Canadian Oil & Gas Companies Message Board

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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: Kerm Yerman who wrote (4355)	12/31/1997 9:09:00 AM
From: HAZ	Read Replies (1) of 24920

Kerm / All / Flow-Through Shares We are witnessing a recent rush to issue flow-through shares at quite decent prices relative to current trading prices. SEY 1.5 million shares @ $ 1.90 27% premium over 1.50 trading price COU 1,070,000 shares @ $ 2.10 20% premium over 1.75 trading price RLP.A 695,000 shares @ $ 4.95 21% premium over 4.10 trading price I suspect that the companies want to secure just enough financing with as little dilution as possible in order to guarantee their 1998 drilling programs. Maybe they are little afraid that the capital markets will not be as eager to buy shares in 1998 so crab what you can now. Most of these flow-through shares go to institutions or directors and management in need a tax write offs so the common Joe is excluded from these shares issues. What is the implication for cashflow and earnings of Flow-through versus common shares. Are there any tax experts present that can explain how these flow-through shares work both for the buyer and the issuer. My own personal take is that this is very positive for companies concerned, they are securing the capital today and reducing any risk of no capital in the future which would impact their future drilling plans. Happy New Year and a Prosperous 1998

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