THAMES CAPITAL CORPORATION
Singapore Perth Australia Toronto Canada
INVESTMENT UPDATE JUNE 12, 2000
OSPREY ENERGY LTD.
Symbol: OEL (CDNX)
Recent Price: $1.00
52 Week High/Low: $1.75-$0.07
Share Capital:
Basic 6.7MM
*Fully Diluted 11.1MM
Market Capitalization: $6.7MM
Market Float: $4.3MM
Managers/Directors own: 13%
Charts: Courtesy of The GlobeInvestor.com
Report prepared by: Grahame M. Notman, Senior Oil and Gas Consultant
Tel: (416)-350-3528
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HIGHLIGHTS
ú Since my last research report on Osprey in December 1999, the Company has
accelerated its joint venture (JV) program in Louisiana. The latest
acquisition, the third and the largest to date, is a 75% working interest
(reducing to 50% after payout) in a northern Louisiana oil and natural gas
series of properties along the prolific "Cotton Valley Trend".
ú This, together with the two previous Louisiana acquisitions completed late
in 1999, is expected to generate production from Louisiana, net to Osprey,
of 1,175 BOE/day (65% natural gas) during the third quarter of this year.
ú The other joint venture for Osprey is its 5% interest with Crestar in the
Jenner light oil project in southern Alberta. This has been expanded from
an initial five well program (completed during the first quarter of 2000) to
a 12 well program (8 horizontal, 4 vertical) to be completed and tied in by
mid August. Expected gross production from this phase of development is in
the order of 1,800-2000 bbls/day (90-100 bbls/day net to Osprey).
ú As detailed in my December report, Osprey's involvement in Louisiana
initiated through its joint venture partner Petroleum Resources Inc. and its
affiliate New Energy Corp. William G New, who heads both these companies,
has extensive experience with Gulf of Mexico on shore operations. The
operations for the JV are run by BPR Energy, a Lafayette, Louisiana based
private oil and gas company. This company's President, Bernard Robichaux,
also has extensive experience running and developing oil and gas production
in Louisiana, and works closely with many of the major producing companies
in the area such as Union Pacific Resources and Anadarko. His expertise in
enhancing the production from previously uneconomic oil and gas wells is a
key factor in our confidence in the production forecasts for Osprey.
ú The combination of the Alberta and Louisiana projects is expected to
initially increase Osprey's production over the balance of the year to
around 1,275 BOE/day, of which natural gas represents approximately 50%.
The planned development of the Cotton Valley project is expected to increase
the contribution from natural gas to around 65%.
ú Using the above production assumptions, and a reference price for oil and
natural gas of US$ 25/bbl and US$3.00/Mcf respectively, results in the
company's cash flow increasing to Cdn.$11.5 million ($1.05/share f.d.) on an
annualized basis as early as the end of the third quarter of this year.
ú However, to complete the necessary work-overs and tie-ins at the three
Louisiana plays is estimated to cost approximately US$1.5 million (Cdn.$2.2
million) over the balance of 2000. In the past three months, Osprey has
raised Cdn.$2.4 million through a Cdn.$1.5 million convertible debenture
issue (coupon at 10%, convertible at $1.00/share) and a Cdn.$850,000 equity
issue at $1.00/share. These funds were used to complete the latest
acquisition in Louisiana, drilling at Jenner in Alberta and initial
recompletion activity at the Livingston and Bayou Choctaw fields in
Louisiana. Osprey would like to raise a further Cdn.$1.5 million (net of
internally generated cash flow) to accelerate the planned program and is
presently pursuing both debt and equity opportunities.
ú Based on the outlook for a rapid acceleration in the company's growth in
both cash flow and reserves, exclusively from development drilling, i.e. no
exploration risk, the shares appear significantly undervalued.
This report contains information that has not been approved by any
Securities Commission. While the information in this report cannot be
guaranteed, it was obtained from sources believed to be reliable, but in
providing it, Thames Capital Pte Ltd. and Thames Capital Corporation do not
assume any liability. All statements, other than statements of historical
fact, included in this report, including, without limitation, statements
regarding potential reserves, exploration results, and future plans and
objectives of Osprey Energy Limited, are forward-looking statements that
involve various risks and uncertainties. There can be no assurance that such
statements will prove to be accurate and actual results and future events
could differ materially from those anticipated in such statements. Thames
Capital Pte Ltd. and Thames Capital Corporation, its officers, directors and
employees may from time to time acquire, hold or sell a position in the
securities mentioned herein. Within the past 12 months Osprey Energy Limited
retained Thames Capital Pte Ltd. and Thames Capital Corporation as its
financial advisors.
This report is intended for information only, and should not be considered
as advertising for the purposes of offering of securities by the issuer
mentioned herein. The use of this report should not be construed as a
recommendation to purchase or trade the shares of Osprey Energy Limited.
Thames Capital Pte. Ltd. and Thames Capital Corporation assumes no liability
for any investment losses as a result of the contents of this report and
investors are advised to consult with their registered financial advisers
prior to making an investment in the securities of Osprey Energy Limited.
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