Special points of interest:
· A crucial press announcement points the way to a potential double of present produc-tion
rates.
· Option to expand Louisiana land position is in place.
· Private Placement is disclosed—Further confirming Osprey’s ability to raise needed
funding dollars.
· Upcoming Market Presentations in London, England and New York.
The Resource Stock Watch
S E C T O R A L E R T— N A T U R A L G A S
On Thursday, April 5, 2001, Osprey Energy an-nounced
that remedial work on the Crosby 36A well
is now in progress. In addition, a financing was dis-closed.
When we issued our initial report on Osprey we saw
a positive year ahead for a dynamic Tier One com-pany.
On page one we highlighted that the Crosby
25, Crosby 36A and the Williamette were three wells
with the greatest reserves.
The press announcement reviews the 36A as a high
pressure well with a total depth of 19,800 feet. It was
successfully drilled by Union Pacific Resources in late
1998 but never equipped, produced or tied-in to the
commercial gas gathering system. A pipeline was re-cently
completed, tying-in the Crosby 36A Well to
the infrastructure of another Company Well, the
Crosby 25, also drilled and completed in early 1998
by UPR. The Crosby 25 is fully equipped and tied
into a commercial gas gathering system. It produced
142,821 BO and 554 million cubic feet of gas prior to
being plugged with shale in late 1999. Once the work
is completed on the Crosby 36A, remedial work on
the 35 will be planned and finalized.
Production, Production, Production!
In the real world, land positions and holdings mean
little if the Company has not demonstrated its ability
to exploit those holdings successfully. In the case of
Osprey we have a Tier One CDNX listed company,
already on an established path of transition.
The significance of Crosby 36A coming on stream
cannot be overstated. This is a huge well, which even
discounted 50% has proven reserves of 271,000 bar-rels
of oil and 7.8 billion cubic feet of gas.
One can appreciate the value of this reserve with simple
math. Gas today is selling close to $5.50 per MCF.
Rounding that number off to $5.00 and multipling
it by the number of thousand cubic feet in 7.8 billion-
7.8 million we value the gas alone at $39,000,000
USD or $58,500,000 CDN (conversion at 1.5).
In addition if we multiply the 271,000 barrels of oil
net to Osprey (proven reserves) by $25 USD per bar-rel
we add another $6,775,000 USD or $10,162,500
CDN.
The total reserve value of the well at current prices
therefore is more than $68,600,000, of which Os-prey’s
current 50% interest is worth $34,300,000.
PV 10% Evaluation
The economic evaluation of the property prepared by
Keljor LLC a Houston geological geophysical firm,
established the PV 10% discounted value of Osprey’s
50% working interest in the entire Cotton Valley prop-erty
at $15,475,549 USD or $23,213,323 CDN. This
equates to $2.10 per share CDN.
Furthermore, the company also announced an option to
purchase another 10% of the Cotton Valley property for
two million treasury shares. This means Osprey can ac-quire
an additional $4,642,664 CDN worth of reserves
for two million common shares or $2.32 of value for
each share.
In Closing
We see a positive natural gas market throughout 2001,
and beyond. Our own Steven Thomas, who conducts
risk analysis for one of North America’s largest energy
producers feels that a firm floor will be established due
to the increasing role that natural gas plays in the produc-tion
of energy. Further, the bottoming out that occurred
several years ago gave us a huge well deficit in the face of
rapidly increasing demand.
Osprey has demonstrated its ability to establish sensible
goals and to meet them. And further, they have demon-strated
their ability to raise money needed for field devel-opment.
The Thursday, April 5th, release discloses a bro-kered
private placement.
If the Company’s projections are on-target, the Crosby
36A will more than double Osprey’s present production
levels. And, of course, this will greatly impact revenues in
a market that’s ever more revenue sensitive. Financial
results for the second quarter ending December 31, 2000
are as follows:
Revenues soared 1442% to $854,387 from $59,250 in the
same period last year and exceeded total revenues for
year end June 2000 by $43,095. Louisiana operations
contributed $708,938 (83%) while Alberta operations
contributed $145,449 (17%). Cash flow rose 704% to
$520,559 from $73,989. Revenues for the 6 months
ended December 31 increased 781% to $1,269,904 com-pared
to $162,655, while Net Earnings rose to $291,309,
compared to a loss of $55,860 for the same period last
year.
Simply put, Osprey Energy Limited demands an immedi-ate
review by all investment advisors and investors inter-ested
in hedging against current market volatility in other
sectors. We have long been a fan of Canadian junior re-source
companies who focus their activities within the
American oil patch. Osprey is no exception. And, with
the Crosby 36A coming online, we have established ur-gency.
The time is now to carefully review this dynamic
Canadian junior.—Kelly Boatright.
April Alert!
Osprey Energy is progressing rapidly. We recommend an immediate
review. (CDNX-OEL)
Natural Gas Sector |
