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

To: Kerm Yerman who wrote (10099)	1/29/2004 7:11:56 AM
From: Kerm Yerman	Read Replies (2) \| Respond to of 24921

Material Change Report / TIER III Portfolio January 28, 2004 Beginning Cash Component $21,846.72 E3 Energy Purchased 2500 Shares @ $1.55/share Total Amount Invested $3,875.00 Note: This doubles the portfolio holdings position of the company – 2500 shares were acquired on 12/18/03 @ $1.25/share. In just over a year of operations, E3 has reached the first plateau of 1,000 boed rather quickly, a huge step in becoming a sustainable full-cycle exploration and production company. The company just announced a property acquisition which adds 140 boed to their production profile which at this moment is 1225 boed. Current established reserves are 3.3 million boe (factoring the Sibbald acquisition) with proved reserves of 2.8 million boe (96% producing) and a somewhat balanced commodity weighting of 46% gas & 54% liquids. Brief History Oct-02:---Completed RTO of Mill City Int’l Inc. Restructured business to oil and gas Dec-02:---Acquired private E&P for $3 mm: 263 boe/d (6:1) Dec-02:---$3.75 mm equity issue (flow-through) @ $0.60 Dec-02:---Commenced active oil and gas operations Apr-03:---Purchased Metiskow property for $2.5 mm: 175 bbls/d Jun-03:---$4.0 mm equity issue (flow-through) @ $1.05 Jul-03:---Acquired E&P for $7.7 mm: 400 bbls/d Qtr 03:---Tied-in successful gas drilling: ~ 450 boe/d (6:1) Jan-04:---Announced $7.5 mm equity issue @ $1.50 Jan-04:---Property purchase agreement for $3.2 mm: 140 bbls/d Jan-04:---Strategic farm-in on 37 sections undeveloped land News Releases ccnmatthews.com; SEDAR sedar.com Chart chart.stockwatch.com The company is projecting average 2004 production of 1,500 boed with an exit rate of 2,000 boed - almost double that of 2003. They have budgeted $16 million in expenses which includes the current acquisition and the drilling of between 22-24 development wells and between 11-13 exploration wells. In comparison to 2003, the company drilled 5 development wells and 11 exploration wells. In reviewing the 2004 drilling scenario, I believe the company has conservatively placed their production targets. Estimated cash flow for 2004 is $0.27/share and will be exiting 2004 at a annualized rate of $0.34/share. The company’s 2004 cash flow estimate is based upon the assumptions of WTI $29.00, Nymex gas $5.00 & C$ Fx 0.7737. The exit year estimates are based upon WTI $28.00, Nymex gas $4.80 & C$ Fx 0.7692 E3 expects to exit 2004 at a debt to cash flow ratio of 1.1X. In conclusion, I feel E3 offers superior share price appreciation over the near and longer term. The company just recently listed on the Toronto Stock Exchange and investors have welcomed the company with open arms. The share price continuously climbed to a 52-week high of $1.80 before settling back to the current price, which I see as a great opportunity to add to my position. The company just recently offered 4 million shares at $1.50/share and I believe the dilution effect of added shares is the contributing factor behind the fall off in share value. I view that as a temporary situation as we move forward. ====================================================================================================================== I have also increased my holdings in two other companies. High Point Resources Purchased 1000 Shares @ $2.34/share Total Amount Invested $2,340.00 Note: The acquisition increases total holdings in the company to 3500 shares. The previous 2500 shares were acquired at an average cost of $1.52. Again, the primary reasons behind investment in the company are exceptional management with their Slave Point drilling activity. Rio Alto Resources International Purchased 2000 Shares @ $1.10/share Total Amount Invested $2,200.00 Note: The acquisition increases total holdings in the company to 8000 shares. The previous 6000 shares were acquired at an average cost of $0.73/share. Reason for investment in the company is that it is a generating cash flow cow and 90% of it is being re-directed from South America to establish core areas in Canada - which are currently active in terms of drilling and getting production on board. Shares just broke out into new high territory as investors begin to realize the game plan behind the company’s operating objectives. I have increased my 12-month price target to $1.60, anticipating favorable reporting in regards to first quarter activity. Ending Cash Component $13,431.72