Material Change Report / Tier III Portfolio
December 24, 2003
Beginning Cash Component $10,777.72
I have decided drop coverage of Devlan Exploration for the time being. There was a falloff in production from the second to third quarter – 2426 boed to 2110 boed. The company still expects to exit 2003 at 2500 boed, most of the addition being heavy oil. I’ll revisit the company when I learn more of progress made in their winter program. Incidentally, the winter program involves more wells than the company drilled in all of 2003. There will be no activity in the NWT. The bulk of activity will be located in the Rainbow Lake area where costs have increased significantly. Rainbow Lake is also where the company is experiencing larger declines among their areas of operation.
Sold
1200 Shares Devlan Exploration @ $2.35 = $2,820.00
Original Purchase Cost @ $1.66 or, total of $1,992.00
Profit = $ 828.00
Cash Component Sub-Total $13,597.72
I am also dropping coverage of Olympia Energy because I do not like their debt position currently at $45 million versus an estimate cash flow in 2003 of 27 million.
Sold
1000 Shares Olympia Energy @ $3.05 = $3,050.00
Original Purchase Cost @ $ 4.13 or, total $ 4,130.00
Loss = $1,080.00
Cash Component Sub-Total $16,647.72
Just when I thought Purcell Energy was to come alive, their major drilling partner, Anadarko Petroleum, announces they are making operational changes in Canada. I don’t know how any of these changes affect operations of Purcell at this point in time – but I have decided it’s about time to get off the fence as far as my investment in the company is concerned.
Sold
4000 Shares Purcell Energy @ $2.48 = $9,920.00
Original Purchase Cost $*1.54 or, total $ 6,145.00
Profit = $3,780.00
Cash Component Sub Total $26,567.72
My universe of the smaller Junior Oils is too large and I am proceeding to reduce my holdings to a more manageable total. If anyone is interested as to why I chose to drop the following companies, send me an email and I will be specific with a reply.
Sold
4000 Shares Bow Valley Energy @ 1.63 = &6,520.00
Original Purchase Cost $1.65, total of $6,600.00
Loss = $ 120.00
Cash Component Sub Total $33,087.72
Sold
4000 Shares Case Resources @ $ 1.14 = $4,560.00
Original Purchase Cost $0.70, total of $2,800.00
Profit = $1,760.00
Cash Component Sub-Total $37,647.72
Sold
1400 Shares Impact Energy @ 1.35 = $1,890.00
Original Purchase Cost $1.48, total of $2,072.00
Loss = $ 182.00
Cash Component Sub-Total $39,537.72
Sold
15000 Terraquest Energy @ $ 0.205 = $3,075.00
Original Purchase Cost *$0.33, total of $4,750.00
Loss = $1,675.00
Cash Component Sub-Total $42,612.72
I have also decided to add two companies to this portfolio. I will provide the details in a posting sometime within the next few days as to why I like them.
Purchased
800 Shares Defiant Energy @ $ 4.45/share = $3,560.00
Cash Component Sub-Total $39,052.72
Purchased
700 Shares Tempest Energy @ $ 5.55/share = $3,885.00
Ending Cash Component $35,167.72
My tactics behind these moves was to narrow coverage down to those companies, which over the near and far term, will provide more impact on share prices with continued success. The portfolio now contains 18 holdings and I am restricting the portfolio to 20 holdings – leaves me with a little flexibility to jump into something I feel is attractive.
Coverage on 18 companies is in excess when compared to the other portfolios – but I feel over the coming 12 months, Tier III companies will provide the superior returns on investment.
That’s a warning sign.
The majors and larger junior oils have seen their share prices raise dramatically. When emphasis is refocused on the smaller companies, it’s a sure sign we are in the very late stage of a oil and gas bull market.
The ending cash component has increased to $35,167.72 from $10,777.72. A special note - The original investment into this portfolio is $31,934.30. |
