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

To: Greg Spendjian who wrote (5223)	7/7/1998 5:40:00 AM
From: Kerm Yerman	Read Replies (1) \| Respond to of 24900

Greg / Energy Trusts First and foremost, I don't monitor energy trusts and don't have a feel for providing any direction. With that said, let me mention what I would be looking for in the form of energy trusts at this time. I will direct comments at oil and gas producing companies only. To begin, I would seek a energy trust with proven management - that would mean an energy trust with a proven track record. With the rash of energy trusts gone public in the past two years, the proven number of companies might fall to less than 50% of those now available. After screening and isolating the proven energy trusts, I think I would then proceed to see how these companies are growing. I would want to be involved with those trusts which are growing evenly between internal growth and acquisitions. Optimum production/reserves would be evenly split between oil and natural gas. If I lean heavily in one direction, it would be natural gas. With the exception of the oil sands trusts, I would think that natural gas offers longer life reserves. I would also search for the financial institution who has an analyst that follows energy trusts. One requirement I would have is to make sure his/her coverage extends beyond those that the firm has underwritten or prepared financing for. I searched my file for articles I retained on Energy Trusts and surprisingly, I found only one article that I retained. The article follows and there is mention of analysts. You might want to contact institutional houses to see if you can't get a report specifically for energy trusts. ---------------------------------------------------------------------------------------- Daily Oil Bulletin March 3, 1998 Acquisition Opportunities Could Lure Investors Back To Royalty Trusts Growing potential for property acquisitions at more reasonable rates in an equity market constricted by low oil and stock prices could be enough to lure investors back to royalty and energy trusts as the year progresses -- but it may take awhile. Low oil prices are difficult for all forms of energy-related investments, said Brian Ector, who tracks the royalty trust sector for CIBC Wood Gundy Inc. He noted the returns from royalty trusts have started to come down with stock prices for regular issuers. "You are going to see ... and you are seeing lower cash distributions." Royalty trusts rely on commodity prices and interest rates, pointed out Gord Currie, an oil and gas analyst with Canaccord Capital Corporation. "Prices are down and interest rates have been going up. That's a bad combination for royalty trusts." "Right now we're seeing the lows in the royalty trust market," said John Driscoll, president of NCE Resources Group. The NCE group is manager of the NCE Petrofund Royalty Trust. The oil price and the natural inclination of investors to turn away from a slumping sector is driving down energy stocks and royalty trust unit values, "when there may be a buying opportunity," Driscoll said. Commodity prices should be stronger going into the fourth quarter and interest rates will remain relatively low, he said. "We're anticipating $18 (U.S.) per bbl." "If I were an investor, I'd be looking at acquiring some positions, which we (NCE's various investment funds) are doing," Driscoll said. And "the potential is there for availability of properties," CIBC Wood Gundy's Ector noted. "For those with strong cash flow, there should be opportunities to purchase properties at prices much more reasonable than a year ago," he said. Noting that trust funds are partly to blame for driving up prices (for properties), Canaccord's Currie said there may be less new capital available to all issuers and trusts, but savings on purchases could result. Conventional or reflexive royalty trusts -- such as those operated under corporate entities like NCE, Enerplus Resources Corporation and PrimeWest Energy Trust -- grow mostly by acquisition. Investors gain from cash distributions and royalty trust acquisitions, which can lead to more unit issues, trading opportunities and value. "There are going to be opportunities (for acquisitions)," said Driscoll. "Right now, we're not being aggressive (in searching out potential purchases) ... but the time to start looking at it hard will be in the third quarter," he said. Based on the perception that commodity and stock prices will be languishing until the fourth quarter this year, Driscoll said traditional oil and gas companies will be looking for funds through property dispositions as equity issue financings become more difficult to accomplish. "I think you're going to see companies become more negotiable on prices," Driscoll said. "I believe that most non-trust companies are having a tough time," said Eric Tremblay, vice-president of corporate development at Enerplus. He anticipates first-quarter results for most equity stocks could be down significantly from last year. "It's going to be tough to go back to equity markets." Tremblay said property is going to open up as companies strive to bring in cash and keep debt down. This scrambling might see prices, restricting property acquisitions for a good part of last year, drop to more reasonable levels. The Enerplus Group includes EnerMark Income Fund and Enerplus Resources Fund and also has the Westrock Energy Income Fund I and Westrock Energy Income Fund II operating under the Westrock Energy Fund Inc. banner. During 1997, Enerplus focused its acquisition and development activities on gas properties adding 24.8 bcf of proven and 4.2 bcf of probable net reserves. This represented 77% of net 1997 reserve additions. "I think it's going to be a good year for acquisitions," said Ron Ambrozy, vice-president of business development for PrimeWest. His optimism is fueled by the commodity corrections that have occurred and "the good amount of product out there right now," he said. While the "last three years have been exceptionally strong for vendors," Ambrozy indicated acquisition prices may fall in this year's environment. References: pengrowth.com nceresources.com

To: Greg Spendjian who wrote (5223)	7/7/1998 9:43:00 AM
From: Syncrude	Respond to of 24900

Greg, if you know someone with an account with RBC Dominion Securities, there is a new publication call "Income Trust Investor". While a new issue is due very soon, the previous edition (March 13, 1998) had buys on ARC Energy Trust, Pengrowth Energy Trust, Labrador Iron Ore, Athabaska Oil Sands, Canadian Oil Sands and Superior Propane Income Fund. (These are old recommendations, don't act on these without getting updated views). More and more brokerage firms are creating these studies. Mind you they are only as good as their research teams. If you do make a choice at one point, you might want to canvass this thread for other opinions before acting.