receipt of approval of the ASE, more detailed information relating to the proposed Major Transaction will be provided to shareholders of EBY in the form of an Information Circular in advance of a special meeting of the shareholders at which EBY will seek approval for the acquisition.
Management of EBY has stated that the announcement of the proposed Major Transaction is an important step in the company's development into an active participant in the oil & gas industry. Pending successful completion of the proposed Major Transaction, EBY will continue to evaluate and consider further acquisition opportunities in oil & gas exploration as well as oil & gas services.
Pinnacle Oil International, Inc. (OTC BB/PSFD), announced that Pinnacle had voluntarily filed a Registration Statement on Form 10 with the United States Securities and Exchange Commission on April 14, 1998, pursuant to which Pinnacle will become a reporting issuer under the United States Securities and Exchange Act of 1934.
"The filing of this registration statement represents an important step forward in raising the visibility of Pinnacle in the U.S. market place, particularly since a majority of our stockholders reside in the United States," said R. Dirk Stinson, President of Pinnacle. We anticipate the Form 10 will clear comments, and be declared "effective" by the Securities and Exchange Commission, approximately three months after filing."
Pinnacle is a technology company engaged in oil and gas exploration and development, and holds the exclusive rights for hydrocarbon exploitation through the Stress Field Detector ("SFD"), a technology which has been shown to be accurate in the identification of hydrocarbon deposits. Specifically, the SFD affords a capability to perform wide area exploration more rapidly than any traditional method, and offers an opportunity to locate numerous, productive oil and gas fields at a fraction of the cost of conventional methods.
Alberta Oil and Gas Petroleum Corp. (AOGASE) has closed the Arrangement involving AOG, Cairo Energy Inc., 763375 Alberta Ltd., 763387 Alberta Ltd. and 771988 Alberta Ltd. Final court approval for the Arrangement was received yesterday from the Court of Queens Bench of Alberta following securityholder approval obtained at the Annual and Special Meeting of shareholders held in Calgary an April 9, 1998.
Upon closing the Arrangement, gross proceeds in the amount of $10,175,000 from the private placement of 3,700,000 Special Warrants were released from escrow to a wholly owned subsidiary or AOG. The private placement had previously closed on March 31, 1998. Through the Arrangement, each Special Warrant was converted into one, freely tradable common share of AOG.
AOG has been renamed EDGE ENERGY INC. The company will announce its new ticker symbol and the date upon which it will recommence trading as soon as approval is received from The Alberta Stock Exchange. Edge Energy expects to receive such approval shortly.
RESEARCH NOTES
Gordon Capital
Courage Energy Inc. (CEO-T: $2.75) BUY
Reports 1997 Results
Fully diluted CFPS was $0.27 vs. $0.31 in 1996 - Operating results were negatively impacted by delays bringing on new reserves. However, these setbacks were more than offset by the gains made from exploration activities. Courage's proven and risked probable reserve additions replaced production by 5.5X at a finding and development cost of $3.94 ($4.68 proven only).
We have increased our NAVPS to $2.55 up from $2.20. This increase primarily results from the recognition of Courage's 50% working interest in the 425,000 undeveloped acres held in the East Midlands (U.K.). Prior to the Newton discovery we had assigned no value to this acreage. Currently we are valuing this land at $45.00/acre. Note that our NAV model assigns no value to possible UK reserves. The upside potential lies in the fact that several producing pools in surrounding area are over 10 million bbls - on a net basis, such a discovery would double Courage's liquids reserves. Our fully diluted CFPS forecast is $0.35 in 1998 and $0.50 in 1999. We reiterate our BUY opinion on Courage with a near term target price of $3.00.
EARNINGS
Berkley Petroleum Corp./ Top 20 Listed
Message 4077851
Canadian 88 Energy Corp.
Message 4078029
AltaQuest Energy Corporation
Message 4077875
Tier One Energy Corp.
Message 4079650
Tracer Petroleum Corp.
Message 4081093
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