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Microcap & Penny Stocks : OILEX (OLEX) -- Ignore unavailable to you. Want to Upgrade?

To: Steve who wrote (3567)	6/22/1998 5:55:00 AM
From: Ditchdigger	Read Replies (1) \| Respond to of 4276

" Additionally the boards of OLEX and CAYC have continued negotiations on possible consolidation of the respective companies. Terms of the discussions are expected to be announced in the next ten days." One would assume,since there was no announcement, plans to consolidate have fallen through.(announcement should have been a month and a half ago)..DD

To: Steve who wrote (3567)	6/22/1998 6:04:00 AM
From: Ditchdigger	Respond to of 4276

Interesting article Thursday June 18, 9:59 pm Eastern Time Hard times for small North Texas oil producers By Andrew Kelly HOUSTON, June 18 (Reuters) - Three months ago crude oil prices hit nine-year lows and small North Texas producers thought things could not get any worse. Then things got worse. As prices fell to 12-year lows this week, small operators said they were losing money and having to think about shutting in wells temporarily or even plugging them for good. Since last fall the price of a barrel of benchmark West Texas light crude oil has fallen from $20 to around $12. This has slashed the earnings of major oil companies such as Exxon Corp (XON - news) and Texaco Inc (TX - news) and severely eroded the revenues of major exporting nations such as Saudi Arabia and Venezuela. The effects on operators of marginal wells, with a daily output of less than 10 barrels of oil, are not as well publicized but they are no less painful for the people involved. ''The price is just so low, it's devastating...We're having to do whatever we can just to get by,'' said Paul Clark of Clark Operating in Wichita Falls near the Oklahoma border. Clark said most of his leases in Texas and Oklahoma were just about breaking even or losing money. Even at the best of times marginal wells, also known as stripper wells, yield only a small profit for their operators. Alex Mills of the North Texas Oil & Gas Association said that at current prices marginal well operators could no longer cover their costs of about $12-15 a barrel. ''We thought prices had hit bottom in mid-March and then all of this happens,'' he said. Mills said small North Texas producers were currently getting some $2.50 per barrel less for their oil than the widely quoted futures price on the New York Mercantile Exchange (NYMEX). ''Our posted price here yesterday was $9, so you're losing $3 a day if you continue to produce,'' he said. Clark, whose company employs nine people, has tried to buy time by shutting in 20 of his 153 wells, ceasing production temporarily in the hope that oil prices might recover. But wells can be damaged if they remain shut in too long and at some point a decision might have to be made to plug them with concrete, effectively taking them out of production forever. Clark said he was worried about the long-term supply and demand outlook for oil and was considering diversifying into the real estate business or even returning to the legal profession. Mark Metzler at Felderhoff Drilling in Gainesville said the sharp drop in prices had wiped out the profit margin a typical stripper well might previously have generated. ''It's probably safe to say that across North Texas 50 percent of the stripper wells are operating at a loss,'' he said. Metzler said his company, which has 40 employees, had not yet shut in any wells but that a decisionto do so could come any day now and that some wells might never produce again. ''A business can only run unprofitably for a limited period of time and at some point it makes more sense to plug the wells and sell the equipment,'' he said. Metzler said the regulatory authority, the Texas Railroad Commission, required wells to be plugged for environmental reasons if they had been out of production for a year. ''We don't have the option of letting the reserves sit there indefinitely, waiting for higher prices two to three years down the road,'' he said. Marginal wells produced 352 million barrels of oil in 1996 or 15 percent of all the oil produced in the United States, excluding Alaska. More recent figures are not yet available. Among individual states Texas led marginal well production with 117 million barrels, followed by Oklahoma with 59 million. Mills said there was some resentment in North Texas of NYMEX dealers trading ''paper barrels''of oil. ''Out here in the oil patch we struggle daily to find, produce and sell a barrel of oil and the price that we get for our actual wet barrels is dictated by what's happening in New York City on the Mercantile Exchange,'' he said.