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Gold/Mining/Energy : Canadian Oil & Gas Companies
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To: AL R who wrote (4826)3/12/1998 1:41:00 PM
From: Kerm Yerman  Read Replies (3) of 24910
 
AL R / Gas Pricing

What lies ahead for gas prices in Western Canada after installation of the pipeline is somewhat cloudy. There is a fear of under capacity, but that is in the minority. The majority actually believe gas prices will average in the $2.30 range.

I'll take the conservative approach of an average about 20% more than the average will be for 1997. I think that will end up in the $2.10 range for 1999. Keep in mind, an early cold winter can contribute to a higher average for 1999 also.

One topic that is infrequently mentioned is the scheduling for the completion of the new pipeline. Originally scheduled for completion by November -- one should consider the consequences of delay. Further, I want to express that contribution to a company's 1998 earnings and cash flow will be minimum -- unless the pipeline is completed far ahead of schedule.

Regardless of what occurs related to the pipeline, one can expect the average price for 1998 to be very favorable when compared to 1997. 1999 should follow with a banner year compared to 1998.

Of the intermediate and larger sized companies, my runaway favorite is Rio Alto Exploration. If the oil price situation drags shares to the downside on this one, it's a must for performing personal due diligence. I see share price in the range of $18.00 to $21.00 12-months down the road.
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