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To: ms.smartest.person who wrote (418)	9/22/2005 1:48:56 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

David Pescod's Late Edition September 1, 2005 WESTERN LAKOTA (T-WLE) $13.00 n/c ATLAS ENERGY (T-AED) $5.65 +0.10 TECHNICOIL CORP. (V-TEC) $3.65 +0.25 INTL. SOVEREIGN (T-ISR) $3.73 +0.23 He’s bullish on energy, but bearish on the market in general and even within the energy sector Brendan Kyne of Leeward Hedge Funds has his favorite sub-species. On ROB-TV two days ago (go to www.robtv.com and click on past videos. Click on Tuesday and scroll down to 12:00 pm) we watched an intriguing interview on his take on the energy sector. Brendan suggests (as we go into the shoulder season) that you usually see demand for gasoline by cars, subside at this time of year. Therefore, he usually expects oil to fall. Meanwhile, as we are going into winter, he is spectacularly bullish on natural gas. At this time, he is expecting natural gas to fly and wouldn’t be surprised to see it hit $14.00 an mcf, which would make heating people’s homes this winter particularly expensive—let alone making electricity. In the meantime, he expects oil to correct up until October and then move higher and he wouldn’t be surprised to see $85.00 a barrel on oil sometime next year. So while he is buying natural gas stocks, there is another sector he thinks is going to have a great quarter coming up and that’s the Royalty Trusts. With oil and gas at prices so high, many of these Trusts he says are going to be churning out so much money that many of them are going to be stuck with a choice—either paying income tax or paying extra dividends to unit-holders. That should be an easy choice. As far as his favorite stock picks, one that he picked back in May that has almost doubled is Western Lakota. It is one of the drillers that has connections to many of the native bands in western Canada and has a leg up on getting contracts, even at favorable prices, on much of native land. He wouldn’t be surprised to see it hit $20 in the next 12 months. If you are taking interest in coal bed methane and many Canadians are behind the Yanks as preferable tax treatments have the Yanks about a decade ahead of us in this sector, he points out that Technicoil Corp., has much of the equipment you’re going to need for the growing business. Technicoil should do $0.36 to $0.37 a share this year and $0.50 or better next and he believes the stock will perform accordingly. Then there’s his other pick of Atlas Energy which arouses some controversy. He points to its chart and notes that it, like many other oils, retreated significantly over the first part of the summer, but has responded better lately. He expects to see their heavy oil production double over the next year, mainly from two of their projects—Mooney and Druid and that’s why Atlas is one of his top picks. (Atlas is not everyone’s top pick as one Canaccord analyst points out that after meeting with management, notes that Atlas hasn’t increased oil and gas production in four quarters and currently enjoys a lofty multiple). One of these guys might be right. We have noticed that Calgary Money Manager Steve Smith has Atlas as one of his favorite picks as well. Then we caught up with Kyne in Muskoka, (where he is enjoying some of the last bits of summer) and were reminded of the old Brendan Kyne who was not afraid of taking the odd high risk shot in return of the really big reward. While we realize that most of the hedge funds these days are used to taking big risks, his fund has been (at times) a little shyer than most. Pretend, we say, “that you are in a long alley on a dark and dreary night and someone sneaks up behind you, grabs you over the head, covers your eyes, sticks a gun in your back and demands “give me your best high risk, high reward play that could change my lifestyle” ….. IT COULD HAPPEN!!?? He takes a minute to think about that and first answers, “if you are looking for one with liquidity, I am a big fan of Duvernay Oil and the management team. I wouldn’t be surprised to see it at $100 in 18 months.” (That’s almost a triple) Then he warms up to the concept of something with big risk and big returns and comes up with International Sovereign. He suggests there should be little downside here as this company currently has about 1000 barrels a day production in western Canada. He believes it is being priced at around 50% - 60% of what it is worth if valued on a flowing barrel basis. There are only 11 million shares outstanding. Management is very much tied into international situations and Kyne suggests that “they have been negotiating for oil and gas properties and plays in Pakistan and Yemen.” Kyne says. “I wouldn’t be surprised to see them come up with some major deals over the next six to twelve months”. Should some of these deals come to fruition, he wouldn’t be surprised to see this company, which currently has lots of bucks in the bank, become a five or ten bagger. We bought a few shares, just in case. Western Lakota www.westernlakota.com Atlas Energy www.atlasenergyltd.com Technicoil Corp. www.technicoilcorp.com Intl. Sovereign www.isove.com Disclosure: * Atlas Energy : Canaccord Capital covers this stock and has a Sell rating on it. (Sell: The stock is expected to generate negative risk-adjusted returns during the next 12 months.)* DEB’S DITTY: Ever notice how the repairman has never seen a model quite like yours? If you would like to receive the Late Edition, just e-mail Debbie at debbie_lewis@canaccord.com