Canadian Oil and Gas Firms Thrive Despite 1993 Oil Price Drop

Canadian oil and gas producers are reporting record drilling programs and significant profits despite the 1993 oil price drop. According to David O'Brien, chairman of the Canadian Association of Petroleum Producers, many companies will profit from higher North American gas prices due to the growth in the US Northeast and California markets. Small and medium-sized companies, such as Tarragon Petroleum Ltd, Co-Enerco Resources Ltd, and Jordan Petroleum Ltd, are the biggest beneficiaries, reporting sharply higher year-end and first-quarter earnings and revenues.

Key Takeaways:

• Despite the 1993 oil price drop, Canadian oil and gas producers are reporting record drilling programs.
• Small and medium-sized companies, such as Tarragon Petroleum Ltd, Co-Enerco Resources Ltd, and Jordan Petroleum Ltd, are the biggest beneficiaries, reporting sharply higher year-end and first-quarter earnings and revenues.
• Tarragon Petroleum Ltd reported a 73% increase in oil production and a 371% increase in gas production, resulting in a 116% boost in annual net income.
• Co-Enerco Resources Ltd reported a 91% success rate among 32 wells drilled, adding 14.3 Bcf of natural gas and 1.6 million bbl of oil and natural gas liquids to its proved reserves.
• Jordan Petroleum Ltd reported a 59% increase in oil equivalent production, with a mix of 65% gas and 35% oil, and a 26% increase in gas prices received.

Statistics:

• 91% success rate among the 32 wells drilled by Co-Enerco Resources Ltd.
• Addition of 14.3 Bcf of natural gas and 1.6 million bbl of oil and natural gas liquids to Co-Enerco Resources Ltd's proved reserves.
• 73% increase in oil production by Tarragon Petroleum Ltd to 7,284 b/d.
• 371% increase in gas production by Tarragon Petroleum Ltd to 84 MMcfd.
• 59% increase in oil equivalent production by Jordan Petroleum Ltd to 5,900 b/d.
• 26% increase in gas prices received by Jordan Petroleum Ltd to $1.67/Mcf.
• Capital spending for the quarter by Co-Enerco Resources Ltd was about $17 million, representing 40% of the total 1994 program.
• Current natural gas production by Co-Enerco Resources Ltd is 50 Mmcfd, and oil and liquids production is 9,600 b/d.

Sources:

• Canadian Association of Petroleum Producers Chairman David O'Brien
• Tarragon Petroleum Ltd President David Martin
• Co-Enerco Resources Ltd
• Jordan Petroleum Ltd
• Numac Energy Inc. (target of a takeover by Co-Enerco Resources Ltd)
• Amoco Canada Petroleum Co. Ltd. (reported first profit in six years)