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


To: Kerm Yerman who wrote (13773)11/26/1998 1:59:00 AM
From: Kerm Yerman  Respond to of 15196
 
SERVICE SECTOR / Falcon Well Services Ltd Third Quarter Reort

FALCON WELL SERVICES LTD. ANNOUNCES RESULTS FOR THE
NINE MONTHS ENDING SEPTEMBER 30, 1998

CALGARY, ALBERTA--

Falcon Well Services Ltd. reports the operating and financial
results for the nine months ended September 30, 1998. This
represents the third fiscal reporting period of the Company since
its amalgamation with East Indies Mining Corporation ("EIMC")
effective February 13, 1998.

Falcon reported Drilling and Well Service revenue of $1,287,647
during the third quarter of 1998, bringing year-to-date revenues
to $6,287,079. This compares to revenues of $1,884,290 and
$2,718,005 for the same periods in 1997. The Company's net loss
for the third quarter of 1998 amounted to $658,063 (($0.02) per
share) versus a net income of $47,974 ($0.00 per share) in 1997
while 1998 year-to-date loss is $1,947,608 (($0.07) per share)
versus a loss of $161,584 (($0.01) per share) for the same 1997
period.

Falcon's horizontal re-entry rig has continued to perform well
despite the slowdown. The Company anticipates this rig will
continue to be fully utilized throughout the winter season. Also,
service rig activity improved as production companies began
resuming some heavy oil production and performed maintenance on
natural gas wells in anticipation of strong winter pricing.
Falcon's overall service rig utilization rate continues to be in
line with other industry competitors.

Drilling rig activity in the third quarter of 1998 continued to
reflect the general slowdown in exploration activity that
continues due to weak oil pricing. In light of current market
conditions, the Company has decided to focus on service rig
operations and is reviewing strategic options for the drilling
rigs.

Operating costs showed improvement during the third quarter of
1998 but overall netbacks remain lower than 1997 due to
competitive pressure on the price of services and cost
recoveries. Management is closely monitoring all costs in order
to maximize margins while maintaining high quality service
levels.

Due to low world oil prices, demand for drilling and other
oilfield services will remain lower than in recent years. Falcon
anticipates the service and re-entry rig environment will improve
with the continued strengthening of natural gas prices and 1999
capital budgets focused on existing production optimization. The
Company's continuing focus on increasing operating efficiency and
focused marketing efforts should enhance market share for the
fourth quarter of 1998 and into 1999.

Falcon's common shares are quoted on the Canadian Dealing Network
Inc. (CDN) wider the symbol FWSL. There are currently outstanding
approximately 27,142,000 Common Shares and 75,136 Preference
Shares.



To: Kerm Yerman who wrote (13773)11/27/1998 2:14:00 AM
From: Kerm Yerman  Read Replies (1) | Respond to of 15196
 
IN THE NEWS / East Lost Hills Play

Crew begins task of taming raging well fire

November 26, 1998
The Bakersfield Californian

Well control specialists braved heat intense enough to melt steel Wednesday as they began what may be a weeks-long effort to cap a natural gas well that exploded near Lost Hills on Monday night.

A four-man firefighting team from Boots & Coots International Well Control, headed by 20-year veteran James Tuppen, used bulldozers to begin clearing the shattered hulks of support equipment from around the now-destroyed drilling rig at the site.

What once added up to millions of dollars worth of equipment must now be dragged, pushed or pulled away from the well, which is spewing millions of cubic feet of natural gas and condensed hydrocarbons each day, feeding an immense orange fireball visible for miles.

Tuppen's crew, occasionally soaking their fire resistant clothing with water, worked within 30 feet of the blazing well on foot and in bulldozers equipped with metal cab covers to protect the driver. A fifth member of the team acts as a hazardous materials specialist and support person.

Spectators 100 yards away needed to shield themselves from the heat, the howl of the flames reminiscent of a jet fighter's takeoff roar.

"For right now we're going to clear the debris around the well," Tuppen said during a break in the dawn-to-dusk operation. "Then we'll assess again. Hopefully, it will be good news."

Tuppen said he suspects there isn't any major damage to the well pipe, known as casing, that is cemented into the ground, or to the well head itself.

After the debris is removed, the firefighters will try to douse the flames with water and an explosive charge. Another well may need to be drilled and linked to the existing well to relieve pressure.

"I've been saying a week on moving the rig off if we don't run into any problems," Tuppen said.

The Boots & Coots crew working at Lost Hills has battled hundreds of oil and gas well fires and spent months extinguishing well blazes in Kuwait after the Persian Gulf War ended. Tuppen said this fire is more complicated than the Kuwaiti infernos, mainly because of the preliminary work needed to remove shattered equipment. It also is unusual because of its location.

"You just don't see stuff like this in California," he said. "On a scale of one to 10, this is a big one."

No one was injured when the crew of the contracted Nabors Drilling USA rig lost control of the exploratory wildcat well at 8:30 p.m. Monday. Seventeen people were at the site when the well blew, but all escaped before the rig was engulfed in flames and collapsed.

On Monday, the drilling rig's crew had experienced a "gas kick," an uncontrolled flow of natural gas into a well bore, and was working to clear the gas from the well casing when the accident happened, said Hal Bopp, district deputy for the state Division of Oil, Gas and Geothermal Resources.

The crew realized the well was out of control minutes before it exploded and cleared the area.

"Due to their professionalism nobody was hurt," Bopp said. "They deserve a lot of credit."

The well is operated by Bellevue Resources Inc., a subsidiary of the small Canadian independent oil and gas company Elk Point Resources Inc., on land leased from Chevron. Seven other Canadian firms and one U.S. company also own a share of the well.

Bellevue's president, Aidan Walsh, would not confirm what caused the crew to lose control of the well, saying it was too soon to determine and that his company's focus was on controlling the fire and capping the well.

"I'm just very thankful no one was injured. That's the first question I asked," Walsh said. "It's an appropriate Thanksgiving."

Walsh may be thankful for more than the safety of the workers.

Although there is no estimate on the amount of natural gas erupting from the well, it is enormous. The rig had been on site since May, and had drilled 17,640 feet, almost 3-1/2 miles deep.

The blowout is providing clear evidence of a gas discovery, and if proven to be commercial, it would be the deepest in the state and likely the most significant gas field in Kern County.

The deepest producing well in California at Rio Viejo field near Old River and Copus roads southwest of Bakersfield, bottoms out around 14,500 feet.

Although other oil fields in Kern also produce gas, only Occidental Petroleum's Elk Hills field produces large quantities, Bopp said. Kern also doesn't have any significant production from very deep wells.

The Bellevue well is about 1-1/2 miles from the nearest proven oil field, Lost Hills. But that field holds mainly oil, and at depths averaging only 4,500 feet, more than two miles shallower than the depth of the burning well.

"Its definitely positive that there are hydrocarbons," Walsh said. "Certainly it could have significant potential."

November 25

Kern County Gas Well Fire Poses Containment Challenge
Los Angeles Times

LOST HILLS, Calif.--A huge blaze at a natural gas well may burn for at least a week before experts can extinguish the flames.

The gas well erupted in flames 150 feet high on Monday, destroying drilling equipment worth millions of dollars. No one was injured.

More than 10 people were working on the drill rig owned by Nabors Drilling in Bakersfield when the well caught fire in a remote area, Kern County Fire Department engineer Vern Brothers said Tuesday.

A special crew from Houston was called to handle the blaze. Boots and Coots International was one of the companies that extinguished oil rig fires in Kuwait after the Gulf War, authorities said.

The crew will have to assess damage to the well and well head before attempting to put out the flames, a process that could take at least a week, Boots and Coots officials said.

Lost Hills well fire rages

November 24, 1998
The Bakersfield Californian

LOST HILLS — A descendant company of the famed well-tamer Red Adair swooped into Lost Hills on Tuesday and geared up for at least a week long fight to control an oil-well fire that is billowing flames 200 feet high.

The fire was caused by a blowout at 8:30 p.m. Monday as 17 employees were at the drilling site, about two miles north of Lost Hills just east of the California Aqueduct. There were no injuries. Spectators standing along the edge of the California Aqueduct watch flames from a well blowout near Lost Hills. Henry Barrios / The CalifornianClick here for a map of the location

It is difficult to determine what caused the blowout because of intense heat from pluming fireballs, which sounded like a jet engine, and a collapsed rig around the well head, officials said.

Oil well firefighting experts battling the blaze are from the Houston-based Boots & Coots International Well Control, a company whose roots date back to 1950 and oil fire conqueror Red Adair. It could take months to put out the Lost Hills fire, Boots & Coots officials said.

"The million-dollar question is whether the blowout was inside or outside the well," Boots & Coots spokesman Brian Krause said.

If inside, the battle could be over in a week or two, he said. Krause suspects that is the case because of the depth of the well, which is more than 3 miles.

However, if it is outside, the blaze could take several months while a "high-tech relief well" is drilled to go underneath the existing well, he said. The existing well took six months to drill.

If unchecked, the fire could rage for months, Krause said.

But right now, it's too early to tell what type of fire it is, he said.

The fire is on land owned by Chevron Oil Co., and leased for oil production by Bellevue Resources Inc., a wholly owned subsidiary of Elk Point Resources Inc. of Calgary, Canada.

Aidan Walsh, president and chief executive officer of Elk Point Resources Inc. of Calgary, arrived at the fire scene Tuesday afternoon.

He said he was pleased that none of the workers were injured and that Boots & Coots specialists were on hand to put the fire out as quickly as possible. The 17 employees at the site Monday night work for the Houston-based Nabors Drilling Co. and a local drilling engineer firm whose name was not released.

While Krause, whose firm has battled 4,000 oil well fires, estimated lost production at at least $1 million a day, Walsh disputed that figure as "pure speculation." Walsh said the dollar loss can't be quantified because the site wasn't in production yet.

Black smoke from the steel and iron drilling rig, and possibly from oil, is rising above the flames and blowing south. Flames about 60 feet in diameter are visible up to 20 miles away.

Clif Calderwood, compliance chief of the San Joaquin Valley Air Pollution Control District, said favorable wind conditions and the remote location will minimize any adverse health affects. Calderwood said drilling operations are not subject to air pollution permits and it's unlikely that any air pollution penalties will be assessed.

All of the rig employees escaped without injury after they were alerted by danger signals. Although officials wouldn't elaborate on what those signals were, warning signs can include a loss of drilling pressure, the smell of natural gas or equipment failures.

"It will be a good Thanksgiving for those people," said Krause, who has worked with Red Adair in other Kern County blowouts that have killed workers, including a 1977 fire at Elk Hills that killed three.

Two workers in Kern County were killed in gas or oil blowouts in 1990 and 1993. There have been 16 gas or oil blowouts since 1990 in Kern County, although most lasted a few hours to a couple of days and didn't result in fires, according to the Division of Oil, Gas and Geothermal Resources.

Krause said the Lost Hills blowout "is in the higher-end caliber."

The operation is located in the middle of 3,000 acres of cotton fields farmed by C.J. Ritchie Co. of Visalia, which is leasing the land from Chevron. Farming supervisor Steve Bottoms said electricity was cut off by the fire, but the farm will use generators for power and other needs.

"We've operated without electricity before," Bottoms said.

Several mobile homes are located within a half-mile of the well head, but no residents were injured.

Firefighters are fighting the blaze by turning high-powered pumps on bulldozer operators, who are clearing an area about 100 yards around the blaze and pulling the molten drilling rig away from the well head. Welders were brought to the scene Tuesday to craft tin screens that will deflect heat from people operating equipment.

Once the well head is cleared, firefighters will ignite a 55-gallon drum of dynamite to create "a void in oxygen," which should put the fire out, Krause said. Further steps will be taken, depending upon the type of blowout, to cap the well head, he said.

Oilfield Mishap Visable3 From 20 Miles Away

Bakersfield News
November 24, 1998

An oilfield mishap near Lost Hills is creating smoke and flames that can be seen 20 miles away.

No one was injured in the blowout, which occurred about 8 p.m. Monday on a Chevron oil and gas lease. The lease is located on a 3,000-acre cotton farm near Highway 46 and General Petroleum Road.

Nabors Drilling USA had 10 to 12 workers operating the rig but all safely escaped thanks to a monitoring device which warned of the impending danger.

Flames from the blowout, which is caused by an escape of natural gas from the well casing, are shooting some 200 feet into the air and are estimated at 30 to 40 feet in diameter.

The site operator is Bellevue Resources, a subsidiary of Elk Point Resources of Calgary, Canada.

A Bellevue spokesman said it could take one to two weeks just to gain access to the well to begin to extinguish the fire.

Flames have engulfed the drilling rig, which may hamper efforts to reach the well head to shut off the flow of gas and oil.

The gas rig had reached a depth of 17,600 feet and was completely destroyed in the blowout, causing damage estimated at several million dollars.

A crew from Boots & Coots International Well Control in Houston arrived early this morning to battle the flames, but the firm's specialized fire fighting equipment is not expected to leave the company's Texas-based headquarters before noon today Central Standard Time. (10 a.m. local time).

Blowouts are sometimes extinguished by drilling an adjacent companion well that allows the escaping natural gas to be redirected and contained outside the original well casing.












To: Kerm Yerman who wrote (13773)11/27/1998 6:07:00 AM
From: Kerm Yerman  Respond to of 15196
 
IN THE NEWS / Canadian Occidental moves to get its house in order

Claudia Cattaneo
Financial Post

The latest round of talks this week between members of the Organization of Petroleum-Exporting Countries is unlikely to offer any short-term oil price relief to energy producers like Canadian Occidental Petroleum Ltd.

But the senior oil company, one of three vying for the spot of number two Canadian energy producer by volume after Imperial Oil Ltd., is pushing ahead with plans to fix what it can to cope with the oil's deep price plunge. The other two Canadian companies of a similar size -- with daily production volumes in the 240,000 barrels of oil equivalent range -- are PanCanadian Petroleum Ltd. and Talisman Energy Inc.

Last week, CanOxy said it expects to close the sale of $550-million in assets, including non-core oil and gas properties in Alberta and the North Sea, by the end of January.

The sales accelerate a divestiture program started last year following the $1.7-billion cash acquisition of Wascana Energy Inc., financed entirely from debt.

With the sales, CanOxy is doing what it said it would do after buying Wascana -- selling non-core assets to pay down debt, said Craig Langpap, a principal at Peters & Co. Ltd. in Calgary.

"I was delighted they did this without issuing equity. They have a tremendous record for using their balance sheet aggressively and astutely. This company has not issued stock since 1983," he said.

The latest sales are in addition to $60-million in assets sold in the first part of 1998, and another $490-million in 1997. Proceeds are earmarked to reduce debt to $1.8-billion by January.

When coupled with some significant operational successes, the asset sales are improving the company's asset mix, restoring a healthy debt level, and increasing the firm's staying power in a low-oil price environment, say industry analysts.

Because of low oil prices, CanOxy accumulated losses of $38 million for the year's first nine months (28¢ a share), compared with a profit of $124-million (91¢) last year.

Cash flow was $433-million for the period ($3.16) ended Sept. 30, down from $623-million ($4.57) last year.

The asset sales also are allowing the firm to focus on international core areas like Yemen, the Gulf of Mexico and in Western Canada, where CanOxy has significant exposure to heavy oil and the oilsands.

In Yemen, the firm is producing more than 100,000 barrels a day at a cost of $1 (US) a barrel. CanOxy is also a partner in the Syncrude Canada Ltd. oilsands project in Northern Alberta.

This spring, the firm discovered one of the largest oil pools in Western Canada in the past 20 years in the Hay River area of Northeastern British Columbia.

President and chief executive Victor Zaleschuk said CanOxy looked at increasing its natural gas weighting to benefit from the current natural gas boom, and reduce its dependence on oil, but rejected the notion. CanOxy is overwhelmingly an oil producer (80% of its production is oil), and it would have required a $3 billion acquisition to become a balanced oil and gas company.

While they generally applaud CanOxy's strategy, analysts' views on the outlook of the firm's stock are mixed.

Terry Peters, a partner at Griffiths McBurney & Partners in Toronto, is among the optimists. He rates the stock a "buy" and has a 12-month target price of $28.50. The rating coincides with his positive view of other Canadian oil-weighted producers.

CanOxy stock (CXY/TSE) fell 50¢ to $21.45 yesterday, a long way short of its high of $37 reached on Sept. 30 last year.

The decline has been almost perfectly aligned with the slide in oil prices. The stock surged immediately after the Wascana acquisition, which closed in June 1997, reflecting a higher valuation because of market perceptions the firm had more balanced operations. Before Wascana, CanOxy's production came predominantly from Yemen.

"We believe oil prices will probably outperform the recovery in gas prices," said Mr. Peters. "Natural gas companies are already trading off high prices, while oil companies' stocks are tuned to oil's pessimistic outlook," he said.

Mr. Peters believes "invisible" production cuts by oil firms around the world, rather than OPEC's "visible" cuts, would restore the world's supply demand balance, starting this spring.

"The market's attention seems to be focused on more OPEC cuts. Don't count on it. Even if they agree to more cuts, they wouldn't deliver," Mr. Peters said.

"The actual fundamentals of supply and demand will surface in inventory numbers. And we suspect that those numbers will get better and better."

But Mr. Langpap, of Peters & Co., is concerned oil's tough environment is here to stay. While impressed with CanOxy's management and business plan, he recently downgraded its stock to "hold" from "outperform" because he is not expecting an oil price rebound any time soon. However, he still has a 12-month target price of $30 on the shares.

Along with Talisman and PanCanadian, smaller CanOxy peers with similar international focus are Ranger Oil Ltd. and Gulf Canada Resources Ltd.

Historically, CanOxy has been one of the group's least appreciated. That was partly because it has a large shareholder, Occidental Petroleum Corp. of Los Angeles, with a 30% interest, which reduces its public float and makes the firm a less likely takeover or merger target, said Michael Spohn, principal at New York based Petroleum Research Group.

An above-average international focus in countries like Yemen, which is seen as a riskier place to do business, also has contributed to the discount, along with its large reliance on oil rather than naturalgas, Mr. Spohn said.

The group's leader in terms of market valuation has been PanCanadian, because it has a large land spread in Western Canada (a legacy from its parent company, Canadian Pacific Ltd.) which it holds in perpetuity under freehold titles. However, Mr. Langpap said CanOxy is now trading at fair value, or 4.6 times 1999 cash flow per share.