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Gold/Mining/Energy : Canadian Oil & Gas Companies
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To: Kerm Yerman who wrote (4912)4/8/1998 12:40:00 AM
From: mike smith  Read Replies (3) of 24921
 
Oil and Gas Reserve Evaluations

Kerm,

You bring up an excellent point about independent engineers used
by a company to value its reserves. Of the "big three" engineering
firms, Sproule has the reputation of being the most aggressive or
optimistic when doing valuation work, McDaniel's has the reputation
of being extremely conservative and Coles Gilbert is somewhere
in the middle. This is why you often here the addage when
buying oil and gas properties to "buy on McDaniels and sell on
Sproule."

Since the majority of an oil and gas producer's net asset value
is derived from its reserve valuations, the independent engineer
employed by the company to do the valuation becomes a very
important parameter when placing credibility on reserve values
calculated. As an investor I always feel more comfortable when, for example, a conservative firm like McDaniel's is supplying the
reserve information.

Mike
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