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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area

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To: allevett who wrote (12305)	9/12/2005 5:03:11 AM
From: Crossy	Read Replies (1) of 37387

re: Diaz Resources - DZR.TO - C$0.80 This is my next domestic NorthAm NG pick Diaz Resources - DZR.TO - C$0.80 63m shares Fully diluted Marketcap - US$39m USD, $8m debt Management owns 42% of the outstanding shares Current production around 1400boepd (per Q2 Report - June) - 80% NatGas Guided to exit 2005 around 2000boepd The company appears to be completely unhedged Land position: 105.000 acres (gross) <http://www.diazresources.com/s/CompanyNews-2005.asp?ReportID=114735&_Type=Company-News-2005&_Title=Diaz-Reports-Increased-Production-Volumes-and-Financial-and-Operating-Resul>... This is my next pick to capitalize on this winter’s NG crunch.. Diaz Resources (DZR.TO traded in Toronto under the ticker “DZR”) is another Canadian junior O&G company that appears significantly undervalued. DZR.TO is around 85% NG weighted. All the remaining 15% is light oil only (including “Ultra Light Oil” 50°API from their “Harmattan” project). What is noteworthy about this company is also that their NG wells have a rather high RLI (Reserve Life Index).north of 11 Trading at a significant discount to (year 2005 exit) calculated NAV (Net Asset Value) of C$1.06. One should however bear in mind that this NAV was calculated on 2004 exit prices of ($6,80 NG and $50 oil). Moreover, some significant discoveries (additional Wilcox pools in Texas, Harmattan oil discovery) are NOT YET INCLUDED in this appraisal. The price effect alone (currently $11NG and $60+ oil) should put “implied” NAV at C$1.50 or higher, not including the additional discoveries cited Website: <http://www.diazresources.com> <http://www.diazresources.com/s/News.asp> Presentation <http://www.diazresources.com/presentation_2005_AGM/slide1.htm> The operating assets consist of Canadian Oil & Gas “development” assets of medium to shallow depth (in Alberta and Sasketchewan) and “Deep Gas” plays (Wilcox sand type) located in Texas (development and exploration) <http://www.diazresources.com/s/Operations-Index.asp> For 2005 there are 13 development and 17 exploration wells planned in Canada. Additionally, 3 deep gas wells in Texas are to be drilled (Wilcox sands). Management CEO is the rather colourful Bob Lammond, a former Petroleum Geologist with Exxon. Later he started his own junior companies and an investment “mercheant” bank called “Humboldt Capital”, a key shareholder of DIAZ Resources. <http://www.diazresources.com/s/DirectorsAndOfficers.asp> On top of all this, management is considering putting itself for sale to unlock the value of the company. To facilitate this, the multi-tier voting structure of Diaz (single and multiple voting shares had existed) was recently streamlined and the multiple voting class abolished. However management insists that any offer to be considered would need to reflect the true market premium attainable in recent deals elsewhere. <http://www.diazresources.com/s/CompanyNews-2005.asp?ReportID=109580&_Type=Company-News-2005&_Title=Diaz-Confirms-Harmattan-Oil-Discovery-and-Announces-Change-in-Capital-Struc>... Additionally, Diaz authorized a NCIB (Normal Course Issuer Bid), for the purchase up to 5% of the outstanding shares on the open market from time. www.diazresources.com/s/CompanyNews-2005.asp?ReportID=116204&_Type=Company-News-2005&_Title=Diaz-Announces-Normal-Course-Issuer-Bid <http://www.diazresources.com/s/CompanyNews-2005.asp?ReportID=116204&_Type=Company-News-2005&_Title=Diaz-Announces-Normal-Course-Issuer-Bid> Because Diaz Texas deep gas properties might not be as attractive to let’s say a Canadian Royalty trust as to Diaz itself (or US prospects ?) the company is alternatively considering selective asset sales.. Just the undervaluation as evidenced by flowing barrel numbers (current and “future” flowing boes versus marketcap), backed up by a rather high RLI number of 11.2 should make a double or more over the medium term absolutely attainable. Every production increase and new discovery of course would further increase the potential.

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