TALKING POINT/DOME PETROLEUM <DMP>
Dome Petroleum Ltd's loss of 2.20
billion dlrs, believed to be the biggest ever by a Canadian
company, will have little impact on daily operations but will
pressure creditors to accept a proposal to restructure Dome's
debt of more than 6.10 billion dlrs, industry analysts said.
    "Essentially what it (Dome's loss) does is put more focus on
the importance of the restructuring and puts more pressure on
creditors to agree to the debt rescheduling," said an oil
analyst who asked that he not be identified.
    Dome reported earnings yesterday.
    Analysts said the huge loss improves the appeal of a debt
accord by underlining company statements that creditors would
receive little or nothing under a forced liquidation that could
take several years to complete.
    After several months of negotiations with a group of 56
major creditors and other unsecured public debt holders, Dome
submitted a complex proposal earlier this month that includes
converting debt to equity and extending repayment time.
    "They've had their talks and now they have the proposal, so
the banks have to decide whether to accept the restructuring or
pull the plug," the analyst said.
    He and others said the huge loss, including writedowns
totalling 2.08 billion dlrs before a 571 mln dlr reduction in
deferred income taxes, dramatically enforces the company's
claim that a 50 pct drop in world oil prices has crippled its
financial position.
    But analysts said the writedown only impacts Dome's balance
sheet and does not hurt the company's cash position.
    "To a large extent, these writeoffs of the carrying value of
assets is really just the bookkeepers catching up to what the
stock market has been telling us for a long time, reflecting
the collapse in oil prices," Peters and Co Ltd analyst Wilf
Gobert said.
    Dome reported it took a 1.20 billion charge in the fourth
quarter, before a 305 mln dlr reduction in deferred income
taxes, for the decline in value of Dome's oil and gas
properties.
    The extraordinary loss conformed with new Canadian
Institute of Chartered Accountants guidelines that require Dome
to use average 1986 oil prices to value its holdings, instead
of an escalating price method used in prior years.
    Analysts said six individual Swiss noteholders, who
initiated legal action against Dome to recover debt of 408,500
dlrs, will also be pressed to adopt a more lenient stand by the
1986 results.
    "To the extent that individuals were not fully accepting or
cognizant of the seriousness of Dome's financial position, the
financial statements reflecting this writedown of the value of
assets is certainly going to indicate the depth of the
hemorrhaging that has taken place," Gobert said.
    The legal action now before Swiss courts threatens to
trigger cross-defaults on all of Dome's debt, toppling the
delicate debt negotiations. Dome is next scheduled to appear
April six to defend against the action.
    First Marathon Securities Ltd analyst Rick Hallisey said
the size of the loss was slightly larger than industry
estimates of Dome's negative net worth, ranging between 1.50
billion and two billion dlrs.
    "What this writedown says is that a lot of the money that
was spent in the past is unrecoverable, but the shareholders
have already recognized that through the writedown in the stock
price," Gobert said, adding, "The financial statements have come
out and said that what has happened in the past has been a
disaster for Dome," Gobert added.
    The price of Dome common shares fell five cts to 1.05 dlrs
in trading on the Toronto Stock Exchange today. At the height
of Dome's success in 1981, common traded at about 25 dlrs a
share.
 Reuter
