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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Kerm Yerman who wrote (5707)	12/11/1998 11:45:00 PM
From: Tomas	Respond to of 24905

More hostile bids seen for Canadian oil companies By Robert Curran CALGARY, Dec 11 (Reuters) - Canadian oil and gas producers should brace themselves for further consolidation following three uncontested hostile takeovers in the past four months, industry analysts said on Friday. ''Definitely it's the start of a new trend,'' said David Stenason, analyst with Montreal-based brokerage ScotiaMcLeod. ''It used to be, not very long ago, that companies were reluctant to make a hostile takeover offer, because they understood there were lots of white knights in the wings.'' ''The big difference in the last six months has been low oil prices, the failure of gas prices to recover, and high debt levels,'' Stenason said. ''White knights can't afford to be white knights.'' ''I think we'll continue to see hostiles in this market.'' The latest hostile takeover target was Blue Range Resource Corp. (Toronto:BBRa.TO - news), which fell to rival Big Bear Exploration Ltd. (Toronto:BDX.TO - news) on Thursday after failing to find a white knight to counter Big Bear's share swap offer. Big Bear offered 11 of its shares for each Blue Range share after it was approached by several of Blue Range's largest shareholders who were unsatisfied with the company's direction. At current stock prices for the two companies, the deal was worth about C$167 million. Potential suitors are loath to pay a premium for any stock in a market where spending and debt levels are being tightly monitored, Craig Langpap, analyst with Calgary-based Peters & Co. Ltd. said. ''If there's fair value, they'll be gone,'' Langpap said. ''And fair value is in the eyes of the beholder.'' ''Unless there's some compelling strategic reason why you can do a better job than other people, generally the bids that come in are fair,'' he said. Langpap cites the C$445-million hotile takeover of Amber Energy Inc. by Alberta Energy Co. Ltd. (Toronto:AEC.TO - news), which closed in early November, as an example of a bid that was at first seen to undervalue Amber, but eventually came to be viewed as fair. In early September, Sunoma Energy Ltd. concluded a C$220-million hostile takeover of Barrington Petroleum Ltd. (Toronto:BPL.TO - news) after it failed to attract any rival offers. Because of the depressed condition of the Canadian dollar compared with its U.S. counterpart, subjects of hostile bids often look south for a white knight, but U.S. companies are also suffering with low oil prices, Langpap said. Stenason expects the consolidation to continue even if oil and gas prices recover. ''With the vast number of public companies in this sector, you're going to continue to see M&A activity, attempts at consolidation and it's going to happen in good markets as well,'' Stenason said. ''What could happen in a good market is the white knights might reappear.'' ($1=$1.54 Canadian) biz.yahoo.com

To: Kerm Yerman who wrote (5707)	12/11/1998 11:45:00 PM
From: Richard Saunders	Read Replies (1) \| Respond to of 24905

Kerm - Blue Range. You're the one to be asking........ thanks again for keeping the oil threads going during the gloomy periods. Totally off the cuff and possibly not totally accurate, here's quick impressions. Blue Range folks (mgmt. type) seemed to have put themselves in to uncomfortable situations over the past several years. Even a yr. ago I remember seeing something indicating that shortfalls in production/sales volumes forecasts vis-a-vis actual results were tending to upset institutional shareholders. Part of the problem re: forecasting could possibly be argued as being too optimistic (opinion) however part of the problem was also dealt to Blue Range with overall weather. I'm not sure how much of problem was also caused by production declines within reserves. All in all the bloom had disappeared from the name/situation and it seemed ripe for a change. Incoming mgmt. group seems to currently have investment community approval and whether or not they will be able to make things work any better remains to be seen. I think you probably saw the same commentary however it was recently indicating that the "new" mgmt. group should be able to command a higher CF trading multiple than status quo group. Who knows, it seems somewhat related to sentiment. Your ponder re: reserve base is interesting though as the takeover bunch seemed to couch some of their argument so it sounded as though there'd be some reserve write-downs coming soon. Again, time'll tell. Blue Range is tilted (75%) towards gas production - I think are operating just under 13K boepd. PROBLEM........ Long term debt. Something like $100mil. BBR.A is on a goofy yr. end and their most recent qtr. showed something like $8.7mil CF. As the kids say....... "do the math". Combine that with the rollback that Big Bear will be doing to consolidate the 390.5mil shares that they are issuing and another reason for slack stock price appears. Finally, back to the old weather thing. Yesterday I recall looking at B.C. temperatures in the north. Places like Fort Nelson, Fort St. John, Dawson Creek and what not. Before lunchtime all of those places were showing temperatures above freezing. For this time of year that seems unusual. Today I glanced at a temperature up in the NW far north of B.C. and it was just below freezing but supposedly 17 degrees C. above the normal temperature for this time of the yr. e've already passed something like 24% of the normal winter gas heating period so unless temperatures begin to cool off on a sustained basis the rosy gas prices that many were assuming a little while ago may not happen. Just two months ago the Cdn. Association of Oilwell Drilling Contractors was forecasting $2.65/mcf for the period to Sept.'99. At the moment this looks a bit different than current gas pricing. That too has to reflect on the asset base that Blue Range has (had?). So........ got off on a sidecast but it seems current sentiment isn't great at the moment. Maybe arguments can be made for patient buying?