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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (107598)	3/8/2008 7:37:55 PM
From: LoneClone	Respond to of 313040

Oh, I forgot RTE.V. BTW, this is not an 'all-inclusive' list regardless of quality like my other watch lists. All members of this one have come with recommendations from knowledgeable analysts who I respect. But you should still do your own DD! LC

To: LoneClone who wrote (107598)	3/9/2008 8:54:17 AM
From: que seria	Read Replies (1) \| Respond to of 313040

I own SVW and don't see much better risk/reward among the microcap E&Ps. More developmental drilling than pure exploration, so it has none of the pizzaz of the slice-of-an-elephant plays such as ENG or the what-if plays such as MCF. (I buy those types of E&P micros too, although I'm not in either of those). It is likely to be a 2nd half story, only after production is on line for a while and more wells have been drilled. I'm expecting a boring hundred percenter this year--something I can rarely say about the far riskier exploration stuff I usually buy. Here I see more execution risk than finding risk. Company got a big capital infusion several months ago. Good work on the watchlists!

To: LoneClone who wrote (107598)	3/9/2008 9:05:12 AM
From: Condor	Read Replies (1) \| Respond to of 313040

I'm surprised that ENC.t doesn't appear on your lists. C

To: LoneClone who wrote (107598)	3/9/2008 10:25:46 AM
From: 4C	Respond to of 313040

Natural gas price spike It's not a question of if, but when Sun, March 9, 2008 By RON HIEBERT Currently, there is great pessimism among natural gas producers in Canada. Spot gas prices are down about 40% from their highs of three winters ago and North American storage levels are near their all-time peak. The short-term outlook doesn't look encouraging. Two years out, the story will be entirely different. Falling supplies and rising demand are a prescription for healthy price increases down the road. Depletion and less drilling will eventually decrease supply. Low gas prices combined with high finding costs has decimated gas exploration in the Western Sedimentary Basin. Natural gas well completions in our region have dropped from 15,360 in 2006 to 12,690 in 2007. That figure is expected to be even lower in 2008. When well completions decline, the relentless effects of depletion will eventually reduce volume. The average production from North American natural gas wells that began their life in 1996 are 69% lower today then at their peak. Supplies are also being affected by the arrival of liquefied natural gas, or LNG, to our shores. A year ago, low demand and prices for natural gas in Europe and Asia were causing LNG exporters to dump their unwanted gas in North America. Today, with spot prices as high as $20 per thousand cubic feet in Japan and between $9 and $11 in Europe, LNG shipments are down by two-thirds. Eventually, the cure for low prices is always low prices. Alberta produces approximately one million barrels of bitumen and synthetic crude oil per day. That number is expected to increase to three million barrels per day by 2020. Natural gas is currently the fuel of choice for steam creation and upgrading. According to the Alberta Energy Research Institute, oil-sands operations currently consume 5% of Canada's natural gas supply. This will triple over the next 15 years. Even if Arctic gas does become a reality, don't look to it to protect the consumer from eventual higher prices. The one billion cubic feet of gas per day that is expected to be produced in the Mackenzie Delta will be just enough to meet the extra gas demands from oil-sands operations in Northern Alberta. Natural gas is also becoming the fuel of choice for producers of electricity. More than 90% of electrical generating plants built in North America since 1990 have been gas fired. Peak demand growth for electricity is expected to grow by an additional 18% over the next 10 years. Clean, low emission natural gas will be the fuel that meets those needs. VALUATIONS ATTRACTIVE Back in 2005, oil and gas companies were trading at lofty financial multiples. The price to net asset value of the average junior was 3.5 times and for mid-cap producers the P/NAV was almost 2.5 times. Both juniors and mid-caps were trading at a lofty six to eight times cash flow. Since then, the Canadian dollar has gone into orbit against the U.S. greenback, Alberta Premier Ed Stelmach has raised royalty rates, and federal Finance Minister Jim Flaherty has cut the heart out of the income trust market. Valuations have collapsed. Today, cash flow multiples for energy companies are commonly between three and four and the share price to asset value is at a discount of 0.8 to 0.9 times. This puts equity valuations -- for natural gas producers especially -- at the very low end of their historical range. For investors with patience, natural gas stocks look like incredible bargains at current levels. Natural gas prices going up and taking share prices along with them seems less a matter of if and more a matter of when. edmontonsun.com