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

To: Kerm Yerman who wrote (14978)	1/22/1999 12:50:00 PM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Northern Border Pipeline Says New Gas Line Meeting Chicago Demand One month after an extra supply of Canadian natural gas began flowing on Northern Border Pipeline Co.'s expansion line to Chicago, the project's owner said the system is operating normally and meeting demand. "Total system receipts from Jan. 1 to Jan. 14 were 2,423 million cubic feet per day (mmcfd), which is a little above the designed capacity of 2,375 mmcfd," a company spokeswoman said, noting the extension line's Dec. 22 start-up coincided with severely cold weather in the Midwest. She said the cold weather allowed the Northern Border system to deliver more gas than expected since the low temperatures condensed the gas, increasing its energy content per cubic foot. The new extension brings another 700 mmcfd of capacity to meet the growing needs of Midwestern markets, primarily Chicago. In fact, Northern Border, which transports about 25 percent of all Canadian gas imported into the U.S., now has the ability to provide about 20 percent of the gas consumed in the Chicago area. The Northern Border system, excluding parallel pipelines, now stretches for 1,214 miles from the Saskatchewan-Montana border to Chicago. The $837 million Chicago Project, approved by the Federal Energy Regulatory Commission in July 1997, involved the construction of about 390 miles of 30- and 36-inch diameter pipe and the addition of 303,500 horsepower of compression. The company had originally scheduled to begin deliveries Nov. 1 and then again on Dec. 1, but excessive wet weather in the Midwest and the Northern Plains delayed construction. Northern Border Partners LP <NBP.N> owns a 70 percent general partner interest in Northern Border Pipeline. The remaining 30 percent is owned by subsidiaries of TransCanada PipeLines Ltd. <TRP.TO>.

To: Kerm Yerman who wrote (14978)	1/22/1999 12:54:00 PM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Talisman Energy Shares Sink After North Sea Writedowns Shares in Talisman Energy Inc. (TLM.TO) lost 4 percent of their value on Friday after the company took a major writedown in the value of its North Sea oil and gas assets because of low oil prices and rising costs. Calgary-based Talisman said it wrote down its U.K. Southern Gas Basin and Beatrice and Ross oil assets by a total of C$183 million after tax, blaming the stubbornly depressed oil markets and strength of the British pound against the Canadian dollar. "While we have charted remedial actions, these writedowns conservatively assume that our actions will not be completely successful and that oil prices will not recover soon," Talisman Chief Executive Jim Buckee said in a statement. The company's shares sank C$1.20 on the Toronto Stock Exchange to trade at C$25.05 on Friday.

To: Kerm Yerman who wrote (14978)	1/22/1999 1:02:00 PM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / S&P Rates Talisman Energy Issue BBB (The following statement was issued by the rating agency) LONDON, Jan 22 - Standard & Poor's today assigned its triple-'B' rating to Talisman Energy Inc.'s proposed 49-year, preferred securities issue. At the same time, Standard & Poor's affirmed its triple-'B'-plus corporate credit and senior unsecured debt ratings on the company. The outlook was revised to negative from stable. Proceeds from the issue will be used to repay existing debt. The rating on Talisman Energy reflects the company's average competitive position, a growing and diversifying reserve base, and fairly conservative financial policies, which are offset by a high growth strategy. Talisman Energy has made a series of acquisitions that have increased its year-end 1997 net proved reserve base to 254 million boe of liquids and 2.3 trillion cubic feet of gas, increased production, further diversified the company outside of Canada, and provided a better balance between its oil and gas reserves and production. In October 1998, Talisman Energy finalised its purchase of Arakis Energy Corp., which provides a 25% working interest in the Greater Nile Oil Project in Central Sudan, for 8.9 million common shares. The Sudan acquisition added proven and probable reserves of 113 million boe net to Talisman. While the Arakis acquisition increased the company's business risk profile to some extent, the Sudan assets extended Talisman Energy's exploration and production operations into its fourth core area. As a result of recent acquisitions and continuing low oil prices, leverage increased to a total debt-to-capital ratio of 52% at Sept. 30, 1998, which remains within the parameters of the company's rating category. Talisman expects to reduce its debt ratio through internally generated cash flow and asset sales. OUTLOOK: NEGATIVE The revised outlook reflects the protracted low oil and gas price environment which could limit Talisman's ability to fund its exploration programme and reserve replacement. Should this result in the deterioration of Talisman's business risk profile, a rating downgrade would occur, Standard & Poor's said.

To: Kerm Yerman who wrote (14978)	1/22/1999 1:24:00 PM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / World Oil Lower After Brief Iraq Troops Scare Oil prices moved lower on Friday following Thursday's modest price recovery after weekly U.S. inventory statistics showed that oil stockpiles in the world's biggest petroleum consumer had eased. Early excitement in the wake of report that Iraq was moving troops and tanks into southern Iraq proved shortlived. London Brent blend futures for March loading traded 20 cents down by 1530 GMT at $10.78 a barrel after reaching $11.27 during Singapore hours. The brief rally was a result of a report from the BBC that Baghdad was moving large numbers of troops and tanks towards Kuwait and the southern no-fly zone, a security corridor imposed by the West. "There was a brief scare in Asia over the report but the feeling is that Saddam wouldn't risk any move against Kuwait," said an oil dealer in London. An Iraqi opposition group in London said that the buildup had started more than a month ago and was aimed mainly at quelling internal opposition as well as intimidating Kuwait. Hamid al-Bayati, of the Supreme Council for the Islamic Opposition in Iraq (SCIRI), said the buildup began in mid-December and included surface to air and surface to surface missiles. "It's difficult to know what he is going to do because he is unpredictable," Bayati, the group's London spokesman, told Reuters in reference to Iraqi President Saddam Hussein. "These troops have been used to suppress any kind of popular uprising. But we cannot rule out that some of these forces might be used against neighbouring countries following the latest Iraqi statements." The military governor of Basra region, General Ahmad Ibrahim Hamash, told the BBC he was reinforcing his defences and had orders to shoot down all military planes. The United States and Britain heavily bombed Iraq last month to punish Baghdad for what they said was failure to cooperate with United Nations inspectors. Iraq also this month slammed the small oil-producing state for receiving SCIRI leader Mohammad Baqer al-Hakim, saying he was in the country to plan sabotage against Baghdad. Bayati, whose organisation is seen by Western diplomats in the Gulf as an influential opposition group in the Shi'ite south of Iraq, said the movements filmed by the BBC had been going on since the start of the Moslem holy month of Ramadan. Oil prices were helped on Thursday by weekly U.S. data showing lower crude and heating oil stockpiles. But with oil producers showing no sign of any further move to reduce supplies prices remain well below last year's lowly $13.34 average for Brent, itself down 30 percent from $19.30 in 1997. Mexico's Energy Minister Luis Tellez said on Wednesday that OPEC member Venezuela's lack of full compliance with agreed output cuts was stalling attempts by oil producers to further cut world oil supply. Venezuela, Mexico and Saudi Arabia last year spearheaded a total 3.1 million barrels per day reduction to world oil supply in a bid to raise crude prices. Caracas has acknowledged it still has not met fully its own pledged reduction while a row over how to measure Iranian supply cuts also has still to be settled.

To: Kerm Yerman who wrote (14978)	1/22/1999 1:27:00 PM
From: Kerm Yerman	Read Replies (9) \| Respond to of 15196

IN THE NEWS / Union Pacific To Produce 60mmcfd More Gas By Feb 1 Union Pacific Resources Group Inc. (UPR.N) said Friday it expects to begin producing and processing about 60 million cubic feet of natural gas per day by the end of this month from its Edwards field in Texas. The "sour" gas will be gathered from seven wells at the Edwards formation and piped to a new "sweetening" plant to be stripped of hydrogen sulfide and carbon dioxide. Union Pacific, one of the largest U.S. oil and gas exploration companies, said it plans to drill another well later in the year to extend the northern boundary of the field, in Texas's Fayette and southern Lee counties. In November, Union Pacific said its new "sweetening" plant will be sold to Duke Energy Services Inc in March. Under the agreement, the company has dedicated production from about 500 square miles to the plant for 10 years.

To: Kerm Yerman who wrote (14978)	1/22/1999 1:48:00 PM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Oil Firms' Asset Sales Offer Bonanza For Rivals Oil companies with cash to spare could enjoy a wealth of opportunities this year as struggling rivals are forced to sell off assets, consultants Wood Mackenzie said on Thursday. "Given the low oil price environment 1999 is likely to prove a year of significant opportunity in the global upstream asset market for those companies with both the financial strength and corporate vision," the Edinburgh-based firm said in a new report. As companies write down the book value of upstream oil assets to account for the price slide, so they will be forced to shed assets to avoid recording book losses. Many firms will simply dispose of non-core assets either to rationalise or to free up capital for remaining activities, the report said. The price fall would also force some firms to pull out entirely from some areas or countries to sharpen focus on key areas, it predicted. Firms will also choose to farm out part of existing projects, allowing them to keep an interest in key assets while cutting capital commitments. But the industry's current financial woes mean there be less buyers than sellers, enhancing the appeal of asset swaps and deferred payment or farm-outs, the report said. Wood Mac identified Eastern (TXU.N) and state-owned Gaz de France in the UK, and TransCanada Pipelines (TRP.TO) in the Netherlands as becoming increasingly active in expanding their upstream business. "These companies have the funds to take advantage of the depressed upstream asset market in order to develop increasingly integrated energy businesses (the gas value chain in particular)," the report said.

To: Kerm Yerman who wrote (14978)	1/22/1999 1:56:00 PM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Exxon's Profits Dry Up Low Oil Prices Effect Income Exxon Corp., the world's largest traded oil company in terms of market value, said Thursday fourth quarter net income fell 39 percent to $1.53 billion from $2.5 billion as global crude oil prices slumped 40 percent. Excluding the effect of a one time credit in the 1997 quarter, net income fell $655 million, or 30 percent, and diluted net income per share fell to $0.63 from $0.89, or $1.00 including the year-ago credit. Wall Street analysts surveyed by First Call Corp. had estimated fourth quarter at 57 cents per share. Falling Prices Means Falling Profits A large drop in both domestic and foreign upstream earnings for the quarter was offset by a smaller than expected drop in U.S. refining and marketing, where earnings fell just $35 million to $157 million despite razor thin refinery margins. U.S. oil and gas earnings fell to $214 million from $419 million while overseas earnings fell to $415 million from $790 million as crude oil prices clung persistently to 12 year lows. Also supportive was the overseas downstream segment, where despite Asia's economic woes, earnings rose $41 million to $487 million. Exxon said that revenues in the fourth quarter sank to $29.663 billion from $35.062 billion as oil prices fell $7.50 per barrel from a year ago to their lowest levels in real terms since 1972-73. For the full year, Exxon's earnings diluted per share fell to $2.61 from $3.41 and net income dropped to $6.37 billion from $8.46 billion and revenues fell to $117.488 billion from $137.242 billion.

To: Kerm Yerman who wrote (14978)	1/22/1999 2:22:00 PM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Canadian Oil Firms Brace For Poor Returns Fed By Depressed Prices Journal of Commerce Analysts are bracing themselves for what are expected to be a spate of poor 1998 financial results from hard-pressed Canadian oil companies. The figures come this week against a backdrop of stubbornly depressed oil prices. Benchmark prices for crude oil in 1998 were down an average of 30 percent from the year before and companies that produce more oil than natural gas will show the biggest slides in financial and operating results, analysts said. In addition, the industry's corporate fortunes could remain under pressure through the first six months of this year before world oil supplies drop off to meet reduced demand. "Clearly, the dogs are going to be the ones weighted toward oil. The fourth-quarter oil price was certainly lower than the third- quarter oil price and much lower than the fourth quarter 1997 price," said analyst Peter Linder of CIBC Wood Gundy. "Certainly, 1998 will go down as a very weak year." Corporate cash flow has declined because of the weak oil prices, which has meant cuts in drilling budgets. As a result, most producers are expected to report production numbers that are lower than previously forecast, analysts said. "The gas projects made more sense, so oil was neglected. Consequently, oil production will come in lower than what was anticipated," Mr. Linder said. His oil production outlook mirrors estimates from Canada's National Energy Board, which point to an industrywide drop in output in 1998 of 2.4 percent. Big oil-weighted producers include [ Canadian Occidental Petroleum Ltd. ] , PanCanadian Petroleum Ltd. and [ Ranger Oil Ltd. ] , a firm that has been warning investors of red ink throughout 1998. Natural gas producers, now reaping the benefits of stronger prices within Canada despite weaker markets in the United States, are expected to lead the industry in results. Gas firms expected to show strong -- albeit still tempered -- results for the quarter and year. Those firms include [ Alberta Energy Co. ] and [ Shell Canada Ltd. ] , which are two of the country's biggest gas producers, [ Anderson Exploration Ltd. ] and small Genesis Exploration Ltd.Analysts said even these companies' results would not be stellar due to a winter heating season that started later than normal amid warm weather early in the fourth quarter. Canadian natural gas spot prices averaged 2.40 Canadian dollars (about US$1.56) a gigajoule in fourth quarter of 1998, up 50 percent from the same period the year before. For the full year, Canadian spot gas averaged C$2.04 (US$1.33), up nearly 13 percent. West Texas Intermediate crude oil prices averaged US$2.86 a barrel during the recent quarter, down 35 percent from the same period the year before, while full-year prices averaged $14.43 a barrel, down 30 percent. [ FirstEnergy Capital Corp. ] analyst Martin Molyneaux said he believed strong profit margins in gasoline sales would place integrated oil companies near the top of the earnings pack. "Refining and marketing results should be medium to moderately positive because oil prices are down but product prices have been remarkably resilient to downward pressure in Canada," Mr. Molyneaux said. Of the integrated companies, [ Suncor Energy Inc. ] was expected to release respectable results in exploration and production as a result of its decision last year to lock in an oil price of US$20 a barrel for 30 percent of its 1998 output and growing production from its Alberta oil sands operation. Shell Canada was set to lead the group overall in quarterly results because of its high percentage of natural gas production, compared with oil and strong cash flow and earnings from refining and marketing, he said.

To: Kerm Yerman who wrote (14978)	1/22/1999 2:25:00 PM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Canada's Conventional Oil Output To Drop In '99 Journal of Commerce Conventional oil production in Canada declined in 1998 for the first time in seven years, and an even bigger drop is expected this year as depressed crude prices keep squeezing the cash companies need to drill wells and boost output. New figures from the country's energy regulator show overall crude production rose 4.4 percent last year. But the Hibernia offshore development off Newfoundland and expansions at major oil sands projects accounted for the increase, not bread-and-butter onshore drilling, which sagged. ACTIVITY DOWN IN WEST "Activity was down in western Canada -- it very negatively affected production," said a crude oil supply analyst with the National Energy Board, which compiled the statistics. "We had some major shut-in of crude oil in 1998 as a result of the low oil prices, and drilling activity was down." Canadian companies produced a total of 2.18 million barrels of oil a day in 1998, up from 2.09 million the year before. Those figures include synthetic crude from the Syncrude Canada Ltd. and [ Suncor Energy Inc. ] oil sands plants and [ Imperial Oil Ltd. ] 's Cold Lake bitumen project in northern Alberta, all of which are in expansion mode. They also include production from the fledgling Newfoundland offshore play, which rose to an average of 64,634 barrels a day in 1998 from just 3,447 in 1997. But oil prices, which sank to 12-year lows in 1998, took their toll on standard operations in the main producing region. The NEB said conventional light and heavy crude output from the western provinces fell to 1.52 million barrels a day from 1.56 million in 1997, a drop of 2.4 percent. 1991 DOWNTURN It was the first time conventional production declined from the previous year since the last industry downturn in 1991. The situation is likely to deteriorate further in 1999. The NEB official expected overall production to be about flat with 1998, and conventional output to fall by another 4.5 percent, or roughly 76,000 barrels a day. In a report issued this week, Calgary-based brokerage First-Energy Capital Corp. said 2,951 oil wells were completed in Canada in 1998, down 66 percent from the year before. Amid what it now believes will be an average benchmark West Texas Intermediate oil price of $15 a barrel -- and a continuing shift to natural gas drilling -- it forecast just 1,999 oil well completions in Canada this year, also the lowest number since 1991. Based on that projection, First-Energy analyst Martin Molyneaux said he believed the NEB's forecast drop in regular oil output would be too small. He said the decline from 1998 would be more like 150,000 barrels a day, or nearly 9 percent. "Funding is the issue. Funding makes a lot of difference when it comes to productivity," he said. The lion's share of the 1998 decline was in light oil, which has been gradually falling for a number of years as the region becomes more extensively explored and developed. This year, however, a big drop in drilling activity and increase in shut-in production also contributed. Conventional western Canadian light oil output fell by 2.7 percent to 975,485 barrels a day in 1998. HEAVY OIL Volumes of tarlike heavy oil, which is slapped with a price discount to light crude because it needs more extensive refining, also declined. The discount has been halved in the past year, but returns still lag amid weak light oil prices. Conventional heavy oil production averaged 545,835 barrels a day last year, down nearly 2 percent as drilling for the gooey crude nearly dried up completely and companies turned off the taps on as much as 100,000 b/d because of weak returns. The NEB estimated 60,000 b/d shut in, a figure it acknowledged was probably conservative.

To: Kerm Yerman who wrote (14978)	1/22/1999 2:28:00 PM
From: Kerm Yerman	Respond to of 15196

IN THE NEWS / Should Oil, Gas Stocks Be Left Out In The Cold? The Journal Record In our brave new world of investing, assets are out and ether is everything. Tangibles like a rising book value at a company or even significant growth in corporate earnings are no longer required by investors who are looking to justify their stock purchases. Rising share prices are what counts. So, while investors' ardor for Internet and other technology companies drives those stocks to the heavens, many companies with hard assets underlying them -- oil and gas concerns, for example -- have been left for dead. That many are trading at extreme discounts to their assets matters not to investors dazzled by ether stocks. Investors shun oil shares today because of the depressed state of crude oil prices. A barrel of West Texas intermediate fetched about $13 on Friday, down from almost $17 a year ago. But in just three weeks, oil prices have jumped 26 percent from their 12-year lows of $10.35 a barrel. As a result, some investors think the outlook for oil -- and some oil-related equities -- may be brightening. The price of oil has fallen because there's just too much of it. Demand for oil grew 1 percent to 2 percent worldwide last year, but production remained high. The oversupply shows signs of lessening a bit, however. Last week, oil prices jumped on news of the biggest decline in United States oil inventories in 18 years. More important, capital spending by oil companies is plummeting. Michael Spohn, principal at Petroleum Research Group in New York, says such investment will fall 10 percent to 20 percent from 1998 levels at American companies this year. "Because they are cutting capital expenditures now, productive capacity will be below expectations in the future," Spohn said. "But there is a lag between spending and production, so you don't see it in the numbers right away." At the same time that supply is shrinking, some investors think the demand for oil may increase this year in parts of the world. If rebounding stock markets in parts of Asia are indicating a turnaround there, demand from that region may increase. Asia accounts for roughly one-quarter of the world's oil demand. One sign that oil stocks' fortunes may be rising is that the shares no longer fall on bad news. On Thursday, [ Smith International ] , a large oil-services company, warned investors that its fourth quarter earnings would likely be between 25 cents and 27 cents a share, not the 36 cents a share that Wall Street had hoped for. The shares rose $3.65. Of course, not all oil-related shares are buys. Some of the biggest companies are not cheap, according to Spohn, and some of the smallest, with heavy debt loads, could find themselves on the ropes if oil prices stay low. Three of the best values in the oilpatch, Spohn said, are [ Arco ] , Kerr-McGee and [ Unocal ] . Arco is trading at a 22 percent discount to its asset value, as he reckons it, and the shares pay a 4.3 percent dividend. Kerr-McGee, out of favor among investors because of its announced merger with [ Oryx Energy ] , trades at a 41 percent discount and pays a 4.6 percent dividend. And Unocal, which closed on Friday at $32.75, has a value of $42 a share, Spohn said; he considers Unocal a takeover candidate to boot.