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

To: Kerm Yerman who wrote (13828)	11/27/1998 1:38:00 AM
From: Kerm Yerman	Respond to of 15196

TALKING STOCKS / Canada oil stocks hit by OPEC fears, profit-taking ending Wednesday Canadian oil and gas stocks slid further on Wednesday as profit takers continued to dump shares amid an increasingly bearish outlook for world crude oil prices, industry observers said. The Toronto Stock Exchange's oil and gas sub-index was off 127.5 points, or 2.5 percent, to 5,082.28 in midday trade, after closing down 133.05 points yesterday. The primary factor in the slide was the Organization of Petroleum Exporting Countries' winter meeting, which kicked off in Vienna today, Craig Langpap, analyst with Calgary based brokerage Peters & Co. Ltd. said. With OPEC members not expected to reach a consensus on production cuts, the benchmark West Texas Intermediate oil prices on Wednesday fell below US$12 a barrel for the first time since June. "There's general pessimism that we're not going to see the current cuts adhered to, or we will not see anything past June of next year, when they're supposed to end," said Langpap. Despite the strength of Canadian natural gas prices -- benchmark AECO spot price was up 77 percent on the day to C$2.48 a gigajoule compared with C$1.40 per GJ last year -- profit-takers are selling their oil and gas exploration and production stocks in general, Langpap said. "If the whole thing looks like it's going in the tank, people are going to avoid oil stocks and take profits out of other E&P stocks, even if they're gas-focused," he said. Some of the TSE's biggest losers on Wednesday included natural gas-focused companies like Alberta Energy Co. Ltd. <AEC.TO>, off C$1.50 to C$34.70. Also hard hit was Canadian Natural Resources Ltd. <CNQ.TO>, which produces almost a 50/50 split between oil and gas, down C$0.85 to C$25.15. Adding to the malaise is tomorrow's U.S. Thanksgiving holiday, which means markets there will be effectively closed until next Monday, Langpap said. "You basically have almost five days when the U.S. people are out of the market," he said. "So it may be a bit of a one-day phenomenon, where people will step off to the sidelines and take another look on Monday." "Nobody wants to be long," he said. "You might see on Monday that they bounce back some." Producers have responded to the gloomy outlook with deep cuts to 1999 spending. Earlier this week, Ranger Oil Ltd. <RGO.TO> blamed depressed oil prices for a 34 percent cut in 1999 expenditures, to C$145 million from an expected C$220 million this year. And gas-leveraged Anderson Exploration Ltd. <AXL.TO> announced and 18 percent spending rollback to C$345 million in fiscal 1999, with 75 percent targeting natural gas projects.

To: Kerm Yerman who wrote (13828)	11/27/1998 6:10:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Oil prices falling to near 12-year lows SUN MEDIA CALGARY -- A meeting half a world away has taken a bite out of oil prices here. The Organization of Petroleum Producing Countries met in Vienna yesterday to try to hammer out ways to bring oil prices back from the brink of 12-year lows. Gridlock on what to do had oil markets reeling as the spot price for North America's crude, West Texas Intermediate, slid 35 cents to close at $11.08 US. That pushed crude's January futures price - the measure most analysts follow - to levels hovering just above prices not seen since 1986 when the bottom fell out of the industry. Yesterday's plunge has local industry wondering when the end of the slide will come. "It's not a disaster today," said Roger Soucy, president of the Calgary-based Petroleum Services Association of Canada (PSAC). "But if it sits at that level till March then we could see some real problems." PSAC, which represents companies that service the oil and gas industry, is closely tied to the price of oil. When the price drops, oil companies have less cash to spend on drilling new wells, which cuts into the work of PSAC's 210 member companies. The price drop from the good times of last year has already claimed about 15% of the workforce, estimates Soucy. The price dropped in half in 1986 compared to the year before at a time when the industry was banking on prices even higher than the $25 to $30 US a barrel they were enjoying, said Onno Devries, manager of crude oil and fiscal policy at the Canadian Association of Petroleum Producers (CAPP). He said the industry learned from that experience and is better equipped to handle today's harsh price climate. "It is a different industry today, than it was in '86," he said. "The industry has restructured over the years to plan for price volatility." Calgary-based Ranger Oil Ltd. isn't planning wholesale shifts in direction because of this week's price plunge - at least not yet. "Our plans are based on weak oil pricing, but not this low," said Mike Daguiar, vice-president of finance for Ranger Oil. "If the prices continue at this level, the plans will have to be reviewed."

To: Kerm Yerman who wrote (13828)	11/27/1998 10:56:00 AM
From: Kerm Yerman	Read Replies (41) \| Respond to of 15196

IN THE NEWS / Exxon-Mobil would dominate energy industry in Canada From the gas pump to offshore oil megaprojects, a merged Exxon Corp. <XON.N> and Mobil Corp. <MOB.N> would enjoy a commanding presence in Canada, where they already dominate numerous parts of the energy landscape. Separately, the Canadian subsidiaries of the two U.S. oil majors sell the most gasoline in Canada, are involved in the biggest drilling ventures off its east coast and have among the richest investments in Alberta oil sands and heavy crude oil fields. Analysts point out there is very little overlap of the two operations, meaning there would likely be few concerns raised by Canada's competition watchdog. "The concept of these assets being put together makes a lot of sense," said analyst Duncan Mathieson of Scotia Capital Markets in Toronto. Sources close to the U.S. companies say merger talks between Exxon, already the world's biggest publicly traded oil company, and Mobil, the second-largest U.S. oil company, are at an advanced stage, and a deal could come shortly. Analysts say savings from a merger in which Mobil shareholders would receive Exxon stock would generate cost savings far greater than $2 billion just as the industry faces its worst conditions in 12 years. Exxon is active in Canada through 69.6-percent owned Imperial Oil Ltd. <IMO.TO>,, Canada's biggest energy company. Toronto-based Imperial, which had 1997 earnings of C$847 million on revenues of C$11 billion, is Canada's biggest seller of gasoline, which it produces at four refineries and markets nationwide under the Esso banner. It is a 25-percent owner of the sprawling oil sands mining and synthetic crude operation Syncrude Canada Ltd., operates a huge heavy oil development at Cold Lake, Alberta, has a stake in the Sable natural gas project off the coast of Nova Scotia and pumps oil and gas from numerous fields in western Canada. Imperial, which has about 7,000 employees, produced an average of 293,000 barrels of oil and 350 million cubic feet of gas a day during the third quarter. Calgary-based Mobil Oil Canada Ltd., wholly owned by Mobil Corp. of Fairfax, Virginia, does not refine and market gasoline in Canada. But it is a major player in Sable, the multibillion-dollar Hibernia and Terra Nova oil projects off the coast of Newfoundland and has made several major oil and gas discoveries off the east coast. The division produces an average of 95,000 barrels of oil and 500 million cubic feet of gas a day. Mobil Canada, which employs 950, is also planning a C$2-billion oil sands mining development in northeastern Alberta. "It would be an excellent fit and it would change the face of Imperial Oil," said John Clarke, analyst with Deutsche Morgan Grenfell. Officials from the companies declined to comment. It was not known how the Canadian assets would be put together, but industry observers said a takeover of Mobil Canada by cash-rich and debt-light Imperial within the larger Exxon-Mobil deal would make sense. Clarke said he believed Mobil Canada, with growing production from Hibernia and Sable under development, could be purchased by Imperial for about C$4 billion in cash. "What that would allow would be the financial strengths of Imperial Oil to be accessed by Exxon in funding the overall acquisition, and it also puts the assets where they belong," Mathieson said. "You wouldn't have to go a stretch to get the Imperial Oil shareholders on board." Investors already appeared to be excited by the concept, driving Imperial Oil shares up by C$1.20, or nearly 5 percent, to C$27.30 on the Toronto Stock Exchange on Thursday.