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

To: Herb Duncan who wrote (10830)	5/21/1998 1:34:00 PM
From: SofaSpud	Respond to of 15196

MEDIA / Carmanah Resources Calgary Herald May 21, 1998 Carmanah fights for payment from Indonesia By Barry Nelson The Indonesian national oil company, Pertamina, has not paid Calgary's Carmanah Resources about $1.5 million US that Carmanah is owed for oil taken from its Camar field about 100 km. off the coast of Java. The payment for about 100,000 barrels of oil was due April 26. "The only difficulty we've encountered is in the finance department. They are late in paying for the last lifting of oil," say Carmanah chairman Dick Gusella. "We know payment has been approved by Pertamina, but under the new arrangements everything goes through the finance ministry. "Money movements are complicated because the banks are shut down and there are restrictions on foreign exchange transactions." Gusella and Carmanah president Abby Badwi are in Montreal today meeting with Carmanah's biggest investors after spending Wednesday in Toronto where they held a lunch to soothe about 50 brokers and institutional investors. The price of Carmanah shares has plunged almost as fast as the Indonesian rupiah did when the county's economy collapsed last October. From a high of $8.75 on April 17, the shares fell to a low of $3.65 Tuesday before gaining 17 cents to close trading at $3.82 Wednesday. The drop reflects both the political turmoil in Indonesia and the fact that the first exploratory well drilled on Carmanah's 736,000 acre Natuna block was a dry hole. Carmanah is the Calgary company most affected by the Indonesian upheaval. Both Gulf Canada and Talisman Energy have significant Indonesian operations, but they earn most of their money elsewhere. Carmanah derives almost all its revenue from Indonesia and has its biggest growth opportunities there. Since last week's riots that claimed 500 lives, destroyed 5,000 buildings in Jakarta and produced an exodus of foreigners, at least five investment dealers have issued written reports saying that the stock market has overreacted and recommending Carmanah stock. "I think the stock is a buy," he says. "You start to accumulate at these price levels. This Camar field is going to contribute a lot of cash flow. "In a lot of countries that are far less civilized than Indonesia, we've seen governments change and contracts remain in place. Pertamina has been around a long time and they are good to deal with. I don't think much is going to change. "Even if Suharto goes, I suspect there will be a fairly orderly transition." Gusella is telling investors that he is so confident that Carmanah will be paid that the company intends to ship more oil to Pertamina. "We have another lift scheduled for the next seven to 10 days and at this stage we intend to go ahead with it," he says. "It's just a matter of waiting it out. The banking system is in disarray. They won't clear cheques for more than 20 million rupiahs, which is about $15,000 US." Carmanah's biggest asset is an 84 percent interest in the Bawean production sharing contract that covers 750,000 offshore acres and includes the Camar oil and gas field. The company is now producing 1,300 to 1,400 barrels of oil daily from six wells connected to a production platform at Camar. Four more wells are now being tied in and Carmanah says production from the field could exceed 10,000 barrels per day by early 1999. The dry hole in the 736,000 acre offshore Natuna field cost Carmanah nothing because it has farmed out the area to giant Exxon, which must spend a further $15 million US to earn an interest in the field. In the Strait of Malacca off northern Sumatra, Carmanah has an 80 per cent interest in three wells expected to produce at an initial rate of 15,000 barrels a day beginning next year. And Carmanah has a 23.4 per cent interest in a program to rework old wells in Venezuela. The wells are now producing 1,000 to 1,700 barrels daily and the operator hopes to hit 9,000 barrels a day this year. Gusella forecast Carmanah production will average about 4,000 barrels a day this year, hit 8,000 by year end, and average 15,000 a day in 1999. The analysts who have looked at Carmanah in recent days forecast 1999 cash flow will range from $1.60 to $2.37 a share, compared to varying calculations of seven to 11 cents a share in 1997. And Gusella is confident that Carmanah will continue to operate successfully in Indonesia despite the outcome of the current unrest. "Our contract will be upheld," he says. "I'm not at all exercised. We're very confident with the sanctity of our contract and our relations with Pertamina, and there's no hint of any change at this stage. "Nothing has changed for us at this point in time. We're liquid, we have no net debt and are carrying on with our program. We're in it for the long term. "Stability has a good chance of being restored and in a very short time I believe we'll be back to business as usual. "The economic dislocation is going to take longer to sort out, but oil is still Indonesia's biggest foreign exchange earner. The environment will continue to be conducive to foreign capital coming in."