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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: Doug who wrote (5231)	7/10/1998 8:08:00 AM
From: Kerm Yerman	Read Replies (2) of 24892

Doug / Northstar Energy Let's get this preliminary info out of the way. DEVON ENERGY July 9, 1998 U.S. Share Price: $35.50 C$1.4683 (US$0.6811) Conv. Price C$52.12 X 0.227 NEN Value C$11.83 Current NEN C$11.40 Devon will issue 0.227 share for each of Northstar's 68 million shares outstanding. The transaction also has a provision that allows Devon to pay as much as 0.235 share for each Northstar share if Devon's stock price falls below $32.95. REFRENCES Devon Energy Corp.'s Ratings Placed on S&P CreditWatch Positive biz.yahoo.com DCR Comments on Devon Energy's Merger Agreement biz.yahoo.com Zack's Wall Street Recomendations www1.zacks.com Zack's Earnings Estimates www1.zacks.com ----------------------------------------------------------------------- For further research, begin with this page; wsrn.com ----------------------------------------------------------------------- My comments: Devon has been a strong share performer in the U.S., doubling in past three years. Here is what we are confronted with and really is the key in the decision that lie's ahead of you. Valuations by the markets for oil and gas companies in the U.S. and Canada are different. The U.S. is earnings driven while Canada is cash flow driven. There are other financial and operating characters which vary slightly also. I would make my decision based upon the financial and operational characteristics I am more familiar with. Therefore I would be selling my Northstar shares and look to reinvest back into the Canadian Oil & Gas Industry. Current NEN share price is close to share price valuation as noted in Devon news releases ($0.40 to the lowside). I would not hesitate to sell now and look to jump into another Canadian company in the very near term. I am a firm believer that people should be accumilatiing shares in selective oil and gas companies at this time for further downside risk is minimum and longer term potential allows for above averge return on investment. I would want to replace NEN with a company of similar or higher stature. My list of potential candidates would include Northrock Resources, Probe Exploration and Talisman Energy under $40.00/share. Stepping down in size, I also think a lot about Bonavista Petroleum, Genesis Exploration and Tethys Energy. There are others, but these hold my peak interest at current prices and further upside potential from here. If I were to cut this list in half, I would lean towards Northrock and Genesis.

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