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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: Bobby Yellin who wrote (130)	8/27/1996 3:14:00 AM
From: Kerm Yerman	of 24925

Bobby/Spire Energy/Grant Geophysical/Capilano Int'l Got your note on Spire Energy ( newswire.ca ) This is a company I do follow. First came to my attention very early this year when shares were at $0.50. Almost listed company in my TOP TWENTY at end of May when shares were at $1.05, but I thought shares were fully valued at that point in time. Shares dropped to $0.90 in late July and have increased another 50% in value since then to $1.35 which is current price. Based upon their production growth anticipated for fiscal 1996, I am still of opinion shares are fully valued. This is based upon the wells that were just tied into their new gas facility. I believe shares may flatten out for next two-three months as they get into their drilling program. If shares were to drop back 10 to 15%, I would rate the company a strong buy. Cash Flow multiple is key number to focus upon. Look to buy shares under multiple of 6X projected 1996 cf/ps and less than 25X eps. Right now I believe shares in the range of $1.15 to $1.20 would be in line with these objectives. I like the manner in which the company is managed. They are focused on budgeted objectives real well. Late spring breakup may of hurt them somewhat, but it allowed monies to be put into their new gas facility and the tie in of existing wells which will allow cash flow to support their active 2nd half of drilling. With drilling success and substantial increase in undeveloped acreage in their core areas, one could expect shares to double in a 12 month period. Company is growing by the drill bit and who knows what may happen further down the road in terms of acquisitions. Spire Energy is a good situation. Grant Geophysical is still hanging in the $2.00US level. They have their problems. However, I don't see much downside from here. Do you? I like their increase in revenue and record backlog in orders. If someone was to administer the company with focus on expenses, the company can be turned around and begin to profit. I bought a few shares today based upon this factor. There is a company in Canada which might be a mirror image of GRNT. The company's name is Capilano International. Symbol is KPA and trades on Toronto Exchange. This is a good turnaround situation in motion. Check out their news releases for past year and take it from there. Their operation is basically same as GRNT and problems were of same nature. Some months ago, the company brought in an administative specialist to get things under control. Shares have traded in $0.50 to $0.70 range since first of year, closing today at $0.62/share.

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