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Gold/Mining/Energy : Parkcrest Explorations Ltd. (PKC) Harken (HEC) partner -- Ignore unavailable to you. Want to Upgrade?

To: Jeff who wrote (173)	7/29/1998 12:11:00 AM
From: Jeff	Read Replies (1) \| Respond to of 261

New Coverage by Yorkton RESEARCH COMMENT Natural Resource Group July 24, 1998 Oil & Gas Sector PARKCREST EXPLORATION: COMPANY WILL PRODUCE OIL FROM ESTRO #1 & 3 AND (PKC C$0.69, (-.01), ASE) TRUCK TO PIPELINE CONNECTION WHILE BUILDING PALO BLANCO PIPELINE. Recommendation: SPECULATIVE BUY Paul Hayes (416) 864-3670 12-Month Target: C$2.50 phayes@yorkton.com Shares Outstanding: 9.6 million Shares Fully Diluted: $19.4 million Volume: 29,600 12-Month High-Low: $2.10-$0.50 Market Capitalization: C$6.6 million Recommendation We are initiating coverage of Parkcrest Exploration with a Speculative Buy rating and a 12-month target of $2.50. Parkcrest is Harken Energy Corporation' s (HEC, AMEX) 25% partner in the Alcaravan contract area, where two prospects have been drilled. Oil production is to start from the first, Palo Blanco, on August 1, 1998. This oil production will be trucked to Ecopetrol' s pipeline connection while a 3.2 mile, 8-inch pipeline is constructed. The second prospect, Anteojos, where the Canacabare #1 was drilled, is awaiting the end of the rainy season to allow a completion rig to enter the location. Our target of C$2.50 is based on NAVPS of almost C$5.00. Since valuation of Colombian reserves is in question after the failure of Triton (OIL, NYSE) to get acceptable bid for its reserves, we feel that we must discount the NAVPS by 50%. We will monitor theresults of additional drilling and the price for crude oil in order to modify this target. Background Parkcrest Explorations Ltd. was formed on June 4, 1984 in British Colombia. The company' s first ten years were dedicated to exploration for minerals and hydrocarbons. In January 1997, Parkcrest formed a strategic alliance with Harken Energy Corp. Parkcrest has earned a 25% interest in Harken' s Palo Blanco field and the Anteojos prospect where the Canacabare #1 well has been drilled. These two prospects lie in the highly prolific Llanos Basin in east central Colombia. The company also has options to participate on a 25% basis in other locations in Harken' s 210,000-acre Alcaravan Contract. Harken is carrying Parkcrest for approximately US$2.5 million (C$3.9 million) for PKC' s share of the development of the discovery and the 3.2 mile pipeline to Ecopetrol' s connection. Projects Alcaravan Contract in Colombia: In the Alcaravan Contract, Parkcrest has 25% working interest, Harken has 50%, and Rochester International (ROH, TSE) has 25% before royalty and Ecopetrol' s back-in. Two projects have been drilled, the Palo Blanco and the Anteojos. Palo Blanco Field : Two wells have been drilled and tested. These wells, Estero # 1 and 3, will begin production about August 1, 1998. This production must be delivered by truck while a 3.2 mile, 8 inch pipeline is constructed. All permits are in place and actual pipeline construction is to start next week. Recent interpretation of the seismic and drilling data from the Palo Blanco indicate the reserves are in the order of 200-350 million barrels. Harken is carrying Parkcrest for its share of costs until the end of November at which time Parkcrest must repay Harken or reduce its interest by one-half. Anteojos Prospect Parkcrest apparently has a discovery in the Canacabare #1 well. However, this is the rainy season in Alcaravan. Therefore, completion and production testing must wait for dryer weather to allow a completion rig to enter the location. Logs of the Canacabare #1 look good. We have learned that the Mirador and Ubaque look encouraging in the Canacabare, with 77 feet of net pay. Additionally, the Gacheta sandstone is present with about 14 feet of pay. Porosity ranged in an acceptable level from 20% to 24%. Oil saturation was a little low at 40%. Yorkton Securities Inc. has acted as agent for financing of or financial advisor to Parkcrest Exploration within the past three years.