Kerm’s Korner / Notes - Tier I Portfolio Report
These notes apply to my Tier I portfolio which can be found at Message 17303265
I have reviewed my Tier I Portfolio and have brought it up to date beginning April 5, 2002. No consideration has been given to dividends
A total of $100,000 has been invested into this portfolio and this original amount will remain constant. Coverage and transaction history goes back to mid 1998 with transaction activity coming to a halt sometime late March 1999. I have come out of hiding and am picking up the pieces to bring it up to date.
The portfolio had grown to a value of $135,000 in 1999 and holdings were established in 17 companies. Positions were obtained in an era when O&G was unpopular and the performance of the portfolio still performed above par. Unfortunately, market sentiment changed dramatically after I disappeared and I couldn’t enjoy the ride.
Of the 17 holdings, only 7 survive today and they include Nexen (old Cdn Oxy), Paramount Resources, PennWest Petroleum, Petro Canada, Rio Alto Exploration and Talisman Energy. The 6th holding is Canadian 88 Energy which I have removed from Tier I and will account for the holdings in the Tier II Portfolio.
I have sold off two companies at the closing prices of last Friday. I sold shares in Paramount Resources, 500 at $14.55 = $7,275.00 and Rio Alto Exploration, 400 at $15.49 = $6,196.00. (Original investment in POU was $7,500.00 and RAX $6,000.00) Most of the damage in share prices of these companies has probably already occurred. However, they are out of favor with me and I sold them as a result.
I have positions in two new entities as a result of acquisitions. Burlington Resources acquired Poco Petroleums and as a result I had shares in Burlington Resources Canada which in time, were exchanged on a 1 for 1 basis for U.S. Burlington Resources shares. Similarly, Alberta Energy was acquired by PanCanadian in a 1.472 to 1 share transaction and as a result, I have a position of 442 shares in EnCana (PanCanadian), representing the original 300 shares held in Alberta Energy.
I also increased my Position in Burlington Resources.. I picked up 400 shares at US$38.60 – a total investment of $24,400.00. Holdings now total 700 shares. Their NG exposure in Canada is huge and they have aggressive plans for drilling there. They have acquired Poco Petrolems and about 1 year later, took out Canadian Hunter. They just made another large acquisition of ARCO properties in Alberta. They even took out little Petrobank. To get a great insight as to Burlington Resources, pay a visit to br-inc.com and click on Burlington Resources 2002 Management Meeting Webcast . This is the best presentation of a company I have seen on the web. More impressive is the information provided. It is done with an automatic slide show plus audio to go with it. Most of the info is focused on Canada.
This is the background for my current holdings which now consist; of Burlington Resources, EnCana, Nexan, PennWest Petroleum, Petro Canada, and Talisman Energy.
The portfolio had a cash on hand status of $4,500 in 1999. My cash position has increased significantly since, the result of companies being acquired in exchange for cash.
The following reflects how I have obtained my current cash position.
Ulster Petroleums Holdings amounted to 600 shares obtained at an average price of $11.50/share. Anderson Exploration acquired ULP for $11.00/share in addition of a share exchange of 0.09655 AXL shares for each ULP share. As a result, cash was received in the amount of $6,600.00, along with 58 AXL shares.
Anderson Exploration Original holdings amounted to 250 shares and was increased to 308 shares with the acquisition of Ulster Petroleums. Subsequently, Devon Energy acquired AXL for cash consideration of $40.00/share. As a result, the portfolio’s cash position increased $12,320.00.
Crestar Energy This was the most heaviest weighted holding in the portfolio, comprising 23.4% of portfolio value. I always wanted to thin the position out, but never did. That was fortunate for me. Holdings amounted to 1800 shares which were obtained at an average of 13.00/share, a total investment of $23,400.00. Gulf Canada Resources acquired CRS for cash consideration of $3.25/share, in addition to a share exchange, 3-1/3 shares for each CRS share. As a result, I received $5,850.00 in cash plus 6000 shares of GOU. Subsequently, GOU was acquired by Conoco for $12.40/share which amounted to $74,400. In total, CRS shares resulted in a cash position of $80,250.
Berkley Petroleum Holdings amounted to 600 shares obtained at an average price of $11.60/share, a total investment of $6,960.00. Andarko acquired BKP for cash consideration of $11.40/share, a total amount of $6,840.00.
Chieftain International Holdings amounted to 300 shares obtained at an average $13.90/share, a total investment of $6,915.00. Hunt Oil acquired CID for CDN cash consideration of $44.30/share, a total amount of $13,290.
Newport Petroleum Holdings amounted to 300 shares which were obtained at an average of $5.25/share. Hunt Oil acquired NPP for cash consideration of $5.50/share, a total amount of $1,750.00.
Northrock Resources Holdings amounted to 400 shares obtained at an average of $11.75/share. Unocal acquired NRK for cash consideration of $10.10/share, a total amount of $4,040.00.
Factoring beginning cash on hand ($4500.00), proceeds from the sale of RAX and POU shares ($13,471.00) with the added cash via acquisitions ($125,090.00), the total cash position of the portfolio was $143,061.00 entering last Friday.
Subsequently, 400 shares of Burlington resources were purchased at $38.60/share, a total investment of $15,440.00 which leaves the portfolio with a cash position of $127,621.00.
This report serves as to the accountability and integrity of the portfolio. I will be publishing a status report reflecting the progress of the portfolio and the individual holdings within it.
My investment stance at this time is to take a wait and see attitude over the next six months with possible spot purchases in select issues. I declare that all my holdings are on a HOLD basis with exception of Burlington Resources which I see as an ACCUMULATE BUY. |
