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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: Kerm Yerman who wrote (5707)	12/11/1998 11:45:00 PM
From: Richard Saunders	Read Replies (1) of 24927

Kerm - Blue Range. You're the one to be asking........ thanks again for keeping the oil threads going during the gloomy periods. Totally off the cuff and possibly not totally accurate, here's quick impressions. Blue Range folks (mgmt. type) seemed to have put themselves in to uncomfortable situations over the past several years. Even a yr. ago I remember seeing something indicating that shortfalls in production/sales volumes forecasts vis-a-vis actual results were tending to upset institutional shareholders. Part of the problem re: forecasting could possibly be argued as being too optimistic (opinion) however part of the problem was also dealt to Blue Range with overall weather. I'm not sure how much of problem was also caused by production declines within reserves. All in all the bloom had disappeared from the name/situation and it seemed ripe for a change. Incoming mgmt. group seems to currently have investment community approval and whether or not they will be able to make things work any better remains to be seen. I think you probably saw the same commentary however it was recently indicating that the "new" mgmt. group should be able to command a higher CF trading multiple than status quo group. Who knows, it seems somewhat related to sentiment. Your ponder re: reserve base is interesting though as the takeover bunch seemed to couch some of their argument so it sounded as though there'd be some reserve write-downs coming soon. Again, time'll tell. Blue Range is tilted (75%) towards gas production - I think are operating just under 13K boepd. PROBLEM........ Long term debt. Something like $100mil. BBR.A is on a goofy yr. end and their most recent qtr. showed something like $8.7mil CF. As the kids say....... "do the math". Combine that with the rollback that Big Bear will be doing to consolidate the 390.5mil shares that they are issuing and another reason for slack stock price appears. Finally, back to the old weather thing. Yesterday I recall looking at B.C. temperatures in the north. Places like Fort Nelson, Fort St. John, Dawson Creek and what not. Before lunchtime all of those places were showing temperatures above freezing. For this time of year that seems unusual. Today I glanced at a temperature up in the NW far north of B.C. and it was just below freezing but supposedly 17 degrees C. above the normal temperature for this time of the yr. e've already passed something like 24% of the normal winter gas heating period so unless temperatures begin to cool off on a sustained basis the rosy gas prices that many were assuming a little while ago may not happen. Just two months ago the Cdn. Association of Oilwell Drilling Contractors was forecasting $2.65/mcf for the period to Sept.'99. At the moment this looks a bit different than current gas pricing. That too has to reflect on the asset base that Blue Range has (had?). So........ got off on a sidecast but it seems current sentiment isn't great at the moment. Maybe arguments can be made for patient buying?

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