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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: Richard Saunders who wrote (221)	9/12/1996 8:20:00 PM
From: Kerm Yerman	of 24935

Richard/Richland Petroleum Richland had a great year last year. However, the 2nd half was very disappointing and the market reacted to it. First, before you read on, go to canada-stockwatch.com . You will notice that shares began to lose value at the beginning of the year. It was at this time that word was getting out regarding their poor drilling results along with unexpected steep declines in production in key core areas of operation. At this point, go to isdnwire.com . Perform a "historical search" for 'Richland Petroleum" for the period of "1 Year" and review 1995 Results dated April 1, 1996. (URL is mile long & couldn't use it in reference) Key attention to 4th paragraph. The rest of the following information is taken from their 1995 annual report. Although financial gains in 1995 were substantial, we were not satisfied with our performance as we failed to meet targets set out in the 1994 annual report. We were below the cash flow target of $14.5 million by 2 percent and missed our production target by 7 percent. Richland remains confident that Southeast Saskatchewan offers excellent opportunities but, we have been reminded over the past year of the complicated nature of these reservoirs and the difficulty in predicting the rate and timing of production declines from horizontal wells. After three years of drilling and production amounts well above targets, we encountered a succession of dry and marginable productive wells in the last half of 1996. Unfortunately this poor drilling performance coinsided with the accelerated decline by some of our existing horizonal wells. In response, we made the decision to reduce Saskatchewan probable reserves related to future drilling in order to conservatively present the reserve base going forward. The writedown of reserves effected the net asset value of the comapny. In the year ending 1994, NAV=$6.18 compared to year ending 1995 NAV=$5.04. This concludes Part I Review of Richland, consisting of the negatives contributing to share decline. I will follow this up with the positives and reason why company ranks in my Top Twenty Selections.

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