This Week in Oil and Gas by Gary Edmondson (MF Wildcat) (NOTE: You may have to maximize your browser's window or scroll to the right to view this page.) Houston, TX (Feb 1, 1997) - Oil and gas stock performances were quite boring during the week. This was despite a number of new year end reports containing substantial increases in earnings, cash flow, reserves and capital spending plans for the current year. Despite the exciting news, the stocks did not respond. The Wildcat Twenty E&P stocks gained a mere .19% for the week. In comparison, the Dow Jones integrated oils were up 1.20% on the week; secondary oils were down .54%. The high flying drillers rebounded 2.71% from last week's big drop and oil service companies gained 1.58%. Among individual stocks, Belwether Exploration <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BELW)") else Response.Write("(Nasdaq: BELW)") end if %> continues to outperform the other 19 stocks and still on no news. The stock gained another 2.50% and is up now over 30% year to date - not bad for a one month performance. Forcenergy <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FGAS)") else Response.Write("(Nasdaq: FGAS)") end if %> gained 10.59% during the week in a rebound from its recent drop, but still remains down 10% for the year. Paine Webber issued a mid-week "buy" on FGAS. Swift Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SFY)") else Response.Write("(NYSE: SFY)") end if %> gained 12.74% during the week and is up 22.18% already this year. The company has really become a favorite of analysts. Nine out of ten opinions that I am aware of on this company rate it a "buy", and seven of those nine rate it a "strong buy". Inexplicably down during the week 6.83% on no news was Chesapeake Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHK)") else Response.Write("(NYSE: CHK)") end if %>. The company is down over 14% for the year, despite excellent year-end results and is at one of its most attractive levels in quite some time. The company is now in its third message folder here in the Motley Fool and is the second most "discussed" oil and gas stock here next to Arakis Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AKSEF)") else Response.Write("(Nasdaq: AKSEF)") end if %>. Chesapeake is followed by 15 analysts, which also makes it one of the most widely followed independent exploration and production companies. Among those 15 analysts, 7 rate the company a "strong buy", 6 are "buys" and 2 are "holds". UPDATE ON COMMODITY PRICES Natural gas trended lower during the week and oil remained stable as it fluctuated day to day in a very narrow trading range. The March crude oil contract which had closed last Friday at $24.05 per barrel was up as high as $24.87 at its Thursday close, but dropped on Friday to close at $24.15 per barrel. Natural gas prices dropped steadily during the week despite cold weather across much of the country. The mid-week AGA report showed a normal 150 BCF drawdown in storage. But midweek the February contract closed out and trading transitioned to the much lower priced March contract. Despite dropping prices, there is still substantial "backwardization" in natural gas futures. The Friday closing price of $2.438 reflected a substantial drop from the prior week price of $2.824 and the $2.658 price of a year ago. OTHER NEWS This week's news was highlighted by outstanding year end reports from three of the top independent exploration and production companies. During the next several weeks, I expect to see similar reports from many additional companies who are benefitting both from increased production volumes and the favorable price environment of 1996 that is continuing into 1997. Anadarko Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: APC)") else Response.Write("(NYSE: APC)") end if %> reported cash flow of $5.53 per share for 1996 and $1.87 for the fourth quarter. Earnings for the year were $1.73 versus $.36 for 1995. Anadarko also increased its reserves from 526.3 MMBOE to 601.3 MMBOE. With respect to Anadarko's 1997 spending plans, Robert J. Allson, Jr. the company's CEO stated, "These are exciting times for Anadarko. Development of crude oil discoveries is underway in Algeria, Alaska and the Gulf of Mexico. Aggressive development drilling in our mid-continent fields is expected to increase production by 17 percent in 1997. We plan to double our production volumes from 1996 levels by the turn of the century." Apache Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: APA)") else Response.Write("(NYSE: APA)") end if %> reported year end results of $5.55 in cash flow and fourth quarter cash flow of $1.80. Earnings for the year were $1.42; 1995 was $.28. Apache increased reserves to 506.2 MMBOE from 420.6 MMBOE at the end of 1995. Apache is considered undervalued by many analysts; if you look at these year end reports you will notice many similarities in financial performance and reserves growth that make it difficult to explain the large differences in the current stock price levels of 38 3/8 for Apache and 64 3/4 for Anadarko. Santa Fe Energy Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SFR)") else Response.Write("(NYSE: SFR)") end if %> reported earnings and cash flow for the year. After adjusting for special items related to its recently completed public offering of Monterey Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRC)") else Response.Write("(NYSE: MRC)") end if %>, SFR reported year end cash flow of $2.99 versus 1995 cash flow of $1.97. Earnings were $.60 versus $.10 a year ago. Santa Fe also increased its reserves base to 342.7 MMBOE from the prior year's 320.1 MMBOE. A company which I think is highly overlooked and very attractive for consideration by anyone wanting a very conservative oil and gas investment is Louis Dreyfus Natural Gas <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LD)") else Response.Write("(NYSE: LD)") end if %>. Based on my recent check of Zacks ratings, 7 analysts have 3 "strong buys", 3 "buys" and 1 "hold" on the company. LD reported that it had replaced 250% of its 1996 production of 75BCFE during 1996. Year end reserves increased to 990 BCFE from 876 BCFE a year ago. Union Texas Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:UTH)") else Response.Write("(NYSE:UTH)") end if %> is another outstanding, "conservative" stock to consider. The company's 20% held Iona field went into production this week in the North Sea with initial production flows at 4,400 barrels of day. Paine Webber initiated coverage of Forcenergy Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq:FGAS)") else Response.Write("(Nasdaq:FGAS)") end if %> with a "buy" rating. The company announced Tuesday that it plans to spend approximately $195 million on capital projects during 1997. The budget calls for approximately $160 million to be spent on 28 exploitation/exploration wells and 8 development wells on the company's Gulf of Mexico producing properties, $10 million is planned for Gulf Coast onshore drilling activities, $15 million on drilling and workovers on the recently acquired producing properties in the Cook Inlet area of Alaska, and the balance on international drilling ventures primarily offshore Gabon and Australia. In a continuation of recent bullish press releases, Triton Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OIL)") else Response.Write("(NYSE: OIL)") end if %> announced that it has approved a 1997 capital program of $310 million, most of which has been allocated to development of significant oil and gas reserves in the Gulf of Thailand and Colombia. Up to $150 million of Triton's capital program is allocated for the development of the Cusiana and Cupiagua fields in Colombia, compared with $146 million in 1996. It is expected that oil production from the two fields will reach at least 500,000 barrels per day by year-end 1997, nearly tripling the present rate. Approximately $95 million has been earmarked for initial development of the Cakerawala Field -- the first of four natural-gas discoveries that the company has made in partnership with Petronas on Block A-18 in the Malaysia-Thailand Joint Development Area (JDA) in the Gulf of Thailand -- and for exploration and further appraisal of the block. Plans for 1997 include the drilling of an exploratory well on the Senja prospect in the northwest corner of Block A-18 beginning late in the first quarter. The majority of the remaining $65 million is allocated to worldwide exploration activities including drilling wells in China, Colombia, Ecuador, Guatemala and other locations. Be sure to learn more about Triton by visiting their web site at www.tritonenergy.com . TransTexas Gas <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TTXG)") else Response.Write("(Nasdaq: TTXG)") end if %> continues to provide updates on its recent exploration success outside its core operating area in South Texas. The company reported on Monday that it had completed drilling of its second natural gas well in Wayne County, Mississippi. Drilling of the Fairchild No. 1 was completed on January 17, with logs indicating net pay of 27 feet in the productive Norphlet formation and 74 feet in the Cotton Valley formation. The discovery well in this new field, the Foote Estate No. 1 flow tested from the Norphlet formation at a rate of 12.4 million cubic feet of natural gas and 440 barrels of condensate per day and a 60 foot interval in the Cotton Valley was tested at approximately 1 million cubic feet of natural gas per day.

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