Summer 99 - TESCO Corporation

The end of 1999 is rapidly approachingand we are planning on saying a fondfarewell to the first millennium. In recognitionof the new millennium, Tesco isputting the past behind and switchingover to a fiscal accounting year that coincideswith the calendar year. We arelooking forward as our core businessactivities, top drives and underbalanceddrilling, start to pick up in activity.The Canadian and US drilling rig activityhas been steadily increasing since midyear and looks like it might exceed thelevels attained last year. In addition, thehigh price of oil is making heavy oil moreprospective to oil operators, so they aredrilling more wells. This is usually verygood for Tesco, as many more oil wellsare drilled horizontally which increasesthe demand for top drives. Internationally,drilling rig activity remains at or nearrecord low levels, but signs of optimismare returning. We are planning on a numberof top drives going to work aroundSo how does the stock market work anyway?The stock market is generally understoodto consist of Stock Exchangesin many countries around the world. Astock (such as shares in Tesco) can betraded (bought and sold) either on a StockExchange or privately between individuals.99% of public company shares (suchas Tesco) are traded on Stock Exchanges.However, the public can onlytrade in a public company’s sharesthrough a stockbroker (also known as aninvestment dealer). The stockbrokingfirms own the Stock Exchanges – nowthere is a conflict of interest for you(!)Companies, such as Tesco, apply fortheir shares to be “listed” on a Stock Exchangeand pay fees for that privilege.Tesco is listed on the Toronto Stock Exchangein Canada and the NASDAQStock Exchange in Washington, D.C.Tesco’s shares can only be traded onthose Exchanges as they are the onlyones where Tesco is listed. Tesco’s stocksymbol on the Toronto Stock Exchangeis TEO and on NASDAQ it is TESOF.BUSINESS OUTLOOKOOKthe first of the year in South America, andare hopeful for new activity to start in Algeria.If you have driven by the Corporate officelately you will have noticed more andmore rig parts stacking up in the back.This is a result of some excellent workthat the Product Development group hasbeen doing over the last several monthsto build the two new rigs for Driller’s Tech,Inc. We are very optimistic that the rigswill be delivered on time and on budget.Our Underbalanced Drilling systems aregoing back to work as activity continuesto increase worldwide. We have onesystem operating in Argentina, two in theUS, and three in Canada. We just completeda very successful operation for BP/Amoco in Utah that generated over $1Million US in revenue; our largest singlejob on record. BP/Amoco was very excitedby our services and people and arelooking for more opportunities to utilizeSTOCKTALKWhen Joe Public decides to make a tradethe following steps occur. Joe phoneshis stockbroker and says he would liketo buy or sell say 1,000 shares of a company.Joe Public can stipulate a minimumor maximum price and quantity.The stockbroker enters the proposedtrade on his computer which then talkselectronically to the Stock Exchange’scomputer system. The Stock Exchangecomputer then sifts through all the buyand sell orders and matches them by referenceto time and price and sends amessage back to the stockbroker confirmingthe transaction if there is a matchingbid. The stockbroker then calls hiscustomer and confirms whether or not atrade has been concluded. It is possibleto leave a buy or sell offer open for anumber of days. The stockbroker thenmails a transaction confirmation slip tohis customer. The stockbroker chargesa commission of up to 3.5% on the valueof the trade for his services.A fairly recent innovation is that you cannow make stock trade transactions viathe Internet from your personal computer.this technology.The Completions Group is gearing up foran active Winter drilling season and hasrecently purchased a new CNC machineto build more product faster. The Industrialgroup is busy with orders from FosterWheeler for refinery systemunheading devices and Kelon/Ener-Rigis growing its rig services business inCanada and Worldwide.We are very close to putting 1999 and allthe challenges that it brought behind us,and must now start looking forward to thechallenges of 2000 and beyond. I wishall of you a very happy and safe holidayseason, and look forward to working withyou to make 2000 a very successful andrewarding year.Mark FischerChief Operating OfficerTesco Corporation, CalgaryThis method carries much lower commissionrates but creates additional risk forthe investor, as he does not receive anyadvice from a stockbroker.In the olden days (as my kids refer to aperiod 5 or more years ago) the systemwas somewhat different. The stockbrokerwould telephone to the floor of theStock Exchange to an individual called ajobber who represented the stockbroker’scompany. The jobber would then runacross the floor of the Stock Exchangeand make a deal with a specialist in thelisted company’s shares and record it ona slip of paper. These slips of paper weretallied up at different times during the dayand then, for some reason, thrown on thefloor. Much shouting and gesticulatingwould accompany these transactions.The jobber would then phone back thestockbroker who would then phone hiscustomer. Now this activity is only seenin the movies.Martin Hall, C.A.Senior Vice President, FinanceTesco Corporation, CalgaryTesco Connections Page 2