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Gold/Mining/Energy : KERM'S KORNER

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To: Kerm Yerman who wrote (7360)	11/22/1997 4:43:00 AM
From: Kerm Yerman	Read Replies (1) of 15196

REPORT / Gordon Market Opening Notes, November 18, 1997 Norcen Energy (NCN-T:$31,60) BUY Shares Worth At Least $38 On A Take Over With the announcement by Noranda that it intends to sell its 49% interest in Norcen Energy, and the fact that the shares have weakened considerably during the past month, we are re-instating our BUY recommendation and maintaining our target price of $38 per share. While the market capitalization of Norcen is currently approximately $3.3 billion, making it a large acquisition, we believe there will be a number of interested parties looking at acquiring the control block. Norcen offers a solid operating base in the Gulf of Mexico and Venezuela in addition to its conventional assets in Western Canada. Earlier this year the company acquired Basic Petroleum which provides a large position in the Guatemalan oil industry, both upstream and downstream. The company also has operations in Argentina and Australia. We have revised our cash flow estimates for this year down to $6.00 per share (vs. $6.20 previously) and are maintaining our $6.95 per share estimate for next year. Norcen is in good financial position with debt currently equaling 1.5 times our 1998 estimated cash flow. The company offers modest growth in most of its operating areas and our target price of $38 per share is based on a multiple of 5.5 time next year's cash flow.

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