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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Stocker who wrote (4150)	11/15/1997 11:32:00 AM
From: Kerm Yerman	Read Replies (2) \| Respond to of 24916

Bird / Upton Resources - Newport Petroleum Upton Resources Absolutely right, I hold the company in high esteme. I have established a 12-month price target of $11.50. Here's some information which might help you. It's about two months old. Company "lost it's focus" a bit with the Red River acquisition. Have been a bit disappointed with the results. They expected the Red River production to be 2,000 b/d by now, instead it's 1,200. What's the problem? They're not sure yet. They've tried all the "quick fixes" they can think of, so now it's a case of looking more closely. It's possible that there's a reservoir problem that they do not yet understand, but they think it's more likely that there will be a technical fix. "When you're spending $1 million for a well, you're gonna keep trying ". Deeper is harder. The last three RR wells they drilled were 300-400 b/d, when they were hoping for 900-1000 ---BUT --- they're still the best three wells they've ever drilled. All that said, Red River is only about 20% of the company. The other 80% is "bread and butter Mississippian", and that's going just fine. They're currently completing 4 wells (ranging from 50% to 100% wi), of which three are Mississippian. The stock market rewarded them for the potential upside on the Red River stuff, now it's discounting them because they've had delays. Fair enough. Management owns about 23% of the shares, and they're not selling. They've resharpened their focus on the bread & butter stuff. There won't be a big production increase in Q3, but Q4 should be better. They don't have an official forecast for CF, but a "working number" for 1998 is $2. Debt is more or less as was reported in the Q2 figs. It's running around 1x CF, which is where they want to keep it. They have identified some modest opportunities that weren't in their CAPEX budget, mostly to increase their WI in some plays, but they have some room on their bank line right now, so that's probably how they would finance anything. Business as usual. They're not anxious to issue new shares at these levels. Company is well managed. Newport Petroleum As stated in earlier posts this week, just a case of falling behind schedule. Good properties + good management will prove the company. My 12-month price target is $10.50. Added Note. Situations with Upton and Newport are not exactly the same. Problems are a little different. However, the major difference is that Upton is an oil play and Newport is a natural gas play. The combination of the two in one's portfolio presents a balancing between commodities. I consider current share value presents a great buying oportunity. There is minimum downside with above average 12 month return on investment. There was a report issued on Newport which was posted at the Korner within last couple of days.