MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, APRIL 21, 1998 (4)
IN THE NEWS
Curlew Lake Resources Inc. reported on its participation in ongoing exploration and development activities in the Turner Valley area of Alberta. The Imperial-Berkley Turner Valley 2-21-21-3 W5M well was drilled and completed in a regional Mississippian gas zone with approximately 100 feet of net pay in a gross 126 foot Turner Valley section. Ninety (90) feet of Turner Valley reservoir section was perforated. The April 1, 1998 Crown P&NG lease sale prevented participants from releasing information and precluded the operator from conducting any major testing and completion work on the well prior to that date. The Farmor/Farmee group acquired 1,120 acres at the sale, which provides fill in land coverage over the new gas pool.
Imperial Oil Resources Limited is the operator of the well and reports that, based on seismic data, the portion of the pool in which they have an interest is expected to contain approximately 150 billion cubic feet (BCF) of gas in place. They advise that the 2-21 well was tested in March at rates of one to three million cubic feet per day (1-3MMcf/d) and that economic recoverable reserves cannot be determined until pressure build-up analysis is complete and reservoir deliverability can be analysed. The gas has a hydrogen-sulphide content of approximately 2.7 percent.
Bearcat Explorations Ltd. and Stampede Oils Inc., two other farmor participants in the well, have reported that their area and regional geological/geophysical interpretation indicates potential recoverable gas reserves in this new gas field should be in the order of 600 BCF. They also report that well deliverability should improve significantly after stimulation. Two follow-up wells to the current 2-21 gas discovery are expected to commence in the near future.
With regard to the recently drilled BPC et al Turner Valley 12-35-20-3 W5M well, it is now planned to whipstock this well into the newly discovered regional Turner Valley gas pool when a rig is available likely early this summer.
In addition to this new discovery in the Mississippian Turner Valley formation, our group previously made a significant gas discovery in the Stampede Bcat et al Hartell 4-13-19-2 W5M Devonian Crossfield well at the southern end of the trend. The spacing unit for the Hartell discovery has proven recoverable reserves of 42 BCF and the overall South Turner Valley Crossfield gas pool has been estimated to hold at least 250BCF. This gas has a hydrogen-sulphide content of approximately 22 percent and contains 12 barrels of light 43 API gravity oil per million cubic feet of gas. Two development wells are planned for this south pool this year.
The Turner Valley prospect is now developing into a major gas development project. It is expected that Mississippian gas production will commence this year and Devonian Crossfield gas production should commence in 1999. Information related to the potential for major oil development on this prospect will be forthcoming at a later date.
Curlew Lake's working interests in the Regional Mississippian Turner Valley gas formation varies from 1.3% to 2.78% and in the underlying Devonian Crossfield gas from 2.5% to 5%.
Circle Energy Inc. (CEN/ASE) has booked a CanTex rig to drill a well targeting a Nisku reef at Brazeau River, Alberta. Drilling will commence in mid-June and it will take approximately 45 days to reach the target depth of 3,100 metres. Based on immediately offsetting producing wells in the Nisku 'P' pool, this gas condensate well has the potential to net Circle in excess of 1,000 boe/d with long-life reserves. Circle has a 75% working interest before payout, 52.5% working interest after payout. Payout of the Nisku well is defined as 200% of capital expenditures.
The Morinville, Alberta gas well has been completed and will be tied-in by mid-May. The gas well at Brazeau River, Alberta has also been completed and tie-in is expected by June 1, 1998.
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.
M.L. Cass Petroleum Corporation (MLO/TSE) has sold four heavy oil wells at Taber North, Alberta and a processing facility at Esther, Alberta for $1.3 million. A portion of the proceeds was used to retire the outstanding debts of the Company and the remainder, will be used for working capital. The transactions conclude the Company's goal of eliminating all corporate debt.
INTERNATIONAL
Companies
Pacific Tiger Energy Inc. (PTE/MSE) announced that development drilling will commence in the Wichian Buri Field on or about April 22. The Wichian Buri Field is located in the SW1 Concession, onshore Thailand. The Wichian Buri Field is currently productive from one well, Wichian Buri-1. This well was completed in 1990. Producing facilities were installed in May 1995 and the well has subsequently produced over 250,000 barrels of oil. The strong performance of the reservoir suggests an extensive hydrocarbon area.
"We are very excited about the upcoming drilling campaign at the Wichian Buri Field" said Michael Cvetanovic, President and CEO of Pacific Tiger. "If successful, it will confirm our geological models and allow for a multi-well, second phase of development drilling. Exploitation of the Wichian Buri Field presents Pacific Tiger with an opportunity to generate significant cash flow through low risk exposure of capital".
The drilling program, comprised of two wells, will be targeted to intersect the productive "F Sandstone" interval at a distance of between 250 to 500 meters from the Wichian Buri-1 well. The wells are planned to be drilled to a depth of approximately 1000 meters and should each take 30 days to drill, complete and test.
The first well to be drilled will be referred to as Wichian Buri-A2 and is located approximately 300 meters to the north of the productive Wichian Buri-1 well. The second well will be drilled at either the Wichian Buri-A1 or A4 locations, depending on the outcome of testing of Wichian Buri-A2. All locations are within the coverage of a 3D seismic grid and are perceived to represent low risk exploitation.
Additionally, Pacific Tiger currently holds a 100% working interest in a highly prospective Exploration Block, PEP 38463 in the Taranaki Basin, Offshore New Zealand. The permit is adjacent to the recently announced Fletcher Challenge operated Mangahewa discovery, which reportedly contains between 1-3 TCF of gas. Oil and gas is present in several wells in the concession.
INTERNATIONAL
Countries
S.Korea Refineries Raise Output, Demand Improves
SINGAPORE, April 22 - South Korean oil refiners are operating at maximum feasible levels in the face of rising regional and domestic demand for oil products, company sources said on Wednesday.
The sources said that with the exception of the country's largest refiner, SK Corp, which has begun a four-month maintenance programme, and Hanwha Energy, which is facing difficulty securing crude, the remaining three refiners are running at full capacity.
A spike in domestic demand for gasoline, which has returned to pre-crisis levels after taking up to a 30-percent fall in January and February, has helped improve profits, they said.
Diesel and kerosene demand has also improved. Demand is down now about 20 percent year-on-year, but has improved from the 40 percent slump seen earlier in the year.
"The domestic margins have always been good, and now that we are selling more in the domestic market we can run the refinery at a higher rate," one refining source said.
Trading sources said the refiners were also able to raise production following an unexpected diesel buying binge from China, which is buying up to 1.8 million tonnes for arrival in April and early May.
Korea is over the worst of its economic crisis, but nevetheless economists forecast a contraction in the overall economy this year, which will impact demand for oil.
And although the China buying could soon end, company sources said they doubted the big drop in domestic demand seen in January and February would be repeated, offering a less pessimistic outlook for the months ahead.
An LG-Caltex spokesman said the company was operating its 650,000 barrel per day (bpd) refinery, the second largest in the country, between 95-100 percent of capacity.
"We are back to our normal operating rate," the spokesman said.
Ssangyong Oil Refining Co is running its refinery -- with nameplate capacity of 443,000-bpd -- at more than 500,000-bpd, a company spokesman said.
An official at Hyundai Oil, an affiliate of the Hyundai Group HYGR.CN, said its 310,000-bpd refinery was operating between 330,000-340,000-bpd.
"The rate changes a little bit depending on the the type of crude we run," he said.
South Korea's largest refiner, SK Corp is unable to raise throughput at its 810,000-bpd refinery above 700,000-750,000-bpd due to the start of a maintenance programme.
"We have already started our annual maintenance programme and from now until August we will be operating at the lower level," an SK official said.
SK Corp has already shutdown its No-1 60,000-bpd crude unit and this will be followed by three other crude units except for the new No-5 unit, which is not scheduled for maintenance this year.
Hanwha Energy has brought down its throughput to 100,000-120,000-bpd from 140,000-150,000 bpd earlier this month at its 275,000-bpd refinery.
A Hanwha official said the company had almost used up all the crude oil it had borrowed from the government and was unable to raise its purchases on the spot market.
"We have already taken three million barrels from the government. By the end of this month, we will lift the remaining one million," he said.
Hanwha had managed to raise its refining rate after the company secured a loan of four million barrels of crude oil from state-run Korea Petroleum Development Corp (PEDCO).
Russian Crude Oil Export Proceeds Drop in Jan-Feb 1998.
MOSCOW, April 21 (Itar-Tass) - The Russian proceeds from the crude oil exports amounted to 1,956.1 million dollars in January - February 1998, which is 610 million dollars (24 percent) less than in January - February 1997, sources at the Russian Ministry for Foreign Economic Relations' economics and information department told Prime Tass.
Russia supplied 21.2 million tonnes of crude oil to the world market in January - February 1998, which is 9.3 percent more than in the first two months of 1997.
The crude oil share in the Russian overall exports dropped by almost 2 percent -- from 19.1 to 17.4 percent -- in January- February 1998.
An average export contract price of the Russian crude oil dropped by 40 dollars per ton -- from 132.5 dollars per ton in January-February 1997 to 92.4 dollars per ton this year.
The far abroad bought 18.1 million tonnes of Russian oil to a total sum of 1,641.3 million dollars from Russia in the first two months of this year. It was a seven percent increase as compared to 1997, but the proceeds were 30 percent smaller.
The Russian oil supplies to the CIS countries increased by 25.8 percent (from 2.4 million tonnes to 3 millions). According to the ministry experts, the contract price in deals with the CIS countries increased by 4.6 dollars per ton as against January- February 1997 and reached 103.6 dollars per ton in January - February 1998, which is 13 dollars larger than an average contract price in trading with the far abroad.
China's Crude Oil Production Remains Steady in First Quarter
BEIJING (April 21) XINHUA - China produced 34.82 million tons of crude oil in the first quarter of the year, almost the same as the first quarter last year, according to China's State Administration of Petroleum and Chemical Industry.
The production from January to March accounted for 22.2 percent of the target set for the whole year.
China turned out 35.11 million tons of crude oil in the first quarter of last year. And this year, it expects to produce 157 million tons.
Statistics show that, in the first two months of this year, the sales revenue of China's petroleum and natural gas industry was 24.07 billion yuan, down 1.99 billion yuan or 7.6 percent less than the same period last year.
The industry made 1.27 billion yuan in profit, a 400-million-yuan decrease on a yearly basis. The reduction was 23.95 percent.
Currently, a total of 3,287 wells were shut in China's seven major oil fields such as Daqing, Liaohe, Shengli and Xinjiang.
Consequently, the impact on annual production is estimated at nearly 3 million tons.
According to statistics, China's sales volume of crude oil in the first quarter was 31.6 million tons, and 1.1 million tons were not marketable.
Asia-Pacific Economic Cooperation
A new Country Analysis Brief on the Asia-Pacific Economic Cooperation (APEC) group is now available. To access this report, the World Wide Web address is: eia.doe.gov
The report presents highlights of the energy situation in the group of countries belonging to the Asia-Pacific Economic Cooperation (APEC) forum. Included are charts showing U.S. trade with APEC countries and energy demand in APEC Countries. Also included is a table titled Economic and Demographic Indicators for APEC Countries, and another table titled Energy Consumption and Carbon Emissions in APEC Countries, 1996.
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