Outlook '98 - Stock markets

In view of the recent drop of some 20 per cent in energy stock prices, and the decline in the value of the Canadian dollar, forecasting oilpatch financing in 1998 is a risky undertaking. Based on a variety of relevant factors, it is expected that there will be a slowdown in oil and gas financing deals in the short term. On the other hand, longer term outlook is bullish, based on the huge capital requirements over the next few years for conventional projects, heavy oil, oilsands and pipelines projects. Corporate mergers and acquisitions will continue at about the same rate as in 1997, as companies attempt to achieve ''economies of scale'' and growth in the most economically sensible manner. Adding production and reserves through corporate transactions at the current lower stock prices will be a powerful incentive. Creative deal structuring will become more prevalent. Corporate reorganizations into separate companies in search of value maximization will increase