Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Canadian Small Cap Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Ally who wrote (20)	4/9/1998 11:13:00 AM
From: DJB	Respond to of 512

Velvet Exploration Co. Ltd. (V.VLV) Last CDN$1.65 Year High 4.85 Year Low 1.25 A junior Canadian company engaged in the exploration, development and production of natural gas and crude oil in one of the largest land holdings in the Western Canadian Sedimentary Basin, located in south central Alberta. In December of 1996, the Company was awarded the right to explore the 46 square miles (29,440 acres) comprising the Samson Cree lands. In February of 1997, the Company also successfully negotiated an agreement with the Ermineskin Nation to explore the 38 Square miles (24,300 acres) comprising the Ermineskin lands; adjacent to the Samson Cree lands. With the addition of the Ermineskin lands, the Company holds a block of contiguous oil and gas leases consisting of approximately 54,000 acres (84 square miles) in central Alberta. As you will notice while conducting DD, the company has cash reserves, no debt, and wells coming into production. Velvet minimizes financial risk by having others fund drilling. It is also important to bear in mind that forecast earnings from Paragraph 5 of their latest news release (see below) are based on current natural gas prices, which many analysts expect to increase substantially in the coming months. Interested to see what you think. As always, my amateur opinion only WEB Site: www.velvetvlv.com Email: info@velvetvlv.com SI Discussion Group: Subject 13256 Latest News Release: March 31st, 1998 NEWS RELEASE Velvet Exploration Co. Ltd., "Velvet" is pleased to provide the following Corporate update: 1) EXPLORATION JOINT VENTURE Velvet has entered into a farmout agreement with SYNNOVA Capital Corporation, a private Vancouver based financial planning organization. Under the terms of this farmout, SYNNOVA will fund 100% of Velvet's exploration costs up to $5.5 million in exchange for 50% of Velvet's interest in up to seven exploration wells. These wells, which are subject to a one section earning, are expected to be drilled on the south half of the Company's 50 square mile Samson Cree exploration permit near Hobbema Alberta. This proposed transaction is subject to approval by the Vancouver Stock Exchange. 2) COMPLETION RESULTS Velvet has further production test information on three gas wells as follows: Well # Location Velvet Ownership Zone Completed Flow Information 5 10-35-43-24W4 80% Ellerslie 'A & C' 3.0 mmscf/d 7 16-36-44-24W4 40% Ellerslie 'A' 4.5 mmscf/d 8 07-21-44-24W4 40% Ellerslie 'A' 1.5 mmscf/d Well #6 at 10-28-43-23W4 is a Belly River well and will be completed as part of a large scale Belly River program in the coming weeks. 3) DRILLING PLANS Velvet has spudded well #9 at 10-12-44-24W4. The Company's working interest in this well is currently 80%. Wells #10 and #11 will commence operations in the next few days as a second drilling rig is moved into the area. Velvet has increased the number of wells it expects to drill in 1998 from 18 to 26. This will result in a projected total well count of 31 by year end. 4) PIPELINE All approvals required for the 23.5 mile Altagas Services Inc. gas gathering and transmission system have been received. Altagas expects this system to be operational by May 1, 1998 and Velvet anticipates initial Company gas production of about 3 mmscf/d. This production rate is expected to increase steadily through 1999 as the Altagas plant is expanded and drilling continues. 5) FINANCIAL Velvet forecasts that the Company's share of gas production capability from the Samson Cree Lands will reach 18 mmscf/d by December 31, 1998. This production rate is forecast to grow through 1999. This 18 mmscf/d exit rate for 1998 if achieved, will generate about $8 million in annualized cash flow at current natural gas prices. These corporate production and cash flow forecasts do not include potential production additions from acquisitions during 1998. Velvet continues to have a very strong balance sheet with over $7 million in cash, no debt and imminent cash flow. The Company is aggressively pursuing exploration land and producing asset acquisition opportunities. 6) SEISMIC Processing of the Ermineskin 3-D data is nearing completion. Interpretation of this 50 square mile program will be completed in the next 4 to 6 weeks. The first Ermineskin well is anticipated to commence operations in June, 1998. 7) ACQUISITION Velvet has completed the purchase of all of the issued and outstanding shares of 520307 Alberta Ltd. 520307 Alberta Ltd. has a 5% working interest and 1% Gross Overriding Royalty in certain Samson Cree Lands. Management believes that Velvet is positioned for rapid growth in natural gas production and cash flow in the year ahead. Velvet Exploration Co. Ltd. is a Canadian company engaged in the exploration, development and production of natural gas and crude oil. The Corporation's common shares are listed on the Vancouver Stock Exchange under the trading symbol "VLV". For further information please call our investor relations line at 1-888-689-5659 or in Calgary 265-0088.