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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: Bearcatbob who wrote (5396)	9/21/1998 8:12:00 PM
From: Kerm Yerman	Read Replies (2) of 24921

BEARCAT BOB / Canadian 88 Energy To answer your question that was posted at the Korner as to why I excluded EEE from my listing. Canadian 88 Energy, along with Newport Petroleum and Encal Energy in the same peer group (Intermediate Sized Oil's) were all on the "bubble" list for incursion into my listings and subsequent portfolio. I like all three companies for exposure to natural gas and planned growth thru 1999. All three are selling at or close to net asset value. Canadian 88 and Encal have a decent amount of debt. The primary reason I omitted these three companies was limited upside share price appreciation over the coming 12 months. Shares are a little high (for me) for purchase at this time. Canadian 88 shares are at $4.75. I would be a buyer at $4.20 or lower and looking for a price target of $6.30 in 12 months. Newport Petroleum shares are at $4.80 and I would be a buyer under $3.60 with a 12 month price target of 5.40. Encal Energy shares are at $5.25 and I would be a buyer under $4.50 with a price objective of around $6.75. Canadian 88 Energy projections have been based upon timely construction of pipelines and facilities and there are complications with sour gas also. Most of this is behind them, but I would like to see tying wells into production before I consider accumulation of their shares. No doubt the company and its management are agressive. Production is estimated to be 160mmcf/d in 1999, up from 70mmcf/d in 1997. Cash flow is projected to be $0.75 in 1999 vs $0.40 in 1997. Just worth noting, operating peers to these companies which are in my lists include Berkley Petroleum, Northrock Resources, Penn West Petroleum, Rio Alto Exploration and Ulster Petroleums.

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