Kerms Korner / Tier II Portfolio Material Changes
TIER II Additions 021703 (Part II)
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Beginning Cash Balance $59,129.34 Before Purchases
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PEYTO Exploration & Development Corp.
PEY – 200 Shares @ $12.85
Total Invested $2,570.00
For the three months ended September 30, 2002, Peyto achieved corporate records for production, cash flow and earnings. Daily production averaged 45 mmcf of natural gas and 2,009 barrels of oil and natural gas liquids. Gas and liquids production per share for the quarter increased 94% and 138% respectively, over the same period in 2001. Despite a 19% drop in natural gas prices, production gains increased cash flow from $8.1 million in 2001 to a record $13.5 million in 2002.
Peyto expects to exit 2002 at a production rate of 10,750 boe/d. The 2003 CAPEX is forecasted to result in expenditures of $110-160 million with drilling between 50-70 wells. The numbers apparently are adjustable dependent on the pricing scenario as the year plays out.
On January 23 2003, PEYTO announced the results of their 2002 reserve report effective December 31, 2002. Proved developed reserves at year end increased by 63% to 44.4 million barrels of oil equivalent ("boe", natural gas converted on a 6:1 basis throughout) from 27.2 million boes in 2001.
Peyto has continued its practice of not allocating a proven reserve designation to undeveloped property and accordingly had no proved undeveloped reserves booked at year end 2002.
During the year, Peyto was successful in converting the majority of its probable reserves (ie. drilling locations) to the proved developed category.
Proved plus probable additional reserves increased by 27.3 million boes to 85.2 million boes.
As in previous years, the majority of the probable reserves booked at the end of 2002 represent development gas locations in Sundance that Peyto is currently drilling (90,000 net acres) . The net present value ("NPV") of Peyto's proved plus probable additional petroleum and natural gas assets increased 77% from $455.9 million or $10.85 per share (discounted at 10%) in 2001 to $807.4 million or $18.60 per share in 2002.
SEDAR sedar.com
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Progress Energy Ltd
PGX – 300 shares @ $8.40
Total Investment $2,520.00
Progress met their year-end production target of 6,000 boe/d by the end of the third quarter 2002. The company substantially increased the production and operating base of their Ft. St. John growth area through the acquisition of assets originally owned by Encal Energy Ltd., which closed October 4, 2002. They added 61,000 undeveloped acres in Ft. St. John British Columbia via acquisition and exploration partnership. The company established an exploration inventory which will allow continuous drilling operations throughout 2003 in each of their two growth areas. The fourth quarter will see completion of the 2002 drilling program with the remaining six wells being targeted at natural gas.
During 2002 Progress has been successful in the creation of two new high quality growth areas, Fort St. John British Columbia and West Central Alberta. The company has assembled over 180,000 net acres of undeveloped land and has established a strong exploration momentum with its 2002 drilling results and enters 2003 with a large and balanced inventory of drillable prospects split between light oil and natural gas.
The company's 2003 capital program is $50 million with $11 million forecast on land and seismic, $28 million on drilling and $11 million on facilities. The program will result in the drilling of approximately 50 wells.
The net debt at December 31, 2002 is forecasted to be $45 to $46 million and $53 million at December 31, 2003. The Company currently has outstanding approximately 30.9 million common shares.
As a result of the successful drilling program and the Fort St. John asset acquisition the company will exit 2002 over 7,000 boepd. The company is forecasting average 2003 production of approximately 8,000 boepd, a 70%+ increase over 2002, with an exit production rate for 2003 of approximately 9,000 boepd.
Cash flow is forecast to be approximately $22 to $25 million for 2002 and $43 million for 2003.
The company's 2003 commodity price assumptions are for crude oil prices of $US23.00 WTI per barrel, resulting in a Progress realized wellhead price of approximately $CDN 29.00 per barrel and natural gas prices of $US $3.70 per mmbtu NYMEX resulting in a realized Progress wellhead price of $CDN 4.50 per mcf.
SEDAR sedar.com
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Zargon Oil & Gas Ltd.
ZAR – 200 Shares @ $10.00
Total Investment $2,000.00
Zargon Oil & Gas Ltd. is a Calgary-based upstream oil and gas company with assets located in Alberta, British Columbia, Manitoba and Saskatchewan. Zargon's primary goal is to generate sustainable long term per share growth in reserves, production, cash flow and earnings. Over its history, Zargon has generated substantial per share growth by adhering to its focused value-added acquisition, exploitation and exploration strategy.
In the third quarter of 2002, Zargon recorded cash flow of $7.75 million or $0.43 per diluted share and earnings of $2.27 million or $0.13 per diluted share. Cash flow in the third quarter 2002 was virtually unchanged from third quarter 2001. For the first nine months cash flow was $21.41 million or $1.21 per diluted share, earnings were $6.40 million or $0.36 per diluted share.
Production of oil and liquids averaged 3,048 barrels per day in third quarter 2002, a seven percent increase over the 2,851 barrels per day reported in second quarter 2001 and a four percent improvement over the second quarter 2002 rate of 2,918 barrels per day. The majority of the quarter over quarter increase came from the July acquisition of an operated Pembina Belly River oil pool in West Central Alberta.
Natural gas production averaged 20.44 million cubic feet per day in third quarter 2002, an eight percent improvement over both the 18.86 million cubic feet per day and the 19.00 million cubic feet per day production rates reported in third quarter 2001 and second quarter 2002, respectively. The increase in gas production primarily related to the second quarter 2002 corporate acquisition of Hadrian Energy Corp. During the third quarter, production at Jarrow, Zargon's largest gas property, averaged 14.36 million cubic feet per day, a slight improvement over the prior quarter's rate of 13.94 million cubic feet per day. Operated and third party processing and compression facility outages in the third quarter still resulted in approximately 0.40 million cubic feet per day of shut-ins at the East Central Alberta properties of Jarrow and Hamilton Lake.
On an equivalent basis, the 2002 third quarter production of 6,454 barrels of equivalent per day (6:1) showed an eight percent improvement over the prior year's third quarter rate of 5,995 barrels of equivalent per day. The 2002 third quarter rate was also six percent higher than the second quarter 2002 rate of 6,085 barrels of equivalent per day. Further production increases are anticipated in both of the next two quarters, as gas wells drilled in the summer/fall 2002 drilling program are placed on production.
Zargon’s 2003 CAPEX involves the drilling of a minimum 40 (net) wells. Total expenditures planned amounts to $45 million. At the end of the second quarter, the company is forecasting 5900 boe/d.. The company is focusing on exploration in West Central Alberta, grow oil in Saskatchewan via exploitation and, maintaining production in east central Alberta. The company is well positioned for internally generated growth in a the current high O&G price environment.
SEDAR sedar.com
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Current Cash Position $52,039.34 After Purchases
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