Questerre Energy Corporation: St. Edouard #1 Spuds in St. Lawrence Lowlands, Quebec
00:18 EST Friday, March 06, 2009
CALGARY, ALBERTA--(Marketwire - March 6, 2009) -
NOT FOR DISTRIBUTION ON U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Questerre Energy Corporation ("Questerre" or the "Company") (TSX:QEC) (OSLO:QEC) reported that the operator, Talisman Energy, has spud the St. Edouard #1 well in the St. Lawrence Lowlands, Quebec.
St. Edouard #1 is the fourth well in a four-well farm-in program. The well will test multiple horizons including the Trenton Black-River plus the Utica and Lorraine shale sequences.
Testing operations for several prospective shale intervals are underway on the La Visitation #1 well. Preliminary results are expected in the second quarter of 2009.
Questerre is a Calgary-based independent resource company actively engaged in the exploration, development and acquisition of high-impact exploration and development oil and gas projects in Canada.
This news release contains forward-looking information. Implicit in this information are assumptions regarding commodity pricing, production, royalties and expenses, that, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. These forward-looking statements are based on certain assumptions that involve a number of risks and uncertainties and are not guarantees of future performance. Actual results could differ materially as a result of changes in the Company's plans, commodity prices, equipment availability, general economic, market, regulatory and business conditions as well as production, development and operating performance and other risks associated with oil and gas operations. There is no guarantee made by the Company that the actual results achieved will be the same as those forecasted herein.
Barrel of oil equivalent ("boe") amounts may be misleading, particularly if used in isolation. A boe conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil and is based on an energy equivalent conversion method application at the burner tip and does not necessarily represent an economic value equivalent at the wellhead.
This news release does not constitute an offer of securities for sale in the United States. These securities may not be offered or sold in the United States absent registration or an available exemption from registration under the United States Securities Act of 1933, as amended.
FOR FURTHER INFORMATION PLEASE CONTACT:
Questerre Energy Corporation
Anela Dido
Investor Relations
(403) 777-1185
(403) 777-1578 (FAX)
Email: info@questerre.com
Friday, March 6, 2009
QEC: spud the St. Edouard #1 well in the St. Lawrence Lowlands, Quebec.
Thursday, March 5, 2009
Talisman Energy earns $3.51-billion in 2008
Symbol TLM
Shares Issued 1,018,770,249
Close 2009-03-04 C$ 11.48
Recent Sedar Documents
Talisman Energy earns $3.51-billion in 2008
2009-03-05 08:45 EST - News Release
David Mann
TALISMAN ENERGY GENERATES A RECORD $6.2 BILLION IN CASH FLOW AND A RECORD $3.5 BILLION IN NET INCOME FOR 2008
Talisman Energy Inc. has released its operating and financial results for 2008. Highlights for the year include:
* Cash flow was a record $6.2-billion, up 42 per cent from a year ago due to higher commodity prices; cash flow in the fourth quarter was $1.6-billion, up 54 per cent from a year earlier, due primarily to realized gains on derivative contracts;
* Net income was $3.5-billion, an increase of 69 per cent from a year earlier, and $1.2-billion for the quarter, almost double a year ago;
* Earnings from continuing operations were $2.5-billion, an increase of 167 per cent. The total for the quarter was $537-million, more than four times higher than the previous year, despite a significant decline in oil prices;
* Production averaged 432,000 barrels of oil equivalent per day, a decrease of 4 per cent relative to 2007; however, excluding discontinued operations, production was 3 per cent higher than the previous year;
* Net debt at year-end was $3.9-billion, down from $4.3-billion a year earlier;
* Total exploration and development spending was $5.1-billion;
* The company spent $1.8-billion on unconventional programs in North America, adding substantial amounts of acreage and progressing development of the Montney and Marcellus plays;
* Development projects were brought on stream in Southeast Asia (Song Doc, Northern Fields gas), and the Rev Field (Norway) started production in January, 2009;
* The company acquired exploration acreage in the Kurdistan region of northern Iraq, expanded its exploration holdings in Colombia and entered into two joint study agreements offshore Indonesia;
* Talisman continued to focus its operations, completing sales of 12,000 barrels of oil equivalent per day of non-core assets for approximately $1-billion, including properties in Denmark and the Netherlands;
* Yesterday, the company announced it has entered into an agreement to sell non-core assets in southeast Saskatchewan for proceeds of approximately $720-million;
* The company replaced 75 per cent of 2008 production with proved reserves (excluding price-related revisions).
"Two thousand eight was a year of change for Talisman," said John A. Manzoni, president and chief executive officer. "We set the company in a new strategic direction and realigned major parts of the organization in support of the new strategy. We've also successfully navigated a very dynamic economic environment, posting record financial results despite the collapse in oil and natural gas prices in the fourth quarter.
"Talisman paid down a significant amount of long-term debt last year and we are in excellent financial shape. The company entered into a number of derivative contracts last year to protect its capital programs against a drop in prices and this contributed to very strong fourth quarter results. The 2009 capital program has been designed for a volatile and uncertain economic environment and low commodity prices.
"Talisman generated a record $3.5-billion in net income for the year, a 69-per-cent increase over 2007 despite writedowns associated with year-end pricing and reserves. Earnings from continuing operations were $2.5-billion, 167 per cent higher than the prior year.
"Cash flow was $6.2-billion, up 42 per cent year over year, and $1.6-billion in the fourth quarter. Talisman paid down $935-million of long-term debt, net of cash, last year. However, the impact on our year-end numbers was less than this because of the currency effect of the weaker Canadian dollar.
"Production from continuing operations averaged 419,000 barrels of oil equivalent per day for the year, an increase of 3 per cent, with production gains from Corridor (Indonesia), Tweedsmuir (U.K.) and new wells in North America (Monkman, Foothills, Bigstone). Including assets, which were sold during the year or slated for sale, production was 432,000 barrels of oil equivalent per day. This was slightly above our last guidance provided at the end of the third quarter.
"Talisman replaced 75 per cent of its production through drilling and non-price revisions last year. The company wrote down 159 million barrels of oil equivalent of proved reserves, almost all in the United Kingdom North Sea, due to low year-end prices. However, using average 2008 prices, these price-related revisions would have been positive instead of negative.
"We replaced 106 per cent of production in North America, with approximately half of our proved reserve additions coming from unconventional drilling programs. Proved reserves in unconventional areas account for about 11 per cent of our North American total, which means there is a lot of running room.
"International reserve additions can be lumpy, depending on both project approvals and drilling results, and this was the case in 2008. For example, we have a number of development projects moving towards approval in Southeast Asia. Talisman's new strategy will improve reserve replacement and finding and development costs over time.
"Since the introduction of the strategy last May, we have made significant progress towards our objectives of profitable long-term growth, high-impact exploration and focusing the portfolio.
"We continued to dispose of non-core assets, selling assets in Denmark, the United Kingdom and Canada last year and completing a sale in the Netherlands early this year. Proceeds totalled $1-billion and the impact on production was 12,000 barrels of oil equivalent per day. Yesterday, we announced the sale of non-core southeast Saskatchewan properties for approximately $720-million.
"The company is positioned for profitable long-term growth from its unconventional natural gas portfolio in North America and development projects in Southeast Asia and Norway.
"Talisman spent $1.8-billion on its unconventional portfolio last year, adding a significant amount of land. We have moved into development of the Marcellus shale play in Pennsylvania, with excellent drilling results so far. We are moving from piloting to development in our Montney core area and seeing some very encouraging pilot results in the Montney shale play. In Quebec, we will complete our fourth well in the evaluation phase and are excited by the long-term potential.
"Outside of North America, we brought on production from the Northern Fields and Song Doc in Southeast Asia and commissioned Rev in Norway early in 2009. This year, we expect to see first production from the Northern Fields oil development and will progress work on the Yme oil redevelopment in Norway.
"We are also repositioning our international exploration program to focus on larger, material prospects. As an example, last year, the company acquired interests in two blocks in the Kurdistan region of northern Iraq. This is a region with world-scale, unexplored oil opportunities.
"Talisman also added to its offshore exploration portfolio in Southeast Asia and continued the appraisal of oil discoveries in Vietnam. In South America, we added additional acreage in Colombia and have started evaluating our light oil discovery in Peru.
"We have made a lot of progress towards implementing the strategy in a short period of time. Talisman is in a strong financial position and can react quickly in this volatile environment. We have set our plans for the year to be robust to low commodity prices, while still investing into our strategic priorities. We will remain flexible through the year and we are confident that our new strategic direction will result in sustainable and profitable growth into the longer term."
Financial results
Talisman plans to file its audited financial statements for the year ended Dec. 31, 2008, along with the related management's discussion and analysis, with Canadian and United States securities authorities on March 5, 2009. The company will file its annual information form and annual report on Form 40-F on March 9, 2009.
Cash flow for 2008 was $6.2-billion, up 42 per cent from a year earlier. This was primarily due to higher average commodity prices and a $365-million aftertax cash gain on held-for-trading commodity derivatives. Cash flow from continuing operations was $6-billion. Despite falling commodity prices in the fourth quarter, cash flow from continuing operations increased 54 per cent to $1,530-million compared with a year ago, with a realized aftertax cash gain of $461-million on derivative contracts.
Net income was also a record $3.5-billion, an increase of 69 per cent from a year earlier, reflecting a $1.2-billion aftertax gain on held-for-trading commodity derivative contracts and higher commodity prices.
Total depreciation, depletion and amortization expense was almost $3-billion for the year, an increase of $800-million compared with 2007. Of this increase, $585-million (73 per cent) was the result of writing down proved reserves due to low year-end prices. These writedowns had a $225-million aftertax impact on net income.
Earnings from continuing operations were $2.5-billion, versus $952-million last year, primarily the result of higher commodity prices and higher production volumes. However, these were offset by increased operating expenses and higher depletion, depreciation and amortizatio. Earnings from continuing operations adjust for significant one-time events and non-operational items such as the mark-to-market effect of changes in share prices on stock-based compensation expense, unrealized mark-to-market gains and losses on commodity derivatives, changes to tax rates, and additional depletion, depreciation and amortization related to properties that had no proved reserves at year-end prices. The company strengthened its balance sheet, reducing net debt to $3.9-billion, down from $4.3-billion in 2007, principally due to cash flow in excess of capital expenditures. In total, the company repaid $935-million of long-term debt net of cash, which was partially offset by a $581-million currency translation effect.
Talisman spent a record $5.1-billion on exploration and development in 2008, an increase from the $4.4-billion capital budget in 2007. North America accounted for 48 per cent of spending, North Sea development 25 per cent, Southeast Asia development 9 per cent and international exploration was 17 per cent.
Production from continuing operations averaged 419,000 barrels of oil equivalent per day, 3 per cent above 2007, in part due to increased production at Tweedsmuir (U.K.), Corridor (Indonesia) and first gas from the Northern Fields development in Malaysia/Vietnam. Total production for the year was down 4 per cent to 432,000 barrels of oil equivalent per day, as a result of asset sales, as well as maintenance at the PM-3 CAA field.
In 2008, the company's average netback was $47.33 per barrel of oil equivalent per day, 30 per cent higher than 2007, with the effect of higher commodity prices partially offset by increases in royalties and operating costs.
As discussed previously, commodity prices were extremely volatile in 2008 and both oil and natural gas prices fell significantly in the fourth quarter. Fourth quarter netbacks were down 34 per cent from the same quarter last year, averaging $25.98 per barrel of oil equivalent per day, 54 per cent below the third quarter of 2008.
Higher average prices translated into a higher corporate royalty expense of $2,091-million, a 34-per-cent increase over 2007. The company's average royalty expense remained relatively unchanged at 18 per cent.
Unit operating costs increased 12 per cent to $13.57 per barrel of oil equivalent per day over the previous year. Unit operating costs in North America rose by 14 per cent due to increased processing fees and maintenance costs. Pricing pressure in the United Kingdom resulted in unit costs increasing 21 per cent as the cost of labour, fuel, repairs and well operations rose with commodity prices. In Scandinavia, increased production volumes resulted in a 9-per-cent reduction in unit operating expenses.
The company may choose to designate derivative instruments as hedges for accounting purposes. To date, the company has elected not to designate any commodity price derivative contracts entered into since Jan. 1, 2007, as hedges.
The company added 118 million barrels of oil equivalent of proved gross reserves last year through drilling and positive revisions (non-price), replacing the equivalent of 75 per cent of annual production.
Under existing SEC rules, the company wrote down 159 million barrels of oil equivalent of proved gross reserves, almost all of which were in the U.K. North Sea, due to low year-end prices. The SEC has announced new reserves disclosure requirements, including an average annual pricing methodology, which is expected to be applied to 2009 year-end reports. Using average 2008 prices, the effect on Talisman would have been the addition of 19 million barrels of oil equivalent of proved gross reserves, rather than writing off 159 million barrels of oil equivalent.
Using year-end pricing, Talisman's proved gross reserves totalled 1,434 million barrels of oil equivalent, down 14 per cent from a year earlier. Using average 2008 prices, proved gross reserves were down 3 per cent to 1,612 million barrels of oil equivalent.
Drilling results in North America were encouraging. The company replaced 106 per cent of production with proved gross reserves through drilling. About half of Talisman's proved North American reserve additions came from unconventional areas. At year-end, proved gross unconventional reserves in new areas accounted for only about 11 per cent of the company's total in North America.
International reserve additions can be highly variable because they depend on development approval before discoveries can be moved to the proved reserves category. Development plans are under way for a number of Talisman projects, including offshore development in Vietnam and expansion of the Corridor gas project in Indonesia.
The new strategy, with the emphasis on unconventional gas in North America, low-cost, long-life reserves in Southeast Asia and the addition of new core areas from high-impact exploration, is expected to improve Talisman's reserve replacement ratios and finding and development costs in the future.
North America
Talisman has identified significant potential within its unconventional North American landholdings and has targeted this part of its portfolio for long-term growth. In 2008, the company focused on piloting and started development on a number of new unconventional plays.
Production from continuing operations averaged approximately 1.1 billion cubic feet equivalent per day (180,000 barrels of oil equivalent per day) in 2008, a 4-per-cent increase over 2007. Natural gas production from continuing operations averaged 838 million cubic feet per day, with increases in the Northern Foothills, Monkman and Bigstone/Wild River areas.
Talisman spent $1.8-billion on unconventional natural gas programs in North America, including land, development, infrastructure and drilling. The company drilled 169 gross wells on its new unconventional areas. Talisman also added significantly to its unconventional land base in 2008 (320,000 net acres added in new areas) bringing total unconventional holdings to three million net acres.
In New York and Pennsylvania, Talisman holds 800,000 net acres. During the year, the company shifted its focus toward Pennsylvania from New York, where pilot programs have been delayed due to regulatory and environmental reviews. In Pennsylvania, Talisman has 140,000 net acres of undeveloped land, including the addition of highly prospective state land last year. The 2008 pilot program consisted of one operated rig with a total of six gross wells (five net) drilled.
Results of the Pennsylvania pilot program have been encouraging, with recent production rates upward of 3.5 million cubic feet per day per well. Based on this early success, Talisman is preparing to move to development in Pennsylvania by mid-2009, with plans to drill 36 gross horizontal wells. The company currently has two rigs drilling, with plans for up to five rigs by the third quarter.
Talisman continued to expand its Montney land base in British Columbia and Alberta in 2008, which now totals 600,000 net acres (380,000 Montney core, 220,000 Montney shale). The region has numerous opportunities at different stages of maturity and Talisman made significant progress in its piloting programs in preparation for development in 2009.
Within the Montney core, the company completed 39 gross (31.1 net) development wells in 2008 in addition to 13 gross pilot wells to test drilling, completion techniques and the quality of the reservoir. Initial production rates have been encouraging, ranging from 1.6 million cubic feet per day to 3.6 million cubic feet per day (sales gas) per well. Talisman expects to drill 35 gross (26 net) wells in 2009, with a focus on horizontal wells from pad locations to reduce costs and improve efficiencies.
The company started pilot operations in the Montney shale area of northeastern British Columbia in mid-2008, drilling nine gross (3.2 net) wells last year. At Farrell Creek, the company successfully tested a vertical well with rates up to five million cubic feet per day (raw gas). A total of 14 gross pilot wells are planned in the Montney shale in 2009, in addition to construction of processing facilities.
The company has the ability to accelerate drilling, depending upon economic conditions and drilling results in both the Marcellus and Montney plays.
Talisman is continuing its pilot program in Quebec where the company holds rights to 770,000 net acres. In September, the company completed a successful test well from the Utica shale in the Gentilly well. This well flowed at 800,000 cubic feet per day (raw gas) from one completed interval during the test period. Talisman expects to complete the earning phase of its drilling program in Quebec in 2009.
In the Bakken core, Talisman drilled 43 gross (36 net) wells, achieving top-tier performance in drilling costs and production rates. However, the company has decided to exit southeast Saskatchewan to focus on more material assets in North America. Yesterday, Talisman entered into an agreement to sell these assets for proceeds of approximately $720-million. Current production is approximately 8,500 barrels of oil equivalent per day (net).
In the Outer Foothills, Talisman was successful at Hinton and Ojay. In total, 21 gross (15.8 net) wells were drilled and Talisman now holds 430,000 net acres in the area with the addition of new land in the Hinton area.
Production from Talisman's conventional areas was 730 million cubic feet equivalent per day. In total, 129 gross (74.3 net) wells were drilled in 2008, with excellent results in the Foothills and at Monkman.
Talisman's midstream operations averaged throughput of 635 million cubic feet per day. The company will use its expertise in infrastructure development to support its unconventional natural gas programs. In line with the objective to focus operations and exit non-strategic areas, Talisman completed the sale of its Lac La Biche assets for proceeds of $247-million.
United Kingdom
Talisman is repositioning its high-quality U.K. assets as a source of free cash flow from a sustainable long-term production base. Production from continuing operations in the United Kingdom averaged 95,800 barrels of oil equivalent per day, relatively unchanged from 2007.
Production increases from drilling and development projects, including Tweedsmuir and Blane (on stream in 2007), offset natural declines and maintenance shutdowns at Monarb and Claymore. At Tweedsmuir, production averaged 22,459 barrels of oil equivalent per day.
The company progressed the Burghley and Auk North subsea developments and has started engineering work for the Auk South redevelopment project.
Talisman completed the sale of the Beatrice oil field licence interests in 2008. In January, 2009, the company also completed the sale of its assets in the Netherlands, with proceeds of approximately $600-million.
Scandinavia
Norway is seen as an area of growth from continuing development projects in the short-term and exploration activity in the long-term. Production from continuing operations in Scandinavia averaged 34,866 barrels of oil equivalent per day for 2008, a 15-per-cent increase from 2007, mainly due to increased production from new wells at Varg and Brage and a full year of production at Blane.
In the Southern North Sea area, including the Blane and Gyda fields, Talisman drilled two development wells and one exploration well. The long-reach development well at Gyda had an initial gross production rate of 3,500 barrels per day. Production from the Southern North Sea area averaged 11,437 barrels of oil equivalent per day.
In the Mid North Sea area, the Rev field commenced production in January, 2009. The field is expected to produce at a rate of approximately 15,000 barrels of oil equivalent per day net to Talisman from two subsea wells. A third producer, the Rev East well, is expected to be brought on stream later in 2009. Talisman also drilled seven development wells in the Mid North Sea area in 2008.
Development of the Yme field in the Norwegian continental shelf continued throughout 2008 and seven development wells are planned at Yme for 2009.
Talisman sold its producing interests in Denmark in 2008. In February, 2009, Talisman entered into an agreement to sell a 10-per-cent interest in the Yme field.
Southeast Asia
Southeast Asia is a low-cost area with opportunities for sustainable long-term growth. Production from continuing operations in Southeast Asia averaged 91,363 barrels of oil equivalent per day, approximately the same as in 2007. Production increases came from first gas production from Northern Fields, the start-up of the Song Doc field and additional Corridor sales in Indonesia, which were largely offset by natural declines in Malaysia.
Talisman's interests in block PM-3 CAA offshore Malaysia/Vietnam are split between the Southern Fields and the Northern Fields. In the Southern Fields, compression upgrades on the Bunga Raya platform were fully commissioned in 2008, adding 17 million cubic feet per day of gross sales gas.
Following successful platform installations and drilling 19 development wells, first gas from the Northern Fields commenced on schedule in July, 2008, at 30 million cubic feet per day net sales gas. Oil production is expected from Northern Fields toward the end of the first quarter of 2009 and dry gas is expected in mid-2009.
In January, 2008, Talisman announced its second oil discovery offshore Vietnam at Hai Su Den in block 15-2/01, following up on the Hai Su Trang discovery in 2007. Development sanction for the Hai Su Trang field and for the Hai Su Den early production scheme is expected in 2009, with first production anticipated in 2012.
In late November, 2008, oil production commenced at the Song Doc field in block 46/02. Gross production from five predrilled wells is expected to reach approximately 20,000 barrels per day in early 2009. An additional three development wells are currently being drilled.
In Indonesia, natural gas production increased by 16 per cent to 266 million cubic feet per day, mainly due to the West Java pipeline being on stream for the entire year.
Other areas
In Talisman's other areas, production from continuing operations during the year averaged 16,031 barrels per day, an increase of 12 per cent over 2007. In Algeria, production averaged 15,100 barrels per day, up from 13,200 barrels per day.
In line with its strategy to focus on core assets, Talisman has announced the intention to sell its assets in Trinidad and Tobago.
International exploration
Southeast Asia
In September, 2008, Talisman entered into a farm-in agreement in blocks 133 and blocks 134 offshore Vietnam with a 38-per-cent working interest. This agreement was approved by the Vietnamese government in February, 2009, and represents the company's first step into the Nam Con Son basin.
In July, 2008, Talisman was awarded 100-per-cent and 60-per-cent interests in two joint study agreements in the Makassar Strait, offshore Indonesia. The company is currently evaluating the blocks and recently completed the seismic across both blocks. Talisman can elect to include these blocks in a future bid round.
In early 2008, Talisman participated in the successful Kitan-1 exploration well in PSC 06-105 offshore Australia resulting in an oil discovery, which tested at 6,100 barrels per day. A subsequent appraisal well delineated the discovery. A field development plan is currently being prepared and is scheduled to be submitted later in the year.
North Sea
In the United Kingdom, Talisman added to its acreage position in the Central Graben area of the North Sea with three blocks awarded in the 25th licensing round. In addition, the company participated in the APA 2008 bid round in Norway, with two licences awarded in February, 2009. Talisman also submitted a bid in the 20th licence round in Norway for blocks in the Barents Sea and expects the results in spring of 2009.
In Norway, Talisman drilled one successful well in the Southern North Sea area.
South America
Talisman has built a significant presence in Peru and now has interests in four blocks covering 4.5 million net acres. In 2008, the company began evaluating an earlier Talisman discovery at Situche on block 64 and expects to complete drilling of the well in 2009.
In Colombia, Talisman has added sizable amounts of acreage. The company now has interests in 11 blocks covering approximately five million net acres. Talisman plans to complete drilling of the Huron exploration well in 2009.
Kurdistan region of northern Iraq
In 2008, Talisman entered into an agreement with the Kurdistan regional government within northern Iraq for interests in block K44 and K39. The company has acquired seismic across block K39 in order to define drilling prospects for future drilling consideration. The Sarqala-1 well on block K44 was drilling over the year-end, with a second well planned for later in 2009.
CONSOLIDATED STATEMENTS OF INCOME
(in millions of dollars, except per-share amounts)
For the three months For the year
ended Dec. 31, ended Dec. 31,
2008 2007 2008 2007
Revenue
Gross sales $ 2,200 $ 2,393 $ 11,779 $ 8,861
Hedging gain/(loss) - 3 (28) 104
--------- --------- --------- ---------
Gross sales, net of hedging 2,200 2,396 11,751 8,965
Less royalties 380 440 2,091 1,558
--------- --------- --------- ---------
Net sales 1,820 1,956 9,660 7,407
Other 33 37 146 145
--------- --------- --------- ---------
Total revenue 1,853 1,993 9,806 7,552
--------- --------- --------- ---------
Expenses
Operating 538 502 2,025 1,854
Transportation 44 48 208 205
General and administrative 98 57 295 223
Depreciation, depletion and
amortization 1,207 544 2,979 2,177
Dry hole 220 298 492 607
Exploration 158 91 431 315
Interest on long-term debt 43 55 168 207
Stock-based compensation
(recovery) (36) (53) (73) (15)
Gain)/loss on held-for-trading
financial instruments (1,695) 41 (1,664) 25
Other, net (52) 55 (183) 34
--------- --------- --------- ---------
Total expenses 525 1,638 4,678 5,632
--------- --------- --------- ---------
Income from continuing operations
before taxes 1,328 355 5,128 1,920
--------- --------- --------- ---------
Taxes
Current income tax 277 236 1,497 700
Future income tax (162) (238) 119 (58)
Petroleum revenue tax 16 60 176 258
--------- --------- --------- ---------
131 58 1,792 900
--------- --------- --------- ---------
Net income from continuing
operations 1,197 297 3,336 1,020
--------- --------- --------- ---------
Net income from discontinued
operations 5 359 183 1,058
--------- --------- --------- ---------
Net income 1,202 656 3,519 2,078
========= ========= ========= =========
Per common share
Net income from continuing
operations 1.18 0.29 3.28 0.99
Diluted net income from
continuing operations 1.17 0.29 3.23 0.97
Net income from discontinued
operations - 0.35 0.18 1.02
Diluted net income from
discontinued operations - 0.34 0.17 1.00
Net income 1.18 0.64 3.46 2.01
Diluted net income 1.17 0.63 3.40 1.97
We seek Safe Harbor.
Canadian Arrow announces extension of loan
Canadian Arrow announces extension of loan
07:30 EST Thursday, March 05, 2009
SUDBURY, ON, March 5 /CNW/ - Canadian Arrow Mines, Ltd. (CRO: TSX-V) (the "Company"), is pleased to announce that it has reached an agreement with an arms-length third party lender to extend the term of its $1,500,000 loan to January 31, 2011.
The loan which was announced by press release on May 26, 2008 is secured by a charge against all of the Company's assets, bears interest at a variable rate per annum equal to prime plus 2% calculated daily and compounded monthly and matures on the earlier of (i) the date on which an event of default occurs under the loan or the security, (ii) the date on which Canadian Arrow completes any equity or debt financing after the date hereof for net proceeds of at least $5,000,000, and (iii) January 31, 2011.
In connection with the extension, the Company also agreed that the lender would have an option to have all or a portion of the loan repaid in common shares of the Company any time after the completion of an equity financing by the Company, with the deemed issue price of such shares being equal to the issue price under the financing. Furthermore, the Company was provided with an option of repaying the loan through the transfer of an interest in its Kenbridge property.
The revised note as well as the ability to repay in either common shares of the Company or the transfer of the property interest will be subject to the receipt of all necessary regulatory approvals including the TSX Venture Exchange.
Investors are invited to visit Canadian Arrow's IR hub at http://www.agoracom/IR/CanadianArrow where they can post questions and receive answers within the same day, or simply review questions and answers posted by other investors. Alternately, investors are able to e-mail all questions and correspondence to CRO@agoracom.com where they can also request addition to the investor e-mail list to receive future press releases and updates in real time.
Take it to the bank: A new bull market is here
Bill Carrigan is an independent stock-market analyst.
Why a new bull market?
Because bear markets usually trade to new lows about every 12 to 18 weeks in a series of lower highs and lower lows. We technicians call that a down trend.
In the U.S., as of mid-week, only three of the 10 Standard & Poor's stock sectors have violated their 2008 October through November lows of more than 20 weeks ago and so far, the large cap benchmark S&P 500 and the small cap Russell 2000 have not violated their 2008 October through November lows.
In our local market the TSX composite, the TSX mid cap and the TSX small-cap indexes have all held at or above their 2008 October through November lows.
At this time the only technical argument the bears can table is the new lows posted by the Canadian and U.S. financial sectors. There is no doubt that if we have a new bull we need the participation of the financials and we need it now.
This observation creates a money management problem in that we need to manage risk exposure by the careful selection of non-correlated stock groups or sectors
My best low-risk returns tend to occur when I take large positions in the early stages of a rising stock sector and hold for about six to nine months. When this position is sold the proceeds are "rotated" into a new and different emerging stock sector.
At this time to two stock sectors with the greatest inverse correlation are the gold stocks and the financial stocks. It could be the next big trade would be to get the timing right on the switch from those hot gold stocks into those cold bank stocks.
Believe it or not, there is growing evidence that reducing exposure to some of the gold stocks and increasing exposure to some of the financial stocks may be a prudent decision.
Technically, at mid-week, many gold stocks over extended on the upside and many financial stocks over extended on the downside. For example, Eldorado Gold (TSX-ELD) is sitting about 35 per cent above its 200-day moving average and Bank of Nova Scotia (TSX-BNS) is sitting about 35 per cent below its 200-day moving average.
These are at historical extremes.
As an Eldorado shareholder I did not welcome the Feb. 23, 2009 news that Eldorado Gold was intending to raise approximately $275 million through a public offering of common shares. The offering was cancelled the next day but the damage was done. If the management thinks the time is right to sell maybe I should also be a seller.
Now, let's consider a bullish case for the Bank of Nova Scotia.
Most investors know that the TSX financial group has lost about 55 per cent in value since its price peak in May 2007. Over the same period the U.S. SPDR financial sector has lost a stunning 80 per cent of its value.
CNBC host Jim Cramer claims that the UltraShort Financials ProShares ETF (NYSE-SKF) is the culprit. The fund is supposed to be a play on the financials' decline. As the Dow Jones U.S. financials index goes down, the two-times levered SKF shares go up. Cramer argues that what this ultra-short fund really offers is the chance to sidestep the SEC's margin restrictions.
Short sellers are now double the threat they once were, and their exchange-traded fund-enabled positions are hammering down the financials, hurting common-stock shareholders and the markets as a result. In Cramer's words, "it is a manipulator's dream come true."
On the flip side, any recovery in the U.S. financials could trigger a bearish stampede out of the SKF resulting in a stunning rally in the North American financial stocks.
Our chart this week is that of the daily closes of the Bank of Nova Scotia plotted above the daily closes of Eldorado Gold. The inverse correlation is obvious.
Some exposure to both stocks would be a prudent way to reduce the volatility in your portfolio.
Bill Carrigan is an independent stock-market analyst.
Talisman Energy Inc. Earns Net 1.2 Billion Dollars
The Canadian Press
March 5, 2009 at 6:23 AM EST
CALGARY — — Talisman Energy Inc. [TLM-T] said Thursday it managed to book strong profits for both the final quarter and full fiscal year of 2008, despite plunging commodity prices that marked the final months of the year.
The Calgary-based oil and gas company reported net earnings of $1.2-billion, or $1.18 per share, for the quarter ended Dec. 31, 2008, up sharply from a year-earlier profit of $656-million, or 64 cents per share.
Talisman's quarterly cash flow jumped to $1.6-billion from $1-billion reported during the same period in 2007.
The increases came despite a drop in oil and gas production, which fell to an average of 432,000 barrels of oil equivalent per day from the 446,000 barrels being produced a year earlier.
Talisman Energy
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* Talisman sells Bakken assets for $720-million
The Globe and Mail
Talisman said it benefited from the high oil prices that prevailed throughout much of the year, reporting a 69 per cent surge in 2008 profit to $3.5-billion, or $3.46 per share, from year-earlier net earnings of $2-billion, or $2.01 per share.
The company said oil and gas prices, coupled with a $365-million gain on commodity derivatives, helped push full-year cash flow up to $6.2-billion from $4.3-billion reported the year before.
Average production fell to 432,000 barrels a day from a 2007 average of 452,000 barrels.
Talisman also said it paid down $935-million in long-term debt for the year, bringing net debt down to $3.9-billion.
“2008 was a year of change for Talisman,” chief executive John Manzoni said in a statement.
“We set the company in a new strategic direction and realigned major parts of the organization in support of the new strategy. We've also successfully navigated a very dynamic economic environment, posting record financial results despite the collapse in oil and natural gas prices in the fourth quarter.”
Talisman, a Calgary-based energy company with operations around the world, has been paring down its portfolio in order to focus on a few key strategic areas: the U.K. North Sea, North American unconventional natural gas and Southeast Asia.
On Wednesday Talisman announced a $720-million deal to sell assets in Saskatchewan's Bakken oil play to Tristar Oil and Gas Ltd. and Crescent Point Energy Trust.
Wednesday, March 4, 2009
What Will Markets Do Today???
Help from Asia
RTGAM
Another day, another attempt by stock markets to break out of their demoralizing losing streak, which has sent major U.S. indexes to 12 year lows amid an unending stream of bleak economic news, bankruptcies and slashed dividends.
Unfortunately, the news wasn't a whole lot brighter on Wednesday morning. The ADP employment report for private payrolls showed that U.S. employers cut their payrolls by 697,000 in February, considerably worse than the 630,000 job cuts that economists had expected. The reports are a prelude to the official numbers, to be released on Friday.
"Every indicator we know tells us that employment is tanking right across the economy, and we doubt any of the numbers have hit bottom yet," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, in a note.
Despite the gloomy employment picture, U.S. stock index futures were higher with about an hour before markets open, suggesting that stocks will rise at the start of trading - part of a global bounce that is being attributed to talk of big new stimulus measures in China, where the government has already pledged $585-billion (U.S.) in spending.
Futures for the Dow Jones industrial average rose 91 points, to 6760. Futures for the broader S&P 500 rose 10 points, to 700.
In Europe, the U.K.'s FTSE 100 was up 1.5 per cent and Germany's DAX index was up 2.6 per cent. In Asia, Japan's Nikkei 225 rose 0.9 per cent and China's Shanghai stock exchange composite index shot up 6.1 per cent.
Copyright 2001 The Globe and Mail
Star Reporters
Ann Perry
The man responsible for keeping the economy humming pushed the panic button yesterday, reducing the Bank of Canada's key interest rate to nearly zero in hopes of getting consumers buying again.
Governor Mark Carney cut the central bank's trend-setting overnight rate by a half-point to a record low of 0.5 per cent. The move is intended to help revive the struggling economy by encouraging borrowing, spending and investment.
Following the Bank of Canada's lead, the Royal Bank of Canada, Bank of Montreal, Toronto Dominion Bank, CIBC and the Bank of Nova Scotia cut their prime rates – the borrowing rate charged to their most creditworthy customers – by one-half of a percentage point to 2.5 per cent.
Amid a crippling global economic downturn, the Bank of Canada has made a series of rate cuts since December 2007 in an effort to restart the stalled economy.
Now it has little room for further cuts. Some analysts expect Carney to halve the current rate to .25 per cent, as the United States has done. But going all the way to zero would disrupt short-term lending markets for technical reasons, economists say.
"The tank is getting empty," said Toronto economic consultant Dale Orr.
The Bank of Canada's decision came a day after news that Canada's economy contracted at an annual rate of 3.4 per cent in the last three months of 2008, the worst performance since 1991.
That was the latest in a stream of grim economic news from December, including a record loss of 129,000 jobs, a 47 per cent spike in bankruptcies and a trade deficit of $458 million, the first since 1976.
In a statement yesterday, Carney acknowledged he had been overly optimistic when he predicted in January the Canadian economy would start to recover in mid-2009 and turn in growth of 3.8 per cent next year.
"National accounts data for the fourth quarter of 2008 and other indicators of aggregate demand point to a sharper decline in Canadian economic activity'' in the first half of 2009 than the Bank projected in January, Carney said.
"Potential delays in stabilizing the global financial system'' and a larger-than-expected erosion of business and consumer confidence could delay a recovery until early 2010, he said.
"I think it's quite obvious, even though they didn't put a number on it, that they've scaled back their growth forecast for the economy this year, and likely in 2010 as well,'' said BMO Capital Markets deputy chief economist Doug Porter.
While economists doubt Carney had little choice but to slash rates further, some question whether this traditional central banker's tool for expanding the amount of money circulating in the economy is very useful in the current slump.
"If financial institutions are reluctant to lend and consumers and businesses are reluctant to borrow, then lowering interest rates may not do much to stimulate the economy," said United Steelworkers economist Erin Weir.
Scotiabank CEO Rick Waugh said at his bank's annual meeting in Halifax that the lower interest rate is "a step forward'' for the economy but insisted the No. 1 priority is to stabilize the world financial system.
The central bank said the key overnight rate "can be expected to remain at this level or lower" until there are "clear signs" that the economy is beginning to perform closer to its normal capacity. The next rate-setting is April 21.
But, with its interest-rate ammunition all but spent, the central bank said it will be looking at other measures to ease the credit crunch that caused the Canadian economy to slow so drastically.
With files from the Star's wire services
Kill Spyware Instantly!
Tuesday, March 3, 2009
Wow, new lows OUCH!
RTGAM
For a short time on Tuesday afternoon, major North American stock market indexes poked their heads into positive territory, posting their first gains in a long, long time. Alas, that didn't hold: The S&P 500 registered its 11th loss in 12 trading sessions, falling deeper into multi-year lows on waning hopes for an economic recovery any time soon.
Still, perhaps investors can take consolation from the fact that Tuesday's losses were among the slightest of the lengthy losing streak. The S&P 500 closed at 696.33, down 4.49 points, or 0.6 per cent - closing below the 700-point level for the first time since 1996. The Dow Jones industrial average closed at 6726.02, down 37.27 points, or 0.6 per cent.
General Electric Co. fell 7.8 per cent, closing just a penny above $7 (U.S.). Home Depot Inc. fell 5.2 per cent and Coca-Cola Co. - widely considered a defensive stock for being able to weather economic storms - fell 2.2 per cent and touched a new 52-week low.
General Motors Corp. fell 1 per cent after it reported that U.S. auto sales plunged 53 per cent year-over-year in February - though at this point the share price is really just a bet on whether the auto maker survives. Ford Motor Co. fell 3.7 per cent after its February sales fell 48 per cent.
There was some hope that the U.S. administration's release of more details on its plan to buy up distressed assets would remove some uncertainty lingering over the financial sector. It did, sort of: Citigroup Inc. rose 1.7 per cent.
However, investors put greater emphasis on the latest appearance by Ben Bernanke, the U.S. Federal Reserve Chairman, at the Senate banking committee, where he said that the impact of the U.S. administration's stimulus package is subject to "considerable uncertainty, reflecting both the state of economic knowledge and the unusual economic circumstances that we face."
Ugh. As Bob O'Brien, author of Barron's Stocks To Watch Today, put it, saying that the economy won't recover until the banking system improves is "like two drunks locked at the shoulders trying to hold each other up."
In Canada, the S&P/TSX composite index closed at 7631.62, down 55.89 points, or 0.7 per cent, despite aggressive moves by the Bank of Canada to stimulate the economy by cutting its key interest rate to just 0.5 per cent.
An early rally among financial stocks, following upbeat earnings reports from Bank of Nova Scotia and Bank of Montreal, fizzled later in the day. BMO rose 2.4 per cent but Scotiabank ended the day flat; Canadian Imperial Bank of Commerce fell 4.9 per cent and Manulife Financial Corp. plunged 11 per cent, briefly falling below $10 a share.
Copyright 2001 The Globe and Mail
Canada banks cut prime rates by 50 basis points
UPDATE 1-Canada banks cut prime rates by 50 basis points
Tue Mar 3, 2009 10:35am EST
*BMO leads the pack, cuts prime to 2.5 percent
*Other banks also match Bank of Canada rate cut
March 3 (Reuters) - Canadian banks cut their prime lending rates on Tuesday after the Bank of Canada, the country's central bank, cut its key interest rate by a half-point to a record low of 0.5 percent.
The banks showed no reluctance to pass along the full 50- basis-point reduction in the Bank of Canada's overnight rate, in contrast to their more cautious approach in the autumn.
Bank of Montreal (BMO.TO: Quote, Profile, Research, Stock Buzz) led the pack in lowering its prime rate to 2.5 percent from 3.0 percent.
The other larger players -- Royal Bank of Canada (RY.TO: Quote, Profile, Research, Stock Buzz), Canadian Imperial Bank of Commerce (CM.TO: Quote, Profile, Research, Stock Buzz), TD Canada Trust (TD.TO: Quote, Profile, Research, Stock Buzz) and National Bank of Canada (NA.TO: Quote, Profile, Research, Stock Buzz) -- also cut their prime rates to 2.5 percent.
The Bank of Canada cut its key interest rate as expected, and signaled for the first time that it may resort to quantitative easing in the future.
The central bank also acknowledged that its latest projections for the Canadian economy now look optimistic in the light of the latest economic data, showing that the economy contracted at an annualized rate of 3.4 percent in the fourth quarter.
The prime rate determines what banks charge on a host of loans and credit products, including some mortgages.
Canadian bank stocks rose in early trade on Tuesday but some of them later turned lower following a drop in Toronto's main stock index .GSPTSE.
(Reporting by Chakradhar Adusumilli in Bangalore, Editing by Dinesh Nair)
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Monday, March 2, 2009
Serenity now! Serenity now! Serenity now!
Serenity now!
RTGAM
Stocks took a beating on Monday, and while there were few clear reasons why investors scrambled for an exit - beside the usual assortment of dismal economic news, government bailouts and fears of shareholder dilution - the damage was clear: Major indexes plunged to new lows in an all-out rout that hit just about everything.
The Dow Jones industrial average closed at 6763.29, down 299.64 points, or 4.2 per cent, carving out a new 12-year low. All 30 stocks fell. The broader S&P 500 closed at 700.82, down 34.27 points, or 4.7 per cent, to its lowest level since 1996. In both cases, the one-day declines were the worst since Feb. 10.
Defensive stocks were a mixed blessing: Yes, they outperformed the broader index, but they, too, suffered. McDonald's Corp. fell 0.8 per cent, Wal-Mart Stores Inc. fell 2.4 per cent and Procter & Gamble fell 2.7 per cent. Remember, those were the best performers on the Dow.
Meanwhile, some of the more economically sensitive stocks were hammered out of impatience that the U.S. economy - and the global economy, for that matter - was showing no signs of recovering from deep gloom. Citigroup Inc. fell 20 per cent, Alcoa Inc. fell 11.9 per cent, General Electric Co. fell 10.7 per cent and Boeing Co. fell 6.1 per cent.
In Canada, the S&P/TSX composite index suffered even steeper losses than its U.S. counterpart due to its heavier exposure to weak energy stocks. The index closed at 7687.51, down 435.51 points, or 5.4 per cent - blasting through its Nov. 20 low and ending back where it was in late 2003. It was its biggest one-day setback since Dec. 1.
Financials did not fare well, following meltdowns in the sector around the world. Royal Bank of Canada fell 3.1 per cent, Bank of Nova Scotia fell 5.9 per cent and Manulife Financial Corp. fell 10.2 per cent.
However, energy stocks were the biggest drags after the price of crude oil fell to $40.15 (U.S.) a barrel, down $4.61. Suncor Energy Inc. fell 10.2 per cent and EnCana Corp. fell 6.2 per cent.
Even gold producers were unloved, a shift from their usual pattern of moving in the opposite direction to the broader market. Barrick Gold Corp. fell 5.6 per cent and Goldcorp Inc. fell 5.7 per cent even though gold dipped only slightly, to $940 an ounce. In other commodity moves, Potash Corp. of Saskatchewan Inc. fell 9.4 per cent.
Copyright 2001 The Globe and Mail
PDP-T Initiates process to sell Argentinean assets
WebBroker Select Company News Alert
========================
Petrolifera Petroleum reports lower reserves and pre-tax present values for year ended December 31, 2008; Initiates process to sell Argentinean assets
cnw
CALGARY, March 2 /CNW/ - Petrolifera Petroleum Limited (PDP - TSX) announces today it has received the estimates of the company's 1P ("Total Proved"), 2P ("Total Proved plus Probable") and 3P (Total Proved plus Probable plus Possible) reserves, as prepared by GLJ Petroleum Consultants of Calgary, Alberta ("GLJ") in a report with an effective date of December 31, 2008 ("GLJ 2008 Report"). The company's reserves declined on a year over year basis, reflecting 2008 production and sales, technical revisions primarily arising from some current complications with the efficiency of the company's waterflood at Puesto Morales Norte in the Neuquen Basin, Argentina, offset positively by modest recognition of reserve additions through exploration and improved recovery in Argentina and by the initial recognition of reserves for the company in Colombia.
The GLJ 2008 Report and the estimates provided herein were prepared using assumptions and methodology guidelines outlined in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and in accordance with National Instrument 51-101 ("NI 51-101"). Comparisons provided herein with respect to Petrolifera's reserves are to estimates contained in a report prepared by GLJ with an effective date of December 31, 2007 ("GLJ 2007 Report"). The GLJ 2008 Report was prepared utilizing the GLJ January 1, 2009 price forecast, effective December 31, 2008 and adjusted to Petrolifera's asset mix and specific pricing circumstances in Argentina and in Colombia. In the GLJ 2008 Report, future net revenue is calculated after deduction of forecast royalties, operating expenses, capital expenditures and well abandonment costs but before corporate overhead or other indirect costs, including interest and income taxes. The pre-tax present value of future net revenue ("present value") is calculated by GLJ using various discount rates; this release will provide undiscounted future net revenue and the 10 percent present value thereof.
All references to barrels of oil equivalent ("boe") are calculated on the basis of 6 mcf: 1 bbl. Readers are cautioned that the conversion used in calculating barrels of oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Furthermore, boe may be misleading if used in isolation. Future net revenues disclosed herein do not represent fair market value. Also, estimations of reserves and future net revenue to be discussed in this press release constitute forward-looking information. See "Forward Looking Information" below.
Reserve Volumes and Values
The GLJ 2008 Report estimated that, after production of approximately 2.4 million barrels of crude oil and natural gas liquids, Petrolifera's 1P crude oil and natural gas liquids ("NGL") reserves decreased 25 percent to 11.3 million barrels as at December 31, 2008, compared to 15.1 million barrels at December 31, 2007. The decrease primarily reflects production and technical revisions, associated with recovery factors related to waterflood performance and offset by new discoveries of proved reserves, the majority of which are in the proved producing category. As 1P reserves declined, there is no basis for calculating reserve replacement ratios.
Petrolifera's 1P natural gas reserves also declined by almost 6 Bcf or 36 percent to 10.5 Bcf after deduction of record production in 2008 of 1.9 Bcf and the impact of technical revisions, offset by exploration discoveries.
Petrolifera's 2P crude oil and NGL reserves decreased 20 percent to 17.2 million barrels, reflecting the impact of production and waterflood related technical revisions, offset by exploration success and improved recovery at certain wells. At December 31, 2007, 2P crude oil and NGL reserves were 21.5 million barrels.
On an equivalent basis, Petrolifera's 1P reserves totaled 13.0 million boe at year end 2008 compared to 17.8 million boe in 2007, for a decrease of 27 percent. These reserves were forecast to generate $284 million of future net revenue, with an estimated pre-tax 10 percent present value ("10% PV") of $212 million.
On an equivalent basis, Petrolifera's 2P reserves were estimated to total 20.0 million boe at December 31, 2008 compared to 25.6 million boe in 2007 after production of 2.8 million boe and negative technical revisions, partially offset by new discoveries. GLJ estimates these reserves will generate $493 million of future net revenue, with an estimated pre-tax 10% PV of $328 million. The company's calculated reserve life index, calculated by dividing remaining 2P reserves at December 31, 2008 by 2008 total boe production, was approximately 7.1 years.
Petrolifera also commissioned GLJ to provide an estimate of possible reserves, which were last estimated effective December 31, 2007. GLJ estimated the company's 3P crude oil and NGL reserves to be 25.3 million barrels, with 3P natural gas reserves estimated at 24.8 Bcf and 3P equivalent reserves were estimated at 29.5 million boe. These reserves are estimated to generate $830 million of future net revenue with an estimated pre-tax 10% PV of $505 million.
The volume of possible reserves estimated at 9.4 million boe underscores continuing recognition of the development potential for both crude oil and natural gas of the lands reviewed in the GLJ 2007 Report, which included the La Pinta prospect in Colombia and the Puesto Morales/Rinconada concessions in Argentina. These estimates did not include a review of the company's undeveloped exploratory concessions at Vaca Mahuida, Puesto Guevara and Gobernador Ayalla II, all in Argentina nor of Petrolifera's exploratory holdings outside of the La Pinta prospect in Colombia and none of the company's extensive holdings in Peru.
The following tables summarize the information contained in this press release. Tables may not add due to rounding.
<<>>
Sale Process
Petrolifera also announces that its Board of Directors has authorized the company to enter in to an engagement agreement with Tristone Capital ("Tristone") of Calgary, Houston, Buenos Aires and London, whereby Tristone would immediately commence to establish a data room, which will be made available to qualifying companies. Tristone will assist Petrolifera in the sale of Petrolifera's interests in Argentina, which are primarily indirectly held by a wholly-owned Barbadian subsidiary. It would be Petrolifera's intention to sell its interests in a tax effective manner and to redeploy the proceeds in its high-potential exploration activities in Colombia and Peru, after discharging related outstanding long-term indebtedness. While Petrolifera recognizes continuing potential associated with its extensive Argentinean assets, both from an exploratory and exploitation perspective, it is the opinion of management and the company's Board of Directors that the company's holdings in Colombia and Peru have greater identified growth potential. Petrolifera's desire is to sell its Barbadian subsidiary and related assets as a going concern, with view to the purchaser providing continuing employment to the company's managerial, technical and operating staff to the fullest extent possible. Arrangements are contemplated to ensure fair and appropriate treatment under prevailing employment law to both continuing and redundant employees and contractors, should the prospective purchaser not require all of Petrolifera's current Argentinean employees and contractors on a continuing basis.
Forward Looking Information
Sunday, March 1, 2009
The fight has begun. Which side are you on?
Obama's $3.55 trillion budget proposal represents a gamble that the American people are ready for the sort of change they embraced when they elected him last November.
His goals are ambitious and it appears the only thing bigger than his ambitions are the obstacles they must clear.
Barrack AddressThat's why President Obama warned on Saturday he was bracing for a fight against powerful lobbyists and special interests who sought to pick apart the $3.55 trillion budget he wants to advance his agenda of reform. "I know these steps will not sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they are gearing up for a fight as we speak. My message to them is this: so am I," he said.
And a fight he will have. Already waves of opposition are pouring in. In a radio response, the Republicans stuck with their campaign remarks from last year, warning that Democratic spending priorities threaten to destroy the American dream that hard work can build a better life for each successive generation of citizens.
"This week, the president submitted to Congress the single largest increase in federal spending in the history of the United States, while driving the deficit to levels that were once thought impossible," said Senator of North Carolina Richard Burr.
He said Obama's budget commits the government to a billion dollars a day in interest on the debt over the next decade. "Now, instead of working hard so our children can have a better life tomorrow, we are asking our children to work hard so that we don't have to make tough choices today," Burr said. The White House predicts the United States will enter the new fiscal year with a budget deficit of $1.75 trillion - the largest since World War II, and four times the size of this year's deficit.
But Obama has pledged to cut it in half by the end of his first term. Specifically, administration officials say the annual gap between federal spending and tax collections will fall from something north of $1.4 trillion this year -- the highest since World War II -- to $533 billion in 2013. He said a page-by-page examination of the federal budget had already identified $2 trillion in potential savings over 10 years.
But when you look at it from a technical standpoint, this year's budget deficit has already been bloated by major spending in the stimulus package and various financial-sector bailouts which include expenses unlikely to be repeated in future years.
The nonpartisan Congressional Budget Office (CBO) recently predicted that the deficit could be halved by 2013 merely by winding down the war in Iraq and allowing some of the tax cuts enacted during the Bush administration to expire in 2011, as Obama proposed. That alone would cut the deficit to $715 billion, according to the CBO.
As Senior Republican on the Senate Budget Committee Judd Gregg (who recently withdrew as Obama's nominee to head the Commerce Department) said, "You're not getting savings if you're assuming spending that isn't actually going to occur."
Mr. John KeyLast week, we interviewed the American CEO of Canadian-listed gold junior Gryphon Gold regarding their recent Q3 results plus Obama's stimulus and his over-zealous spending. Click on the clip to the right (you may have to log in).
It's tough to side with President Obama when you're an investor and I know most of you are. But I have to admit that his stance and his utmost confidence in his proposal almost make me feel at ease despite all of the loopholes, wordplay and shortcomings of his proposed budgets. Almost.
Friday, February 27, 2009
Better buckle up The Roller Coaster Ride Continues
Better buckle up
RTGAM
If U.S. stock index futures are any indication, major U.S. stock market indexes will carve out fresh 12-year lows on Friday morning when markets open, after investors recoiled from steep losses overseas, a mammoth-sized revision to the U.S. economic contraction in the fourth quarter and a government deal with Citigroup Inc. that seriously dilutes existing shareholders.
With about an hour before markets open, futures for the Dow Jones industrial average were down 139 points, to 7039. During Monday's stock market swoon, the Dow closed below 7115 for the first time in 12 years. Similarly, futures for the S&P 500 were down 17 points, to 735, after closing at a low of about 743 on Monday, before showing signs of rebounding later in the week.
U.S. gross domestic product was revised down to a contraction of 6.2 per cent, annualized, in the fourth quarter - far below an earlier reading of 3.8 per cent that had been well above projections from economists. Although economists had anticipated a downward revision to the quarter's GDP, this was worse than the expected 5 per cent drop.
"In the final analysis, it is clearly evident that the U.S. economy was significantly weaker in the fourth quarter than was first thought, which has a certain irony to it as the initial number was significantly less grim than the initial market expectation," said Millan Mulraine, economics strategist at TD Securities, in a note. "And while we do not believe that this horrendous pace of economic contraction will continue at quite this rate, we expect the economy to remain very weak from some time, with further gaudy declines probable."
Meanwhile, Citigroup Inc. struck a deal with the U.S. government which involves a stock swap that will see the administration take control of more than one third of the struggling bank. As part of the deal, more than $50-billion (U.S.) worth of preferred shares will be converted into common shares. According to the Wall Street Journal, the deal will wipe out about three quarters of the existing shareholders' stake in the bank.
Click Here For The Best Investment You Can Make In A Recession!
The shares plunged 41.5 per cent in premarket trading, to just $1.44, and dragged down other names in the sector. Bank of America Corp. shares were down 21 per cent and Wells Fargo & Co. was down 12.6 per cent.
In Europe, the U.K.'s FTSE 100 was down 3.6 per cent and Germany's DAX index was down 3.9 per cent in afternoon trading. In Asia, Japan's Nikkei 225 rose 1.5 per cent in overnight trading.
Copyright 2001 The Globe and Mail
How Bernie Madoff...Madoff With Billions
DOUG STEINER
Globe and Mail Update
February 26, 2009 at 7:00 AM EST
IF YOU WORK ON Wall Street or Bay Street, it's not that unusual to read that someone you know has been arrested. But when the number $50 billion is attached, the news has the power to shock you deeply. That's how I felt one morning last December, when I read that one of my Wall Street heroes, Bernie Madoff, had been charged after allegedly parlaying his charm and near-legendary stature into a Guinness World Records-scale fraud. There he was, in a stock photo that I could tell was several years old. Bernie, the reports said, was now holed up in his $7-million (all currency in U.S. dollars) Upper East Side apartment, under house arrest.
A few days earlier, Bernie reportedly had admitted that he'd orchestrated a $50-billion Ponzi scheme that was "all just one big lie." His chosen confessors were his brother Peter and his sons Andrew and Mark, who all worked with him at Bernard L. Madoff Investment Securities LLC. For years, clients and rival money managers had been amazed by the returns that his funds had reported—returns so solid and consistent, in good times and bad, that they seemed almost manufactured.
Apparently they were. Within days of the news, the names of dozens of prominent victims became public, including huge international banks like HSBC and the Royal Bank of Scotland, Hollywood big shots like DreamWorks co-founder Jeffrey Katzenberg, charities established by Steven Spielberg and Elie Wiesel, and individuals—even Bernie's sister, Sondra Wiener.
Although I hadn't seen Bernie in two or three years, I've known him for more than two decades. He's one of the smartest guys I've ever met in the investment business. He was also everything I wanted to be—entrepreneurial, rich, charming.
Madoff
Enlarge Image
The Globe and Mail
Not to mention innovative: In the 1980s and 1990s, Madoff blazed a path with new electronic trading technology that rival firms didn't adopt until years later. And then there was the respect. Bernie was revered both on Wall Street, where he served as chairman of Nasdaq in the early '90s, and in social and charitable circles in New York and Palm Beach.
The technology was the reason he and I first met, in 1986. I was working at Dominion Securities in Toronto. DS (soon to become RBC Dominion Securities) was the most powerful firm on Bay Street, but it was still woefully behind some of the American dealers when it came to innovation. I was just out of graduate school, a math whiz trying to run a fledgling arbitrage trading operation. I had to buy desktop computers for my group myself, because management didn't see any long-term potential in them. DS head trader Michael Biscotti told me that "no television will ever tell me what to trade."
I'd heard that Madoff was offering a fast and low-cost electronic trading service for U.S. stocks. I thought it would save our firm and our clients money. So a few of us flew to New York to take a look. DS soon became one of Bernie's biggest trading clients, and it never lost a cent dealing with him.
Right off the bat, we were impressed by the way Bernie treated us. When you work on the trading floor of an investment dealer, you don't get taken out for lunch much, or get fawned over. That's something you do for clients. But at Madoff, we were the clients, and Bernie wanted our business. His brother Peter is a lawyer who was the firm's general counsel. Since he was also the mastermind of the trading operations—a technical motorhead like me—I took to him right away.
The Madoff offices oozed success. They had just moved into the then-new Lipstick Building, an oval-shaped post-modern classic in midtown Manhattan designed by John Burgee and Philip Johnson. That day, and on subsequent visits for years afterward, we were served lunch in the boardroom. Real china, real silverware. The walls were lined with several of pop artist Roy Lichtenstein's serigraphs.
Bernie was always impeccably dressed. He looked so Wall Street to me—suit jacket off, with French cuffs and suspenders. He was almost always in motion. There were phone calls, employees vying for his attention and, one time, his yacht captain trying to nail down a trip. Bernie's own office was immaculate, with nice pens and furniture, but it wasn't big compared to those of other investment titans I met back in the '80s. He was the archetypal gracious-but-tough New York broker, with a Queens accent to prove he had no silver-spoon provenance.
The most impressive thing for me, though, was the darkened trading room. Bernie was strict about how much paper you could have on your desk: none. The screens were the first 19-inch IBM 3290 flat gas-plasma models I'd ever seen; the orange hue they cast on the traders' faces was the only bright colour in the room. The machines could display up to four windows of market information at once. I was drooling: This was the business I wanted to emulate.
The trading room also appeared to be the very profitable—and totally legitimate—guts of Madoff's operations. Bernie offered investment advisory and asset management services as well, but those were run separately, and not something DS needed. What we wanted was immediate execution of buy and sell orders for the most popular Nasdaq stocks. Although there were online services that quoted stock prices, you still generally had to phone a broker to do the trade for you. It was a pain in the ass. The market prices could shift quickly, and brokers could make you pay an unfavourable price if they felt like it.
Technically, Madoff was an "off-floor" dealer registered with the National Association of Securities Dealers—the firm didn't have traders on the New York Stock Exchange floor. Bernie and Peter weren't the only game in town in this niche, but they were the best. How did they do it? By capturing much of the spread between the quoted bid price on a stock (the highest a prospective buyer is offering to pay) and the quoted ask or offer price (the lowest a prospective seller says they'll accept).
It worked like this: Prices for major stocks were quoted in fractions of a dollar, often in 1/8ths—increments of 12.5 cents. If a stock was trading around $30, you might see a bid price of 29 7/8 quoted onscreen, and an offer price of 30 1/8. Madoff guaranteed to buy or sell up to 2,000 shares of the most popular Nasdaq stocks at the best quoted price, do it within seconds, and pay a small and entirely legal rebate of one cent a share to a trading client for the transaction.
If DS had a client who ordered us to sell, say, 2,000 shares of something at the market price, Madoff would pay us a $20 rebate for the order, on top of the $29.875 bid price. If, as was usually the case, Madoff got an order from another brokerage within minutes to buy 2,000 shares at market, he would sell them the stock for $30.125. Bernie's take: the spread of 25 cents a share, or $500 on the two orders, minus the $20 rebate on each, for a total of $460, or 0.77% on $60,000. Do a round-trip transaction like that every day for a year, and the return is 279%.
Madoff's brokerage clients, like DS, loved it. We charged our own clients commission on the trades, we were guaranteed the best price fills, and Bernie took the risk—which was that he could quickly rebuy what he sold, and resell what he bought, and do it at a profit. And his operation was totally automated.
In 1993, inspired by Bernie, I co-founded my own online trading business in Toronto called Versus Technologies Inc., which ran E*Trade Canada until it was bought by E*Trade in 2000. I kept in touch with Bernie in the '90s, and I wanted other people in the industry to study his operation, too, to see how electronic trading could enhance market liquidity. He'd raised his maximum buy or sell order for clients to 5,000 shares for Standard & Poor's 500 stocks, and offered the same execution for convertible bonds, preferred shares, warrants and share purchase rights. He'd also expanded his London trading desk.
The fact that Madoff offered so many services, and that Bernie's name was all over everything, gave people confidence. "In an era of faceless organizations," said an online brochure of the firm's at the time, "Bernard Madoff has a personal interest in maintaining an unblemished record of value, fair-dealing and high ethical standards." The pitch also leaned on the family's positions of leadership in industry organizations. Those roles reflected "the respect the firm and its management have achieved in the financial community."
I believed every word, and so did a lot of heavy hitters on Bay Street and Wall Street. I wanted everybody I knew in the business to meet this guy. I flew down to New York for a day along with super securities lawyer Ed Waitzer, during his term as chairman of the Ontario Securities Commission. He wanted to get a better understanding of how the market for trading services was changing. The highlight was a lunch meeting with Bernie and Peter. They answered all Waitzer's questions in detail, including explaining arcane U.S. trading rules that they'd incorporated into their system.
A few months later, I was at the headquarters of Goldman Sachs, near Wall Street, sitting in the office of Bob Steel, then the partner in charge of the firm's equities division. (Subsequently, Steel served as undersecretary of the Treasury for Domestic Finance in the George W. Bush administration, and he was hired by the troubled Wachovia bank last July as CEO.) When I explained Madoff's electronic trading operation to Steel, he didn't believe it could be that sophisticated. He told a handful of his younger trading-wizard partners to check it out. Bernie agreed to a meeting immediately, so we jumped in a town car and were uptown in his boardroom 30 minutes later.
One of the Goldman guys was the then-already-renowned Jacob Goldfield, a brilliant, 30-something Yoda of eccentricity, unshaven and carrying a knapsack on his back. As he walked around Goldman in his stocking feet, I figured that if this physics and Harvard Law School grad could act like that and become a partner, maybe an off-the-wall guy like me could succeed in this business, too. He and Victor Simone, a Goldman pal of mine who was in charge of electronic trading, toured Madoff's trading room together.
By the late 1990s, Madoff was not so cutting-edge. Bernie was now just one of many firms and alternative trading networks offering immediate electronic-order execution. The decisive shift came in 2001, when U.S. markets completed the switch to stock pricing in cents, rather than in fractions of a dollar. Spreads between quoted bid and ask prices that had been 25 cents or more a few years earlier shrank to a penny or less.
I had left E*Trade Canada by then, and was trying to get another automated trading business going. I lost touch with Bernie and his firm for a while, and when I resumed contact, I talked mainly with his sons. They didn't volunteer too much about the firm. None of my friends on the Street knew how they were making money. It's still possible to earn trading profits on a one-cent spread, but it's a grind. I figured Bernie might have a new arbitrage gig going. I didn't know how big his asset management and investment advisory businesses—where the alleged Ponzi scheme was rooted—had become.
I can't remember exactly when Bernie and I last met. It was at a lunch, two or three years ago. No boardroom that day, though, just sandwiches in the ground-floor café of the Lipstick Building. I was there mostly to talk to his son Mark, who was, for a time, on the board of Market Regulation Services Inc., the spun-off enforcement arm of the TSX that regulated Canadian stock markets. I had some gripes about the rules for new Canadian electronic marketplaces. Bernie wasn't his usual talkative self. Even when I probed, all he would say was that everything was fine. I remember thinking that maybe he should retire.
It's always hard to tell from the outside exactly what a money manager is doing—even if a fund submits all its regulatory filings. Some analysts and reporters questioned Madoff's results over the years, but the red flags weren't glaring. Its flagship hedge fund, the $5-billion Fairfield Sentry Ltd., reported not huge returns, but eerily consistent ones—almost always between 1% and 2% a month.
Harry Markopolos, an independent investigator, first contacted the Securities and Exchange Commission about Madoff in 1999. The regulators dismissed Markopolos as a crank, even after he sent them a 19-page memo in 2005 about Madoff, titled "The World's Largest Hedge Fund is a Fraud." At various times, rival money managers also tried to figure out Madoff's strategy, but couldn't. Now we know why: Bernie, it is alleged, was paying off early investors with money from later ones.
Although it was a shock to me, it was not a surprise. The most duplicitous of fraudsters are often charming, intelligent and helpful. I imagine that almost everyone who knew Bernie admired the same thing I did—his quiet confidence. Like him, many fraudsters are also tireless charitable donors. I knew another one in the late '80s and early '90s: Christopher Horne, a top-selling broker at DS. A lot of us wanted to study his apparently super sales techniques. He was active in art circles, and had assembled one of Canada's top collections. But Horne abruptly quit in 1994, and later pleaded guilty to defrauding clients, many of them elderly women, of $7 million (Canadian).
What sense do I make of it all? Three things: First, if something looks too good to be true, it may well be.
Second, if the way a company makes money is opaque, it could be doing something illegal.
Third, beware of excessive charm; and know, too, that prestige is something you can buy as well as earn.
But I hasten to add: There are no sure-fire warning signs telling you someone is a con artist. Up to the last minute, you might want to be just like them, until you find out the truth.
Thursday, February 26, 2009
With Tongue Firmly In Cheek
Bummer about those lost savings
RICK MORANIS
From Wednesday's Globe and Mail
February 24, 2009 at 8:14 PM EST
Sir George S. Mammon
The Mammon Company
Formerly of Lloyd Harbor, N.Y.
Feb. 25, 2009
Dear Clients and Friends,
I am writing to you from an undisclosed location on an untraceable laptop hoping that you are all well and not too angry with me.
As you know, I had little choice but to leave the North Shore of Long Island last week, quite hastily, after it became apparent I could no longer disguise the fact that, for the past 35 years, I misplaced all your money.
As I've said over and over in my annual letter, it has been my sincere honour and pleasure to have served you and your families' financial needs.
Many of you became "like family" to Sugar and me, and we shared the happiest of times together. I hope somehow that the good memories you have aren't tainted by the recent circumstances of my and your money's disappearance. Like you, I have watched our economy suffer the consequences of poor oversight, a lack of transparency and outright unmitigated greed.
Were it not for the financial mess the country is in right now, I would have been able to sustain the illusion of continuing growth and liquidity I so rigorously worked at establishing for more than three decades.
I share in your displeasure and fear about current conditions and wish I could say that I were optimistic, and comforted with the direction our government officials seem to be heading. I can assure you that, had I legitimately been investing in the holdings that were indicated on your monthly statements, you would be finding yourselves in almost as challenging a situation as you do now.
Many of you introduced me to good friends and family members who joined the Mammon investment community. For that, I am extremely grateful.
Many of you are aware of the extent to which TMC (The Mammon Company) held a special place in the philanthropic world of Nassau County's educational, religious and medical institutions. The countless gifts and vast amounts of money that I was able to donate all these many years were made possible by you, though I received the tax deductions.
Believe me, when a patient is receiving the highest quality reconstructive facial surgery, it doesn't matter whose name is on the building.
Now, the healing must begin.
I also hope you'll take pride in the tremendous contributions you made providing prosperous livelihoods to the many employees around the world whose devoted service to TMC allowed their many children to go to college. The flight captains and crews of our three gorgeous aircraft, the entire crew of "Moolah IV" and all the previous yachts, the housekeeping staffs, landscapers and service people in Malibu, Aspen, Scottsdale, Bermuda, Mayfair and the Seychelles. Every time you entrusted your hard-earned assets to TMC, the wheels of commerce turned a little faster. Because of your commitment and undying belief in the integrity of our service, true unbridled capitalism could flourish. New wealth was deployed for the benefit of many, while regressive and punishing international tax was rigidly kept to an absolute minimum.
Speaking of tax, let me give a word of advice to the many of you who took redemptions in order to remit required taxes on perceived capital gains and dividends. Because the actual transactions are somewhat questionable, the tax can be recaptured by refiling returns. I don't believe there is a statute of limitations in these kinds of cases. My sons Georgie and Niko, who had absolutely nothing to do with, and who had no knowledge whatsoever of, TMC's investment operations, are both exceptionally gifted at the kind of forensic accounting many of you may require. I invite you to contact them for reasonably priced counsel and execution.
May I say here that if I were advising our new President, I'd tell him to privatize the Internal Revenue Service and Securities and Exchange Commission or, at minimum, appoint a "coin czar." Financial and career incentives to bring tax evaders and other felonious operators to justice would be capital better-spent than all the stimulus and bailout money a high-speed press can print. In the hopefully unlikely event of my capture, I'd be honoured to plead my way into consideration for such a position.
I will miss very much the day-to-day interaction with all of you, not only professionally, but at the golf and beach clubs, the casino and masquerade nights and the many different vacation spots where many of us first met and would somehow always seem to run into each other.
I hope you will continue to be warm, kind and generous to Sugar now that I am gone. Like Georgie and Niko, she knew absolutely nothing about TMC. I can unconditionally guarantee that those cash withdrawals last week were a complete coincidence and were only done in order to facilitate some previously structured estate-planning strategies.
For those of you who spent time with us in Florida, you'll be happy to know that Sugar will be retaining possession of that beautiful home; I'm sure she also will be delighted to have company with her in Naples whenever possible.
Well, friends, I hear the train whistle. Or was that a boat? I guess I'll be on my way. I will endeavour to keep in touch as I make my journey through my new life.
I pray that God and our new President can somehow steer us through these rough waters, or bumpy roads, and that prosperity will return to your great country once again.
Sorry about the money.
And thanks to every one of you.
Ciao for now,
George
Wednesday, February 25, 2009
Monday, February 23, 2009
“If the Fed is right, then this market is a screaming buy,” Mr. Delisle said. “Admittedly, the Fed's outlook is likely to be revised lower as the year
“If the Fed is right, then this market is a screaming buy,” Mr. Delisle said. “Admittedly, the Fed's outlook is likely to be revised lower as the year progresses, but as optimistic as their scenario may seem now, we would note that bullish scenarios always look the most outrageous in stormy periods.”
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Federal Reserve: Best-case scenario
Monday, February 23, 2009
In its economic update released last week, the U.S. Federal Reserve forecast that the U.S. economy would contract 0.9 per cent in 2009 and then improve to 2.9 per cent growth in 2010. Wishful thinking? Vincent Delisle, a strategist at Scotia Capital, believes so – but he looked at how the S+P 500 is likely to respond under the Fed's best-case scenario, Scotia's base-case scenario and a worst-case scenario.
The Fed's scenario would likely translate into S+P 500 aggregate per-share earnings of $65 (U.S) in 2009 and $80 in 2010, up from $55 in 2008. Attach a price-to-earnings ratio of 16 onto those figures, and the implied price targets for the S[amp]amp;P 500 would be 1050 in 2009 and 1275 in 2010. During late-morning trading on Monday, the S[amp]amp;P 500 was down to 763.
“If the Fed is right, then this market is a screaming buy,” Mr. Delisle said. “Admittedly, the Fed's outlook is likely to be revised lower as the year progresses, but as optimistic as their scenario may seem now, we would note that bullish scenarios always look the most outrageous in stormy periods.”
Unfortunately, he puts the Fed's best-case scenario at just a 20-per-cent chance of success (ouch) – or even odds with the worst-case scenario. That one looks like this: Stress conditions in credit markets stir again, throwing a cold towel on improving economic conditions. Earnings for the S[amp]amp;P 500 fall to $45 a share in 2009 and improve only slightly to $55 in 2010. As a result, the implied price targets (using a lower P/E ratio) for the S[amp]amp;P 500 would fall to just 550 in 2009 and 650 in 2010 – suggesting another bout of volatility.
Depressed? At least the base case scenario has a 60-per-cent chance of success, in Mr. Delisle's view, and looks reasonable for equity markets. Under this scenario, U.S. gross domestic product contracts 2.9 per cent in 2009 and rises 1.7 per cent in 2010, which is gloomier than the Fed's estimates. S[amp]amp;P 500 earnings flat-line at $55 this year and rise to $70 next year. Using a P/E ratio of 14 (mid-way between the best-case and worst-case scenarios), the implied target for the index is 850 in 2009 and 1000 in 2010.
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