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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Lorne Larson who wrote (1843)	11/9/2001 12:28:18 AM
From: russet	Read Replies (1) \| Respond to of 11633

I'll bite (gggggggggg), However when I see a trust like AET announce a $100 million capital expenditure program $100 million isn't what it used to be,...that figure must be looked at in comparison with the trusts production, cashflow and balance sheet. The $100 million is likely not just for drilling, but includes tie-ins, pipeline and plant buildups, well stimulation and cleaning, etc,. It is possible that a trust with AET's production would have to spend close to that amount annually just to keep their production at last years levels, as wells in shallow fields can lose half their productive capacity in just a few months. A look at AET's financial reports seems to indicate that many of the wells drilled are infill holes in proven fields. The success rate is probably 100%. To compare, Alberta energy (AEC.t) drilled 1236 wells in North America in the last 9 months and had a 99% success rate. I would say the fields most of these trusts are drilling in have similar success rates. Are you suggesting that it would be kosher for a trust to buy a field that had NO producing wells on it, even assuming that the field was pretty much proven? No,...a field with no producing wells on it, would not have proven reserves. The resource could only be inferred. If a trust buys a company with such fields in it, it would usually either sell off such fields, or if exploration risk is limited, they will partner with an exploration company to reduce risk further. That being said, we are running out of easy to drill and produce fields in North America, so it is likely all companies, including the oil and gas trusts will move a bit up the risk ladder as deeper wells, remote, and offshore prospects become the last frontier. $100 million is peanuts in those plays, but usually the flowrates and production life balance the risk. For example, the present cost to drill and tie-in a deep Ladyfern well could exceed $10 million Canadian, but the rewards of high flowrates and long-lived production are worth it. Once the Ladyfern field is delineated and produced for some years, the field will become proven reserves, and no doubt some trusts will buy up pieces of it. The same is probably true of deep water wells of the east coast,...Pengrowth is there already and I took this quote out of their latest Q3 report,...", Sable offshore enery project (SOEP) in June, 2001... SOEP production volumes have been strong in the third quarter. Pengrowth has recorded natural gas sales of 42,774 thousand cubic feet per day and NGL sales of 1,450 boe per day with respect to SOEP since the acquisition on June 15, 2001.",...42,774 thousand cubic feet per day from Sable is almost half of Pengrowth's gas production for that quarter.