CANADIAN OILPATCH / SEPAC OVERVIEW
The following is a overview of the SEPAC event which David Peever
attended. Article appeared in Calgary Herald,
Allure of Riches
Thursday 17 October 1996
The cold number showing the Toronto Stock Exchange hitting another
new high don't say nearly as much as the exciting turnout at the
Westin Hotel yesterday afternoon.
Unexpected throngs of eager oil and gas investors were packed
cheek to jowl as they gathered to hear 16 little oil and gas
companies explain how they intend to make money grow.
The companies paid $750 each for 15 minutes in the spotlight at
the first investment symposium organized by the Small Explorers
and Producers Association of Canada, which represents about 400
of the smallest companies in the business. "If we get more than
200 people and they are happy and excited, we'll definitely follow
up with another show in Calgary next year and we may set up venues
in other cities," SEPAC director Michael Lang, who is also chief
financial officer of Beau Canada Exploration, told me. By the time
the symposium kicked off at 2:30 p.m., Westin banquet manager
Norman Jarowsky estimated that 650 people were packed into two rooms
and a wall divider was removed to ease the crush. Organizers turned
away dozens of latecomers.
"I'm elated. It's fantastic," Lang said when he saw he had a hit on
his hands. "We just had nominal expectations. I'm really, really
pleased. This will be good help for a lot of these companies."
There were brokers, analysts, and oil company executives, among the
throngs, but the crowd appeared to be a cross section of the retail
investors SEPAC wanted to attract. Some were young and some old.
There were men and women. Some were dressed in Gucci loafers, some
in work boots.
"It's a great turnout," said Pointer Exploration president Jack
Bolter as he stood waiting to make his pitch. "There's a lot of
private individuals. What people are looking for here is leverage;
they think a lot of these companies are trading at a good price
and they are going to grow."
SEPAC was created in 1986, the year oil prices plunged from $30 US
to $10 a barrel. "Small explorers are bleeding to death...the
province potentially faces a depression unmatched since the 1930s,"
SEPAC wailed in newspaper ads published at the time.
That was then and this is now. So far this year oil and gas companies
have raised $3.4 billion with new equity issues, compared to $1.8
billion during all of 1995. But only a tiny fraction of this amount
has been directed into the very small companies SEPAC represents.
Institutional investors aren't keen on companies with less than $100
million worth of shares on the market.
"Larger companies are able to get exposure through the Canadian
Association of Petroleum Producers (CAPP) symposium which focuses on
institutional investors," Lang says. "For smaller companies, there
is no easy way to expose themselves to a lot of institutional
investing groups. Our hope is this will assist in giving them that
kind of exposure.
"My feeling is right now the flow-through share market is very
active and a lot of these companies might grow by issuing
flow-through shares. Smaller companies will have trouble just
issuing common shares. The ones with market capitalization of less
than $10 million will definitely have a problem."
The symposium started with a presentation by Tom Budd, managing
partner of corporate finance with Griffiths McBurney Partners, who
outlined the criteria his company uses to evaluate oil and gas
companies. He reminded investors that it's easy to meet cash flow
projections when oil prices are far higher than expected so
investors should see if companies are meeting production targets
as well. "When buying small company stocks, don't borrow money to
do it,"he cautioned. "In good markets, everything flies. When
markets flatten out, good companies shine."
Sepac Symposium Participants
Artemis Energy Bellator Exploration
Best Pacific Resources Big Horn Resources
Calahoo Petroleum First Star Energy
Founders Energy Ironwood Petroleum
Midas Resources New Cache Petroleums
Pointer Exploration Probe Exploration
Search Energy Torino Oil & Gas
*Truax Resources Vintage Resource
* TOP TWENTY SELECTION |
