Wouldn't you know it.I give up OEL.V for the week and The Daily News out of Halifax covers it with a story in the Sunday edition.I almost choked on my coffee when I saw it.
Sunday, April 22, 2001
Oil's well with Osprey
Bridgewater company finds its future down on the
bayou
By STEPHEN BORNAIS -- The Daily News
OSPREY ENERGY LTD. is a former British Columbia company now
based in Bridgewater that is using expertise built up in Louisiana to search for
natural gas in Cumberland County.
Such are the ways of the world for a junior oil company still battling to catch
the eye of investors in a crowded marketplace that is still wary of
commodity-based investments.
Osprey managed to raised eyebrows in Nova Scotia last week when it
announced it had teamed up with Calgary-based Consolidated Beacon to do
seismic testing on 89,000 hectares of land near Debert and Parrsboro.
The two prospects are part of the Maritime Basin, a large sedimentary
formation covering parts of the three Maritime provinces and the Gulf of St.
Lawrence.
If Osprey's zone contains hydrocarbons, the potential recoverable reserves
could be more than 90 million barrels of oil and more than 345 billion cubic
feet of gas.
"That would be huge," said John MacDonald, the company's director of
investor relations. "That would be very big."
At least five other companies are also exploring in the Maritime Basin. One
of them, Corridor Resources of Halifax, has reported excellent gas flows
from two wells it has drilled near Sussex, N.B., while another company
working on Prince Edward Island is prepared to drill its first well into a very
promising structure.
All this activity would indicate Osprey is on the right road, MacDonald said.
"With these other companies, it really helps our credibility," he said.
Osprey was created in September 1998 when it changed its name from Fort
Point Resources Ltd. It still carries on its Alberta business under its former
name.
President Gary Malone, originally from Saint John, took over the company
while it was still out West.
After visiting friends in the Bridgewater area, Malone enjoyed the South
Shore. When he took over the company in 1998, Malone decided to fulfill a
long-held wish and moved its office East.
"The company has to be some place, so why not here?" MacDonald said.
Bridgewater had been slow to acknowledge the company, but now "several
dozen" local people are investors, MacDonald said.
"We got a full-page story in the Bridgewater Bulletin and for many people
that was the first time they had heard of the company," he said.
MacDonald, the former head of the Nova Scotia Teachers Union, joined
Osprey's small staff last September. He had previously held some stock after
a chance meeting with Malone during a round of golf.
"I started buying the stock, and checking it periodically, and my interest level
was high," he said. "Right now, I think this is a hidden gem."
Osprey gets most of its cash flow from production at properties it co-owns
deep in the bayou country of Louisiana, where oil companies have been
drilling since the 1930s. (The company also has smaller operations in
Alberta.)
It had the good fortune to go looking for bargains in a buyers' market. In
1998, it picked up a number of wells in three mature Louisiana fields for a
fraction of their value when oil and gas prices plummeted.
One of the original owners ran into debt problems after a $3.6 billion US
takeover of a Canadian energy company and had to raise cash quickly. It
sold Osprey several wells for a song.
"We really lucked out there," MacDonald said.
Osprey runs its Louisiana operations through a local partner, BPR Energy
Ltd., which is responsible for all day-to-day operations down south.
Its star well, Crosby 36A, is now estimated to have reserves of 7.8 cubic
feet of natural gas - small potatoes when compared to the monster fields
supporting the Sable development, but still significant for an onshore property
where productions costs are minimal compared to the offshore.
"These proven reserves, for a small company, are very significant,"
MacDonald said.
An independent analysis of the company's holdings in Louisiana put their
value at more than $36 million US. It also has very little debt, giving Osprey
a large degree of flexibility in how it finances projects.
Despite rising prices for oil and gas, the bulk of publicly traded companies in
the energy sector are undervalued by the markets. Osprey is no exception.
At Thursday's close on the Canadian Venture Exchange in Vancouver, the
company's seven million shares sat at $1.18 each, up from 75 cents last year.
MacDonald said even the higher price still leaves the company under-valued,
something he thinks will be corrected later this year as the positive results
pouring in from the Louisiana wells are reflected in quarterly reports.
Daily production is expected to exceed 2,000 barrels by the end of the year.
MacDonald isn't surprised the stock has been slow to rise. The company
never made money until last June when it posted a $14,000 profit.
Its last results showed a profit of $291,309 for the six months ending Dec.
31, 2000.
Somebody must be noticing. In the February 2001 edition of The Resource
Stock Watch, Osprey was touted as a stock to follow.
"Osprey is a rare junior that fulfills our demands for sensible risk weighting of
projects and a firm footing to allow full exploration of the reserve base," the
report said.
"In simple terms, the blue sky is here, but not at the expense of sound
fundamentals and business practices." |
