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Gold/Mining/Energy : Canadian Oil & Gas Companies
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To: Kerm Yerman who wrote (295)10/3/1996 2:30:00 PM
From: SofaSpud   of 24928
 
Kerm/Talisman/Royalty Trusts

I had read your reply regarding Prudential, a company I've been keeping
in the back of my mind - along with Precision Drilling. The latter
seems to have an excellent reputation.

Your affection for Talisman has certainly been backed by results for the last
while. Are you in touch with their management? Some people I talk to
aren't keen on the company because of the management - described as
too bureaucratic, perhaps a holdover from B.P.

I've looked into trusts a bit, but don't think they're suitable for us.
For one, we're tax exempt, being a charitable foundation, so a dollar
is a dollar. No difference between dividends and interest, and no
particular attraction to a tax-free source. Moreover, we have an
objective to be here forever, so preservation of capital is important -
something a royalty trust doesn't offer.

I'm surprised you haven't heard of Amber. Shares have roughly tripled
in the last 18 or so months. Seems that every time you hear about them
they are increasing their projections. The last I heard (end of June)
they were talking about $0.61/sh this year and $0.77 next, on 4000 bbl
and 80 mmcf per day this year and 6000 bbl and 105 mmcf next. The
multiple is probably so high that they don't belong on your top 20 list,
but they have been good to me so far.

Anyone who would suggest a 1/3 portfolio exposure to one industry group
is BULLISH! I agree that overweighting in oil & gas and related areas
is probably justified right now, but for us that means going up to 10%.
Our investment policy doesn't allow for any greater exposure than that.

I appreciate you comments -- it's nice to find someone who is willing
to share their (very thoughtful) perspective.
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