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To: ms.smartest.person who wrote (1253)	7/16/2006 9:57:44 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

&#8362 David Pescod's Late Edition July 13, 2006 CONNACHER OIL & GAS (T-CLL) $ 3.90 +0.11 PETROLIFERA PETROLEUM (T-PDP) $12.73 +0.63 The summer doldrums is an excuse being used by many of us to explain the lethargy in the Canadian stock markets these days as we’ve gone from one extreme of record setting volume to a state of almost illiquidity. Nothing made us more aware of it than the announcement of July 11th by Petrolifera Petroleum, where they announced their current light gravity crude oil production from the Puesto Morales/Rinconada Concession in Argentina is approximately 6500—7000 barrels a day and they point out that is primarily from four wells, from 1002, 1003, 1010 an 1011. These were wells drilled in late 2005 and early 2006. Petrolifera has hit the road running and gone from almost zero production to this level in record time. What was intriguing about their announcement was that they suggested they have now identified up to 54 Sierras Blancas/Punta Rosada locations for drilling on the two blocks of their 95,000 acre concession. If a person did some very aggressive mathematics, you could hope for huge production increases from this company, but rather than do that we go to someone we have always thought of as fearless who loves the challenges of the high risk plays and that’s Andy Gustajtis of Dominick and Dominick. “Sure, it’s the summer doldrums” he says when asked how come with the news of such significance as Petrolifera announces and yet the market is up all of ten cents? Sure he could postulate some ridiculous numbers for potential production for Petrolifera, but he says “why not come up with a number of say, 14,000 to 15,000 barrels a day for this time next year.” It’s possible and yes, he notes that the growth of Petrolifera in the last 12 months is nothing less than sensational. “What the company has accomplished is amazing,” he points out as the company just recently did an IPO that raised $25 million and $18 million is still in the bank as cash flow has paid for much of the recent drilling, which has been phenomenally successful. If the company does hit that 14,000 to 15,000 barrel a day rate, he suggests that would be cash flow numbers of $3.00 plus. When we ask about ongoing questions about political stability in South America and in particular for Argentina, he asks the question, “well, why couldn’t you assume that some of the surprises in politics in Argentina couldn’t be on the positive side?” He points to the natural gas market in Argentina where the government has just signed a contract to buy natural gas from Bolivia at $5.00 an mcf, while they are paying the domestic producers a mere $1.00 an mcf. Why can’t they increase the rate that they’re paying the domestic producers, Gustajtis asks and makes it even a better place to be looking for oil and gas. When we ask him about the two companies, Connacher which still owns a big stake in Petrolifera and Petrolifera itself, Gustajtis feels that they are both doubles. Connacher has been hit over the last few days because of the general sell off in all heavy oil producers, but Gustajtis says “they are both good buys.” While he points out that Connacher is currently in the development phase of their SAGD project, which might not illicit all that much excitement in the market, once they are closer to actual production, the market might care much more. As to Petrolifera, Gustajtis suggests there is going to be a lot of eyes watching on how successful their next six wells will be as a clue what to expect from the next 22-50 odd wells they hope to drill. LATEEGRA GOLD (V-LRG) $ 0.89 +0.08 AURELIAN RES. (V-ARU) $20.85 +0.78 We’ve mentioned summer doldrums in the article just above and over the last few weeks the illiquid resource markets that just can’t get going, despite any kind of news, echoes that feeling big time. In a couple of days like this where oil and gold responds smartly, and even when some junior stories have good news, the market simply goes no where and volume on any of the market is just disappearing. If a person did have some courage left, one story to at least follow is that of Lateegra Gold because of the neighborhood they are getting involved in. There’s been no bigger discovery we can think of than Aurelian Resources and Lateegra certainly seems to be coming up with some intriguing land positions in the right neighborhood. Of course being in the right neighborhood doesn’t guarantee you anything, but in the old days, if you had the right land in the right area, area plays used to count for something.