Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Kerm Yerman who wrote (12708)	10/8/1998 7:16:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Off the Record - Jennings Revs Up For Oilpatch Action The Financial Post The scene has been set for increased competition in the oilpatch. Jennings Capital Inc., formed five years ago by veteran corporate financier Robert Jennings, has essentially doubled the size of its operations, thanks to the recent addition of a five-person retail and institutional equity brokerage operation. Until this week, the firm confined its activities to three main areas: bringing junior and intermediate oil and gas exploration companies to market; providing consulting services to the industry; and acting as an agent in mergers and acquisitions. It did not sell its own deals rather it syndicated them to the major dealers. Now it can place the issues with investors itself, thanks to the recruitment of five professionals, three of them from Acumen Capital Partners. The five are: John MacRae, who will head the new division, Robert Achtymichuk, Brian Parker, Kevin Northfield, previously a retail broker with Nesbitt Burns, and John Roy, another industry veteran. Roy, who was already with Jennings Capital and before that for almost two decades with Richardson Greenshields where he worked as an analyst and as a corporate financier, will co-ordinate capital markets activities. Jennings said his firm is expanding "because there is an opportunity in Canada for a new independent Western Canadian-based investment firm. Western-based clients certainly enjoy dealing with a firm that is based in their area rather than firms based in the East." Jennings Capital is his second startup his first was Carson Jennings, which was sold to Midland Walwyn Capital Inc. in 1988. After the sale, he ran the firm's Calgary corporate finance activities. Jennings, who was in Toronto yesterday, said the expansion has been helped because "there are a lot of good people around who want to be part of an independent dealer rather than the bank-owned firms." He plans a "major expansion over the next couple of years if good people are available" and can offer prospective employees share ownership. The brokerage division, which expects to hire an oil analyst soon, will provide a new element to the firm's activities. "We have brought to market a lot of successful oil and gas firms, and have syndicated the deals out to the major dealers. We still want to be involved in syndicating with the bigger firms but we want to offer better service to Western-based companies. And we have to expand on the distribution side." Jennings is clearly unfazed about opening a new division, given the state of the oil and gas market and the dearth of new issue activity. Indeed he feels it's "a good time" to start this division. "Good people are not [always] available in a hot market," he said, adding the current expansion has been planned for some time. He believes eventually there will be considerable corporate finance activity, though the deals will be "better priced." That may not be good news for issuers, given they will be issuing equity at prices much lower than they wished, but presumably it's positive for their long-term interests. Achtymichuk said the four who joined Jennings Capital were attracted by the opportunity. "We all feel there is a great opportunity in the resource and technology area that has been overlooked by the broad market. At some stage, the resource sector will make a nice rebound and we want to be there to allow our clients to participate." For Acumen, an oil and gas firm with about two dozen staffers, the latest departures come a few months after Peter Tertzakian, one of the founding partners, moved on. He is now an oil and gas services analyst with Goepel McDermid. Bruce Ramsay, president at Acumen Partners, couldn't be reached for comment. What do other Calgary-based firms think about the new Jennings? Bruce Fiell, managing director at Peters & Co., said the firm tends to finance start-up oil and gas companies, "which are below the larger investment dealers' radar screens. "Acumen has a good group of salesmen and represents a good addition for Jennings. "But the addition reflects Jennings's wish to manage the distribution itself."

To: Kerm Yerman who wrote (12708)	10/8/1998 7:45:00 AM
From: Kerm Yerman	Read Replies (2) \| Respond to of 15196

IN THE NEWS / Deepwater Exploration Trebles In Three Years - Analyst M2 Communications - Wells spudded in depths greater than 500m have been calculated at 70 in 1996 (with 44 in the Gulf of Mexico), 125 in 1997 (84 in the Gulf of Mexico) and is expected to reach 200 in 1998 with around 120 in the Gulf of Mexico - a near trebling in three years. Market predictions suggest this upward trend is likely to continue over the short to medium term: -- Having already established large-scale deepwater reserves, Angola is now leading West African exploration into unexplored ultra deepwater (+3000m); -- A number of other countries are preparing to test their deepwater regions for the first time; -- By the end of 2000, nearly 60 newbuilds/ conversions will expand this specialised sector of the rig market by nearly 70%. "Deepwater Oil & Gas Monthly" - the unique Internet service from Smith Rea Energy Analysts and EIS Energy Information Services - has tracked this dynamic sector since March 1998. Incorporating market feedback has resulted in major improvements in this product. This additional investment has been undertaken by the co-publishers in the light of the accumulating evidence that exploration in water depths of over 500m (where there has been some notable new commercial discoveries) has so far shown little adverse effect from a period of weak oil prices. The enhanced "Deepwater Oil & Gas Monthly" now includes down-loadable spreadsheets and regional maps and is structured to allow easy navigation and greater manipulation by the subscriber. There has been no change in the subscription price. The upgraded service is to be demonstrates on 29th October at the Marcliffe Hotel, Pitfodels, Aberdeen, to delegates attending the 5th Atlantic Margin Conference, being held on the same day. For further details on this, see the Internet page at: srea.co.uk

To: Kerm Yerman who wrote (12708)	10/8/1998 8:40:00 AM
From: Kerm Yerman	Read Replies (5) \| Respond to of 15196

IN THE NEWS / Active Canada Oil, Gas Rigs At 194 vs 188 Last Week The number of Canadian oil and natural gas rigs active as of Tuesday totalled 194, increasing slightly from last week's 188, according to the Canadian Association of Oilwell Drilling Contractors (CAODC) today. Activity remains significantly below last year's drilling level of 477, with a weekly average of 298 rigs active this year, compared with last year's 398. The CAODC did note that last year's level was an exceptionally high level. The drop in active drilling rigs is mainly due to a "cash-flow crunch" that has hit Canadian oil companies this year. According to industry sources most oil companies have cut their drilling programs this year due to the global weakness in the price of oil. The CAODC revised its forecast of expected wells to be drilled for the winter months down to 10,855 down from its April estimate of 13,500. In the fourth quarter of 1998 the number of active drilling rigs was only expected to reach an average utilization of 50%, which calculates into approximately 290 active rigs out of the 580 available in the fleet. The figures are expected to continue to increase as the winter sets in. The source noted that many companies will not be able to pass up the opportunity of winter, which allows many rigs to reach difficult areas that are only accessible during the cold months. The CAODC reported that there were no rigs moving, with a total o 383 down for repairs out of the 577 rigs available in the fleet.

To: Kerm Yerman who wrote (12708)	10/8/1998 10:00:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / CBRS Revises Canadian Natural Outlook Date: October 6, 1998 Subject: Canadian Natural Resources Limited CBRS Revises Rating Outlook On Canadian Natural's Debt Ratings Canadian Natural Resources Limited's (CNQ) Commercial Paper, Senior Unsecured Debentures, and Medium Term Notes are reaffirmed at A-1, A(Low), and A(Low) and the rating outlook on these securities is revised to Negative, from stable. The rating outlook change is largely due to (i) the protracted period of low crude prices and (ii) the corporation's aggressive drilling program and acquisitions, which have resulted in CNQ's debt leverage increasing above 50% for the first time, a level generally inconsistent with "A" rated credits. While we remain confident that CNQ's debt protection ratios will move back to more favourable levels, CBRS considers it prudent to adjust the corporation's debt rating outlook due to the unfavourable market conditions and CNQ's production profile. Although CNQ is a balanced oil and natural gas producer, its crude oil production consists of approximately 47% medium to heavy gravity crude, where pricing is presently unattractive. Also, it will take time for the corporation to increase its natural gas production in order to take advantage of existing prices. In our opinion, while CNQ's financial challenges are similar to other firms operating in the oil patch, its higher than average leverage, its exposure to medium and heavy gravity oil, and lower crude oil prices require that its rating outlook be revised.

To: Kerm Yerman who wrote (12708)	10/8/1998 10:06:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / CBRS Cuts Gulf Canada Debt Rating Outlook Canadian Bond Rating Service said on Thursday it lowered its rating outlook on Gulf Canada Resources Ltd.'s debt securities after a longer-than-anticipated period of low crude oil prices. CBRS said, however, it reaffirmed its current ratings on Denver, Colo.-based Gulf Canada's debt. The service rates the company's commercial paper at A-2(low), senior debentures and notes and senior subordinated debentures at B++(low), and senior preferred shares at P-4. ''GOU's production is skewed towards oil. Furthermore, the bulk of its natural gas does not trade in the North American market where price appreciation has occurred, but rather in Asian markets, where economies are ailing,'' CBRS said. It said the company's continued high debt levels were expected to reduce its ability to take advantage of growth opportunities ''in the medium term'' and withstand any market shocks that could occur. Gulf is in the process of selling hundreds of millions of dollars worth of assets to pay down its debt. Company Chief Executive Dick Auchinleck said on Wednesday he hoped to reduce debt to C$1.5 billion within the next 12-18 months, from C$2.5 billion at the end of June. While CBRS said the company's asset sales program had been successful so far, it noted low crude prices were negating the positive effects of increased production volumes. That meant reduced profitability and limitations on how much debt it could pay down. ''GOU will record a sizable loss in 1998 and if prices don't recover could potentially face similar results in 1999,'' CBRS said.

To: Kerm Yerman who wrote (12708)	10/8/1998 10:28:00 AM
From: Kerm Yerman	Read Replies (1) \| Respond to of 15196

IN THE NEWS / Big Oil Set For Lousy Quarter, Ponders Recovery Big oil is set for a miserable third quarter, but that should come as no surprise since oil has tumbled by nearly 30 percent in the last year to an average spot price of $14.00 a barrel for the West Texas Intermediate blend. To make matters worse, analysts say there will be little help from U.S. refining operations, which had been responsible for some positive earnings surprises in the first two quarters of this year. ''U.S. refining and marketing margins have not fully benefited from lower crude oil prices. We expect a sizable negative year-over-year comparison in the U.S. R&M sector,'' said Eugene Nowak, analyst at ABN AMRO Inc. Analysts say earnings for the world's biggest oil companies will fall some 50 percent from a year ago, and the main question facing the industry is not just how bad this quarter will be, but whether a recovery in oil prices is sustainable. That is the rub. Some analysts say that 2.6 million barrels per day of output cuts from the world's leading oil producers will eat into glutted inventories and put a floor under oil prices, creating a floor for prices. Others say that a looming global recession will damage demand so much that oil prices will not recover. ''While operating earnings per share for the U.S. major oil group are expected to be very disappointing in third quarter 1998 (down an average of 57 percent from a year ago), it seems likely that earnings will pick-up going forward,'' said Adam Sieminski, analyst at BT Alex Brown. Among the companies best situated to deal with the third quarter malaise are the biggest of the international integrated oils such as Exxon Corp (NYSE:XON - news) and Mobil Corp (NYSE:MOB). Analysts are projecting earnings per share of $0.57 for Exxon versus $0.73 a year ago and $0.61 for Mobil, down from $1.11, according to First Call. Mobil should also benefit from continued savings in its European refining and marketing venture with British Petroleum Co Plc (UK & Ireland: BP.L) which aims to generate $170 million annual pretax savings in 1999. Sieminski says that Chevron Corp (NYSE:CHV) will show a smaller decline than most because of the weakness of West Coast gasoline markets in the year ago quarter. Analysts are looking for $0.63 from Chevron versus $1.11. The worst performers will be those companies which have the highest exposure to the fall in crude oil prices, such as Unocal Corp (NYSE:UCL) and ARCO (NYSE:ARC). ARCO will show some of the worst comparisons among big companies because of the sale of ARCO Chemical and dilution from the acquisition of Union Texas Petroleum Holdings. Michael Mayer of Schroder & Co is looking for $0.15 per share from ARCO, compared with a consensus of $0.20 according to First Call and an adjusted $1.32 per share a year ago. Unocal recently issued a profit warning saying that because of oil price weakness and higher expenses, it may earn less that $0.10 per share in the third quarter, compared with early expectations of $0.20 per share and year-ago comparisons of an adjusted $0.38 in the third quarter and $0.26 in the second. Since then, the average estimate on First Call has dropped to $0.07, with the range as low as as $0.04. Given the fact that oil companies envision such a bad quarter, there are expected to be few earnings surprises on the downside, although James Falvey at Dresdner Kleinwort Benson warns that Phillips Petroleum Co (NYSE:P) may disappoint due to lower than expected production. ''There are concerns about Phillips production profile,'' said Falvey. Phillips, which is forecast to earn $0.36 per share in the third quarter, down from $0.94 a year ago, said late last week that oil and natural gas production from its key Ekosfisk II field in the Norwegian North Sea was down 10 percent and 40 percent respectively in the third quarter. Elsewhere, Nowak at ABN AMRO Inc says that Kerr-McGee Corp (NYSE:KMG) may do better than expected if foreign exchange losses due to the strength of sterling are less than anticipated. He said estimates of the foreign exchange impact were now $5.0 million, or $0.10-$0.11 per share, down from $9.0 million or $0.19 per share. He is looking for Kerr-McGee to earn $0.12 a share, down from $0.71 a year ago. Texaco Inc (NYSE:TX) will also see a negative foreign exchange impact from the pound, and analysts are looking for earnings per share of $0.43, down from $0.91 a year ago. Still, Texaco may see some of the benefits of its U.S. refining ventures with Shell Oil Co. Looking forward, Mayer at Schroder is maintaining 125 percent of market weight for major oils as he believes 80-85 percent compliance with cuts announced by the Organization of the Petroleum Exporting Countries will result in a 1.5 million barrels per day reduction in inventories in the fourth quarter and 0.5-1.0 million bpd in the first quarter of 1998. ''This will eliminate over 75 percent of the inventory surplus that has built up over the past year, and lead to higher oil prices and continued outperformance by the group,'' Mayer said. Nowak at ABN AMRO is forecasting a 35 percent fall in industry earnings in 1998, but says they will rebound by 25 percent or more in 1999 as crude oil prices improve by $1.65-$2.00 per barrel Michael Young at Deutsche Bank Securities is bearish. He sees world oil demand dropping by 200,000-500,000 barrels per day in 1999, adding to the already poor industry fundamentals, and sees earnings power eroding further as refining and marketing margins come under pressure. ''What really matters, in our view, is that the earnings environment for the integrated oil industry does not get any better in 1999. We continue to forecast that integrated oil company earnings will be down 30 percent versus current consensus expectations,'' he said. Company Q3 1998 Est Q3 1997 Actual Amerada Hess (NYSE:AHC) -$0.25 (loss) $0.13 Amoco Corp (NYSE:AM) $0.33 $0.65 ARCO (NYSE:ARC) $0.20 $1.57 Chevron (NYSE:CHV) $0.63 $1.11 Exxon (NYSE:XON) $0.57 $0.73 Kerr-McGee (NYSE:KMG) $0.16 $0.83 Mobil (NYSE:MOB) $0.61 $1.11 Occidental (NYSE:OXY) $0.00 $0.57 Pennzoil (NYSE:PZL) Phillips Petroleum(NYSE:P) $0.36 $0.94 Texaco (NYSE:TX) $0.43 $0.91 Unocal (NYSE:UCL) $0.07 $0.38 USX-Marathon (NYSE:MRO) $0.37 $0.58

To: Kerm Yerman who wrote (12708)	10/8/1998 10:42:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Hurricane Hydrocarbons Ltd Interview Canada's Hurricane to expand in Kazakhstan By Aleksandras Budrys Canadian oil company Hurricane Hydrocarbons Ltd (Alberta:HHLa.AL) (Toronto:HHLa.TO) has big expansion plans in the Central Asian republic of Kazakhstan, Hurricane's director, Werner Wenzel, told Reuters on Wednesday. ''We expect output at Kumkol (oil region) to increase to 80,000 barrels per day next year from the present 60,000,'' Wenzel said in an interview. Kumkol North oilfield in southern Kazakhstan is Hurricane's major production asset in the vast, resource-rich ex-Soviet state. Hurricane has a 50 percent stake in the project, which is a joint venture with Russia's LUKoil . Hurricane's share at Kumkol North is estimated at 115 million barrels of recoverable crude oil reserves. Wenzel said that in the coming year the company would intensify oil output at the Kumkol South oilfield in the same group of deposits, which belongs exclusively to Hurricane. Kumkol South has approximately 28 million barrels in recoverable crude oil reserves. Hurricane's total current reserves in Kazakhstan, where it has a 50 percent stake in five oilfields and a 100 percent share in four other, are estimated at 429 million barrels of crude. The company, which is a major supplier to the Chimkent refinery in the south of Kazakhstan and Pavlodar in the north, plans to increase its exports of crude and heavy fuel oil. ''While we are committed to the local market, we are also poised to develop new domestic and export opportunities which are available, aiming at the huge markets east in China and south in Turkmenistan,'' Wenzel said. He said Hurricane was investing $14 million in rebuilding the Druzhba oil and products rail terminal on the Kazakh-China border. The Druzhba project is 90 percent owned by Hurricane. ''It would start with a capacity of 1.2 million tonnes of crude and mazut (per year), but this could be increased to five million tonnes within five months,'' Wenzel said. Hurricane plans to increase exports of crude oil to the Chardzhou refinery in neighbouring Turkmenistan which is connected to Kumkol by a pipeline, he said. Another major project Hurricane is pushing is the construction of a plant near Kumkol where associated gas would be used to generate electricity at local power stations. ''We intend to produce 80 to 100 megawatts of electricity and then sell it,'' Wenzel said. He added that the plant would also be able to produce 200-250,000 tonnes of liquefied petroleum gas a year to be consumed locally. ''From the start Hurricane has been committed to being in Kazakhstan for the long term,'' Wenzel said.