| To: Kerm Yerman who wrote (3845) | 7/2/1997 3:51:00 AM | | From: Kerm Yerman | | | |
CORP. / COTTON VALLEY RESOURCES IMPROVES STOCK EXCHANGE STATUS
Canadian Dealer Network: CVZC
Tuesday July 1 8:05 AM EDT
Company Press Release
Cotton Valley Resources Corporation announces improved exchange
listing status and symbol change
DALLAS--(BUSINESS WIRE)--July 1, 1997--Cotton Valley Resources Corp. (NASDAQ Bulletin Board:CTVY)(CDN:CVZC)(``Cotton Valley'') announced Tuesday that the designation given to foreign issuers, the letter ``F'' has been removed by NASDAQ as Cotton Valley Resources Corp. now qualifies for regular listing as a domestic company.
Consequently, effective July 2, 1997, the symbol for NASDAQ Bulletin Board trading will be: CTVY.
Liviakis Financial Communications' President John Liviakis, commented, ``Because most of Cotton Valley's shareholder baseas well as its headquarters and operations are now in the U.S., it was no longer appropriate to carry the foreign designation. Members of the U.S. investment community will now have much easier access to following and trading our stock. It will reflect quotes on the CTVY symbol soon on an up to the moment volume and trade by trade basis. We are now going to work diligently to create a strong market maker infrastructure.''
Cotton Valley is a fast growing Texas-based independent oil and gas company with oil and gas property interests in Texas, Oklahoma, Utah and Alabama. |
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| To: Kerm Yerman who wrote (3846) | 7/2/1997 4:39:00 AM | | From: Kerm Yerman | | | |
ENERGY PRICES/WORLD-NYMEX-BLOOMBERG REPORTS FOR DAY ENDING TUESDAY 07/01/97
**********************************************************************
Tuesday July 1 5:13 PM EDT
Financial funds aid oil price recovery
LONDON, July 1 (Reuter) - World oil prices ticked higher again on
Tuesday as financial funds decided to step back in to the market and
weekly U.S. stock figures from the American Petroleum Institute (API)
due out tonight were expected to show draws in crude and gasoline
stocks.
London August futures for benchmark North Sea Brent blend ended the
day up 31 cents at $18.82 a barrel on top of a 33-cent rise on Monday.
Dealers said the funds, which sold oil in June, were taking a renewed
interest after prices rose on Monday amid fresh concerns over a delay
in the resumption of Iraqi oil sales.
Overnight API figures are expected to show a draw of one to three
million barrels in U.S. crude oil stocks in the week ended June 27.
Gasoline is expected to decline by 500,000 to one million barrels in
the same period.
Although distillate stocks, composed of heating oil and diesel, were
expected to show substantial builds, NYMEX heating oil closed
substantially firmer.
``It makes you feel there are whispers out there on the heating oil.
Maybe we are in for a surprise with the API's,'' one broker said.
Oil has recovered from a 15-month low hit in June when Brent touched
$17.32, having endured a $7 slide in the space of six months.
``The funds are beginning to bite again because there seems to be some
fresh impetus in the market,'' said a dealer. ``How long it will last
depends on how long it takes Iraq to start shifting oil again.''
The timing of a second phase of Iraqi exports under the U.N's food for
oil deal remains the single most important factor in world oil
markets.
``Iraqi oil sales are still at the forefront of market thinking,''
said a futures broker.
Iraqi envoy Abdul Amir al-Anbari said on Monday he did not expect
Baghdad to restart crude flows until early August.
On Tuesday U.N. humanitarian aid officials said negotiations to
finalize an aid distribution plan necessary for resuming Iraqi
``oil-for-food'' oil sales were running smoothly and should be
finalized by week's end.
A senior U.N. official at New York headquarters said talks between
Baghdad and the U.N. were continuing in Iraq, and that all indications
pointed to a successful conclusion.
``They should be done by the end of the week, and be able to send (the
aid plan) to New York for the Secretary-General to approve, presumably
next week,'' said the official.
Renewed oil sales were expected to start around two weeks after the
distribution plan approval, in late July or early August, the official
said.
The market had foreseen an early to mid-July date after Iraqi Oil
Minister Amir Muhammed Rasheed last week predicted early agreement
with the United Nations on an aid distribution plan and oil exports
soon afterward.
The later timeframe was more in line with the expectations of the
market, which thought bureaucratic and logistical obstacles would
delay oil liftings.
Traders fear that when Iraqi oil does reappear it could run at up to
one million barrels per day (bpd), up from some 660,000 bpd in the
first phase of the oil sale which ended in June.
Delays and lower international prices mean Baghdad will need to move
increased volumes to meet their permitted $2 billion target under the
plan.
Crude oil prices in dollars per barrel:
July 1 June 30
Dated Brent $18.78 $18.22
IPE August Brent $18.82 $18.48
NYMEX August light crude $20.12 $19.77
**********************************************************************
Closing Bell Petroleum Report @ 07/01/97
Date: Tue, 01 Jul 1997 18:43:42 MDT
Futures rose Tuesday at the New York Mercantile Exchange, due to a
delay in the resumption of Iraqi sales and expectations of a
supportive report from the American Petroleum Institute, observers
said.
If the delay in Iraqi supplies extends to the end of August, an
estimated 50 million barrels of crude oil will be kept from the
market, according to Tom Blakeslee, an analyst at Cargill Investor
Services in New York.
In addition, the American Petroleum Institute reported late Tuesday
that crude-oil stocks fell by 4.361 million barrels in the week
ended June 27. Gasoline stocks fell by 1.233 million barrels, and
distillate stocks rose by million barrels. (WSJ Interactive)
--------------------CRUDE OIL-LIGHT SWEET---------------------
NYM - 1,000 bbl_dollars per bbl. CONTRACT
OPEN HIGH LOW SETTLE CHANGE HIGH LOW
Aug97 19.92 20.27 19.92 20.12 +.32 22.75 16.88
Sep97 19.97 20.25 19.95 20.12 +.28 22.30 16.71
Oct97 20.00 20.18 19.96 20.09 +.19 21.87 16.84
Nov97 20.00 20.16 19.96 20.06 +.12 21.60 16.90
Dec97 20.00 20.15 19.97 20.04 +.07 21.46 16.80
Jan98 20.00 20.15 20.00 20.05 +.05 21.33 17.04
Feb98 20.02 20.10 20.02 20.05 +.04 21.24 17.15
Mar98 20.05 20.10 20.01 20.04 +.02 21.14 17.30
Apr98 20.05 20.10 20.02 20.03 +.01 21.10 17.38
May98 20.02 20.09 20.02 20.03 +.01 20.95 17.39
Jun98 20.05 20.10 20.02 20.01 _.01 20.90 17.17
Jul98 20.02 20.09 20.02 19.98 _.02 20.65 17.60
Aug98 20.00 20.00 20.00 19.95 _.03 20.57 19.34
Sep98 20.00 20.00 20.00 19.93 _.03 20.55 17.94
Oct98 20.00 20.00 20.00 19.91 _.03 20.55 17.75
Dec99 19.85 19.85 19.85 19.86 _.07 20.75 17.62
Est Sales 106470
-------------------------HEATING OIL-------------------------
NYM - 42,000 gal_cents per gal
CONTRACT
OPEN HIGH LOW SETTLE CHANGE HIGH LOW
Aug97 54.20 55.10 54.20 54.84 +.99 61.30 48.60
Sep97 54.90 55.50 54.85 55.31 +.91 61.10 49.40
Oct97 55.80 56.20 55.65 56.01 +.81 62.00 50.50
Nov97 56.60 57.00 56.50 56.76 +.76 61.80 50.75
Dec97 57.50 57.75 57.10 57.46 +.71 62.05 51.90
Jan98 57.90 58.10 57.60 57.86 +.66 62.05 52.40
Feb98 57.80 58.05 57.65 57.86 +.61 61.50 54.25
Mar98 57.30 57.30 56.80 56.91 +.51 59.60 52.50
Apr98 55.40 55.95 55.40 55.51 +.41 58.20 53.50
May98 54.50 54.70 54.30 54.36 +.31 57.10 52.60
Jun98 54.00 54.00 54.00 54.01 +.31 56.25 52.40
Jul98 54.10 54.10 54.10 54.16 +.31 56.50 52.65
Est Sales 24705
--------------------------NATURAL GAS-------------------------
NYM - 10,000 mm british thermal units.
CONTRACT
OPEN HIGH LOW SETTLE CHANGE HIGH LOW
Aug97 2.130 2.150 2.105 2.110 _.029 2.415 1.850
Sep97 2.135 2.150 2.105 2.113 _.023 2.380 1.731
Oct97 2.155 2.160 2.125 2.127 _.029 2.389 1.880
Nov97 2.280 2.285 2.250 2.257 _.024 2.485 1.945
Dec97 2.420 2.420 2.395 2.392 _.019 2.590 1.915
Jan98 2.455 2.460 2.430 2.432 _.019 2.635 2.075
Feb98 2.370 2.375 2.355 2.352 _.019 2.535 2.010
Mar98 2.265 2.265 2.240 2.242 _.019 2.400 1.930
Apr98 2.125 2.125 2.115 2.112 _.013 2.270 1.825
May98 2.080 2.085 2.070 2.067 _.013 2.232 1.830
Jun98 2.060 2.060 2.055 2.048 _.012 2.220 1.745
Jul98 2.060 2.060 2.040 2.039 _.011 2.205 1.852
Aug98 2.060 2.060 2.045 2.040 _.010 2.210 1.845
Sep98 2.045 2.045 2.040 2.038 _.009 2.220 1.850
Oct98 2.057 2.057 2.055 2.048 _.009 2.227 1.840
Nov98 2.169 2.169 2.165 2.161 _.008 2.310 1.980
Dec98 2.260 2.260 2.260 2.257 _.008 2.420 1.950
Jan99 2.293 2.293 2.290 2.287 _.006 2.425 2.085
Feb99 2.235 2.235 2.235 2.229 _.006 2.378 2.025
May99 2.033 2.033 2.033 2.032 _.006 2.270 1.960
Est Sales 17579
------------------------UNLEADED GAS--------------------------
NYM - 42,000 gal_cents per gal
CONTRACT
OPEN HIGH LOW SETTLE CHANGE HIGH LOW
Aug97 58.50 59.25 58.40 58.78 +.66 67.25 54.25
Sep97 58.00 58.50 57.85 58.16 +.66 63.40 54.35
Oct97 57.00 57.25 56.70 56.93 +.48 62.65 53.60
Nov97 56.20 56.55 56.10 56.25 +.34 60.30 53.50
Dec97 56.25 56.25 55.80 55.85 +.30 60.45 53.30
Jan98 56.00 56.00 56.00 56.00 +.30 58.70 53.30
Mar98 57.00 57.00 57.00 57.15 +.30 59.95 55.00
Est Sales 17450
**********************************************************************
Bloomberg Energy for day ending Tuesday July 1, 1997
Key Energy Spot Market Indicators
Crude Oils Price Chg.
WTI f.o.b. Cushing 20.18 0.38
Dated Brent 18.60 0.34
Dubai Fateh 17.77 0.33
Tapis 19.30 0.15
Minas 17.42 0.05
Natural Gas Price Chg.
Henry Hub 2.16 -0.01
N.Y. City Gate 2.42 0.00
Chicago City Gate 2.24 0.00 |
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| To: Kerm Yerman who wrote (3835) | 7/2/1997 8:19:00 AM | | From: Kerm Yerman | | | |
MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING TUESDAY 070197 PAGE 1
**********************************************************************
Wednesday, July 2, 1997 -- Wall Street powers ahead --
U.S. stocks followed bonds upward as investors doubted the Fed would boost interest rates, boosting the profit outlook for U.S. banks. Canadian markets were closed for the Canada Day holiday
In New York, the Dow Jones industrial average rose 49.54 points, or 0.65%, to 7722.33. Volume was 547.8 million shares, compared with Monday's volume of 565.4 million shares.
Stocks gained after a private manufacturing survey suggested the economy isn't growing fast enough to prompt the U.S. Federal Reserve -- which concludes a two-day policy meeting today -- to raise rates as an anti-inflation measure. Steady or falling interest rates and rising earnings have underpinned this year's 20% rally by the Dow.
"It can't get much better, but I think it can continue to be good for some time," said Lee Kopp, president of Kopp Investment Advisers.
J.P. Morgan & Co. (JPM/NYSE), the third-most heavily weighted stock in the Dow average, rose US$3 1/8 to US$107 1/2, rebounding from Monday's US$2 3/8 drop. The company's securities and investment management
businesses benefit from lower rates.
Banks helped boost the broad market as bond yields fell, brightening the outlook for their profit margins. BankAmerica Corp. (BAC/NYSE) rose US$113 1/816 to US$66 3/8, NationsBank Corp. (NB/NYSE) rose 7/8 to US$65 3/8, Citicorp (CCI/NYSE) jumped US$2 3/4 to US$1235 1/816 and Bank of New York Co. (BK/NYSE) rose US$1 1/4 to US$44 3/4.
Bond yields fell after the National Association of Purchasing Management said its factory index declined to 55.7% last month from 57.1% in May. Analysts expected 56.1%. A reading of 50% or more indicates expansion.
Coca-Cola Co. (KO/NYSE) rose US$1 1/8 to US$68 5/8. The company said it expects second-quarter worldwide case sales to rise 7% or 8%, led by growth in Latin America and Asia. Coke also said it will record a US$200-million gain on the sale of a Philippines bottling unit.
Boeing Co. (BA/NYSE), rose US$11 1/816 to US$54 1/8 after winning antitrust clearance from U.S. regulators for its US$15-billion purchase of McDonnell Douglas Corp. Also, Lehman Brothers named Boeing as one of its top 10 stock picks for the coming year.
Warnings of lower profit and apprehension about the traditional summer slowdown hurt software companies. The Nasdaq composite index, which is laden with computer-related companies, fell 3.82 points, or 0.26%, to 1438.25.
Intel Corp. (INTC/NASDAQ) fell US$2 3/4 to US$1391 1/816, Microsoft Corp. (MSFT/NASDAQ) lost US$17 1/816 to US$12415 1/816 and Oracle Systems Corp. (ORCL/NASDAQ) dropped US$113 1/816 to US$489 1/816.
Investors are looking ahead to second-quarter earnings, which will be reported in the middle of the month. Shares of automakers, drug companies and insurers have the most momentum, based on higher earnings estimates, said John Dorian, head of equity investments for Fiduciary Asset Management Co.
However, many investors are worried that U.S. stocks have risen too far in the rally this year, and say prices need to fall.
"We've had one of the most incredible rises in the market that any of us have seen, and a great deal of overvaluation has crept in," said Seth Glickenhaus, chief investment officer at Glickenhaus & Co. "Money is still pouring in and will continue to do so, but eventually there will be a comeuppance."
Investors are looking ahead to today's U.S. labor department report on the unemployment rate and new job creation in June. More signs of tightness in the labor market could prompt the central bank to raise interest rates later this year.
The major overseas markets closed mixed.
London: Britain's benchmark index soared to its biggest one-day point gain in five years in a rally that caught analysts and dealers by surprise. The FT-SE 100 closed at 4728.3, up 123.7 points, or 2.69%.
Frankfurt: Stocks ended at a new closing high as the export-dependent chemical sector stole the spotlight, drawing strength from the US$'s trading above 1.74 marks. The Dax 30 index closed at 3819.85, up 34.08 points, or 0.9%.
Tokyo: The market suffered heavy losses as a mixture of trepidation ahead of the Fed meeting and anxiety over the Nomura Securities Co. Ltd. scandal weighed on it. The Nikkei 225 average fell 429.44 points, or 2.08%, to 20,175.52.
Hong Kong: The market was closed as the former British colony marked its return to Chinese rule. It reopens tomorrow.
Sydney: Stocks ended barely changed from Monday's record close as strong underlying sentiment won over an early bout of profit-taking on the first day of the new financial year. The all ordinaries index closed 4.7 points, or 0.17%, lower, at 2721.2, below Monday's record of 2725.9.
**********************************************************************
Wednesday, July 2, 1997 -- Inside the Market --
Bull and bear views from investing Goliath
By PATRICK BLOOMFIELD The Financial Post
I wrote last weekend about the faint wisps of what might or might not herald a market storm. As the week began, I was intrigued to see a similar theme in one or two other people's market commentaries.
In part, the new quiescence reflects investor hesitation to take positions until the federal open market committee of the U.S. Federal Reserve has confirmed the expectation it will stand pat on interest rates. (It will tell the markets its decision early this afternoon.)
The quieter tone also speaks of the inherent risks of the narrow leadership that has been driving U.S. stock prices higher. Scared of hitting a stock-price air pocket, U.S. fund managers have been converging on the more heavily traded large caps in the hope that, should stock prices take a sickening plunge, they can put on their parachutes and bail out fast.
This unseemly rush for safety has, of course, been self-fulfilling, widening the performance gap between big and small. In the first quarter of the year, for instance, the top 100 stocks in the bellwether Standard & Poor's 500-stock composite index rose 3.6%, while the index itself rose only 2.6%.
Now what happens if all those fund managers who are invested in the biggies decide to bail out together?
That is, I hope, no worse than a hypothetical question. But it does reinforce the second caution I uttered last week: if you have to buy, then for heaven's sake steer clear of the crowd and pin your hopes on finding value stocks.
The case study in my weekend column was Irwin Michael's ABC Funds Inc. mutual funds group, still something of a David in the money management world.
For something completely different, I also joined a small group of Bay Streeters for a breakfast with three executives from a Goliath -- the investment arm of the U.S. company that just happens to have the largest market capitalization in the world and bears the familiar household name of General Electric Co.
GE, of course, does a lot of other things besides manufacturing major appliances. One of those things is financial services (GE Capital), which accounts for about 35% of the parent's profits.
Another GE financial services business is GE Investments, which has been managing money since the 1930s. GE Investments now looks after US$58 billion in client and pension fund assets, of which the company's own in-house pension fund accounts for some US$34 billion.
As Keith Smith, the chartered financial analyst who is GE Investments' vice-president of Canadian marketing, stressed at the breakfast, the style is fundamentally bottom-up.
In investment terms, that means this team of 22 portfolio managers and analysts pick the stocks around the globe they believe have the best potential for growth. They do not invest by picking markets or by trying to second-guess national economies, though these are obviously among the many factors in their decision making.
Essentially, the GE team aims to ferret out names in which the stock price to cash earnings multiple is lower than the percentage rate at which they expect those cash earnings to grow.
If this sounds a little arcane, let's use the example of the French based multinational hypermarket retailer Carrefour SA. Its stock price at March 31 was 14.8 times its cash earnings (earnings per share plus depreciation and any contributions to special reserves).
The growth rate that GE Investments expects for those cash earnings is 18, which means that this company's crucial price/cash flow to growth multiple would be 0.82, readily meeting the test.
It goes without saying that this kind of quantitative analysis is backed by extensive qualitative research. And GE Investments has a superb base from which to work.
Not only can the managers and analysts research their own extensive database, they can also talk to executives around the world in any of GE's 12 global businesses, varying from aircraft engines to NBC's network and cable television. This massive outfit employs 30,000 people in Asia and has 6,000 employees in India alone.
This kind of global access has helped the GE Investments team keep its composite returns some 4 1/2 percentage points higher than the return on the Morgan Stanley Capital International Europe, Australasia and Far East (EAFE) index during the five years to March 31-- and at a lower risk profile.
My three main breakfast hosts -- Smith,Judy Studer,senior vice president and portfolio manager, and Mike Solecki, vice-president and portfolio manager with GE's global equities team -- offered both explanations and question marks for Wall Street's current heights.
On the plus side have been demographic changes; the North American swing from a manufacturing to an information base (which has also changed the character of the major market indexes); a significant increase in productivity; and a benign low-inflation, low-interest-rate environment.
Solecki also expressed confidence in Europe as the site of the next wave of productivity, which is already generating investment opportunities.
On the minus side, there is little doubt inflation will rear its ugly head sometime. More to the point, even if you accept that all the above pluses make life in the marketplace different this time, current price-earnings valuations are by far the highest recorded for any period of 3% inflation since 1926.
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Tuesday July 1 2:04 PM EDT U.S. mergers set record in first half of 1997
NEW YORK, July 1 (Reuter) - U.S. merger and acquisition activity racked up a record $363 billion in the first half of 1997, but the second quarter pace slowed from year-ago levels, according to preliminary data released late Monday by a Newark, N.J., based company that tracks corporate deals.
Second quarter domestic merger volume slipped about four percent from year-ago levels to nearly $181.1 billion, according to Securities Data Co. However, the second quarter figures still mark the ninth straight quarter that domestic volume has topped $100 billion, the firm said.
Approximately 4,636 deals were announced in the first half of 1997, down more than 10 percent from the year-ago period. Some 74 announced deals topped $1 billion each.
The hotel and casino sector dominated the first half of the year, primarily due to two blockbuster bids. CUC International Inc (CUC) and HFS Inc (HFS) agreed to merge in a $11.3 billion transaction and Hilton Hotels Corp (HLT) launched an unsolicited $6.5 billion bid for rival ITT Corp (ITT).
The financial services industry won the second spot for most active sector, followed by the oil and natural gas industry
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Earnings reports could make July even hotter
And that's good news for sweltering investors, since there should be enough positive earnings surprises to keep even this toppy market boiling
Michael Brush Money Daily
As vacationers put the final touches on their July Fourth travel plans over the next several days, the finance departments at companies across the land will be finishing up important July projects of their own -- their quarterly earnings reports.
July is earnings month, and this one promises to be a hum dinger.
"Based on recent volatility in the last few days, I expect investors will be watching the earnings reporting season this July with an even keener eye," says Steve Cusimano, a portfolio manager with the N/I Family of Funds.
"I don't expect the typical summer doldrums. People are going to be paying very close attention to earnings because the market is, at minimum, fairly valued, and maybe overvalued," notes Cusimano, whose fund group uses earnings revision analysis as a cornerstone of its investing style. "Unless earnings come through, I expect that to turn around."
Will they come through? Or will earnings fall short and tank the markets?
You can relax during this Fourth of July holiday because the news will be good, say researchers at the firms that collect and analyze earnings estimates.
Chuck Hill, director of research at First Call, predicts earnings at S&P 500 companies should be up by 12% in the second quarter. Earnings for the quarter will be reported throughout July, but start in earnest the week of the 14th. The busiest weeks will be the two that follow. For a comprehensive rundown on when specific companies are scheduled to report, see the list provided by Zacks Investment Research below.
That 12% gain (compared to the same quarter the year before) may look weak, in contrast to the 15.1% increase for the first quarter of 1997. But don't be fooled. The 15.1% first quarter gain was exceptionally large because it was compared to an unusually weak first quarter of 1996. You'll remember that was the period when gigantic snow storms virtually shut down much of the country, and GM workers went on strike. Events like those slowed first quarter 1996 production, making the first quarter of 1977 look deceptively good by comparison.
More importantly, the 12% expected gain is over twice the average earnings growth of 5.7% for S&P 500 companies over the past 20 years, points out Hill. (Last year, earnings growth was at 8.4% and the year before it was 18.8%.)
Another positive sign is that pronouncements so far this quarter are slightly better than they were in the first quarter. To date, 58% of those early announcements have been negative, compared to 62% in the first quarter.
What sectors stand out as ones that will do the best? As usual, technology tops the list. "I feel quite confident that the technology group will end up with twice as many positive surprises as negative surprises, and it will beat the pretty substantial growth forecasts that area already priced in the market," says Ed Keon, an analyst at I/B/E/S International. Another group he says will do well is steel stocks, although he reckons enthusiasm may be dimmed by the prospects of weaker steel prices. The trucking group will also stand out.
One sleeper may be the investment group. Analysts have had modest expectations for these stocks, despite the heavy trading volume in June and the recent pickup in underwriting activity. "That group is not expected to do well, but I feel pretty confident it will beat expectations," says Keon. The paper and forest products group should also produce some big surprises for analysts, who are not expecting much from them this quarter.
Over at First Call, Hill agrees that the steel sector will be one of the best performers. He also expects technology, trucking oil drillers, oil field equipment makers, and consumer service companies to stand out.
What about the negative side? N/I Family of Funds' Cusimano is cautious about the disk drive sector. "We still have some exposure but in general we are being more selective," says Cusimano. "It has recently been a very volatile group, and I think that is a precursor to what is to come. The ones that do well will be those that supply the high end of the market."
Hill expects the weakest earnings in precious metals and gold stocks, paper and forest products companies, oil producers, and long distance phone companies. Airlines will probably also show some weakness. Unless you own stock in them, however, don't be too concerned. They will still be around to get you back from your Fourth of July vacation.
**********************************************************************
END
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| To: Kerm Yerman who wrote (3848) | 7/2/1997 9:04:00 AM | | From: Kerm Yerman | | | |
MEDIA / STOCK PLAY STILL HOT IN OILPATCH
Wednesday, July 2, 1997
Takeover fever is a long way from being exhausted, analysts say
By SANDRA RUBIN -- The Financial Post
Canada's oilpatch may be set to deliver some investment gushers.
Despite the prospect of weak second-quarter earnings brought on by lower oil and gas prices, analysts say the stock plays are far from over.
Takeovers are expected to fuel the action as sagging multiples and trades at a discount to net asset value have energy executives poring over one another's annual reports.
"We've got a chance here for major, major takeover activity," said Josef Schachter, manager of the Spectrum United Canadian Resource Fund in Calgary. "You've got companies out there trading at three and four times cash flow. In 1993, when investors loved this sector, the stocks were trading at nine and 10 times cash flow."
The bottom line is, it's cheaper for big companies to go shopping than go drilling.
"You're looking at companies trading at a discount to the net asset values, companies that are still growing, with good asset values -- and to me, that's always the time to be a shopper."
On analysts' lists of potential takeover targets are Numac Energy Corp., Elan Energy Inc., Petromet Resources Ltd., Jordan Petroleum Ltd., Rigel Energy Corp., Summit Resources Ltd., Paragon Petroleum Ltd., Oxbow Exploration Inc., Olympia Energy Inc. and Maxx Petroleum Ltd.
They're considered some of the weaker cousins in a sector that's been sizzling in recent months.
With the price of the underlying commodities tailing off, investor interest is cooling as well. And that could make it tougher for
juniors and less-profitable firms to raise the capital needed for exploration and production. That will make them more vulnerable to being pushed into the arms of a suitor, perhaps by their own shareholders.
And there are plenty of would-be wooers waiting in the wings. Crestar Energy Inc., Alberta Energy Co. Ltd., Talisman Energy Inc. and PanCanadian Petroleum Ltd. are all sitting on big asset bases and handsome cash-flows.
But at least one big-name company has removed itself from the list.
Greg Noval, president of Canadian 88 Energy Corp. told shareholders earlier this week it's no longer seeking acquisitions after the collapse of its hostile takeover bid for Morrison Petroleums Ltd.
He said the company will focus on "growth through the drill bit." But it's clearly the exception.
Many energy companies are on the prowl exactly because growth through the drill bit has suddenly become a lot more expensive -- starting with the cost of hiring a rig.
"Rigs are in high demand because there's so much money chasing them," said one analyst. "Last year, there was a ton of equity raised in the patch, so cash flows are enormous. And that's what the oil business does. When they get more money they spend it."
With the rig fleet working now at 95% utilization, rig owners can charge more for service.
"And that same money's chasing land," the analyst said. "So companies who are dependent on the drill bit, in terms of acquiring land and then going out and drilling it up, are facing a rising cost structure. And that's going to force them to look elsewhere for cheaper barrels. They'll look for companies that are undervalued."
Further nudging them out into the mergers and acquisitions market is pressure to meet their production targets, said Peter Linder, an analyst with CIBC Wood Gundy.
"Some producers, in order to attract investors, tend to be optimistic on their future production numbers and Mother Nature has worked against them this year," Linder said.
"We've had a fairly long and difficult spring breakup during which you can't drill in most parts of Western Canada. So some companies are going to have trouble meeting their production numbers for this year. They're thinking: if you can't drill for it, buy it."
Most analysts expect a rush of action in the next few months, even though the immediate outlook for oil and gas prices is not great.
"We think the oil and gas index is going to go down in the next quarter primarily because oil prices are coming off," said Martin Molyneaux of FirstEnergy Capital Corp.
"The market has not reflected US$19 [a barrel] oil prices versus May 1 when everybody thought US$21 or US$22 was going to be the norm for 1997. That hasn't been reflected in the stock prices. The overall market keeps taking the oils up."
Molyneaux said there could be some good bargains around once the prices start to drop, a little later in the summer or into fall. And he cautioned investors that betting on takeovers can be a mug's game because of the downside if you back the wrong horse.
"Quite simply, if they don't get taken over, you don't want to own a number of these companies on a going-concern basis."
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| To: Kerm Yerman who wrote (3848) | 7/2/1997 9:17:00 AM | | From: Kerm Yerman | | | |
MEDIA / GULF CANADA RESOURCES GUNSLINGER KICKS UP THE DUST
J.P. Bryan - oil firm boss, Wild West buff and outsider by nature - is in no mood to mend fences.
Wednesday, July 2, 1997
By Barrie McKenna -- The Globe and Mail
THERE are many sides to Gulf Canada Resources Ltd. boss J. P. Bryan.
There's the swaggering Texas wheeler-dealer who strode into Calgary, bullied his way into Alberta's oil patch and then skulked off to Denver in the dead of night with his band of buyout gunslingers.
Then there's James Perry Bryan, a 57-year-old lawyer, New York-trained investment banker and aficionado of native art and Texan history.
Somewhere between the two is an outspoken, slightly awkward man who likes to cast himself as an outsider wherever he goes.
There are signs of all three Bryans throughout Gulf Canada's new American home base, high atop the Norwest Center in downtown Denver.
Mr. Bryan moved here in April with a team of 35 people, including his top vice-presidents -- leaving 800 lower-level staff back at the company's official head office in Calgary -- ostensibly so that he and his executives would have better flight connections to Wall Street and Houston.
In a wide-ranging interview, Mr. Bryan talked openly about his failed bid to buy heavy oil producer CS Resources Ltd.; his move from Calgary; Alberta's oil patch; the reorganization of his$900-million-a-year company; and his Texas home. And he had unflattering things to say about just about all of them.
On this day, at least, he is in a decidedly grumpy mood, after a 90-minute commute and an early morning private teleconference at his home in Colorado Springs. And he's in no mood to mend fences in Calgary, where Gulf Canada's abrupt exit left a lot of people, including some of his 800 employees, feeling jilted and confused. Unbowed, Mr. Bryan offered no more than clues about the real motives for the move and he sounded as though he feels more than a little rejected by Calgary himself.
"It was clear to me that if Gulf wanted to be an effective international oil and gas company, there were better places to be than Calgary," he said, noting Denver's outdoor lifestyle and convenient air links to major U.S. cities. "I'm not saying you can't build an international oil and gas business from Calgary. I'm just saying if you want to do that, it's going to be a lot harder to do."
As the company grows, it will have better luck attracting industry talent in Denver than in Calgary, he said.
"We're not talking about having 1,000 people here," he explained. "We want to have a few true talented specialists. And I want them located here. To attract the kind of people we want, Denver is a real calling card."
Mr. Bryan, who still spends about a week a month in Calgary, said Denver is a more dynamic city that isn't as incestuous. "Everything is a little interbred [in Calgary]. In the oil business, everybody kind of knows everyone else's business."
In Denver, he has turned the 50th floor of the building into a virtual Wild West museum filled with art and memorabilia, including antique guns, saddles, native pottery and bronzed buffaloes. The walls are covered with oil paintings depicting scenes of cowboys and Indians.
The nerve centre of the operation is down a spiral staircase on the 49th floor. Here, a work crew is putting the finishing touches on a no-walls office that spans the entire bright, pine-floored work area. With the Rocky Mountains behind him, Mr. Bryan will have an unobstructed view of his chief financial officer, legal counsel, his beloved mergers-and-acquisitions team and the rest of his staff from behind his trading-floor desk.
Mr. Bryan said the new open-concept office is the product of nearly a decade of refinement, first at his former company, Torch Energy Advisors Inc. in Houston and later at Gulf Canada in Calgary. He said he's been longing to do it right, ever since he worked in a stable of investment bankers back in New York.
"Frankly, I think it's the only way to do business," Mr. Bryan said from his sparsely furnished temporary office on the 50th floor. "I can't stand the fact that I'm in my office now. I like being out where I can see people. People can walk up and feel like they have free access to you. There's no door they gotta knock on."
For Mr. Bryan, the open office is like a hall of democracy where grievances are aired, views exchanged, problems solved and everyone is equal.
By his own admission, Mr. Bryan was never fully accepted into Calgary's clubby oil and gas industry. He feels that an anti-Gulf Canada mentality has set in that has caused some of his prey to make questionable business decisions. He said PanCanadian Petroleum Ltd.'s outbidding of Gulf Canada to buy CS Resources in late June was a prime example. Mr. Bryan's spin on the failed takeover is not that he was outbid, but that CS Resources wanted to find a white knight at all costs, just to escape the clutches of Gulf Canada.
"I think Dennis Sharpe [chairman of CS Resources] is pleased to tell his friends that he didn't get bought by Gulf . . . where in fact, I think he shot himself in the foot."
Mr. Bryan clearly does not think that getting an extra $1.75 a share for the company's shareholders is the main reason that CS Resources and its board spurned Gulf Canada. He said the deal proves that Alberta's industry is bent on shutting out Gulf Canada and is willing to kill a logical marriage simply out of pride.
He also suggested that CS Resources' top executives, including president Dee Parkinson-Marcoux, missed a golden opportunity to run their own show at Gulf Canada and to "make a lot of money" in a planned spinoff of Gulf Canada and CS Resources assets.
"I think [Alberta] has hurt itself in the past because there was a certain clubbiness there that probably stifled combinations of companies that would have taken place in a less fraternal environment," he said.
One oil industry insider, who spoke on the condition that he not be named, suggested that Mr. Bryan's version of events is part of a well-crafted strategy to create a media personality in an industry generally devoid of "characters" and, indirectly, to sell stock. The source said Mr. Bryan is dreaming if he thinks the industry would make deals simply out of spite.
"He has a story to tell and he's a very good storyteller," he said. ". . . Attracting investment capital is part of a CEO's job. Different members of the oil patch take different tactics."
The scuttlebutt around Calgary is that Mr. Bryan moved the company to Denver for personal reasons totally unrelated to Gulf Canada's business prospects. David Bronconnier, a Calgary alderman and member of the Calgary Economic Development Authority, said it hurts when Mr. Bryan suggests the city is a second-rate place to run an oil and gas company and to raise capital.
There's no doubt that Mr. Bryan likes to stir things up. The company's annual report is designed to resemble the files of a secret service team headed by "special agent James Brash." The sharp-tongued Mr. Bryan, who once suggested that Quebec separatists should go back to France in a boat, didn't just pick on Calgary in the interview. He also had some things to say about a lot of other subjects in a manner that some might view as tactless:
On Canadian business people: "I don't think Canadians have the same sense of urgency or aggressiveness that their peers do in North America."
On Houston: "I have no interest in going back to Houston even though all my family is there."
On the technological prowess of the Canadian oil and gas industry: "Canada is at least 10 years behind the States."
On personal relationships and teamwork: "Too much of it becomes bureaucracy -- a lot of work and no action."
On visiting people in the field: "Other than getting a sense of the people, my time in the field is probably not the most productive way to help Gulf shareholders."
Mr. Bryan, whose company has spread its wings to the North Sea and Indonesia, sounds like he's running out of patience with the tight knit Canadian oil patch, where he has been buying aggressively since 1994. And he warned that there will be no more Mr. Nice Guy. Next time, he said he'll be more inclined to quietly buy up stock and then do a classic hostile takeover.
"I frankly don't believe in friendly transactions unless they are truly done between friends," Mr. Bryan said. "You give up a lot of advantage in trying to do a friendly deal. What happens more often than not is you end up in a hostile situation anyway." |
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| To: Kerm Yerman who wrote (3848) | 7/2/1997 12:41:00 PM | | From: Kerm Yerman | | | |
BUY - HOLD - SELL / MORRISON MIDDLEFIELD RESOURCES & TARRAGON OIL & GAS
Date: Wednesday 02 Jul 1997 09:43:55 -0600
Gordon Market Opening Notes: June 30, 1997
Morrison Middlefield Resources -- Buy
Scupholm Exploratory Well to be Production Tested this Week
FACTS:
- Morrison Middlefield has completed drilling an exploratory well at Scupholm
- The well is located onshore the U.K. on PEDL 005, just north of the
Saltfleetby discovery that the company made last year
- The well has been drilled to its targeted depth, is being logged, and will be production-tested this week
- Morrison Middlefield has a 100% interest in the well
- The well is targetting natural gas
IMPACT:
- This well is one of 10 exploratory wells that the company plans to drill onshore the U.K. this year. A total 14 development wells are also planned
OPINION:
- We recommend a buy on Morrison Middlefield
- Our 12 month stock price target is $20.00
Tarragon Oil and Gas Limited -- BUY
Tarragon to Acquire the Assets of NuGas Limited
FACTS:
- Under a proposed plan of arrangement Tarragon will pay approximately $75 million ($3.60 cash per NuGas share and the assumption of $18.4 million debt) for all of the producing properties of NuGas located in Southern Alberta and Saskatchewan
- This transaction adds 106 bcf of proven gas reserves and 25 mmcf/d of new gas production to Tarragon . This incremental gas production is expected to remain stable within our forecasting time horizon
- Also included in the transaction is a gas processing plant with third party processing income in excess of $1 million per year and a 2.6% gross overriding royalty on Tarragon's Bolney heavy oil property
- Assuming a value for the non oil and gas assets of $15 milli9n, the cost per boe is approximately $5.66
IMPACT:
- This transaction increases Tarragon's capex budget to $275 million increasing our forecasted year-end debt to $370 million -- 1.9x our 1998 forecast cash flow
- The transaction adds approximately $0.10 cash flow per share in 1997 and $0.20 in 1998. Based on our new WTI oil price forecast of $20 in 1997 and $21 in 1998, we are estimating fully diluted CFPS of$2.80 in 1997 and $3.75 in 1998
OPINION:
- We maintain our BUY on Tarragon and are increasing our 12 month price from $22.00 to $22.50 |
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| To: Kerm Yerman who wrote (3848) | 7/2/1997 1:23:00 PM | | From: Kerm Yerman | | | |
ACQUISITIONS - MERGERS / PETROPOWER ENERGY INC. COMPLETES TAKEOVER
ASE SYMBOL: PPW
JULY 2, 1997
PetroPower Completes Take-Over and Votes to Consolidate Shares and
Change its Name
CALGARY, ALBERTA--PetroPower Energy Inc. ("PetroPower") announces
that, in accordance with its previously announced offer to
purchase all the issued and outstanding common shares, warrants
and options of Justinian Explorations Ltd. ("Justinian"),
PetroPower has received tenders representing 100 percent of the
total outstanding common shares, warrants and options of
Justinian. PetroPower has advised the depositary to take up and
pay for all such tendered securities. Upon such payment,
Justinian will be a wholly owned subsidiary of PetroPower.
At today's annual and special meeting of shareholders of
PetroPower the shareholders resolved to consolidate the
outstanding common shares of PetroPower on the basis of one new
common share for every seven old common shares and to change the
name of PetroPower to "Justinian Explorations Ltd.".
PetroPower is in the process of filing final documentation
respecting the foregoing transactions with The Alberta Stock
Exchange and anticipates that the consolidated common shares
should start trading on such exchange in the near future under the
name Justinian Explorations Ltd. |
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| To: Kerm Yerman who wrote (3848) | 7/2/1997 1:27:00 PM | | From: Kerm Yerman | | | |
FIELD ACTIVITIES - TOP 20 LISTED / INTERNATIONAL PETROLEUM CORP
REPORTS 2ND TEST COMPLETED ON BUNGA SEROJA-1 WELL
TSE SYMBOL: IRP
NASDAQ SYMBOL: IRPPF
JULY 2, 1997
International Petroleum Corp.: Second Test on Bunga Seroja-1 Well
Successfully Completed
VANCOUVER, BRITISH COLUMBIA--International Petroleum Corporation
("IPC") is pleased to announce that the Bunga Seroja-1 well
represents the 12th successful well drilled on Block PM-3 giving
IPC a 100 percent success rate in Malaysia.
The second test on this well flowed at an average rate of 14.8
million standard cubic feet of gas per day with 125 barrels of
condensate per day from the interval between 5,640 feet and 5,652
feet. This brings the total flow rate from the two tests
conducted to 64.80 million standard cubic feet of gas and 1,325
barrels of condensate per day.
Bunga Seroja-1 is the latest exploration well on Block PM-3 and
was drilled to evaluate the gas channel sands (known as the "H
Group") which until now had not been explored. Bunga Seroja-1 was
drilled to a total depth of 6,988 feet. The carbon dioxide level
was less the 1 percent which means that the gas is extremely high
quality. Please see attached map.
These test results give an excellent indication that the proven
gas reserves of Block PM-3 could significantly increase. In
addition, Bunga Seroja-1 encountered an oil bearing sand (within
what is known as the "I Group") which contains very similar oil to
that of the Block"s proven reservoirs. The potential of this new
unit is currently under review but has not yet been tested because
of time constraints due to Phase I commercial development of Block
PM-3.
There are numerous other similar prospects across the Block and as
a result of this latest success, several exploration and appraisal
wells are planned for 1998. The overall oil and gas potential of
the Block could be substantially upgraded from its current
commercial standing.
The drill rig is now being moved over to the Bunga Kekwa wellhead
jacket in order to tie-back and complete 3 of the existing wells
as part of Phase 1 development of Block PM-3. Topsides for the
Bunga Kekwa jacket as well as the Floating Production and Storage
Vessel are now ready for installation and commissioning.
Commercial oil production is expected to commence shortly at an
initial rate of approximately 18,000 barrels of oil per day.
IPC operates Block PM-3 with a 26.44 percent working interest.
Petronas Carigali SND BHD has a 46.06 percent interest, Sands
Petroleum AB has a 15 percent interest and PetroVietnam
Exploration and Production has a 12.5 percent interest.
Note: Location map available from the Company |
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| To: Kerm Yerman who wrote (3848) | 7/2/1997 1:34:00 PM | | From: Kerm Yerman | | | |
FINANCING - TOP 20 LISTED / CARMANAH RESOURCES LTD. FILES PRELIMINARY
PROSPECTUS
TSE SYMBOL: CKM
JULY 2, 1997
CALGARY, ALBERTA--
Carmanah Resources Ltd. announced today that it intends to file a
preliminary prospectus for a public offering of 8,000,000 to
9,000,000 common shares and has engaged HSBC James Capel Canada
Inc. to act as lead underwriter and to form a syndicate of
Canadian investment dealers to assist in the marketing and
distribution of the offering. The exact number of common shares
and the price per common share will be established following
marketing of the offering. The proceeds from the offering will be
used primarily to finance Carmanah's interest in the
recently-announced Onado joint venture in Venezuela with the
balance for general corporate purposes.
This information shall not represent an offer to sell securities
or a solicitation of an offer to buy securities in any
jurisdiction. The common shares offered will not be and have not
been registered for sale under the United States Securities Act of
1933, as amended, and may not be offered, or sold, or delivered,
directly or indirectly, in the United States or to a U. S. Person,
absent registration or an applicable exemption therefrom.
The common shares of Carmanah are listed on The Toronto Stock
Exchange and trade under the symbol "CKM". |
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| To: Kerm Yerman who wrote (3851) | 7/2/1997 1:39:00 PM | | From: Kerm Yerman | | | |
FIELD ACTIVITY / RICHLAND PETROLEUM CORP ANNOUNCES JOINT VENTURE WITH
PANCANADIAN PETROLEUM
TSE;ASE SYMBOL: RLP.A
JULY 2, 1997
Richland Announces Joint Venture With PanCanadian on 42,000 Acres
CALGARY, ALBERTA--Richland Petroleum Corporation has entered into
a joint venture agreement with PanCanadian Petroleum Limited in
Richland's south-east Saskatchewan core area. Richland will be
evaluating Mississippian, Devonian and Ordovician targets on the
joint venture lands. The Company will have rolling options to
continue to drill to earn an interest in the joint venture lands
which encompass over 42,000 gross acres. This joint venture
complements Richland's current inventory of over 90,000 acres of
undeveloped land in south-east Saskatchewan. Richland is
committed to drill at least six (6) exploratory test wells on the
joint venture lands and shoot (70) seventy kilometres of seismic
data.
Richland Petroleum Corporation is a public company involved in the
exploration and development of crude oil and natural gas in
Western Canada. Its shares trade on the Toronto and Alberta Stock
Exchanges under the symbol RLP-A. |
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