MARKET ACTIVITY/ WEEKEND EDITION OF TRADING NOTES JUNE 28 1998 (11)
SELECTED NEWS THIS PAST WEEK, Con't
Further to Pan-Global Enterprises Inc.'s (PGE/VSE) news release on June 17, 1998 the company announced detailed information regarding recently acquired prospects and an update on domestic developments.
Acquired International Prospects:
Tunisia/Bazma
Pan-Global has an option to purchase a 40% interest from a third party in the Bazma prospect, resulting in a 6% WI. The Bazma permit comprises an area of approximately 500,000 acres, located in central Tunisia. Three pipelines with available capacity run along the eastern boundary of the permit, carrying oil and gas to the terminals on the Gulf of Gabes, approximately 75km to the northeast.
The initial well, Bazma 1 commenced drilling operations on April 1, 1998 and is expected to reach total depth by mid July 1998. Eurogas Corporation is the operator of the well and Mobil Oil has farmed-in on a promoted basis (pay 53% to earn 40%). Encouraging results at this location could lead to 3 additional prospects of similar size and potential in this area.
Yemen/Block43
Block No. 43 is located immediately to the south and east of the Canadian Occidental Masilla block No. 14 where they are currently producing approximately 200,000 bopd and have suggested reserves close to 1 billion barrels of recoverable oil. The Canadian Occidental export pipeline runs through the southwest portion of this block.
There is 1500km of seismic in place, the operator is reviewing the existing data and has identified several preliminary leads for exploratory wells. Plans include a high-resolution gravity and magnetic survey to help refine these leads and then acquire 3-D seismic over the most promising leads. Plans to drill these wells will be based on the timing of 3-D survey results; most likely scenario is the first quarter of 1999.
The Masilla block has identified 13 separate oilfields, ranging from approximately 5 million barrels of recoverable oil (MMBO) to over 200 MMBO. The geology of the Masilla block carries into block No. 43 and some of the wells have indicated oil shows. Pan-Global has a 16% WI in this project.
West Texas/South Fort Stockton
Pan-Global has purchased a 6.67% WI BPO and a 5% APO in this project. To date, two prospects have been identified by 3-D seismic interpretation. The project area is approximately 5,280 acres, located midway between the Gomez Field to the northwest (cumulative production to date 4.7 TCF gas) and the Puckett Field to the southeast (cumulative production to date 3.8 TCF gas).
The prospects are interpreted by First Calgary Petroleums Ltd. management to be similar in size and geological setting to the McComb Field located immediately to the north (cumulative production to date 70 BCF). The well was spudded in February 1998 and is currently at 18,000 feet. The Final Total Depth will be 26,000 feet; October 1998 is when the company expects results.
Louisiana/South Lakeside, Cameron Parish
The South Lakeside Prospect comprises an area of approximately 3,000 acres, located in southwest Louisiana in Cameron Parish, 17 miles southwest of the town of Lake Arthur, 16 miles north of the Gulf of Mexico coast on the south shore of Lake Misere.
The initial well was drilled, cased and suspended in 1997 at total cost of US $9.2 million. The first well was drilled on a loose grid of 2-D seismic, subsequent to the suspension; a regional 3-D seismic program was obtained and interpreted which confirmed the extent of the fault trace and two adjacent prospective fault bocks. The second well will kick-off from the cased portion of the first well, drill laterally approximately 800 feet, then vertically into the Myogypsinoid sands.
Re-entering the second well started on June 13th, 1998 and is expected to be a 30-day program. The reserve potential may be up to 750 BCF of gas, adjacent fields have produced 500 BCF to 1.5 TCF of gas. Pan-Global has a net 5% WI in this project.
Domestic Developments:
Long Coulee-Alberta
During the fourth quarter of 1997, Pan-Global participated in the drilling of two wells that resulted in a new pool gas discovery and a development well. The company has an 18% BPO and 16% APO for the first two wells. The new pool discovery gas well is located at 14-7-18-22 W4M and the development well at 14-11-18-23 W4M; production tests indicated a combined rate of production of 3,000 mcf/d of sweet gas and some liquids. The wells have been tied-in and production will begin in July 1998. Pan-Global has participated and currently evaluating one additional well at 12-6-18-22 W4M. The company has 22% BPO and 21.33% APO in this well.
Long Coulee North-Alberta
Pan-Global has an AMI in 20 sections covering 12,800 acres, which is adjacent to its successful properties to the south. The company has identified several drillable locations based on interpretation of seismic covering over 70 miles. Pan-Global is currently drilling at W4M, paying 40% of costs to earn 28% BPO and 28% APO.
Kirk Lake-Alberta
Pan-Global purchased a 50% working interest in an Alberta Crown Lease at a land sale in November of 1997. The company believes that this is a good candidate to farm-out during 1998 or to participate in the drilling of this moderate drill depth, relatively low risk well.
Cereal-Alberta
Pan-Global has a 20% WI in two sections of pooled lands and a 20% interest in an AMI. The company plans to purchase seismic and reprocess to optimize a drillable location in 1998. This project is a low risk candidate based on geologic/geophysical control.
Sturgeon Lake-Alberta
During the fourth quarter of 1997, Pan-Global purchased an option to participate in the exploration and development of D-2 (Nisku) and D-3 (Leduc) prospects. Suncor has farmed-in and pooled their interests in the area where Range Petroleum is the operator. Additional sections of land have also been purchased, two sections in Block A and one section in Block B. Pan-Global can elect to exercise its option as to a 1.5% WI on Block A after the well has been drilled or 2% WI in Block B after issuance of a drilling A.F.E. Sturgeon Lake prospects are of enormous size and may have millions of barrels of recoverable oil.
T.M.T. Resources Inc. (TMT/VSE), announced that Management has contracted a service rig for the purpose of logging the cased portion of the horizontal well in order to determine, and proceed with, optimum perforation. Currently 305 meters of the horizontal well at Swan Hills remains cased in the producing formation. Work is scheduled to commence on Monday, June 29, 1998. Also mentioned was that management is reviewing several merger and acquisition candidates within Canada.
Dynamix Corporation (DYX/ASE) announced that it has entered into an agreement (through its new wholly-owned, US subsidiary, Fastway Exploration, Inc.) for a 25 percent interest in a five well shallow gas development program, called Greasy Creek, in Johnson County, Kentucky, USA. The program's primary objective is Devonian Shale - Newman Ls. at 2500 feet. Secondary objectives include
Berea Sandstone, Salt Sand and Maxon Sandstone formations. Anticipated schedule for the program includes:
1. Spudding commencing June 30.
2. Fracing commencing July 31.
3. Pipeline tie-in on August 15.
Total acreage is 5,336 acres and total cost for the entire program is $185,625 USD. The Corporation sees this program as a low-risk, long-term producing asset that will provide cash flow in US dollars. Additionally, Fastway Exploration, Inc. has an option to participate in the entire play that could reach 40 to 50 wells in total. The operator, Carson Associates, Inc., is a proven performer in Kentucky, with strong technical skills and over sixty years of experience.
Gulf Canada Resources Limited (GOU/TSE) announced a natural gas discovery at the Gulf operated Q4-8 exploration well on the Q-4 Block located offshore in the Dutch sector of the North Sea. Gulf Canada Resources, through its wholly owned subsidiary Clyde Petroleum Exploratie B.V., currently holds a 49.75 per cent interest in the block.
The Q4 discovery well tested 27 million cubic feet of gas per day and is located approximately 20 kilometres (12 miles) from Gulf operated infrastructure in the area, which will potentially reduce development time. The current plan is to submit a production licence application later this year, proposing to start production by year-end 1999.
Partners in the Q-4 Block are Dyas B.V. with a 17.25 per cent interest and Clam Petroleum B.V. (a 50/50 joint venture with Marathon Petroleum Netherlands, Ltd., which is a wholly owned subsidiary of Marathon Oil Company, and Burlington Resources Netherlands Inc., which is a wholly owned subsidiary of Burlington Resources Inc.) with a 33 per cent interest. The State has a right to acquire a 40 per cent interest through Energie Beheer Nederland B.V. under ''back-in'' provisions.
Hampton Court Resources Inc. (HCR/ASE) reported that the Company has established a new major focus area in south eastern Texas. The area offers excellent opportunities to acquire multi-zone, natural gas prospects and is an area that has high demand for gas and strong prices.
The Company has agreed to participate for a 10% working interest in a high potential reef prospect with unrisked reserve potential of 1 to 3 trillion cubic feet. Lands on the prospect are currently being acquired.
The Company has also agreed to participate for a 6.25% working interest in a joint venture land acquisition program in the south eastern Texas prospect area. The joint venture will pursue the acquisition of other reef prospects that have been identified as well as a number of shallow zone gas plays. The Company has the option to increase its interest in any prospect through a negotiated farm in as to an additional 6.25%.
Drilling on the South Texas prospect lands is expected to begin in late 1998.
Natural gas exploration throughout the southeastern United States is one of Hampton's primary areas of focus. Hampton's initial exploration area is the Arkoma Basin within Oklahoma and Arkansas where the Company owns a 25% working interest in approximately 68,000 gross acres of prospect specific lands. The Company expects to participate in the drilling of 6 to 12 exploration wells in the Arkoma Basin during the balance of 1998.
Starcor Energy Royalty Fund (STR.UN/TSE) said that it has entered into an agreement to acquire additional natural gas royalty and working interests in its existing lands and in new lands at its Jenner property in Southern Alberta.
The combined royalty and working interest reserves to be acquired total 18.9 billion cubic feet of proven natural gas with a reserve life index of approximately 18.7 years. Starcor will acquire an average 84% working interest in 116 producing gas wells directly offsetting existing operations plus an existing overriding royalty on 126 Starcor 100% working interest wells. Starcor will also acquire the remaining 51% working interest in the Wardlow gas plant bringing its interest to 100%. The plant has a capacity of 13 MMCF/d. Purchase price is $11.2 million which will be funded using existing bank lines. The transaction is expected to close July 29, 1998.
Ultra Petroleum Corp. (UP/VSE) provided a drilling update. Seven out of a total of eleven planned fracture stimulations have now been completed at the Mesa 15-8 well, a joint venture with Western Gas Resources (WGR/NYSE) and Celsius Energy, a subsidiary of Questar Corp. (STR/NYSE). The plug has been removed between zones 6 and 7, which were completed between 10,360 feet and 11,094 feet. The two zones flowed commingled into the sales line at an average combined rate of 5.2 mmcfd of gas and 17 bpd of condensate at a flowing casing pressure of 950 psi on a 24/64 inch choke.
The rest of the plugs will be pulled over the next five days to allow cleanup of all zones completed to date, after which the remaining four zones will be completed between 8,450 and 10,243 feet and the entire well bore flowed to the sales line.
Abraxas Petroleum Corporation (Nasdaq: AXAS) announced an update on the Company's horizontal drilling program targeting the Edwards Limestone Formation in south Texas and plans for Canadian exploratory and development efforts.
In the Three Rivers Field, Live Oak County, Texas, Abraxas has placed its third well, the Schultz #3H on stream flowing 2.8million cubic feet (MMcf) of gas per day with 2,410 pounds of flowing tubing pressure. Production from the well is from a3,600' horizontal lateral section, completed open hole, in the Edwards which was encountered at vertical depth ofapproximately 13,200'. A third party-operated gas processing plant was recently placed in operation and Abraxas' three wellsare currently flowing 5.7 MMcf per day into the plant. A total of 11 additional locations have been identified on the Company's 3,500 acre leasehold.
In the Yoakum Field, DeWitt County, Texas, Abraxas placed on stream its first horizontal well, the Kuester #2H which is flowing at the plant capacity limited rate of 1.7 MMcf per day with 4,200 pounds of flowing tubing pressure. The well was drilled to a total depth of approximately 16,500' including a horizontal lateral of 2,600' and was completed open hole in the Edwards Limestone. Plans include the installation of additional gas processing capacity and the drilling of as many as seven horizontal wells on the Company's 2,200 acre lease block.
Abraxas owns a 100% working interest in both the Three Rivers Field and the Yoakum Field.
In Canada, the Company's two Canadian subsidiaries, Grey Wolf Exploration, Inc. (formerly Cascade Oil and Gas) an Canadian Abraxas Petroleum, Ltd., have recently drilled three successful wells in its Bellis area on acreage owned 100% by the two subsidiaries. The Bellis 15-36-59-16 W4 has been completed from the Nisku Formation and is currently shut in waiting on pipeline after testing 1.2 MMcf of gas per day. Completion operations on the other two wells are currently under way. The Abraxas operated Bellis plant is currently at capacity and the Company will be installing additional capacity this summer to handle this new production as well as production from additional wells scheduled to be drilled later this year.
In the Northwest Territories, the Company's two Canadian subsidiaries have executed a drilling contract with Sheetah Drilling Company for Sheetah Rig 7 for the entire winter drilling season of 1998-1999. The Company has scheduled at least two exploratory Key Scarp Reef tests on its 116,000 acre block adjacent to the Norman Wells Oil Field to evaluate potential reef structures identified from seismic shot during the last winter season. The Norman Wells Field has produced in excess of 130 million barrels of 40 plus gravity oil and is currently producing approximately 29,000 barrels per day. The Company is currently shipping drilling supplies north by barge down the McKenzie River for storage in the town of Norman Wells in anticipation of this winter's drilling season. A seismic program to follow up additional leads developed as a result of this past winter's seismic program is also planned.
Through its two Canadian subsidiaries, Abraxas has committed to drill three wells on its Slave Point Reef prospects in the Cranberry / Chinchaga area in northwestern Alberta. These wells are the result of last winter's seismic program. Abraxas holds interests in 68 sections of land on this play. Abraxas has secured a drilling rig for all three wells which are scheduled to be drilled this winter.
Renata Resources Inc.(RTA/TSE) announced a $20 million joint venture drilling arrangement with Stratum Group LP. A letter of intent was signed today, and is subject to approval by both Boards of Directors.
The joint venture drilling arrangement provides Renata with $20 million to accelerate its drilling programs in the Smoky, Lambert and Bergen areas of west central Alberta, and contemplates initially the drilling of 12-15 wells in these areas. This arrangement provides Stratum Group LP with exposure to a portion of the upside in Renata's drilling program.
The joint venture drilling arrangement follows on recent natural gas exploration successes in the Lambert and Smoky areas of West Central Alberta.
At Lambert, Renata holds a 30% working interest in 5,080 acres of land associated with the 1-3-52-22 W5M Leduc discovery well which flow tested at rates of 53 million cubic feet per day of raw gas. The 1-3 well is scheduled to come on-stream in August 1998. Additional prospects in the Nisku, Wabamun, and Cardium formations have been defined and drilling is scheduled for the second half of 1998.
At Smoky, Renata holds working interests between 35% and 100% in approximately 91,000 gross acres (70,000 net acres). Recent exploration success at the 3-11-59-3 W6M discovery well has prompted acceleration of Renata's exploration program in the area, targeting prospects in the Leduc, Wabamun, and Cardium formations. The 3-11 well, in which Renata holds a 35% working interest, is currently being production tested and has flowed at rates of 26 million cubic feet per day of gas at 1900 psi flowing tubing pressure, with minimal quantities of H2S (0.1%). Further evaluation is required to define the full potential of this discovery. Additional drilling on Renata lands is scheduled during the second half of 1998.
At Bergen, a 3,700 meter test is expected to spud in August, 1998. Similar to the discoveries at Lambert and Smoky, this high impact exploration well is targeting an isolated Leduc reef that has been mapped over approximately four square miles with a reserve potential of up to 500 billion cubic feet of raw gas. Analogue pools in the area have initial production rates from individual wells of up to 100 million cubic feet per day of raw gas.
As a result of this joint venture drilling arrangement, Renata is now able to accelerate exploration and development drilling programs within other core areas where it holds approximately 300,000 net acres of undeveloped lands, in addition to significant light oil and gas development opportunities.
Renata is aggressively pursuing its business plan of balancing its oil and gas reserve base and production mix through the drill bit.
Ranger Oil said first oil from the operated Kiame field came on stream 21 June 1998 at a stabilized production rate of 7,000 barrels of oil per day. Proven reserves for the Kiame Field are estimated to be 8.5 million barrels. The Kiame field lies within Block 4, offshore Angola. The field has been developed utilizing two horizontal subsea production wells tied back to a Floating Production, Storage and Offtake (F.P.S.O.) vessel, the ''Petroleo Nautipa''. Total development costs amounted to US$44 million ($5 per barrel) and operating costs are estimated at approximately US$5 per barrel. The F.P.S.O. is capable of processing 30,000 barrels of production daily with storage capacity in excess of 1 million barrels. Ranger operates Block 4 under a Production Sharing Agreement with the Angolan State Oil Company, Sonangol U.E.E. It has a 100 Percent participation in the Kiame field. Fred Dyment, President and CEO of Ranger commented: ''Kiame represents the first production from Ranger's international operations outside the U.K. Offshore Angola is one of the worlds most exciting exploration plays and is a key area for Ranger's future exploration and development activities. We look forward to building on the base established by Kiame''.
HEGCO Canada Inc. (HEG/ASE) announced that the completion program of the El Grande well in Arkansas commenced yesterday, June 24, 1998. The program includes the shooting of additional perforations in the Arbuckle formation, a high volume acid fracture treatment of one or more intervals, followed by production flow testing.
PanCanadian Petroleum Limited and its partners in Venezuela - Pennzoil Venezuela Corporation S.A. (Pennzoil) and Petroleo y Gas Inversiones C.A. - are moving ahead with development of the B2X-70/80 block located in Lake Maracaibo.
Petroleos de Venezuela S.A. (PDVSA), Venezuela's state oil company, approved the partners' development plan in late March and it has now agreed to the takeover of operations by the partners.
''The operating team is now ready to apply new technology that will improve production from this large, 48-year-old field. We anticipate generating incremental production and PanCanadian's first Venezuelan revenue from this offshore development block by the end of the year,'' said Paul Ellis, PanCanadian's Senior Vice President International.
PanCanadian and Pennzoil were awarded the block in June 1997 during the Third Operating Agreement Round, a public auction of Venezuelan oilfield reactivation projects. PanCanadian was initially designated the operator. But it has now been agreed that Pennzoil will assume this role in order to take advantage of the efficiencies that will result from its existing operations and infrastructure in Venezuela. Pennzoil currently operates block B2X-68/79 in Lake Maracaibo, close to B2X-70/80, and the East Falcon block onshore.
''Transfer of operatorship to Pennzoil will result in greater synergies in the development of both blocks through a more efficient utilization of resources. PanCanadian is contributing staff and expertise to the Maracaibo operating team,'' Mr. Ellis said.
Block B2X-70/80 is producing around 3,300 barrels of oil, with a gravity of 20-22 degrees API, from 50 active wells. The partners intend to increase production substantially. A new drilling barge is under construction and is expected to arrive in Maracaibo by year-end to begin reworking existing wells and drilling new infill locations. The field is located in the northeast corner of Lake Maracaibo, about 500 kilometres west of Caracas. The water depth ranges from 7 to 70 feet.
The partners' interests in the project are:
PanCanadian Petroleum Limited................45%
Pennzoil Venezuela Corporation S.A. .......45%
Petroleo y Gas Inversiones C.A. ............. 10%
Westfort Energy Ltd (WT/TSE) announced that the company's Pelehatchie Deep Unit 18-4 well has reached the depth of 15,900 feet. Log evaluations have been run as well as sidewall cores taken. The company announced that numerous zones have so far been evaluated to be commercial by log analysis and preliminary core lab results. More in depth studies are being conducted. The company expects further evaluation evidence by the first of next week and will give more definite news at that time.
The company plans to now set 7'' casing to 15,900 feet, cement the same in place, and then continue drilling 5'' hole to total depth of 17,350 through the Smackover zone and down to the Norphlet zone. Total depth and evaluation of the next two anticipated zones is expected by July 4th.
On other news, the Johnny Rhodes 7-6 well being drilled in the same field has reached a total depth of 6150 feet and could reach total depth of 11,500 feet by midweek of next week.
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