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 (13951)	12/1/1998 7:52:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Lost Hills Update No date yet set for capping well Filed: December 1, 1998 The Bakersfield Californian LOST HILLS — It will be at least four more days before firefighters will be able to determine if it will be weeks or months before they can control a blazing natural gas well that exploded here more than a week ago. A five-man crew from Boots & Coots International Well Control, headed by 25-year veteran James Tuppen, on Monday continued pulling the wreckage of the Nabors Drilling USA drilling rig from the flames. The well is expected to burn for at least another week. The natural gas fueling the blaze is coming from more than three miles down, and if the fire is doused and the well brought on to production, it will be the deepest commercial well in the state. The well's owner won't release estimates of the amount of gas escaping, but it is massive. One longtime oil man said a very conservative estimate would be in the range of 10 million cubic feet per day. "The big question is, you may get a big flow rate but if you don't have a big reservoir you're done," said Claude Fiddler, who retired from Chevron in 1990 and formerly headed California operations for the oil giant. "The Lakeview gusher (a famous 1910 oil well blowout near Taft that flowed 9 million barrels of oil in 18 months), it gushed and gushed and made all that oil, but there wasn't anything after that." Lakeview sputtered and never produced another drop of oil. The Lost Hills find, so deep as to be in unexplored territory and so unique as to have the whole local oil industry abuzz, could be different. "These guys are in new territory. There's no telling what's there," Fiddler said. "I have not seen one burn as long as this one." Tuppen said removing the remaining debris from around the blazing well should take about four days. Most of the auxiliary equipment has been dragged from the howling flames by Boots & Coots crews using bulldozers and a special boom with a huge forged hook. What remains is the rig floor, the rotary table, the drawworks and the blowout preventers, all parts of the elaborate mechanism that is a modern oil well drilling rig. After the site is cleared, the crew will be able to assess the well head and casing to determine if the flow of natural gas and condensed hydrocarbons can be easily staunched or if a more difficult approach is needed. "It's not a matter of whether we can cap it or not," Tuppen said. "We can cap any well in the world ... if the pipe has integrity." The condition of the pipe casing extending into the well bore will be the determining factor, Tuppen said. If it is damaged deep in the ground — more than 30 feet — there will be no capping the well. In that worst-case scenario, a second well needs to be drilled that connects with the blazing well's bore deep underground. The second well will serve to siphon off the immense pressure of the flowing gas. Planning for the relief well is under way, and it will be started regardless of the initial damage assessment, Tuppen said. If the well casing isn't damaged, Tuppen's crew should be able to cap the blaze. The well exploded a week ago Monday as the rig crew tried to clear the bore of natural gas that had "kicked" into the well bore. Seventeen men fled from the site just minutes before a fireball hundreds of feet tall engulfed the rig. The well was being drilled by Bellevue Resources Inc., a subsidiary of Canadian oil and gas company Elk Point Resources Inc., with participation from 11 other U.S. and Canadian oil companies. The site is leased from Chevron USA, which will receive a 25 percent royalty payment from any commercial discovery. On Monday, the Kern County fire Department issued a warning to the public about the dangers of trying to get close to the raging fire. Such public forays into the fire area place members of the public and workers trying to quench the blaze at great risk, said Capt. Tony Diffenbaugh. The sight of the flames, visible for dozens of miles, is drawing people by the dozens to the remote location 45 miles northwest of Bakersfield. On the west bank of the California Aqueduct, Bakersfield resident Bob Martin, a retired schoolteacher, couldn't help but be awed by the ferocity of the flames on Monday. "The noise is more than what I thought it would be," Martin said. "I knew it would be loud, but this is just incredible. I just can't imagine how they're going to snuff it out." The Boots & Coots team doesn't need imagination. They've been at hundreds of fires, from Kuwait to the North Sea. Tuppen said for he and his crew, it's just one step at a time until they get the job done.

To: Kerm Yerman who wrote (13951)	12/1/1998 9:07:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Competition bureau looks at oil merger Exxon-Mobil deal By CLAUDIA CATTANEO The Financial Post CALGARY -- Canada's Competition Bureau could team up with antitrust authorities in Europe and the U.S. to review Exxon Corp.'s potential merger with Mobil Corp. The bureau would first test whether Canada's anti-competition laws apply to the union, then look into whether it would result in a substantial lessening of competition or even prevention of competition, said spokeswoman Cecile Suchal. If there's a full competition bureau review, it may be carried out with antitrust regulators in other countries. "We don't know what we are dealing with yet. If it's something that is going ahead, we would immediately see if our act applies and determine whether or not we would have a full investigation." Exxon and Mobil have confirmed they are in talks. A merger could result in the firing of 12,000 people, or about 10% of their combined workforce of 123,000, a person familiar with the talks said. Analysts expect most of the cuts to come in the refining and gasoline sales units. Both boards are expected to vote on the deal today. In Canada, the two companies employ almost 8,000 people. Antitrust authorities in Europe and the U.S. said last week they're prepared to carry out detailed investigations. Exxon's 69.9%-owned Imperial Oil Ltd. is already Canada's largest oil company. When combined with the Canadian unit of Mobil it would further strengthen its dominance of Canada's exploration and production sector, which is being bought up by U.S. firms because of depressed stock values and Canadian dollar. But it's too soon to fear a U.S.invasion, said Chris Peirce, vice-president, strategic planning, of the Canadian Association of Petroleum Producers. "When you look at the structure of our industry, and our membership of 170 companies, the vast majority are Canadian." But many firms would be happy to sell at the prices paid by U.S. buyers in the past 12 to 18 months, said Wilf Gobert, research director at Peters & Co. Ltd. Mobil is the dominant oil company on Canada's East Coast. It's the owner of the largest share of the Hibernia oil development off Newfoundland and the Sable Island natural gas development, scheduled to start production next November. It also has an interest in Terra Nova, another offshore oil development scheduled to produce in 2001. Mobil is due to decide by the yearend on the location of an upgrader as part of a proposed $2.5-billion oil sands project in Northern Alberta. Imperial is the dominant shareholder in the Syncrude Canada Ltd. oil sands plant, also in Northern Alberta, with a 25% interest.

To: Kerm Yerman who wrote (13951)	12/1/1998 9:14:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Oil price slump sparks poison pills Starcor and Orion: Petroleum-focused trusts and funds wary of takeovers By THE FINANCIAL POST Low oil prices are prompting petroleum-focused income funds and royalty trusts to implement poison pills in a sector analysts say is ripe for consolidation. Starcor Energy Royalty Fund and Orion Energy Trust both announced yesterday that they adopted unitholder rights plans. Often called a "poison pill," such plans are designed to fend off a takeover by issuing stock cheaply, greatly increasing the buyer's cost. A 35% slump in the past year in the price of crude, with little chance of it improving substantially in 1999 due to global overproduction and weak demand, is dragging down the value of energy-oriented income trusts and royalty funds. Another factor pressuring their equity is the likelihood of asset writedowns. Producers annually compare a property's book value with its estimated revenues, an accounting procedure called a ceiling test. Oil's crash means there will shortfalls, resulting in some firms taking charges. For example, NCE Energy Trust had a $19.4-million ceiling test writedown in its nine-month financial results. About 15 publicly traded royalty or income funds focus on production in Canada. Analysts have said the need to maintain cash distributions to investors and unit values will cause the rationalization of weaker players.

To: Kerm Yerman who wrote (13951)	12/1/1998 9:18:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Oil price plunges OPEC's failure to cut crude production has strong impact CALGARY SUN Still reeling from a failed meeting half a world away, the price of crude plunged yesterday to close at a 12-year low. January futures on the New York Mercantile Exchange fell 64 cents, or 5.4%, to $11.22 US -- the lowest it has been since July 1986. Analysts attribute the drop to the failure of the Organization of Petroleum Exporting Countries to cut crude production at a meeting last week in a bid to sop up a worldwide glut. Oil's tailspin has put the pinch on spending for some Calgary-based companies. Petro-Canada slashed its capital spending budget by $100 million earlier this year in response to low oil prices. And the latest dip hasn't helped. "The issue is serious. It makes for a very difficult working environment," said John Percic, a Petro-Can spokesman. Like Petro-Can, Shell Canada maintains it is still strong, but the current price storm poses a major problem. "Nobody said it won't be a challenge with the price of crude so low, (but) in general terms, we see the capital expenditure (for the next year) as being stable," said Jan Raowley, a Shell Canada spokeswoman. Calgary-based Alberta Energy Company Ltd. (AEC) is weathering the storm by tilting the balance of its operations towards natural gas, which has seen more stable prices this year. "We certainly hope it (the drop in price) is short-lived," said Dick Wilson, an AEC spokesman. About 25% of AEC's operating cash flow comes from oil, while the rest comes from natural gas and midstream activities, said Wilson. "Because of the focus on natural gas, we have less of a reliance on oil." In a meeting last week, OPEC members, including Saudi Arabia and Iran, refused to cut excess supplies that have sent prices down 40% over the past year. OPEC won't meet again until March. "If you're going to wait for OPEC to fix the problem, you're going to be waiting a long time," said Alan Struth, chief oil economist at Bartlesville, Oklahoma-based Phillips Petroleum Co. "I don't think the worst is over" for the oil industry.

To: Kerm Yerman who wrote (13951)	12/1/1998 9:23:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Big Bear Exploration offers extension CALGARY SUN They're going into overtime -- Big Bear Exploration has extended its offer to acquire Blue Range Resource Corp. to 11:59 p.m. Dec. 11. Both firms are Calgary-based oil companies. Big Bear chief executive Jeffery Tonken said yesterday Blue Range dropped its shareholders' rights plan (SRP) or "poison pill" and they, in turn, extended the deadline. "We're quite optimistic (the deal will go through)," said Tonken, adding 35% of Blue Range's shareholders are already in agreement with the takeover. But according to Blue Range chief executive Gordon Ironside, the new deadline changes nothing. "We're still clearly opposed to the Big Bear transaction as the board of directors." Big Bear, one-tenth the size of Blue Range, made its original bid Nov. 13 which was to have expired at 7 p.m. on Dec. 7.

To: Kerm Yerman who wrote (13951)	12/1/1998 9:37:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Oil price slide sinks TSE energy stocks Tuesday, December 1, 1998 The Globe & Mail Oil prices drifted below $11 (U.S.) yesterday for the first time in more than 12 years, sending the shares of energy companies tumbling on the Toronto Stock Exchange. The collapse in crude oil prices followed last week's meeting of the Organization of Petroleum Exporting Countries, which couldn't agree to extend current production cuts through to the end of 1999. The January contract yesterday for West Texas intermediate oil on the New York Mercantile Exchange dipped as low as $10.82 but recovered some ground to close at $11.22 -- down 64 cents on the day and its lowest level since mid-1986. "That OPEC meeting was a disaster," said Wilfred Gobert, an analyst with Peters & Co. Ltd. in Calgary. "There's also production cheating going on . . . I'm fearful that oil is going lower before it goes higher." Oil prices, which have fallen 50 per cent in the past 14 months, will likely bottom in the $10-to-$11 range, said Peter Linder, an analyst with CIBC Wood Gundy Securities Inc. Mr. Linder said plummeting prices should also translate into buying opportunities for patient investors over the next three to six months. A warm November in North America has combined with a glut of crude oil on world markets to push down the Nymex oil contract, and "the lack of agreement at OPEC hasn't helped either," Mr. Linder said. Vincent Lauerman, an analyst with Calgary-based research group Energy Era, predicts that oil could trade in the $9.50-to-$11.50 range in the first quarter of next year. Amid the pessimism, the TSE's oil and gas subindex slipped 190.35 points to 4,804.90 yesterday. The index has fallen 40 per cent since October, 1997. Ian Doig, publisher of Calgary-based energy newsletter Doig's Digest, said weakened demand in Asia and continued Iraqi oil sales on world markets have contributed to the slump in oil prices. An often overlooked factor is the ability of oil companies to produce greater amounts of crude because of improvements in oil recovery technology in places ranging from offshore Africa to northern Alberta's oil sands, Mr. Doig said. One of the beneficiaries of falling crude oil prices could be Big Bear Exploration Ltd., which launched a hostile takeover bid on Nov. 12 for Blue Range Resource Corp. The two companies jointly announced yesterday that Blue Range had agreed to withdraw its so-called poison pill, or shareholder rights plan, which would have given the company until late December to find a superior bid. Big Bear's $190-million (Canadian) stock-swap offer for its Calgary rival will now expire Dec. 11. The bid is valued at $5.72 a share. After engaging in a war of words, the two sides have also agreed "to be nice to each other," said Jeffery Tonken, Big Bear's chairman and chief executive officer. Three-quarters of Blue Range's production is natural gas and the rest is crude oil and liquids. Mr. Tonken said he expects weak commodity prices will scare away potential white knights. Natural gas prices have also softened recently because of the warmer-than-expected weather. "As the market tanks, it prohibits other people from stepping in. There's no question that's to our advantage," Mr. Tonken said. Big Bear shares sank 5 cents yesterday to 45 cents on the TSE, while Blue Range dropped 15 cents to $5.85. Blue Range CEO Gordon Ironside said yesterday that he remains optimistic a higher bid will emerge before Dec. 11.

To: Kerm Yerman who wrote (13951)	12/1/1998 9:43:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Oil patch agonizes over crude price The Globe & Mail How low can it go? That's the question of the week in the oil patch, as crude oil prices continue to set new lows. Adjusted for inflation, prices are the lowest they have been since the mid-1970s, and the damage to balance sheets continues to escalate. Some analysts see little sign of light at the end of the tunnel, and say oil could hit single digits. The latest blow to confidence was the meeting of OPEC representatives last week, a pathetically ineffectual get-together. Despite a history of discord and incompetence in the group, industry experts had hoped that the meeting might lead to further production cutbacks. By Thursday, those hopes were dashed, and the U.S. stock market had the whole Thanksgiving holiday weekend to dwell on where prices go from here. By the market's close yesterday, the crude oil futures contract for January delivery had fallen to $11.22 (U.S.) on the New York Mercantile Exchange. At one point during the day it was as low as $10.82 a barrel -- lower than it has been since 1986, even without accounting for inflation. As recently as last March, the January contract was at $18. At their meeting, OPEC leaders agreed to extend the production cutbacks of 2.6 million barrels a day that they imposed earlier this year, but most observers had already concluded that this would not be enough to prop up the declining price of crude. Adding to the skepticism was the fact that Iraq's oil-for-food deal with the United Nations (which allows it to get around international sanctions and sell oil) was also extended recently. Part of the pessimism that inevitably surrounds these OPEC meetings has to do with the notorious leakiness of the organization's cutbacks. Because the group is made up of countries that compete with each other for oil revenue, and since several have economies that rely on that revenue for a majority of their gross domestic product, cheating is endemic. The current speculation is that both Venezuela -- whose government is under pressure to fix the economy before elections in December -- and Iran are cheating. In the past, so-called "swing" producer Saudi Arabia has picked up the slack, but it has said it will not do so this time. Kuwaiti oil minister Sheik Saud al-Sabah told Reuters Saturday that he feared prices could plunge as low as $5 a barrel unless more cuts are made. According to a U.S. research firm specializing in oil economics, oil prices in the post-Second-World-War era have averaged $19.27 a barrel (in 1996 dollars). But the median price was $15.27, meaning that 50 per cent of the time oil prices have been above that level and 50 per cent of the time they have been below it. The median price since 1869 is $14.91. The Centre for Global Energy Studies predicts that slower growth in demand for oil and increasing production will keep prices low for the next decade or more. Sheik Ahmed Yamani, who was Saudi Arabia's oil minister from 1962 to 1986 and is now chairman of CGES, said he expects demand growth will be weaker during the next 10 years than it has been for the past decade -- while "OPEC's ability to produce oil, on the other hand, will continue to rise." The U.S. Energy Information Administration, which forecasts energy prices, says it expects the U.S. import price for crude next year to average $13.65. The EIA says 1998 will be the first year since 1990 that world demand has grown by less than one million barrels a day. Some market contrarians, of course, are already thinking that if this is the darkest moment in the oil business in 25 years or more, then now is the time to start buying oil stocks. But seasoned players warn that the market for oil companies hasn't sunk as low as it needs to before it can rebound -- a point that some analysts refer to as "capitulation." Chuck Charlton, an investment banker in Calgary with a macroeconomic view of the markets, says he has been skeptical about oil prices since last fall, shortly before they started to plummet from the $22 level. Mr. Charlton says he didn't buy the conventional wisdom that Asian growth would continue to fuel strong demand for oil for the foreseeable future. Mr. Charlton is one of those who believes that the market hasn't yet achieved capitulation, and several market players attending a recent FirstEnergy open house agreed. "It's not there yet -- but it's getting close," said one. The Toronto Stock Exchange's oil and gas subindex closed yesterday at 4,804, up from a low 4,352 in September but still down more than 40 per cent from a high of about 8,000 set in October, 1997. When the market begins to feel optimistic about oil again is the billion-dollar question. Some industry watchers say it could be some time before the price begins to pick up, given growing production and lagging demand from Asia. The only bright spot is that at current prices there is a lot of high-cost production in the world that will have to be shut down, and that in turn will help prop up the commodity price somewhat.

To: Kerm Yerman who wrote (13951)	12/1/1998 9:49:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Major facility being built for service alliance 11/28/98 The Telegram Construction is under way on facilities in Paradise for a major offshore oil-related service alliance. The five-company alliance is building a 34,000-sq. ft. office and warehouse facility on a 15-acre site in St. Anne's Industrial Park in Paradise. The $2.75 million facility is expected to be completed by early spring of next year, according to the town office. The alliance is comprised of Canadian Offshore Industries Ltd., NOSO Ltd., East Coast Tubulars Ltd., Beattie Industrial Ltd.and Van Waters & Rogers Ltd. Gary Whelan, managing director of Canadian Offshore Investments Ltd. of St. John's, said the industrial park, with its proximity to the Outer Ring Road and the Trans-Canada Highway, is the most strategically located industrial site in the region. Paradise Mayor Diane Whalen said, “We hope and believe that this new development will be the stasrt of additional businesses for our industrial park.” Ralph Wiseman, Topsail MHA, said to have suxh a major alliance established in Paradise will be a great economic boost for the district.

To: Kerm Yerman who wrote (13951)	12/1/1998 9:56:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Cougar Helicopters Inc. Wins Third Major Deal 11/28/98 St Johns Evening Telegram Cougar Helicopters Inc. has won a $20 million contract to supply helicopter services to the Petro-Canada-led Terra Nova consortium, solidifying its position as the chopper company of offshore Newfoundland. Terra Nova announced Friday Cougar won the bid to provide helicopter services for support subsea construction work, drilling activity and operations from 1999 to 2002. Cougar, which edged the only other bidder, CHC Helicopter Corp. of St. John's, will be able to rely on its fleet of three Super Puma helicopters which service the Hibernia platform. In fact, Hibernia was about to scale back to just two helicopters for its operations, Cougar base team leader Rick Burt said Friday, but another offshore contract — exploration work for the Jeanne d'Arc Basin Operating Group — allowed the company to keep all three aircraft at its St. John's Airport hangar. “Hibernia was going to get rid of the third machine this year but with the Jeanne d'Arc work, we're keeping our capacity,” Burt said. Work for the Jeanne d'Arc consortium — which includes Mobil, Petro-Canada, Norsk Hydro, Husky Oil — is expected to start this Sunday with the arrival of the exploration drill rig Glomar Grand Banks. Burt said Cougar may increase its fleet for the Terra Nova contract. “There's certainly an option there to bring on a fourth,” he said. It all depends on whether Terra Nova requires extra capacity during the initial start-up of production, and what other exploration activity is under way on the Grand Banks at the time, he said. Terra Nova chairman Gary Bruce said both offers provided a high level of capability and expertise, but Cougar's offered the best value. Despite cornering the market for offshore Newfoundland, the latest contract was anything but a slam dunk, Burt said. “We didn't assume anything, we thought it was extremely, extremely competitive,” Burt said. Cougar opened its books to Terra Nova, he said, and showed the consortium exactly what its costs and profits would be. There are still additional potential helicopter contracts coming to the region over the next few years, Burt said, including a possible contract for Gulf Canada's planned operations in the St Pierre - Miquelon corridor and possibly, further down the road, a Mobil Oil contract for deep-water targets on the Flemish Cap. Cougar is also in the bidding for a Department of Fisheries and Oceans surveillance contract, which is currently held by Provincial Airlines, but is expected to be awarded for another five year term some time next week. The surveillance contract is for fixed wing aircraft.

To: Kerm Yerman who wrote (13951)	12/1/1998 10:03:00 AM
From: Kerm Yerman	Read Replies (23) \| Respond to of 15196

IN THE NEWS / Oil, natural gas prices tumble Crude oil dips below $11 US Stephen Ewart, Calgary Herald The price of crude oil fell below $11 US a barrel for the first time since 1986 on Monday as speculation mounted about single-digit prices. Weighed down by OPEC's perceived inaction on a worldwide supply glut, the price of near-month crude hit $10.83 on the New York Mercantile Exchange but it climbed back to close down 64 cents at $11.22. It was the first day of oil trading after the U.S. Thanksgiving holiday weekend and last week's meeting of the Organization of Petroleum Exporting Countries where members did not agree to a widely anticipated extension to current production cuts. Oil companies based in Calgary have reined in spending with the drop in prices and that will continue through the first quarter of 1999, traditionally the busiest and biggest expenditure period in Canada, said Rick Roberge, a Calgary-based industry analyst at PriceWaterhouseCoopers. "You're going to see companies monitor spending monthly. . . and there are going to be more and more cuts if prices don't recover," he said. The Canadian oilpatch has taken a one-two punch from commodity prices as natural gas declined about 25 per cent in recent days and the industry's hope for a long, cold winter fade as warmer-than-normal air envelopes much of the continent. The Alberta spot price for gas has fallen from $2.84 per thousand cubic feet to $2.24. "The mood is changing," said Peter Linder, an oil analyst at CIBC Wood Gundy in Calgary. "The gas price is making people a lot more nervous." Gas production has been seen as a saviour for energy companies facing oil prices that are about 40 per cent lower than this time last year. Linder called the North American gas woes a short-term situation with the longer-term supply-demand still positive. The same can't be said for crude oil. "There is no momentum on the upward side," said Roberge. "There's no demand growth in sight and on supply we're left to rely on the politics of OPEC." Traders certainly blamed OPEC members for Monday's freefall. Last week, its members abandoned the much-anticipated plan that they would extend current oil production cuts to the end of 1999. Now those cutbacks will expire in mid-1999, unless OPEC decides differently at its March meeting. Saudi Arabia and Iran, OPEC's two biggest members, reportedly refused to make more cuts, though each wanted the other to pump less. Kuwaiti Oil Minister Sheikh Saud al-Sabah said Saturday that he feared prices could plunge to the range of $5 to $7 a barrel. "There's currently no sign of support underneath this market," said Jim Ritterbusch, an oil trader for Chicago-based Sweeney Oil. It was the first time NYMEX crude traded below $11 a barrel since July 27, 1986, when it slid to $10.65 in the middle of a price war among OPEC members. Linder predicts more mergers as belt-tightening continues. Last week, Exxon Corp. announced it was in talks with Mobil Corp. to create the world's biggest publicly traded oil company. An Exxon-Mobil deal would follow British Petroleum Co.'s agreement in August to acquire Amoco Corp., the fifth-largest U.S. oil company.