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

To: Kerm Yerman who wrote (14681)	1/7/1999 8:08:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Third quarter Not Kind To Oil Patch Companies 164 firms lost $33.2-million in the '98 period Thursday, January 7, 1999 STEVEN CHASE Alberta Bureau Globe & Mail Calgary -- The third quarter of 1998 was the second-worst profit drought for the Canadian oil patch this decade, according to a recent survey of earnings. Calculations by industry newsletter Doig's Digest show 164 companies across the patch, from integrated to pipeline to field service concerns, recorded a combined loss of $33.2-million in the July-through-September period. Third-quarter bottom lines were hit hard by low oil prices. The average benchmark West Texas intermediate crude price for the months was $12.90 (U.S.) a barrel, down 35 per cent from $19.94 in the same 1997 period, according to the Canadian Association of Petroleum Producers (CAPP). Doig's Digest said the only worse third quarter was in 1991, when a smaller universe of players, 94, racked up a total loss of $90-million (Canadian) because of an extraordinary loss recorded by Nova Corp. of Calgary. Nova took a $265-million after-tax writedown on its investment in Husky Oil Ltd., also of Calgary, when it sold its stake in the company to Hong Kong industrialist Li Ka-shing. Remove the Nova writedown from the 1991 numbers and last year's third quarter is the worst July through September of the 1990s, newsletter publisher Ian Doig said. The 1998 third-quarter numbers are especially bleak compared with the same 1997 period, when the companies surveyed by Doig's Digest recorded a $1.43-billion profit. The results bring nine-month earnings for the 164 companies to $1.6-billion, down 66 per cent from the same 1997 period, according to Doig's. The fourth quarter, when oil prices broke 12-year lows, is expected to be just as grim. "It's going to be a blood bath," Mr. Doig said. Weaker crude prices near year-end dragged the average West Texas intermediate crude price in 1998 down to $14.39 (U.S.) a barrel, 30 per cent lower than the 1997 average of $20.61, according to CAPP. However, natural gas prices were stronger during the third quarter, up more than 45 per cent to $2.48 (Canadian) for 1,000 cubic feet from $1.68 in the same 1997 quarter. But the impact of crude prices on the oil patch is still strong. While there's plenty of talk about shifting to natural gas production, the reality is it's a costly task for many companies. "Where one company might have produced 60 per cent oil, now it's shifted to 55 per cent oil and 45 per cent gas," said Gord Currie, an analyst with Canaccord Capital Corp. in Calgary. He expects fourth-quarter asset writedowns to depress earnings in the period. Accounting rules require oil and gas companies to revise their asset values from time to time. Companies may also do so to clear the deck for better earnings ahead, Mr. Currie said. "I would guess many will take their lumps in 1998 and start 1999 with a clean slate." The time is right for companies to do so because investors are less shocked by bad oil patch news after a year of sliding crude prices, Mr. Currie said. "The market doesn't seem to react very negatively to writedowns [at the moment]." Writing down the value of assets at the end of 1998 would leave companies with fewer depletion charges against earnings in 1999, meaning less drag on earnings. This year is expected to be the beginning of a painful crawl out of the woods for oil patch companies. Canaccord Capital is forecasting an average oil price of $13 (U.S.) a barrel in the first quarter, rising to $15 by mid-year and $17 by year-end as some production gets shut down and capital spending in the oil patch falls off dramatically. Still, Mr. Doig predicts a lot more predatory activity in the oil patch as cash-strapped companies are forced to sell assets or themselves. "The people who are going to do a crackerjack lot of business in the next six months is the merger and acquisitions business in town."

To: Kerm Yerman who wrote (14681)	1/7/1999 8:13:00 AM
From: Kerm Yerman	Read Replies (4) \| Respond to of 15196

IN THE NEWS / '99 Will Be Another Hot Year For Oilpatch Mergers Chris Varcoe, Calgary Herald Mega-deals help lead to a record year for merger and acquisition activity in the Canadian oilpatch last year. And as depressed oil prices continuing to haunt the industry, analysts predict corporate takeovers will remain at a torrid pace in 1999. "I would expect mergers and acquisitions to continue to be robust,'' said analyst Rick Roberge of PricewaterhouseCoopers. "This will go on until oil prices come back." There were $18.3 billion worth of mergers and acquisitions involving petroleum producers during the first nine months of 1998, almost $2 billion more than in all of 1997, said Frank Sayer of Sayer Securities, a Calgary investment firm that tracks M&A activity. The massive international merger of British Petroleum Co. and Amoco Corp. last year added $6.5 billion to the Canadian figures, Sayer said. Not included in the nine-month totals are several major deals triggered in the final quarter of the year, including the $163-million acquisition of Pan East Petroleum Corp. by Poco Petroleums Ltd., Big Bear Exploration Ltd.'s $300-million hostile takeover of Blue Range Resource Corp, and Abraxas Petroleum Corp.'s $129-million deal for New Cache Petroleums Ltd. Internationally, the largest merger in corporate history - Mobil Corp.'s proposed $76.6-billion US merger with Exxon Corp. - was ignited in December, affecting the Canadian affiliates Mobil Oil Canada Ltd. and Imperial Oil Ltd. Sayer believes depressed oil prices will lead more companies to put assets up for sale in 1999. Several companies put themselves up for sale last year, including Summit Resources Ltd. and Remington Energy Ltd. "People are uncertain about what they should value assets at...but I think it's going to pick up now that there is a better understanding of long-term oil and gas prices,'' Sayer said. Several factors are driving the merger mania. Low commodity prices have eroded cash flows for some petroleum producers, impeding their financial flexibility and ability to grow, said Mike Tims, president and chief executive of Peters & Co. investment firm in Calgary. Falling share prices last year made some companies vulnerable to hostile offers, with their stock price falling below net asset values. Reduced profits and lack of success caused other management teams to lose shareholder support, sparking a takeover, he said. "The basic factors haven't changed,'' Tims added. "I think there will be a steady run of deals in 1999." Several American companies made their mark buying Canadian firms last year, but Roberge believes most U.S. organizations have stopped kicking tires as the cash crunch has affected the entire sector. "The Americans aren't floating around on the streets of Calgary with cash in their pockets,'' he said. "But I think in the first half we'll see some fairly larger merger deals with paper (involving a company's stock) rather than cash."

To: Kerm Yerman who wrote (14681)	1/7/1999 8:17:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Canadian 88 Energy Corp. and Newport Petroleum Corp. Resolve Caroline Dispute CALGARY, ALBERTA -- Canadian 88 Energy Corp. and Newport Petroleum Corporation have announced today that they have entered into a settlement agreement with respect to their joint lands in the Caroline Area. The agreement addresses all of the issues outstanding between the corporations, and establishes a mechanism for the withdrawal without costs of all legal actions pertaining to the dispute between the two corporations. The companies will be preparing a joint development plan for the Caroline Beaverhill Lake 'B' Pool for submission to the Alberta Energy and Utilities Board (AEUB) in early January, 1999. This plan will detail the drilling sequence, testing plans and processing alternatives being considered by both companies. Both Canadian 88 and Newport will continue to actively participate in the Caroline Beaverhill Lake 'B' Pool Advisory Committee, which also has representatives from the AEUB, the Sundre Petroleum Operators Group, and the community. Included in the agreement is a division of operatorship of the lands. The corporations will establish a joint technical team to work together on all development matters including jointly assessing gas processing alternatives. This will lead to timely development and ultimate production from this very significant gas discovery.

To: Kerm Yerman who wrote (14681)	1/7/1999 8:23:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Rig Prepared For Nasty Weather By CHRIS FLANAGAN Business Editor The Glomar International semi-submersible oil rig Grand Banks and its crew of mostly Newfoundlanders has begun drilling the Hebron oil field on Grand Banks, reaching a depth of more than 700 metres into the ocean floor in its first four days on the job. The Glomar Grand Banks is operated by Jean d'Arc Basin Operations, a consortium of four oil companies, Mobil Chevron, Petro-Canada and Norsk Hydro, and has been leased for a year to drill four exploration wells at the Hebron, Nautilus and Riverhead oil fields. The consortium employs 210 people in St. John's, as many as 100 of whom are on the rig at any one time. When the well was spudded Dec 30, it marked the first time in about a year a semi-submersible was operating off the coast of Newfoundland. The rig, built two years after the Ocean ranger went down Feb. 15, 1982 and previously employed on the Grand Banks as the Bow Drill 3, is beginning its 12-month stint at one of the roughest times of the year. “It's not the norm to start (a drilling program) right now but we're fully prepared for the weather conditions,” said Paul MacMillan, supervisor for the operating consortium. “We absolutely understand the weather conditions, we know the weather, we've got good weather forecasts and we know what were going to deal with.” Drilling was already suspended for about 24 hours, MacMillan said, but added he does not expect to fall behind schedule. “It was just too bloody windy to run the crane,” he said. “We lost about a day.” The oil rig has a new crew after changing owners and undergoing a refit at the Friede Goldman Shipyard at Marystown, but the team, made up of about 90 per cent Newfoundlanders, is experienced, MacMillan said. “There are lots of Newfoundlanders in the industry working all over the world,” said. “Some of them worked back here in the '80s.” The crew will drill a vertical well to a depth of about 2,250 metres. It will take about 45 days to complete the program, which includes core sampling and data gathering. The Grand Banks will be joined this summer by the Husky-operated Bill Shoemaker semi-submersible rig, which last worked off Newfoundland in 1997, drilling the West Bonne Bay property for Amoco.

To: Kerm Yerman who wrote (14681)	1/7/1999 8:31:00 AM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Oil Prices Jump On Rumours Of Meeting By AP NEW YORK -- Crude oil prices soared yesterday on the New York Mercantile Exchange after two surveys indicated a drop in oil supplies. Inventory reports by both the American Petroleum Institute and the U.S. Energy Department showed a drop in oil supply by nearly 15 million barrels last week. Rumours about a proposed meeting among OPEC leaders to discuss further production cuts also pushed prices upward. Light sweet crude oil for delivery in February rose 81 cents to $12.80 US a barrel. The benchmark West Texas Intermediate price jumped 72 cents yesterday to close at $12.70 US. News reports say that the Saudis, Iranians and Venezuelans are planning to meet at the end of January. In London, North Sea Brent Blend crude closed at $11.46 US a barrel, up 93 cents.