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

To: Kerm Yerman who wrote (4517)	1/18/1998 1:10:00 AM
From: CIMA	Read Replies (1) \| Respond to of 24928

KERM: BELAIR ENERGY Met with the President, Vic Luhowy, this past Thursday at their offices in the First Alberta Place building in Calgary. Nice building, spacious office under lease at $6/sq.ft. for the next four years (going rate near $16 according to Vic). Vic explained that Belair was formed last year with the intention of building a cashflow base by buying proven reserves. They intend to use the cashflow to attract heavy-hitters. The objective of reaching 475 BOE/day was reached exiting 1997. 1998 brings on phase two and this will be done through the drill bit. The capital budget is $3.6M and will be funded through cashflow and debt. Belair has no debt now and debt cannot exceed 1.5x cashflow. They are using $19 WTI and $1.75 gas (production-60% gas). The 1998 exit target is 800 BOE with an average during the year of 600. Cashflow and CFPS expected to be $1.4M and 6 cents respectively in 1998. NAV currently 33 cents per share with 42-45 expected for exit 1998. Vic feels the shares should trade at a premium to NAV based on management. G & A budget $3.50/BOE based on the 600 average for 1998 and includes "bringing in high-powered help to do deals to crank up the share price". On several occasions Vic mentioned that the $3.6M capital budget doesn't preclude further spending for a major acquisition or takeover focusing more on land than production. Hart Lake: Seismic completed to prove the best spots. He considers this about as low risk as it gets so is confident. They have good relations with the natives and Talisman has infrastructure all around their lands. Two wells there in the first half of 98. One well near Rocky Mountain House, waiting for a rig. Two more wells on a property operated by Upton in Gainsborough, Saskatchewan. All in all, a good visit with Vic who appeared to be a very friendly and competent man. If you have any other questions or need clarification on the above Vic is willing to answer them.