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To: ms.smartest.person who wrote (2884)	11/16/2007 10:37:34 PM
From: ms.smartest.person	Read Replies (2) \| Respond to of 3198

&#8362 David Pescod's Late Edition November 16, 2007 FIRST CALGARY PET. (T-FCP) $3.05 -$0.21 WESTERN CANADIAN COAL (T-WTN) $0.54 +$0.04 TUSK ENERGY CORP. (T-TSK) $1.25 +$0.10 MERRILL LYNCH & CO. INC (NYSE-MER) $56.08 -$1.22 EXXON MOBIL CORP. (NYSE-XOM) $85.07 +$0.58 CITIGROUP INC. (NYSE-C) $33.96 -$0.62 Traditionally this is the time of year that people are having fun in the junior resource sector. Usually you’re going into winter and gas prices are going to perk up this time of year (if they ever perk up), demands for heating oil and the likes also can affect positively oil prices. And usually the fall and close to winter is pretty good for gold as well. So here we are at $90.00 oil and $800.00 gold and yet you look at your screens and they seem to be 95% red lately. So what’s going on? Maybe a lot of people simply don’t believe these prices are going to hold and maybe others are worried about North American recession but it’s definitely getting ugly. Many Canadian miners and oil and gas producers are currently being affected by a currency that’s gone through the roof and is now costing producers and explorers almost 20% to 30% more than not too long ago. And if you’re in the Canadian oil and gas patch, most Canadian companies have a big exposure to natural gas, and these days with gas trading Calgary at cash cost of $5.55 mcf you aren’t making any money. And with big inventory in stock, the concern is if we don’t get a big winter soon, what happens to many of these natural gas producers come spring? It could get even uglier than it is. Many gas companies these days are trading 3 for 1 from prices a year or two ago. It use to be summer time was ugly time for the resource business and winter is fun time. Have they changed the rules? But even with all this there's some stories that are definitely standing out as ugly. It wasn’t too long ago that First Calgary Petroleum and their exploration story in Libya was one of the stories of the day. This week they announce yet another financing to help finance their development on their Algerian project in Libya. First Calgary Petroleum The chart tells you this has not worked out as well that had been expected. Then Western Canadian Coal announced that they are being hurt in a big way by the higher Canadian currency, and they’ve just announced that at this rate they don’t have enough funds in the kitty to continue as an ongoing concern. Western Canadian Coal You know that’s not good news. A chart on Tusk Energy, a gassy company that most analyst love and they have a price targets of $2.50 to $3.00 on just continues to hit newer lows, a symptom of that sector of the business. Tusk Energy Corp. The bottom line for so many Canadian companies seems to be that when you look at commodity prices from gold to oil to nickel to copper to zinc, to you name it (other than natural gas of course) we should be having a party time. Then you look at your screens and you wonder “has someone declared that the recession is here?” Much of this has to be tied to the housing crisis which Wells Fargo yesterday called “the worse since the great depression” and of course the big kafuffle about asset back securities and just what they might be worth in this market. And of course if the US is going into recession, that’s definitely something that could effect commodity prices down the road. We would assume that even if the United States does go into recession, demands from places like India/China and Asia, Africa and Brazil so forth should remain strong for commodities, and prices could easily correct but hopefully not disappear. So what to do at a time like this? Well of course it’s the billion dollar question? Is this an opportunity to be picking up things cheap or on the other hand to make sure you don't have you’re margins in a difficult position. For ourselves there is no margin problem and there certainly won’t be. But there’s just a lot of opportunities out there that beg stink bids. One point that seems to be getting a lot of play from tons of commentators we think a lot of, “this hasn’t been the most fun year so far and that everyone from institutions to market players to you name it have been looking at the performances for the year and making sure that if it’s not going to be a great year, at least whatever they have to pay the feds is not going to be big.” Tax loss planning or tax loss selling they all suggest has been big in every field from bio-med to bio-tech to oil and gas. Our favorite stink bid stories: 1) Bankers Petroleum Ltd. 2) Argenta Oil & Gas Inc. 3) Arise Technologies Corp. 4) TSO3 Inc. 5) Ucore Uranium GALLEON ENERGY INC. (T-GO.A) $14.35 +$0.50 OILEXCO INC. (T-OIL) $16.25 -$0.09 STERLING RES. LTD. (V-SLG) $2.76 +$0.10 It’s not too often that two analysts in a row being featured on BNN (Business News Network) pick the same stock as their #1 pick, but Robert Floyd on November 14th and Josef Schachter on November 15th both go with Galleon Energy as their top stock picks. Galleon Energy Inc. Oilexco Inc. Sterling Resources Ltd. Schachter was as always entertaining as he went down his top 3 list of: Galleon #1, Oilexco #2 (he’s upped his target on Oilexco to $25.00 and his comments are of interest and Sterling awaiting for results on their Breagh well in the North Sea next week which are going to be important as his third pick). But back to Galleon, which announced the results on November 13th, and they had some results that were simply spectacular but the chart shows you that Canadian based oil and gas company with a 50% component of natural gas are not having a lot of joy these days. Anyway the company in the third quarter announced what they call “the best quarter in Galleon’s history.” The company currently has 5 rigs drilling and they’ve decided to expand 10% with the drilling program to potentially 30 wells. On their last quarter though they announced production of 13,726Boe/d, an increase of 46% from the same time last year. Production of light oil is up 85%, gas up 48% and natural gas liquid up 132%. Operating cost which is something of interest these days actually showed a decrease of 22% down to $8.35/Boe, and is this not great ... 33 gross wells were drilled of which 32 were cased for production. That included 11 light oil wells, 3 heavy oil wells and 18 natural gas wells. But as we pointed in the previous article, this doesn’t seem to be the excitement for commodity based stock that we would’ve expected and with all the good news out, Galleon being picked by two analysts the stock has still not reacted as one might have hoped. Obviously it should be on your screen though.