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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: Richard Saunders who wrote (166)	8/31/1996 5:11:00 PM
From: Kerm Yerman	of 24925

Richard/Pipeline Benefits The reason I thought people would be interested in the article I referenced is because it does effect oil and gas producers. How many times have we read financial and operations reports where company contributes loss of production due to pipeline maintenance or constraints. Western Canadian producers are saying they're losing money because of these factors. Somewhere back in my messages I mentioned the great variance between Alberta Spot Pricing and prices being realized in the Southeastern US. Alberta gas for export is worth about $0.97 per million cubic feet versus $1.96 being realized in SE US. The problem is capacity. By the way, for those of you investing in US O&G companies, this same problem exists in the Rocky Mountain Region of US. Natural gas is essentially trapped in Alberta because there isn't enough space on pipelines allowing producers to respond quickly to rush orders. So, immediate benefactors of added pipelines would be the producers. Can you imagine the impact on cash flow and earnings if, a company could increase capacity and get a dollar more per million cubic feet. I think one will see more alliances of producers for supporting new pipeline construction from common core areas. Of course, there are the companies whose sole business is transport of oil and gas via pipelines. A review can be found for the largest three companies which comprise the TSE Pipeline Subindex. Reference (1) for the article can be found at end of this message. In regards to steel producers. I just read an interesting review on a company named PRUDENTIAL STEEL LTD., listed on Toronto--symbol PTS. Shares traded as low as $8.00 last December and are now trading near their 52 week high of $14.20. Prudential, while a steel fabricator, is effectively an oil & gas play because of their tie with the drilling industry. The company is on a roll, fueled by strong demand for its products by the Western Canadian energy sector. Analysts have just increased projected earnings for 1996 & 1997. Check reference (2) at end of this message for full details. References: (1) canoe.ca (2) canoe.ca

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