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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (20053)	11/14/2004 9:22:21 PM
From: schzammm	Read Replies (1) \| Respond to of 78567

Madharry, not sure if you missed the most recent unit sale on Nov. 1 2004 that SME has entered into a non-binding Letter of Intent with Haywood Securities to sell 1,920,500 units at at a price of $1.25 with warrants. I did not go into all the details but you get the idea of what is going on. Haywood gets 8% of the gross sales, plus the purchase of agents warrants, etc. Also the company will try a non-brokered sale of 800 units themselves. Most often one has to be very nimble "with story stocks". The problem with these small companies is that even if they start with a small number of shares, it does not take long to have major dilution selling share for around US$1.00. They burn through the money and management is usually unloading shares they get for nothing by the bushel load. Also it usually is years before successful drilling, if any, takes place and then the infrastructure to transport the gas must be built. I speak from experience and am currently sitting on a couple micro E&Ps and a couple Biotechs that are very similar in nature. That is not to say that there will not be some spectacular plays but usually they take so long that one gives up after two to three years just before the price explosion. Or after sitting on it for so long one is happy to get their money back or a quick profit. The stories are great but not for a value investing thread.

To: Madharry who wrote (20053)	11/15/2004 8:09:22 PM
From: Brinks	Respond to of 78567

I was not omitting anything. It is all on their website. All start-ups go through initial private placements to raise capital to begin operations. The reason private placements are discounted to market price is that the shares are restricted for some period of time. Thus they are not freely tradable. Perhaps that is your point. These restricted shares are sometime referred to as Rule 144 shares. That's a whole different story... For example I just participated in the most recent Storm Cat private placement at $ 1.25 CDN. Why would I do that when last private placement you pointed was done at $ .80 CDN? I paid 56% more. I've even bought shares in the open market as high as $ 1.65 CDN. Why? There is twenty reasons. One they hired Evergreen veteran Zimmerman, two they tied up Mongolia property which has a VALUE in excess of market cap toady, three can't find cheaper CBM company, etc. etc. It is a ever changing situation. Today they announced they purchased production in the best area of the country the Powder River Basin of Wyoming. It is less risk today than yesterday. Plus I know it costs $ 75,000 to $ 125,000 per hole to drill in the Powder River Basin. His acquisition price was a fraction of this (28 production holes X $ 75,000 = $ 2.1 million minimum). Stock was up 21 % today. finance.yahoo.com Why? Zimmerman is doing exactly what I said he would. Beginning strategy is to buy production (revenues) and improve on that prodution and its reserves (His strategy). Zimmerman has the expertise to do this. Read his quote. Why would a person come from a $ 2.1 BILLION company (the acquisition price) such as Evergreen to a $ 20 million start-up? Read real close Zimmerman's quote below: STORM CAT ENERGY ACQUIRES NATURAL GAS FROM COAL PRODUCTION IN POWDER RIVER BASIN, WYOMING TSX-V: SME Nov 15, 2004 November 15, 2004 - Storm Cat Energy Corporation (SME-TSX.V) (the "Company") is pleased to announce it has acquired 100 % working interest (81.5% net), in 1,481 acres of the Jamison/North Twenty Mile fields, located in Campbell County, Wyoming, USA. Geologically, these fields are located on the eastern flank of the Powder River Basin coalbed natural gas region. Originally placed in production in early 2002, these fields are currently producing at a rate of approximately 1.0 million cubic feet per day (Mmcfd) of natural gas from 28 producing wells. The current production derives from the Anderson and Canyon coal seams with gross and net proven reserves of 1.148/0.842 billion cubic feet (Bcf) respectively and gross and net probable reserves of 3.231/2.370 Bcf respectively. The reserve estimates were provided by Sproule Associates in Denver, Colorado. In consideration of the acquisition, the Company has paid $1.25 million US for the properties. The effective date of the transaction is December 1, 2004. A total of six coal seams exist in the area, including the Anderson and Canyon. The company believes two of the lower coal seams, the Cook and the Wall provide sufficient thickness to warrant testing and development through the drilling of new wells. In addition, the Company feels the Smith coal seam is a good candidate for recompletion of certain existing wells but no reserves were attributed to it in the Sproule analysis. Company President, Scott Zimmerman said: "The acquisition of natural gas production with potential developmental drilling in a renowned coalbed natural gas region of the United States is a fundamental step in Storm Cat establishing itself as a company focused on the acquisition, exploration and expansion of significant natural gas deposits worldwide." Storm Cat Energy Corp. is a growing exploration company focusing on developing unconventional natural gas reserves globally. The company's primary objective is to create value for it's shareholders by applying strong technical expertise to strategies that will unlock substantial natural gas resources in areas where production can be achieved quickly and efficiently. For further information, please contact The Kottmeier Resolution Group, investor relations, at toll free 1-87STORMCAT (1-877-867-6228) or via email info@stormcatenergy.com . By Order of the Board of Directors Storm Cat Energy Corporation J. Scott Zimmerman