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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: Kerm Yerman who wrote (5581)	11/13/1998 8:13:00 PM
From: Richard Saunders	Read Replies (1) of 24925

Kerm/ seh startech - Enjoy reading commentaries both here at at the korner, thanks for continuing to post all the stuff. Agree with the general comment re: Startech pulling in the horns once they saw what was happening with debt & forward pricing. Those moves were definately prudent (issuing equity, hedging, backing off capex). Two things make me wonder about the future of this situation, maybe it's totally out of line but then again......... I don't know. First, SEH has done a great job with hedging approx. 1/2 of '98s production. The 1Q news release used BOLD FONT (not caps.) to say "Pursuant to the Company's ongoing hedging strategy, Startech has locked in approximately 50% of the Company's expected 1998 crude oil production at US$19.60 WTI per barrel." The current 3Q qtrly. doesn't use any BOLD LETTERS, it just says "continuing our successful hedging program". IF the goofiness in Saddam-land does translate into a blip upwards in oil pricing then MAYBE a brief window will be available to lock on some higher oil prices but if that doesn't happen will SEH be able to realize the healthy revenues they are currently reporting compared to peers? I don't know......... Second thing - SASKATCHEWAN. Besides being able to watch your dog run away from home for a week isn't this also home to general declines and high watercuts. I realize this is a generalization however there are many examples of cos. who have been snagged with declining production and increasing amounts of water in the oil. Maybe I'm missing something but I occassionally wonder if this is/will become an issue someday? Bottomline, I don't know - just tossing out some tho'ts.

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