MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING WED., MAY 20 1998 (3)
TOP STORIES, Con't
Nigerian Oilfield Spat Another Blow For Abacan Resources
The Financial Post
Investors shaved another 8% off the shares of financially troubled Abacan Resource Corp. yesterday, cutting the firm's value by almost 20% in the past two days.
Reacting to news the company is in a dispute with its Nigerian partner over the sale of an offshore oilfield, the stock (ABC/TSE) lost 6› to close at 71›. This followed a 12.5% drop on Tuesday, when 11› was lopped off.
Amni International Petroleum Development Co. has served Abacan's subsidiary, Liberty Technical Services Ltd., with a termination notice on developing the Ima field in the Niger River delta.
Joint-venture agreements between Liberty and Amni do not allow unilateral termination, Abacan said.
Vice-chairman Jim Harvie called Amni's move a negotiating ploy as Abacan has lined up a buyer for the shallow part of the field, but Amni is more optimistic about the field's long-term potential. Amni has a 15% carried interest in the field.
Harvie declined to identify the buyer, but said Abacan would like to close the deal next month. The field produces 15,000 barrels of oil a day.
An agreement would also allow Abacan to sell the associated production equipment. The proceeds will be used to pay off current liabilities of about $57 million. The firm also has long-term debt of about $30 million.
The dispute with Amni is being blown out of proportion and likely will be resolved soon, Harvie said. "I keep hearing that we're on the verge of going under and there's no danger of that, in my view, in the short run."
Business Briefs
Edmonton Sun
Keep On Truckin
KTS Transportation Services, a Nisku oilfield trucking firm, is winching up its future with a $750,000 building and materials-handling facility to be officially opened May 29.
Owners Mel and Judy Kapicki started the company with the $100,000 purchase of RaySon Trucking's one single axle picker truck, a tandem winch tractor, four trailers and a forklift.
The company now has five pickers and three winch tractors, two pilot and hotshot trucks and 25 trailers.
Since its first year, KTS has grown from gross sales of $700,000 to projected revenues this year of $4 million.
The Kapickis now plan to add another seven trucks to the fleet.
Soutern Exposure
Nancy Southern has been appointed deputy CEO in a move that positions her to succeed her father as head of Atco Ltd., the company's annual meeting was told yesterday.
Southern, who already holds the title of deputy chairman, is gradually taking over duties from her father, Ron Southern, 67.
"I like to think of it as situational leadership," Nancy Southern said of her gradual succession.
Ron Southern, Atco's chairman and CEO, started the company with his father in 1947, increasing its sales to more than $2 billion from $1,078 that first year.
Last year, he earned $7.17 million, including $5.73 million from gains related to stock options. He controls 20% of Atco non-voting shares and 78% of voting shares, mostly through his firm, Sentgraf Enterprises Ltd.
Amazing ATCO
Calgary Sun
ATCO Group chairman Ron Southern had to plead -- and plead again -- for questions from shareholders attending the company's 31st annual meeting at the Palliser Hotel yesterday.
But, as the fellow sitting next to me put it, how can you question the management of a corporation, that has increased its profits 10 straight years in a row, and has given its shareholders a compounded rate of return of 18% over the past decade?
Or a company that now has assets of $4.4 billion, 1997 revenues of more than $2 billion, operates or has projects underway in almost 100 countries, and has almost 4,500 employees?
Earnings per share in 1997 reached $2.68.
Ask any question you want, pleaded Southern, even if you think
Well, the chairman of this particular board did manage to finally coax the odd question from shareholders, but they were basically laudatory statements proffered, one guesses, so that Southern wouldn't feel too lonely.
When he said ATCO was built on a base like "granite" he was referring to his own earlier comments that some might be puzzling or worried about "succession" in the management team and whether as top people moved or or retired the company could keep up its legendary pace of expansion and ever greater profits.
Perhaps he was talking about himself, now just touching 69, and for those who noted daughter, Nancy, is now deputy chairman.
But Southern, always the gentlemen, assured shareholders that over the years top people have come and gone from the company but transitions have proven to be both smooth and invigorating.
ATCO, he said, relies on no single person to ensure the company's future, and indeed plans are well in hand to assure current and future management keep building the balance sheet, and keep building values.
Nancy Southern, who surely gets her drive and entrepreneurial spirit from her father -- and basically admitted it on stage -- described his interest, wisdom, and knowledge of the company's activities as being all-embracing.
No one could doubt that.
Chief Financial Officer J. A. Campbell must have lifted the hearts and the optimism of shareholders when he gave the financial report, and said capital expenditures this coming year would be in the $400 million region.
Perhaps referring to the sudden drop in oil prices to a 10-year low, Campbell reminded his audience the ATCO Group had been through bouts of adversity over the years but always had a pre-emptive plan to capitalize on new opportunities. No one doubted it wasn't doing this right now.
President C. O. Twa just added to the upbeat move when he described some of the projects ATCO is now involved in -- including building a $40-million, 790-room camp at a copper mine in Chile that resembles a four-star hotel, and accommodations in Algeria so insulated they could withstand bullets from AK-47s.
Twa again raised spirits when he said ATCO would always continue its creed every investment it made must perform both in the short-term and the longterm.
"A wait and see attitude is just not good enough for our shareholders," he said.
Don't you wish every company had this philosophy?
Insider Trading
As reported in The Financial Post this morning;
Red Sea Oil Corp. -- Lukas Lundin, director, exercised 290,000 options for $1.04 each, sold the same number of shares for $2.70 each, and bought 8,200 shares for $2.25 or $2.30 each to hold 48,200.
Seven Seas Petroleum Inc. -- Robert Hefner III, officer, director and holder of more than 10%, sold 330,000 shares for US$22.50 or US$25.25 each to hold more than 5.7 million directly and indirectly.
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