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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Goldberry who wrote (8562)	11/28/2001 4:18:07 PM
From: stan_hughes	Respond to of 24921

Graham - Quick from the hip analysis says you divide the $62 million by the 7.6 million BOE and get ~$8.15 a barrel in the ground, reportedly 85% proven. That price is no steal, but it isn't godawful either. Another quick metric is to divide the $62 million by the daily production rate of 1,720, which yields an acquisition price paid of about $36,000 per flowing barrel. I'd say that's a little rich for the times myself, but other relatively recent deals have been done higher. Be interesting to see what the market thinks of it tomorrow.

To: Goldberry who wrote (8562)	11/28/2001 6:54:30 PM
From: Richard Saunders	Read Replies (1) \| Respond to of 24921

Graham - further to what Stan indicated. The production is gas weighted & the per flowing number that Stan mentioned is based on a 6mcf/1 barrel conversion. It wasn't too long ago when conversions were being done at 10:1 On a 10:1 basis the price of production using ESTIMATED production for 2002 is just under $53,000 per daily barrel of production....... A swack of the reserves - 85% area? - purchased are classed as proven. There is a difference between proved reserves which aren't yet producing and proven producing reserves. Without looking at the engineered report it's impossible to say how much capital spending will be required to turn in-the-ground-reserves to cashflow generated from production. Also, I noticed the McDaniels mention also indicated the production assumptions for 2002 to be ESTIMATED. Generalizing however McDaniels is a reputable firm and I believe tends to estimate on the conservative side of the page however keep in mind that engineered reserves are ESTIMATES. Sometimes there's a difference between estimates today for stuff that is assumed for the future vs the reality that actually happens.......... A good example? Watch for annual reports that start to appear next spring and see what general ceiling tests for previously estimated reserves start to translate into based on Dec.31, 2001 commodity prices vs. estimates being made for the same a year ago. Write downs for many balance sheets coming soon to oil and gas companies near you....... It has started already. EEE Cdn88 wrote down $245mil. recently, Anadarko did some of the same a while earlier and more companies will be doing it too. Interesting days ahead, especially if some of the banker types start getting involved in situations that may be riding with aggressive debt, etc. Stay tuned.

To: Goldberry who wrote (8562)	11/28/2001 11:59:16 PM
From: Richard Saunders	Respond to of 24921

Graham - some apples and oranges for your consideration. This doesn't really relate closely to your AVN.un question however it may also give a bit of a comparison. I don't have a position however have watched a little thing called Hawk HWK.a-cdnx for a while. The co. news released 3Q results today and let's use them for comparison's sake. Hawk is currently producing about 8,000 mcf gas and 1,015 oil on a daily basis. If 6:1 conversion is used that translates into just under 2,350 boepd. Gas weighting is not quite 57% The private situation that AVN.un bought was much gassier, something like 90% if the assumed estimated 8,300 mcf per day is converted at 6:1. Hawk - approx. 2,350 boepd with 57% gas vs Private co. bo't by AVN.un - est. 1,720 boepd with 90% gas. Hawk at Sept.30 had LT Debt & working capital deficit of just over $10.7mil There were not quite 7.9mil. shares o/s in Hawk. Stan indicated that on a per flowing basis your AVN.un appeared to be paying something like $36,000 per flowing barrel of production. Apply the same metric to the Hawk situation and you obtain a share price of something like $9.39 Hawk's stock last traded Nov.26 at $2.15. I haven't tried to go looking to see what Hawk's reserve situation consists of and it's recognized that production is much more weighted to oil. Still, I think the above does give you an idea of premium price that appears to being given to the gassy private co. if only production is being looked at. It would appear that the trust may be seeing some possible development opportunities in the reserves that they appear to be paying for....... might also be interesting to find out who's tied to the private co. as they appear to have negotiated quite an impressive price given the current commodity pricing environment....