London (PRWEB) May 27, 2006
The number of oil wells being drilled worldwide is on the rise. Russia's oil drilling surpassed its market, according to Research and Markets latest report, creating export opportunities and in the Eastern portion of the United States, oil drilling permits are setting new records in Pennsylvania and Ohio while in Canada, the oil drilling season is just about to begin in the oil-rich Alberta province.
With OPEC producing near its capacity demand worldwide for the black gold that runs the world's economies is growing in demand, so much so that prices are at record levels on all the world's commodity exchanges. OPEC member states have said they were expanding production capacity but that it would take several years to complete, meanwhile the demand grows.
In the United States consumption is at record levels and the slightest bit of global political turmoil or breakdown in supply pushes traders to quickly raise oil futures prices. When the U.S. National Oceanic and Atmospheric Administration (NOAA) report forecast six major hurricanes in the Atlantic on May 23rd it pushed crude oil up over $1.68 a barrel in New York that day.
In Canada where the western province of Alberta is experiencing an oil boom, the Conservative government's Federal Environment Minister, Rona Ambrose, told reporters May 23rd that the provinces were in basic agreement to begin adding ethanol as a gasoline additive to preserve supplies using an alternative fuel, just like in the U.S.
In a reported entitled Drilling in Troubled Waters, Canadian Imperial Bank of Commerce (CIBC) said higher crude oil prices, combined with declining production capacity and already lower-than-average inventories are expected to send average gasoline prices higher.
The CIBC estimates the average price of crude to be $78 per barrel in the fourth quarter of 2006.
While bankers at the CIBC rings their hands in worry, Nav Energy Trust (TSX: NVG) said Tuesday that it will merge with Clear Energy Inc. (TSX: CEN) to form a larger trust and a new publicly traded junior exploration company.
The two Calgary-based oil and gas producers currently have a total stock market value of about $473 million. Once merged, the new entity will be called Sound Energy Trust, while the junior explorer has yet to be named, the Canadian Press reports.
The merged entity is expected to have estimated production of about 12,500 barrels of oil equivalent per day, made up of 4,650 barrels of oil and natural gas liquids and 47 million cubic feet of natural gas.
It would also have a large undeveloped land base of nearly 2,000 square kilometres, providing a multi-year drilling inventory.
Calgary-based Magnus Energy Inc. (TSX.V: MEI.A) released its first quarter results today noting that it is planning a major development drilling program for the Antler area of southeast Saskatchewan with 18 wells budgeted for the remainder of 2006.
At March 31, 2006 the Company had an estimated 500 to 600 BOE per day of production waiting to be tied in. This includes 2,000 MCF per day (333 BOE) of natural gas from six wells drilled at Paradise Valley in East Central Alberta and 200 to 250 BOE per day from half a dozen wells in Central and Southern Alberta which were drilled in the fourth quarter of 2005.
Still quiet is Patch International, Inc. (OTCBB: PTCH), which has yet to start announcing its drilling program this spring. Patch is sitting on millions in cash from a sale of shares it held in a NASDAQ-listed company and earlier this month announced the addition of an M&A-happy president to its operating subsidiary, Patch Energy, Mr. Michael Vandale. Vandale had left his post as president of Arsenal Energy (TSX: AEI), where he grew the company from 50 BOE to 2,e00 BOE per-day through acquisitions in under two years.
Source Press noted in a story earlier this month ("Supplying America's Oil") the change of the guard at Patch when Vandale joined the company, citing his background and history, suggesting that his departure from a successful Calgary-based oil company may be due to Patch's lure for stronger growth and deep pockets.
At any event, it appears that things are just starting to heat up in the booming Canadian oil market with drilling programs just now beginning to be disclosed. The year itself should prove interesting to see the number of new wells coming into play, whether in the US, Russia or Canada, where the action is highest.
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