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. 9, 1997) -- Driven by fears of a steady deterioration in commodity prices, oil and gas stocks ended the week with a big selloff and substantial losses. The Friday downturn was an escalation in the downtrend that had started several weeks earlier. I happened to hear one CNBC commentator late afternoon on Friday say that the independent oil and gas companies have dropped 16% since January 10. The Wildcat Twenty stocks illustrated the sector wide selloff with a drop of 5.38% on the week and a transition into the red for the year with a 4.16% loss. Among Dow Jones industry groups last week, the major integrated companies were down 1.56%, secondary oils were down 4.52%, the equipment and service sector was down 5.78%, and the drillers were down 9.96%. There has been no specific company news that has reflected poorly on any of these companies. All company news items have been positive, especially 4th quarter performance. But the commodity price weakness for both oil and gas is overshadowing all the positive trends that have been in place. Rather than single out any company for specific comments, I will post the entire weekly and year to date performance of these twenty companies that I am actively watching. Company Symbol 1/1/97 This Week Week Year Price Price Change Change British Petroleum BP 141 3/8 142 1/4 0.44% 0.62% Texaco TX 98 1/8 102 -3.66% 3.95% Santa Fe SFR 13 7/8 14 3/8 -3.36% 3.60% Apache Corp APA 35 1/8 35 1/8 -8.47% 0.00% Anadarko Pet APC 64 3/4 59 7/8 -7.53% -7.53% UnionTexas UTH 22 3/8 20 1/2 -3.53% -8.38% Triton Energy OIL 48 1/2 45 7/8 -7.79% -5.41% Arakis Energy AKSEF 3 5/16 3 1/4 2.97% -1.89% Ranger Oil RGO 9 7/8 8 3/4 -6.67% -11.39% Rennaisance RES.T 46.65 43.70 -6.82% -6.32% $Can Forcenergy FGAS 36 1/4 32 3/8 -0.77% -10.69% Chesapeake Energy CHK 27 13/16 23 -3.66% -17.30% Belwether Expl BELW 7 7/8 9 1/2 -7.32% 20.63% Benton O&G BNTN 22 5/8 18 -7.69% -20.44% Swift Energy SFY 29 7/8 30 1/8 -17.47% 0.84% TransTexas Gas TTXG 14 1/2 16 1/2 -2.94% 13.79% Louis Dreyfus NG LD 17 1/8 17 3/8 2.21% 1.46% Comstock Rescs CRK 13 10 3/8 -18.63% -20.19% Saba Pet SAB 25 1/4 21 3/4 -1.14% -13.86% Vintage Pet VPI 34 1/2 32 7/8 -1.50% -4.71% Yearly Avg -5.38% -4.16% UPDATE ON COMMODITY PRICES Crude oil prices were the big culprit as ample supplies of crude oil continue downward pressure on world prices. The mild winter in the northeastern United States is continuing to cause concerns that heating oil levels will remain high and dampen demand for crude oil. Higher production levels of crude oil by OPEC countries including the supplies from Iraq are effecting the price as crude dropped $1.92 for the week to close at $22.23. This also happens to be $4.49 lower than the high last month, but well above the year ago level of $17.78. Meanwhile, natural gas prices dropped on Friday to $2.182, their lowest level since November and a full 35% under month ago levels. There are continuing expectations that there will be ample supplies of gas to meet the demand during the rest of the winter. Despite a record cold winter in parts of the upper midwest, the big consuming areas of the northeast are experiencing a mild winter compared to the brutal cold of a year ago. In the weekly AGA report, withdraws of 161 bcf occurred --- a very high level --- but well below a year ago. Last year, during the comparable week, a major cold spell was occurring. Storage dropped that week 213 bcf to swing the total % to where we now show 3 1/2% more than we did a year ago. This 3 1/2% equates to a mere 45 bcf. The real storage "surplus" of gas is still in the Eastern consuming region where 158 bcf more is available than a year ago. This is one to two weeks' more supply than a year ago. This eastern inventory has been slowing "gaining" for weeks as compared to a year ago and is one of the primary reasons that supply concerns have eased for the winter. Storage in the rest of the country is well under year ago levels --- 511 bcf vs 624. Despite the feeling that the fears of winter shortages are over, a cold snap in late winter or early spring could put a big upward pressure on spot prices again. Producers will still do well with prices sustained at or over $2. OTHER NEWS Apache Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: APA)") else Response.Write("(NYSE: APA)") end if %> announced its participation in one of Oklahoma's largest natural gas producers. The Amoco-operated Maria No. 1, in which Apache owns a 40 percent working interest, is flowing into pipeline at the rate of 12 million cubic feet of gas per day with 3,000 pounds of flowing casing pressure. Producing from a new fault block in the West Cement field, the Maria No. 1 penetrated 267 feet of net pay in three formations and currently is producing from 110 feet of net pay in the lower Boatwright sands of the Springer formation. Perforations are between 14,490 feet and 14,690 feet. Comstock Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CRK)") else Response.Write("(NYSE: CRK)") end if %> announced the results of an infill development well drilled in the Double A Wells field in Polk County, Texas. Comstock's Alabama- Coushatta No. 8 well was recently drilled to a total depth of 14,651 feet and completed in the Upper Woodbine formation. The well is currently producing 10,140 mcf per day and 960 barrels of condensate per day. Triton Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OIL)") else Response.Write("(NYSE: OIL)") end if %> reported 1996 earnings after preferred dividends of $21.6 million, or $.59 per share, compared with $1.9 million, or $.05 per share, for 1995. Total revenues for 1996 rose 25 percent to $134 million from 1995 revenues of $107.5 million. Triton and its partners achieved production from the Cusiana and Cupiagua fields that averaged 174,000 barrels of oil per day during the year, a 35 percent increase over the prior year. Triton's average oil sales price in 1996 increased 19 percent to $19.60 per barrel versus $16.44 per barrel for 1995. Swift Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SFY)") else Response.Write("(NYSE: SFY)") end if %> announced year-end 1996 proved reserves of natural gas, crude oil, condensate and natural gas liquids rose 47 percent to a record 259 bcfe. Proved reserves additions during the year totaled approximately 120 bcfe, giving Swift a production replacement ratio of 618 percent based on 1996 production. Production of 19 bcfe for 1996 rose 74 percent over 1995's production on an equivalent basis. Essentially all of the 120 bcfe added in 1996 resulted from the impact of Swift's successful drilling program in the AWP Olmos Field and Austin Chalk Trend in South Texas. During the year, Swift drilled 153 wells, double the number of wells drilled in 1995, spending $72 million on exploration and development and achieving a finding and development cost from drilling of approximately $.70 per mcfe. Swift also announced that its newly approved 1997 capital expenditures budget is $113 million, a 26 percent increase over actual 1996 expenditures. Approximately $85 million of the 1997 budget is allocated to exploration and development drilling, with approximately 83 percent to be spent in the company's two primary development areas in Texas, focused on natural gas production. The company's plan anticipates drilling 158 development and 20 exploratory wells in 1997 vs. comparable 1996 totals of 142 and 11.

© Copyright 1995-2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. The Motley Fool is a registered trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us