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To: ms.smartest.person who wrote (2848)	10/26/2007 12:43:58 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

&#8362 David Pescod's Late Edition October 19, 2007 CORRIDOR RESOURCES (T-CDH) $10.11 -0.08 PACIFIC ENERGY RES. (T-PFE) $2.29 -0.01 STEALTH VENTURES (V-SLV) $0.82 -0.01 SUSTAINABLE ENERGY (V-STG) $0.40 +0.025 Look at a chart on most natural gas stocks these days (at least those in Alberta) and they look like a ski slope. Clobbered by increasing costs in the Canadian oil and gas patch (actually, make that costs going through the roof), a Canadian dollar that’s been soaring and making revenues significantly less than they were just 18 months ago and a relatively low price for natural gas and you’ve got the perfect scenario for disaster. Add to that a Royalty Review that the Province is looking at that if they do implement, you can expect drilling for natural gas in Alberta to simply disappear. If you are a stock jockey, the last thing you are going to want is to own gas stocks in Alberta. Some suggest that the Province will take the Royalty Review recommendations with a grain of salt and adjust them to the real world and we will know about that in the next ten days or so. But in the meantime, we go to Andy Gustajtis who from time to time seems to specialize in coming up with improbable stories that enrich speculators greatly. Witness Corridor Resources and over the last few weeks, Sustainable Energy, but it was time for an update. While most natural gas stocks have been disasters for the last two years, Corridor Resources with their immense discovery of the McCully project near Sussex, New Brunswick has been that rarity...an enormous discovery that has sent the stock flying. Gustajtis today suggests that “there is another parade across the Prairies and Eastern Canada starting as an enormous big triple rig makes it way from the very quiet Alberta gas patch where hundreds of rigs are sitting idle to New Brunswick where suddenly a rig is a pretty important thing to have in the neighborhood.” Gustajtis suggests that “the next well to be drilled in the McCully field is expected to go down 4500 metres to be drilled under-balanced and equipped with a 10,000 pound blow-out preventor.” They’re taking a first real look at the Dawson Settlement and Andy does caution us that no one knows how deep the potential Dawson Settlement is, or for that matter, whether it’s even there, but he simply gushes over the potential for the project. He suggests, “it smells just like Ultra Petroleum (UPL) and Pinedale and the play just looks better and better” but sooner or later he does admit, they need some results. While Andy doesn’t say much or expect much from results in PEI, he is hoping that shortly the company does give some guidance for what to expect as far as production rates for 2008. He would be disappointed if they couldn’t come up with 70 to 80 million cubic feet and again, this is in New Brunswick, a short pipeline haul away from the lucrative Boston and New York markets where you get top dollar for you gas. He does admit that anything closer to 50 million cubic feet a day would definitely be a disappointment. As far as his ever-evolving top four list, while Corridor is number two on the list, Pacific Energy Resources is currently number one. This is now a relatively confusing company with production in California that’s going up, hopefully to 10,000 barrels a day; gas exploration in Wyoming and a recent purchase of $400 million worth of assets in Alaska has suddenly made Alaska a key component of Pacific Energy’s history. To receive a slide show on the Pacific Energy, just e-mail Jenn at Jennifer_lagdamen@canaccord.com. It remains one of Andy’s favorite stocks and his firm, Octagon Capital and Wellington West just participated in a $65 million financing to help make that purchase of the Alaska assets possible. “What can you say” he says, “other than these are assets in the good U.S. of A and you are not going to see a Royalty Review anytime soon. This is in a country that needs every bit of oil they can consider safe.” As far as his third pick, it’s Stealth Ventures. In his background, he does admit that he probably got interested in natural gas six months too soon and the chart on Stealth shows another natural gas stock that has been beaten up big time (and if the Royalty Review goes through, could be beaten up even worse). Andy points out Stealth’s recent release and its testing and tie-in operations on a 20-well program for its Alberta Shale gas project that looks like it’s come up with some decent results anywhere from 100 mcf to 150 mcf per day with dramatically lower than expected drilling completion and tie-in costs of 25% to 42% less than expected because of the slow times in the natural gas business. The reason for Gustajtis’s hope is that he expects some common sense to come out of the Royalty Review and he believes that sooner or later, $87 oil and $7 natural gas is going to have to change. Either oil prices come down or natural gas prices go up, because utilities that can flick a switch, will do so and use the cheaper fuel which these days is definitely, definitely natural gas. Meanwhile, on his top four list is Sustainable Energy and his whole argument is about a company such as Sustainable is that with oil prices this high, it simply means alternatives to oil are suddenly in demand and more financeable. He compares it to the cell phones revolution which originally saw phones that were bulky and expensive, but over time suddenly became fashionable and much cheaper. With work going ahead on many fronts in alternative energy, the money available to alternative energy could/should make those alternative plays commercial. Sustainable Energy, he suggests, has “the best inverter in the business right now, although they have yet to come up with some significant sales to justify that faith.” Gustajtis currently has a $2.00 target on Sustainable Energy which would give it a rather lofty capitalization, but he suggests that is only the first step in what his ultimate target could be. He also reminds us of the tech-bubble we went through just eight years ago and suggests, “we could see some pricings into alternative energy reminiscent of those times.” If you would like to receive the Late Edition, email Debbie at debbie_lewis@canaccord.com