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LIVING OFF THE LAND

A SALUTE TO THE PRODUCERS OF OIL,

GAS, SULPHUR,CROPS AND LIVESTOCK

October 28, 1997

New Horizon hits target with pin-point accuracy

PECOS, October 28, 1997 - State-of-the-art technology is leading one drilling company into experimental frontiers in Reeves County.

A highly trained and specialized team of workers led New Horizon Exploration, Inc., of Richardson, Tex., into such a new frontier in March when they began drilling horizontal drains into the oil saturated Bell Canyon Sandstone of the Delaware Mountain Group.

Since then, New Horizon has completed four horizontal drains north of Pecos and is currently drilling its fifth horizontal drain with its own rig equipped with directional tools, a working floor, dog house and 24-hour crews.

Greg Boyles, owner of New Horizon, said that the most remarkable thing about the process is the fact that "we can guide the bit to the target and hit it with pin-point accuracy, even if the target is only four feet thick.

"Our team, with the help of Anadrill and state-of-the-art geosteering tools, positive displacement motors and high powered computers, has successfully hit the target each time. The technology is a remarkable thing. We can now drill a vertical well and in less than 100 feet create a curve that builds angle from vertical to horizontal and literally steer the bit into the oil bearing reservoir out a 1,000 feet or more."

Boyles has been drilling wells for 20 years. He said that there has not been a technical development in the oil field that has caused him to be more enthusiastic than he is today, not even 3D seismic.

New Horizon anticipated that the initial oil flow rates from the horizontal drains could be five times more than offset vertical wells and have found this can be true. New Horizon's first horizontal drain on a Mr. Meeker's property in the Ken Regan Field produced at 150 barrels of oil per day while drilling the horizontal section.

Boyles said that his company ended up having such a high fluid entry rate from a 1,000 foot horizontal drain, that a hydraulic jet pump operation had to be installed. During the first 30 days of jet pump operation, the oil cut improved from one percent to ten percent, moving approximately 900 barrels of total fluid per day without any well stimulation.

The offset vertical wells, when completed, came in flowing approximately 100 barrels of total fluid per day (with an acid frac stimulation) and after a couple of weeks ended up producing with a 30 to 50 percent oil cut, or 30-50 barrels of oil per day. Boyles said that he thinks that the high volume drains will take longer to reach their full potential because they are drawing down from a much larger area (1000 ft. versus 10 ft.).

Boyles added that he learned it could take as long as 60-90 days before the oil cut gets up to percent on the high volume wells, so drilling companies should plan for this and not expect 150-180 barrels of oil per day instantly in these cases.

However, New Horizon's most recent well completed on a Texaco property with a 1,067 foot drain has provided a more instant gratification. But, it was not without temporary trepidation.

The well is in a different channel than the Meeker property and presented a different challenge when completed. After the drain was drilled out, the well would only flow approximately 60 MCFPD with 10 barrels of oil per day and no water. Boyles said that the need to stimulate a horizontal drain presented a real challenge.

"So now you have a horizontal drain that is flowing a marginal amount of oil and gas, how do you stimulate it?" he asked.

New Horizon reps had hoped to find the answer at the Society of Petroleum Engineers Horizontal Conference held in Midland this September. What they discovered was that no one had performed an acid sand frac treatment on a horizontal drain in Delaware Sand and that its technical team would be put to the test of engineering a process never attempted.

Ultimately, New Horizon sand fractured 150 foot intervals along the horizontal axis every 300 feet. The sand fracture treatment was pumped by Fleet, FCI of Cisco, Texas. A formation packer was also provided and run by Baker Tools of Odessa. The horizontal drain stimulation process took approximately 30 hours and after a 24-hour shut-in period, the well began flowing 144 barrels of oil per day with 160 MCFPD.

Boyles said that there are a few important steps in the process and that he'd share this information.

New Horizon has been producing oil from the Delaware Basin in Reeves County since 1986. Company leaders felt that it would take new technology to enhance the economic oil potential of this area as well as other areas. During the past three years, New Horizan officials trained and set out to become proficient at horizontal drilling and completion techniques. They were willing to take a chance and apply what they had learned on one of their core properties in Reeves County.

With the success, New Horizon will continue its development effort in the Delaware Basin for many years. The company also plans to take its technical team and experience to the Djay Basin north of Denver where this winter it will drill three 7,000 foot wells and install a 4,000 foot drain in each of the wells.

Asked if he had any other place in mind, Boyles said "Yes, since 1996 we have attempted, and would love to, drill in Trinidad or the West Indies, but we're not sure if we will ever convince the government that an independent from Texas can get the job done, drill multiple wells on a timely basis that is. The international competition is fierce and unless you are the Chinese National Oil Company or an Amoco it is difficult to even be considered.

"However, since human resources are more limited than development capital, I think someday we will get our chance and will drill in places like Trinidad, India and Pakistan."

Dairy farming gets complicated in Texas

By GREG HARMAN
Staff Writer

PECOS, October 28, 1997 - "The days of going out and seeing cows at pasture are gone," said local dairyman Greg Mitchell. "The economics of the world today demand that dairies get bigger."

Greg's father, Charles Mitchell, and a partner started their dairy back in 1955, after moving from El Paso. They started with 60 Holstein cows whose milk they processed into drinking milk, buttermilk and other dairy items which they sold directly to the public. Today they are milking 1,100 cows and shelter a total of 2,600 animals. The process to get the milk to market has grown considerably more complicated.

When their dairy first started there were so many small dairy operations that competition was extremely tough for dairymen. According to Mitchell, the whole process turned into a fiasco. Competitors were known to disturb others' milk products and the fight for shelf space was fierce. After one year of marketing their own items, Mitchell and Davidson began to sell to Bordens in El Paso.

However, that move did not solve all of Mitchell's and Davidson's problems. In the early 1960s they were forced to dump their milk for more than 250 consecutive days because the run-off of DDT from cotton farms had contaminated the milk.

"We had to dump because we sold across state lines," said Mitchell.

Other dairies whose products were known to contain higher levels of contamination did not have to dispose of their product, Mitchell said, because they sold only within the state.

A fluctuating milk market makes dairy life difficult. Often at the end of the school year - when demand for dairy products generally drops - buyers create excuses to limit purchases.

"When MPI (Milk Producers Inc.) came around it was like a godsend," Mitchell said. MPI is a cooperative for dairymen that provided some stability to the pricing system for the dairy market. MPI then became the Associated Milk Producers, Inc. (AMPI), that will be defunct as of January 1, 1998, the result of a proposed "mega-merger" that may soon bring four large cooperatives together under one banner: the Dairy Farmers of America.

"The one thing I've learned, if I've learned nothing else, is that the people that will survive (in this business) will be the people that produce their product the cheapest," Mitchell said.

He added that the success of the farmer of the future depends on inventing market shares: that is, generating new, innovative products and getting involved in advertising. This is a large part of the cooperative attraction.

"As dairy farmers, we can't just sell as we always did. We must have a convenient product," he said.

Dairymen today must worry about competing with soda manufacturers and devising catchy ad campaigns to keep up. Even packaging considerations must be addressed. According to Mitchell, the fact that "a square milk container won't fit in a car's drink holder" could be a turn-off to consumers. He said that there are even colors that may be used in packaging to attract customers.

For the Mitchells, expanding markets and mechanization look to be leading to better conditions for the dairy. While in some of the northern states Canada's milk production is hurting U.S. dairy farmers, down here in Texas there may be great rewards ahead because of NAFTA.

"They can't produce enough of their own milk (in Mexico)," Mitchell said, "and they love dairy products." If adequate refrigeration could be worked out, he said, Mexico would be a tremendous opportunity for U.S. dairy exports.

And the technology seems to be on the way. A new filtration system being experimented with may actually reduce three loads of milk into one load for cheaper transportation. Also, mechanization has improved the situation on Mithcell's own farm.

"We used to have four people to feed 600 cows. Now we have one person feeding all 1,100," he said.

Apart from the obvious finely-tuned business acumen that dairy farmers must possess in today's unpredictable world of "agri-business," the day-to-day concerns for their cows remain a constant.

The Mitchells mix their own feed (a conglomeration of cotton seed, weed silage, milo - hominy and tallow enhanced - and minerals) and, like other farmers, have suffered under the high grain costs of previous years.

"It doesn't behoove you to try and cut corners on nutrition," Mitchell said, "It may come around and bite you on your butt."

Cows must be cared for in an expert manner to keep the quality of milk high. Therefore, a primary focus for dairy farmers is the diet of their cattle.

"A nutritionist once told me that for a cow just to produce milk in 95 degree weather (requires the same amount of energy as a) human riding a bicycle at fifteen miles per hour," Mitchell said.

Merger expected by end of year

PECOS, October 28, 1997 - The merge between Freeport-McMoRan Inc. (FTX on the New York Stock Exchange) and IMC Global Inc. (IGL) is expected to be completed by the end of 1997, though the merger is subject to the approval by FTX and IGL shareholders. The merger between the two companies was agreed upon August 27, 1997, with IGL as the surviving entity.

FTX reported a third-quarter 1997 net loss to common stock of $163 million ($6.89 per share). And the nine month period ended on Sep. 30, 1997, FTX reported a net loss of $154 million.

Several factors contribute to these losses. Phosphate fertilizer sales declined by 7 percent from the previous year, with lower North American shipments that was only partially offset by slightly increased export business. And while phosphate rock prices increased 5 percent since 1996, the sales decreased causing lower operating earnings. Sulphur operations in Main Pass and Culberson continued to operate at reduced rates in response to market conditions.

For each FTX common stock, sharholders are to receive 0.9 of a share of IGL, one-third of a warrant to purchase IGL common stock, and an interest in a new sulphur company owned by IGL.

The Texas Industrial Production Index, according to the Federal Reserve Bank of Dallas - while increasing in the past year - tapered off between July and August.

Overall manufacturing output increased by 3.3 percent between August of 1996 and August of 1997. During this period durable goods increased by 5.6 percent; nondurable goods increased by 1.1 percent; mining increased by 0.9 percent; and utilities decreased by 1.5 percent.

Dairy farmers must cooperate to survive

By GREG HARMAN
Staff Writer

While big city media focus on added costs tacked on to store-bought dairy products, the real problems in the dairy industry are hidden behind the labels. The dairy industry is sick and Texas dairy farmers are weak with fever.

Texas has been losing ten percent of its dairy farms annually for the past two years and a dependable, fresh supply of milk for consumers is at risk, says Decatur dairyman Calvin Buchanan. In an effort to keep Texas dairy farmers afloat, milk processors and farmer-owned dairy cooperatives have agreed to raise the price that dairy farmers are paid for the milk they produce - amounting to a four to five percent increase for milk produced this October.

"While co-ops are expected to negotiate for a profitable price, Texas and New Mexico haven't seen these negotiations in a while because of changing competitive structure within the co-ops," said James Terrell associate of Texas-New Mexico Milk Marketing Agency, a bargaining coalition.

According to Terrell, Associated Milk Incorporated (Tex.), Mid-America Dairymen (Mo.), Select Milk Producers (N.M.), and Elite Milk Producers and Artesia (Tex.), were co-ops involved in the push for higher prices from processors.

Dan Glickman, U.S. Secretary of Agriculture, said during a forum on small farms in July that small family farmers are "operating in a much more complex environment today." He said that, unless innovations were made, the Freedom to Farm Act, which "leaves farmers exposed to the volatility of the markets," is bound to negatively affect smaller operations and could bring "a new wave of small farm losses." According to Glickman, potential solutions may be found in co-ops and farmers' markets.

An open letter from the Texas Milk Producers Association has sounded the alarm. The letter states that the U.S. Federal Government has been determined to "get out of the business of refereeing the dairy industry" since the early 1980s. Now with the Freedom to Farm Act, that suggests that competitive market forces will now determine dairy prices in a free market, farmers are in for even more trouble.

The TMPA suggests that despite the rhetoric of government officials who say they are turning over the dairy industry to a free market, the government "has no intention of backing away from manipulating our market into oversupply." According to the letter, a state of oversupply keeps the price of necessities (such as milk and cheese) down. The TMPA believes this interests the federal government because low prices for necessities, though keeping farmers in debt, frees extra dollars in consumers pockets for non-essential goods and services, that in turn grow the economy.

Economic growth sounds good, but at what expense? argues Clint Van Vleet, dairy farmer from Sulphur Springs. According to Vleet, trade agreements such as GATT and NAFTA ensure that U.S. food needs will be met by "whichever country will produce them the cheapest."

Van Vleet argues that, "American family dairy farmers are pretty much finished unless we can establish an industry-sponsored parity system with milk moving from farm to market under volume contracts." But, the Federal Agricultural Improvement and Reform Act of 1996 eliminates the budget assessment on all dairy producers and phases down the support price on items such as butter, powder and cheese. The farm bill ends price support at the end of 1999 until 2002, when parity-priced provisions are supposed to be enacted.

Ag Secretary Glickman understands that many farmers want a price support program, but says that "placing a rigid floor under fluid milk prices would have widely different effects in different regions of the country and would likely raise prices for consumers and reduce sales."

Enter the "mega-merger" between Western Dairymen Co-op, Inc., Mid-America Dairymen, Inc., Associated Dairy Producers, Inc. (Southern Region), and Milk Marketing, Inc.

According to a report in Milkweed, industry watchers believe that up to one out of every three members represented by the four co-ops believe that the merger is wrong and want out. A schism has emerged between the Southern and the North Central regions of AMPI. Corporate delegates from the co-op will vote late this month to split the two regions.

According to the article, a "majority of North Central Region's directors were turned off by exposing their legitimate assets to the debts of certain merger partners." But if the merger does not pull through the debate intact, AMPI may have to do some quick work. General Manager Noble Anderson said that an emergency pairing between AMPI Southern Region and Mid-Am may be necessary because AMPI Southern may not be able to continue alone much longer.

Conservationists work to kill salt cedar

PECOS, October 28, 1997 - Conservation district directors, representing the 216 Texas Soil and Water Conservation Districts (SWCDs), passed a resolution at their 57th annual meeting this week in South Padre, to address the increasing problem of salt cedar.

The resolution suggests cooperation between the SWCDs, the Texas Department of Agriculture and the Agricultural Resources Protection Authority to find a possible solution for the salt cedar concern. Salt cedar, which grows near or in water, is a problem both on cropland and rangeland in north and northwest Texas, due to the high amounts of water the plant consumes.

According to a report by the United States Department of Interior, salt cedar has some value for the control of soil erosion and for wildlife habitat, but these beneficial features are offset by its lavish use of water. The deep rooting system developed by the salt cedar enables it to use ground water from depths of 30 feet or more below the land surface. Because of its deep rooting capacity, salt cedar may have free access to water and, therefore, may consume by evapotranspiration as much or more water than the amount that would evaporate from a lake surface.

Conservation district directors have proposed a possible solution which would examine the use of a chemical treatment consisting of a combination of Arsenal and Roundup. The combination is currently being used in New Mexico to treat salt cedar. However, the treatment has not been labeled for use in Texas due to the labeling on Arsenal, which does not allow for use on cropland.

The conservation district officials would like to work with the Texas Department of Agriculture and the Agricultural Resources Protection Authority to examine the chemical combination further for possible approval.

More than 900 soil and water conservation district directors and other conservation leaders attended the conference on South Padre Island.

Ranchers will gather for conference

SAN ANGELO, October 28, 1997 - West Texas cattle producers trying to maximize returns on a strengthening market should plan to attend the West Texas Ranchers Conference and Trade Show November 5 in the San Angelo Fairgrounds Exhibit Building.

The seven-county Extension -sponsored program offers updates on the latest beef cattle technology. Profitability and adding value to the live beef product will be the underlying conference themes.

Registration begins at 8:30 a.m. The program starts at 9 am. The first morning speaker is Dr. Barron Rector, Extension Range specialist at College Station. Rector, a San Angelo native, will speak an hour on stocking rate management. His talk is followed by a half-hour break and trade show visitation period.

The formal program resumes at 10:30 a.m. with a look at parasites and herd health by Dr. Steve Hammack, Extension Cattle Specialist at Stephenville.

The rest of the morning is devoted to a panel discussion on ways to add value to calves.

The panel is manned by Kevin Spreen, a backgrounding operator from Winters; Jody Frey, with Producers Livestock Auction, San Angelo; and Dr. Ron Gill, Extension Beef Cattle Specialist at Dallas.

A steak lunch will be served on-site from noon to 1 p.m.

The first afternoon sessions will be devoted to live animal demonstrations. Mark McClintock, of the Rocking Chair Ranch, southeast of San Angelo, will give pointers on bull selection and discuss the importance of EPD's in selecting a herd sire.

Gill will again man the microphone while demonstrating cattle handling techniques using the new "non-stress" methods several feedlots are now adapting to their operations.

The program concludes with an optional 2:30 - 3:30 p.m. "Computer Technology in Agriculture" presentation by Stan Bevers, Extension Economist-Management Specialist from Vemon.

Sponsoring County Extension offices involved with the program include: Coke, Concho, Irion, Runnels, Schleicher, Sterling, and Tom Green.

For further information call any of the County Extension Agents in the seven counties.

Registration fees are $10 before Nov. 3 and $15 thereafter. Those wishing to RSVP may do so by calling the Tom Green County Extension Office at 915-659-6523.

Freeport declares cash distribution for Sept.

Freeport-McMoRan Resource Partners, Limited Partnership (NYSE:FRP) recently declared a cash distribution for the quarter ended September 30, 1997 of $0.10 per unit payable November 15, 1997 to unitholders of record at the close of business on October 31, 1937.

This cash distribution was determined by available distributable cash resulting from operations of the partnership and the terms of the partnership agreement.

FRP is engaged in the production and sale of phosphate fertilizers and animal feed ingredients as well as the mining and sale of phosphate rock through IMC-Agrico Company, the mining, purchasing, transporting, terminalling and marketing of sulphur, and the exploration, development and production of oil and gas reserves.

Cost-cutting alters cotton distribution

PECOS, October 28, 1997 - Recent changes in U.S. cotton marketing patterns include costcutting transportation arrangements and innovative merchandising techniques.

These trends are described in US. Cotton Distribution Patterns, 1993/94, a new report from USDA's Economic Research Service, which also notes that cotton shipments increased sharply across the Cotton Belt in 1993/94 because of greatly expanded domestic demand and strong export sales.

Significant cotton transport cost savings have resulted from intermodal transportation arrangements, such as gin yard container loading, rail-truck piggyback shipments, and special through-rate programs offered by some ocean carriers.

Trucks handled about 85 percent of all shipments and rail carriers the rest. In intermodal transportation, truck trailers or containers are loaded on flatbed rail cars.

At the same time, larger and fewer shipments, both within U.S. regions and across them, have concentrated the movement of cotton. About 37 percent of the total volume of cotton transported in 1993/94 was exported, going primarily to ports on the Pacific coast, and to Canada and Mexico. That 37 percent was substantially lower than the 48 percent during the 1986/87 season.

This report is the latest in a series on transportation of U.S. cotton. Previous reports covering 1970,1975, 1980, and 1986 are out of print, but this report includes some data on those years. The data for 1993/94 were collected in a survey of cotton storage and handling facilities in the 14 major cotton-producing States.

U.S. cotton production has increased from an annual average of 12.5 million bales in the 1980's to more than 16.1 million bales in the 1993/94 season. In the Southeast, production more than doubled in that time period. In addition, the 1990 Farm Act, with its cotton competitiveness provisions, enabled both domestic and export markets for U.S. cotton to expand to near-record levels.

During the 1980's, about had of all shipments went to domestic mills and the rest to ports for export. But by 1993/94, the domestic market was taking nearly twothirds of total shipments, altering regional demand for transportation services and overall distribution patterns.

Railroad deregulation and the closing of many spur lines have changed the means by which U.S. cotton reaches its ultimate destination.

During the 1993/94 season, some States and regions reported shipments exceeding production because of cotton that went into the market from stocks. Total marketings for the year exceeded 17 million bales, with ending stocks declining by more than 1 million bales from year-earlier levels.

The Pacific coast is the leading cotton export area, but shipments from the Central and West gun ports have grown in relative volume. Canada and especially Mexico have emerged as major destinations for U.S. cotton, reflecting opportunities under NAFTA (the North American Free Trade Agreement). In 1993/94, more than 13 percent of U.S. cotton export movements were to Canada and Mexico.

About 62 percent of all reported U.S. cotton shipments in 1993/94 moved to textile mills in Southeastern States and to interior concentration points, compared with 52 percent in 1986/87 and 45 percent in 1980/81. Concentration points are where cotton shipments are consolidated for further shipment.

To Get the Full Report...

The information presented here is summarized from U.S. Cotton Distribution Patterns, 1993/94, SB-940, by Edward H. Glade, Jr., Mae Dean Johnson, and Leslie A. Meyer.

Copies of this and other ERS publications are available from the web at www.econ.ag.gov/

Fax your request to 202-501-6156 before October 24 and 202-694-5638 after that date.

For non-press copies, call 1-800-999-6779.

Arrowhead makes progress on Warbonnet

PECOS, October 28, 1997 - Arrowhead last week announced progress in drilling of the Warbonnet (Buck Horn) 9-23 well, located in T30N R 108W, Sublette County, Wyo.

This is the earning well on the first of three prospects Arrowhead is earning an interest in from operator Ultra Petroleum Corp. in an agreement which has now been approved in principal by the Vancouver Stock Exchange.

The agreement has been amended so that, on the Warbonnet (Buck Horn) and Bull Draw prospects, Arrowhead shall earn half of Ultra's interest in the subject acreage by paying prospect fees and drilling and completing one well in each prospect, regardless of whether commercial production is achieved.

The Warbonnet (Buck Horn) 9-23 is drilling ahead at 9,459 ft. with a target depth of 12,000 ft.

Top of the overpressure was encountered at 8,556 ft. The well is currently drilling with an underbalanced mud system and carrying a 10 ft. flare.

Frac modifications improve results

PECOS, October 28, 1997 - Recent modifications to the frac techniques used by the Ultra Petroleum Corp. in partnership with Halliburton at the Stud Horse Butte (North Jonah) field are delivering improved results.

Several modifications have been made to the frac process, including the use of a proppant gel developed by Halliburton.

The first of nine fracs in the Stud Horse Butee 7-23 well, which completed 60 net feet of pay in seven sands between 11,809 ft. and 12,195 ft., stabilized at a rate of 2.18 million cu. ft. per day of gas and 100 barrels per day of condensate with a flowing casing pressure of 750 p.s.i.

A bridge plug has been set above this zone in preparation for the second frac in this well.

At the Stud Horse Butte 15-24 well, the third of six fracs, which completed 60 net feet of pay in six sands between 11,050 ft. and 10,800 ft., stabilized at a rate of 3.3 million cu. ft. per day at a flowing casing pressure of 975 p.s.i. The two lower zones are isolated below bridge plugs.

The modified frac techniques will also be applied to completions of the eight to twelve exploration wells that Ultra is operating this year.

The first of four fracs at the Cottonwood well, a joint venture with Adda Resources, was performed Monday, Oct. 20 Seven intervals in the sands of the Erikson formation between 11,050 ft. and 10,810 ft. were completed.

Oil prices extend losing streak

NEW YORK (AP) October 28, 1997 - Oil prices extended their losing streak to two days last Friday despite a continued United Nations dispute with oil-rich Iraq.

December crude fell 12 cents to $20.97 a barrel on the New York Mercantile Exchange. November unleaded gasoline fell 0.66 cent to 59.60 cents a gallon.

Oil futures fell for the second straight day, after an industry group boosted prices Wednesday with a report of an unexpected drop in American inventories. Investors remained continued to wonder whether the United Nations will slap new sanctions on Iraq for failing to cooperate with inspectors looking for weapons of mass destruction.

The U.N. Security Council on Friday threatened new sanctions unless it cooperates with U.N. weapons inspectors. Those sanctions, however, involve Iraqi travel and not a U.N. brokered deal that lets Iraq sell limited quantities of oil for humanitarian purposes.

November heating oil fell 1.06 cent to 57.03 cents a gallon.

Breaking the trend toward energy losses, November natural gas wiped out the previous day's decline, rising 1.19 cents to $3.548 for each 1,000 cubic feet.

In London, North Sea Brent Blend crude oil for delivery in December settled at $19.91 per barrel, down 11 cents, at the International Petroleum Exchange.

For the week, energy futures were mixed.

Light sweet crude oil for delivery in December was $20.97 a barrel, up from $20.74 from Nov. 17; November heating oil was 57.03 cents a gallon, down from 57.40 cents; November unleaded gasoline was 59.60 cents a gallon, up from 59.31 cents; and November natural gas was $3.548 per 1,000 cubic feet, down from $3.288.

Ultra buys key acreage in Wyoming

PECOS, October 28, 1997 - Ultra Petroleum Corp. was the successful bidder on 16 highly contested acreage blocks at the Oct. 21 Wyoming Federal Lease Sale.

These parcels contain 20,778 acres at an average price of $260 per acre. This brings Ultra's total leaseholdings in the prospective Lance fairway to approximately 335,000 gross acres.

Gas prices soar as weather boosts demand

NEW YORK (AP) October 28, 1997 - Prices for natural gas soared Monday as bad weather boosted demand for heating across the country.

Natural gas futures jumped to their highest level since Jan. 6 as snow, high winds, rain and below-normal temperatures hit the central part of the country. Contracts for delivery of natural gas in November rose 23.7 cents to $3.785 for each 1,000 cubic feet.

Many oil traders were distracted, however, by the historic 554-point drop in the Dow Jones Industrial Average and waiting to see if if there would be a spillover effect in energy prices.

Light sweet crude oil for delivery in December settled at $21.07 per barrel on the New York Mercantile Exchange, up 10 cents.

Unleaded gasoline for delivery in November settled at 59.95 cents a gallon, up .35 cent.

Home heating oil for delivery in November settled at 57.74 cents a gallon, up .71 cent.

In London, North Sea Brent Blend crude oil for delivery in December settled at $19.99 per barrel, up 10 cents, at the International Petroleum Exchange.

Grains, soybeans sink in market turmoil

CHICAGO (AP) October 28, 1997 - Grain and soybean futures prices retreated Monday on the Chicago Board of Trade as a deepening world financial crisis made the long-term export outlook for U.S. crops more uncertain.

The retreat came during a day that normally would have seen strong gains for corn and soybean futures. An early season storm that socked Midwest growing regions with rain, snow, high winds and freezing temperatures likely damaged part of the bumper crops yet to be harvested, reducing production. Further, the government reported soybean exports last week were well above market expectations, at 48.5 million bushels, up from 42.7 million a week earlier.

But weakening foreign currencies, particularly in Asia, where the trouble began, could make U.S. exports prohibitively expensive and leave U.S. farmers stuck with a record soybean harvest and the third largest corn crop on record.

"There's plenty of grain in the United States right now, and we may not be getting rid of it real fast," said analyst William Biedermann at Allendale Inc. "That's causing some people to get out. The market's on shaky ground, and if we continue to see the Dow go down, you're looking at hysteria."

Corn futures also were pressured by lower-than-expected export sales, while wheat fell on ideas the weekend precipitation benefited the hard red winter wheat crop.

Wheat for December delivery fell 7½ cents to $3.61½ a bushel; December corn fell 2¼ cents to $2.87½ a bushel; December oats fell ½ cent to $1.65½ a bushel; November soybeans fell 1½ cents to $6.97½ a bushel.

Live cattle futures prices were mixed on the Chicago Mercantile Exchange, while feeder cattle and pork futures prices were mostly lower.

December live cattle rose .62 cent to 67.72 cents a pound; November feeder cattle fell .60 cent to 77.50 cents a pound; December lean hogs fell .52 cent to 62.45 cents a pound; February pork bellies fell 1.02 cents to 64.12 cents a pound.

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