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

To: Kerm Yerman who wrote (13200)	11/4/1998 9:17:00 AM
From: Kerm Yerman	Read Replies (1) \| Respond to of 15196

IN THE NEWS / Gulf Canada Resources Posts Major Loss After Writedown CALGARY, Nov 3 - Gulf Canada Resources Ltd.'s 1997 takeover of rival Stampeder Exploration came back to haunt it on Tuesday with the company posting a huge quarterly loss after writing down the value of the assets in the deal. Gulf Canada also unveiled an agreement to sell a half interest in its extensive Canadian natural gas pipeline and processing assets, but it only took away some of the pain from the one-time writedown of mostly heavy oil production assets. The company, on a drive to cut its large debt by selling more than C$1.2 billion of assets worldwide this year, reported a third-quarter loss of C$334 million or C$0.98 a share. That compares to a profit of C$202 million or C$0.67 a share in the same period last year. Of the total loss, C$60 million came from operating results, while C$274 million represented a cut in the carrying value of its assets driven by today's depressed oil prices. Three-quarters of the reduction was in the value of the Stampeder properties, much of which pump out deeply discounted heavy crude oil. The charges were only partly offset by after-tax gains of C$191 million from asset sales during the quarter, including the gathering and processing interest to New York-based KeySpanEnergy <KSE.N>, as well as non-producing oil properties off Canada's east coast and a Reno, Nevada ranch. Cash flow, a key indicator of an oil company's ability to fund upcoming projects, dropped 38 percent to C$96 million or C$0.26 a share from C$155 million or C$0.51 a share last year. Revenues from Canada's 7th-largest oil company were off 21 percent to C$259 million from C$327 million, amid lower production after asset sales and a 27 percent slide in its average oil sales price. Gulf Canada, based in Calgary but with its executive offices in Denver, Colo., has oil and gas operations in Canada, Indonesia, the Dutch portion of the North Sea and offshore Australia. It also has a stake in the Syncrude Canada Ltd. oil sands mining and synthetic crude oil production operation. The company bought Stampeder in 1997 for about C$1 billion including assumed debt after a raft of other high-profile takeovers under ex-CEO J.P. Bryan. Duck Auchinleck, Gulf's current chief executive, said on Tuesday the company acquired Stampeder at the height of the market and now the writedown was necessary because stubbornly low oil prices have reduced its worth. "In today's market, those assets are overvalued. So we've decided that this year we're going to clean up the balance sheet," Auchinleck told Reuters. "We're going to get the overvalued assets down to the proper book value." That, plus reducing debt to C$2.2 billion by the end of this year from the current C$2.5 billion, would allow the company to focus more on operations than asset sales, he said. He stressed the write-down was a one-time charge and that the company was not in financial distress. The company announced on Tuesday a much-anticipated deal to sell the interest in its western Canadian "midstream," or natural gas gathering and processing, assets to KeySpan for C$288 million, C$68 million more than it originally planned. KeySpan owns Brooklyn Union, the gas utility for three boroughs in New York City and two counties on Long Island. Under the deal, the firms will form a new company called Gulf Midstream Services Partnership that will oversee 14 gas plants in Alberta and British Columbia. KeySpan will also provide a three-year, US$65 million loan facility and fund Gulf's share of spending in the partnership for the next three years for a higher share of the cash flow. Gulf shares on the Toronto Stock Exchange closed up C$0.35 to C$6.15 Results were released after the market closed.

To: Kerm Yerman who wrote (13200)	11/4/1998 9:21:00 AM
From: Kerm Yerman	Respond to of 15196

Poco Petroleums Posts Lower Third-Quarter Earnings CALGARY, Nov 3 - Poco Petroleums Ltd. <POC.TO> on Tuesday joined the growing chorus of Canadian oil and gas producers citing weak oil prices for lower third-quarter results, but took solace in improved revenues and cash flow. "With oil prices being as low as they have been, our revenue base just hasn't increased as much as our expenses have, given the proportionate increases in our production volumes," Poco vice-president Darryl Proudfoot told Reuters. Calgary-based Poco's net earnings for the quarter were C$9 million or C$0.06 a share, down 40 percent from C$15 million or C$0.11 a share last year. "Given current industry conditions, Poco's earnings remained very strong," the company, Canada's 10th-largest natural gas producer, said in a press release. Revenues rose two percent to C$145 million from C$142 million in 1997. Third-quarter cash flow also increased slightly, to C$78 million from C$77 million, but because outstanding shares now total 137 million versus 128 million last year, per-share cash flow is down seven percent, to C$0.56 from C$0.60. The company said earnings were pinched by lower crude oil and natural gas liquids netback prices, which fell 27 percent from the third quarter of 1997. Oil fell to C$10.38 a barrel from C$14.31 a barrel, and natural gas liquids to C$11.05 a barrel versus C$15.06 a barrel. However, natural gas netback prices improved 36 percent, to C$1.31 per thousand cubic feet from C$0.96 per thousand cubic feet last year. Crude oil production slipped eight percent during the quarter to 19,841 barrels a day from 21,665 barrels a day. Natural gas liquids production rose 18 percent to 20,259 barrels a day from 17,135 barrels a day in 1997. Natural gas production was up 13 percent to 500 million cubic feet a day from 444 million cubic feet a day last year. The quarter was highlighted by Poco's C$140-million acquisition of Canrise Resources Ltd., which included issuing seven million shares and assuming C$39 million in debt. On Monday, the company announced it was making a friendly C$163 million bid for Pan East Petroleum Corp. <PEC.TO>, offering C$2.65 a share or 0.1797 Poco shares for each Pan East share. Poco's shares gained C$0.30 to C$14.20 in moderate trade on the Toronto Stock Exchange on Tuesday.

To: Kerm Yerman who wrote (13200)	11/4/1998 9:22:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Statoil Raises Costs For N.Sea Huldra Gas Field OSLO, Nov 4 - State-owned Statoil [STAT.CN] said on Wednesday it had increased costs for development of the North Sea Huldra gas and condensate field to 5.5 billion crowns from 4.8 billion. Statoil said the rise in investments would mean the project would have to go before the Norwegian parliament, which was expected to approve it before the end of the year. Fields costing more than 5.0 billion need parliamentary approval. Huldra, a marginal field containing around 19 billion cubic metres of gas and 44 million barrels of liquids, is due to begin gas deliveries on October 1, 2001. An original start up date of October 1, 2000 was put back one year after the government cut investment on the Norwegian continental shelf to try and slowdown the booming economy. Statoil spokesman Hans Aasmund Frisak said the new cost forecasts and the requirement to present the project to parliament should not affect the planned start up. Statoil attributed the rise partly to an increase in general development costs and also to the decision to pipe Huldra gas to Norsk Hydro's <NHY.OL> Heimdal platform for processing rather than Statoil's gas treatment plant at Kollsnes on Norway's west coast. It said the revised cost estimate included terms in contracts concluded so far. Aker Verdal, a unit of Aker Maritime <AMA.OL>, will build the steel jacket for the unstaffed wellhead platform and Italy's Saipem <SPMI.MI> had been contracted for heavy lifts and installation. The contract for the wellhead module is due to be awarded in January. Partners in Huldra are Statoil, Conoco <DD.N>, Total <TOTF.PA>, Svenska Petroleum and PetroCanada <PCA.TO>. Danish Siri oil start still delayed by weather 11/04 05:40 OSLO, Nov 4 - Statoil said on Wednesday the Siri oil platform remained moored in a Norwegian fjord with bad weather continuing to hamper installation at the field in the Danish sector of the North Sea. Statoil said it would soon have to decide whether to continue to wait for a break in the weather or to delay start up of the 50,000 barrels per day oilfield until spring. The original target date for Siri's start up was November 11. The platform has been moored in the Flekkefjord in southwest Norway since the beginning of October. "They towed the platform to the field on Saturday but the waves were still too high so they towed it back to Flekkefjord again," Statoil spokesman Hans Aasmund Frisak said. "The towing vessels are constantly mobilised and that costs money. If we don't see better weather in the future then they (the project team) will have to decide whether to demobilise the vessels and maybe bring them back when the weather improves or even to wait until spring," he said.

To: Kerm Yerman who wrote (13200)	11/4/1998 9:24:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Forest Oil <FST.N> to take $125 mln charge in Q3 DENVER, Nov 3 - Forest Oil Corp said Tuesday it expects to take a third quarter charge against earnings of about $125 million net of income tax effects (estimated to be $140 million pre-tax). The company said the charge is an accounting requirement as prescribed by the Securities Exchange Commission for companies using the full cost method of accounting. Forest said that under full cost accounting, a company's net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated ceiling. The ceiling is computed as the sum of the estimated after-tax future net revenues from proved oil and gas reserves, discounted at ten percent per year, and the value of undeveloped properties. A company must use the prices in effect at the end of each accounting quarter as a basis for computing the ceiling limit. Future net revenues are calculated assuming indefinite continuation of prices and costs in effect of the time of calculation, except for amounts that are fixed and determinable under existing contracts. As of June 30, 1998, the company satisfied the ceiling test requirements. In the third quarter of 1998, however, commodity prices for natural gas, the company's principal product, declined significantly in the U.S. The amount of writedown attributable to such price decreases is about $81 million. Forest said. Forest Oil said it expects to report third quarter results on November 5.

To: Kerm Yerman who wrote (13200)	11/4/1998 9:30:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / CAODC Weekly Western Canadian Rig Count - Nov 3rd WEEK OF NOV 3 VERSUS OCT 27, 1998 DRILLING MOVING DRILLING DOWN TOTAL YEAR AGO ALBERTA 0/0 163/153 301/312 464/465 318 SASK. 0/0 22/ 23 48/ 47 70/ 70 95 B.C. 0/0 19/ 17 24/ 25 43/ 42 30 N.W.T. 0/0 0/ 0 2/ 2 2/ 2 1 MAN. 0/0 0/ 0 0/ 0 0/ 0 2 TOTAL 0/0 204/193 375/418 579/579 446 MOVING = CURRENTLY UNDER CONTRACT, BUT NOT AT FULL RATE. TOTAL LINE IS TOTAL WESTERN CANADA. FIGURES SUPPLIED BY CANADIAN ASSOCIATION OF OILWELL DRILLING CONTRACTORS.

To: Kerm Yerman who wrote (13200)	11/4/1998 9:34:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / TransCanada Pipelines Details Hefty Merger Charge CALGARY, Nov 3 - Big Canadian energy services company TransCanada PipeLines Ltd. on Tuesday outlined the financial details of integrating NOVA Corp.'s assets, which will mean a hefty earnings charge and layoff of nearly 9 percent of its workers. Calgary-based TransCanada, which acquired the pipeline assets of NOVA in a C$14-billion megamerger this summer, said in its earnings statement on Monday that integrating the two businesses would result in a charge of about C$390 million before taxes, most of it to be taken in the fourth quarter. It also revealed that up to 600 jobs would be chopped between now and the year 2000. ''(The moves) represent the business changes necessary to realize the promised savings of C$150 million to capture future opportunities,'' TransCanada Chief Financial Officer Steve Letwin told analysts in a conference call. Letwin said C$135 million of the big one-time hit would represent restructuring charges from the elimination of jobs, moving some of the remaining staff to new locations and terminating office leases. The remaining C$255 million represented the ''re-evaluation'' of assets, and would include such charges as C$100 million to eliminate duplicate information systems, C$85 million in real estate costs and C$50 million more associated with the settling of accounts and pending sale of gas marketer Pan Alberta Gas, he said. The company, which now operates the main Alberta gas pipeline network as well as its cross-Canada gas mainline, took C$8 million of the total charge in the third quarter. TransCanada reported lower third-quarter earnings on Monday, citing the costs of the merger -- Canada's biggest-ever corporate marriage to be completed to date -- and weaker returns from its gas processing segment, especially in the U.S. Its earnings were C$139 million or C$0.30 a share, down from C$214 million or C$0.46 a share in the third-quarter of 1997. Because of the accounting method used in the merger, the prior-year results were restated to include those of the old NOVA Corp., complete with its chemical division, as if they were one company. NOVA Chemicals was spun off as a publicly traded entity immediately following the merger in early July. During the conference call, TransCanada Chief Executive George Watson said investors could expect ''low double-digit'' growth in the company's annual earnings over the next five years after the integration of NOVA's assets is completed at the end of 1998. He said he was unable to provide details of TransCanada's 1999 budget because it was still being formulated. In other developments, Watson revealed on Tuesday the company had begun talks with other energy players about a transaction involving its Louisiana gas processing assets, which have been underperformers. TransCanada acquired the processing assets from Enron Corp. (NYSE:ENE - news) in early 1997 for US$150 million. ''We're looking at optimizing it, reducing our exposure and improving the situation there,'' Watson said. ''We have several initiatives under way that would see us minimize the (exposure).'' He said he had no specific plans for the assets yet, but negotiations with other firms were taking place. The company said on Monday that the U.S. processing business was pressured by increasing natural gas prices and declining product prices, which had combined to create narrow profit margins. TransCanada shares on the Toronto Stock Exchange were off C$0.20 on Tuesday to C$23.20.

To: Kerm Yerman who wrote (13200)	11/4/1998 10:27:00 AM
From: Kerm Yerman	Read Replies (6) \| Respond to of 15196

IN THE NEWS / Oilpatch Jobs Under Fire Low prices affect energy firms CALGARY SUN Mergers and acquisitions in the Canadian oilpatch will continue their torrential pace over the next few months. And that's bad news for workers both in the field and downtown Calgary, predicts top oil analyst Wilf Goberg. "Consolidation always means fewer jobs in the field and that means less office requirements," Goberg told delegates of the First Annual Alberta Real Estate Forum in Calgary yesterday. Holding the industry hostage are low oil prices, which edged upward in September but show few signs of returning to levels enjoyed last year. Low oil prices have taken a chunk out of stock prices of energy companies, forcing them to borrow more to finance spending on things like exploration and development drilling programs, said Goberg. And when debt levels rise -- coupled with falling cash flow falls and weak stock prices -- weaker companies become ripe for the picking, said Goberg. "The industry is suddenly putting on the brakes long after they should have and now they will have to hit the brakes harder," said Goberg, managing director of research at Peters and Co. There have been several oil price downturns over the past three decades, but they all began because oil companies produced too much. This current downturn marks the first time over-supply was matched by falling demand due mainly to sputtering economies in Asia, added Goberg. But now economists are turning their attention to another dark cloud on the financial horizon -- Latin America. Jeff Rubin, chief economist at CIBC Wood Gundy, said the next to fall to the economic malaise gripping Asia will be Brazil, Chile and Argentina. As Asia slowly coughs its economy back to better health, Latin America is racing toward recession "and in that race, Latin America will win hands down," Rubin told delegates.

To: Kerm Yerman who wrote (13200)	11/4/1998 10:33:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Gulf Canada Posts $334-Million Loss Big writedown on Stampeder Exploration acquisition blamed for most of third-quarter hit GLOBE & MAIL Calgary -- Gulf Canada Resources Ltd. reported a $334-million third-quarter loss yesterday, after taking a massive writedown of a heavy-oil producer it swallowed last year at a premium price. Gulf took a $465-million after-tax charge against earnings in the quarter. About 80 per cent of this was a downgrading of the value of Stampeder Exploration Ltd. assets acquired in mid-1997, said the company. Oil and gas analyst Gord Currie of Canaccord Capital Corp. in Calgary said Gulf is paying the price for "buying Stampeder right at the top of the market." Crude prices began to fall in the fall of 1997 -- and with them the value of oil assets and production held by petroleum companies. "Last year was not a great time to be buying assets . . . it was just wrong timing," Mr. Currie said. Gulf Canada president Richard Auchinleck acknowledged the timing of the Stampeder purchase was bad, but denied his company overpaid for it. "People were forecasting $20 (U.S.) a barrel oil going forward back then and today the forecasts are for $15 . . . it's just a different point in time." Gulf said the writedown follows a company-wide review of assets "under the current oil price environment." Crude oil prices are down one-third from a year ago and heavy oil, which is costlier to refine, has seen its market value similarly eroded. The writedown of Stampeder assets amounts to half of what Gulf originally paid in stock for the company in July 1997. Gulf paid $688-million (Canadian) in stock for Stampeder while former CEO J.P. Bryan was still in charge. It also assumed $300-million of Stampeder's debt. Mr. Bryan left Gulf after a disagreement with the board in February, 1998, over when to start paying off mounting corporate debt. The third-quarter writedown was partly offset by another big deal Gulf announced yesterday. It sold 50 per cent of its natural-gas gathering and transport business, Gulf Midstream Services, to New York-based KeySpan Energy Co. for $290-million. Gulf's loss of $334-million or 98 cents a share for the quarter is a substantial reversal of fortune from the same period last year, when it reported a profit of $202-million or 67 cents a share. Mr. Currie said a writedown such as Gulf took is forced upon companies by accounting rules. He predicts more such writedowns by oil patch companies as a year of slumping crude prices draws to a close and producers are required to reassess their devalued crude and heavy oil reserves. As a measure of the difference between the value placed on oil assets today and last year, Mr. Currie estimates Gulf paid about $8.86 a barrel for Stampeder's proven and probable reserves and $27,600 for barrel-of-oil equivalent per-day production. Last month, Alberta Energy Co. Ltd. paid close to half that amount when it bought heavy-oil rich Amber Energy Ltd., according to Canaccord estimates. Mr. Currie estimates Alberta Energy paid $3.50 a barrel for Amber's proven and probable reserves and about $17,500 for barrel-of-oil equivalent per day production. Revenue for the third quarter fell 21 per cent to $259-million from $327-million in the same 1997 period. The share loss for the nine months was $1.32. Profit in the same period last year was $204-million or 68 cents a share. Nine-month revenue was $797-million, down from $875-million.

To: Kerm Yerman who wrote (13200)	11/4/1998 10:46:00 AM
From: Kerm Yerman	Read Replies (1) \| Respond to of 15196

IN THE NEWS / Gulf Starts Selloff As Losses Soar Chris Varcoe and Tony Seskus, Calgary Herald, Reuters Battered by low oil prices, Gulf Canada Resources Ltd. took two dramatic steps Tuesday to get its financial house back in order -- punctuated by an asset writedown and one-time charge of nearly half a billion dollars. The Denver-based company got the ball rolling Tuesday by selling half its midstream natural gas business and pipeline network in Western Canada to KeySpan Energy of New York for $290 million. Later in the day, Gulf posted a third-quarter loss of $334 million - one of the largest losses witnessed in the Canadian oilpatch in years. "We've got our debt down, we've taken a writedown here ... but it's the right thing to do to get our house in order,'' Gulf's chief executive Dick Auchinleck said in an interview. "Is the worst behind us? Absolutely.'' Financially, the worst was a $465 million after-tax charge tied to the review and subsequent writedown of the carrying value on Gulf's assets, which was partially offset by $191 million in asset sales. Most of the writedown came from the properties of heavy oil producer Stampeder Exploration, which Gulf took over in 1997 for about $1 billion. Oil prices have slumped about 30 per cent since the acquisition. "We had some assets that clearly in today's environment were overvalued on our books,'' said Auchinleck. "A lot of it is attributable to heavy oil and over 80 per cent of the writedown is attributable to the Stampeder transaction.'' The $334-million loss ($0.98 a share) compares with a $202-million profit ($0.67 a share) during the same period last year. Excluding the writedown and some one-time adjustments, the company's operating loss for the period was $60 million. Revenues dropped 21 per cent to $259 million during the quarter. Cash flow fell 38 per cent to $96 million ($0.26 a share) from $155 million ($0.51 a share) last year. Sales volumes during the quarter decreased 15 per cent to 161,700 barrels of oil equivalent per day due to the sale of some producing properties, but the company noted it recently completed the promising Corridor Gas Project in Indonesia. "They're doing, I think, what is necessary to restructure the company for what is obviously a lower price of oil," said analyst Craig Langpap of Peters and Co. "I would say they've certainly got the majority of the bad news behind them." Since Auchinleck replaced former CEO J.P. Bryan, Gulf has embarked on an aggressive campaign to sell off about $1.2 billion in assets this year and pay down debt created by several takeovers. The company should exit the year with long-term debt of $2.2 billion, compared to $2.7 billion at the start of 1998. Gulf was taking offers on heavy oil properties in Alberta and Saskatchewan, but pulled them off the table after not getting satisfactory offers. Prices for the discounted heavy oil have also rebounded since early summer. "We're not having a fire sale here,'' Auchinleck said. "I think we can get better value by just operating them.'' Langpap applauded the company's deal to sell the interest in its western Canadian midstream, or natural gas gathering and processing, assets to KeySpan. KeySpan owns Brooklyn Union, the gas utility for three boroughs in New York City and two counties on nearby Long Island. Under the deal, the firms will form a new company called Gulf Midstream Services Partnership that will oversee 14 gas plants in Alberta and British Columbia. About 230 Gulf employees work at the facilities and no layoffs are planned, Auchinleck said. KeySpan will also provide a three-year, $100-million loan and fund Gulf's share of spending in the partnership for the next three years for a higher share of the cash flow. Gulf shares on the Toronto Stock Exchange closed up $0.35 to $6.15 Tuesday.