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Gold/Mining/Energy : Tusk Energy (TKE) -- Ignore unavailable to you. Want to Upgrade?

To: Werlick who wrote (753)	7/25/1998 2:03:00 PM
From: grayhairs	Read Replies (1) \| Respond to of 1207

Good day Werlick, Over my morning coffee I read an article of interest from Friday's Calgary Herald entitled "Amoco touts latest gas find". I believe it could be of interest to you. As the golf course beckons I do not have time to re-type the entire article but here are some of the more significant quotes that might be of "passing interest" to anybody following the nearby Strachan Play. ---------------------------------------------------------------------- "Amoco Canada Petroleum Co. Ltd. has drilled the second largest producing natural gas well in the country at its prolific Blackstone field in the Rocky Mountain foothills." "... the well is pumping out gas at more than 70 million cubic feet a day." "The well, located about 240 kilometres northwest of Calgary, was drilled to a depth of 4,740 metres." "It was brought into production last month." ".. the well is only surpassed by another company well that produces 80 million cubic feet a day from the same Blackstone Swan Hills gas pool." "The company said the pool has an estimated 1.1 trillion cubic feet of raw gas in place, equal to more than two per cent of gas rich Alberta's total established reserves." "The Blackstone gas is being processed at the nearby Ram River Plant, .." "Typically, successful wells in the region produce between 20 million and 40 million cubic feet a day." --------------------------------------------------------------------- Do these results help shed some light upon the veil of secrecy that surrounds the Apache well?? Will there be any competition for the upcoming Crown Land Sales?? [Amoco held a 55% interest in the Blackstone well and was partnered with Husky (34%), Anderson (11%).] Oh, we of course must remember that the Caroline Swan Hills pool is also close by!! Kinda like on the opposite side from Blackstone!! In other words, Strachan is in the midst of some pretty damn exclusive Swan Hills neighbours!! Now with regard to your questions: 1) Tight hole status would be normal because there are some available proximal lands with "potential". But for Apache to have recently tightened information confidentiality suggests "special attention for a special situation". The well is not a duster!! 2) An AOF of 300 MMCF/D would certainly be in the top 5-10% but even that would pale next to the AOF of the above 2 Amoco wells, I suspect. 3) Both AOF and deliverability numbers are published. Often a small cap company will announce AOF so as to generate "hype" because AOF is ALWAYS a bigger number than deliverability. Amoco, announced a 70 MMCF/D production rate [production rate can be equal to or less than (but never greater than) deliverability so announcing production rate is even more conservative than announcing deliverability]. 4) I have no idea where the share prices will be when tight hole status is lifted. The way the markets are treating resource stocks these days these juniors may all plummet and be delisted!!!! But, the Strachan play certainly does offer some pretty damn lofty one year targets for ALL of these juniors. I do not believe that the junior share prices will all appreciate at the same approximate rate (At least they should not if the markets are efficient). One has to examine the shares outstanding in each junior, their interests in the 3-22 reserves, their interests in future wells, etc. Having made these calculations, I long ago chose to invest in TKE (By the way, I continue to invest in TKE having purchased an additional 20,000 shares this week). I only do short term trades in FST [because I am concerned that the large quantity of now free trading PP stock (issued at about $.30-$.35) will hold back FST as people cash in on their one year doubles, triples, etc.] 5) I have not done a great deal of due diligence on FST/DAL/LEY so I can not fairly comment on the downside risk of those juniors. However, I know that those companies have more issued shares and much smaller production bases than TKE. TKE, without anything from Strachan, has an established production base of over 800 boepd (nearly 300(??) boepd greater than its 1997 exit rate!!). It has a low risk and high reward "DEVELOPMENT" project in the Meekwap unit where recent 3-D seismic has indicated numerous targets (much the same concept that Probe Energy has followed in older pools). TKE expects to drill up to 20 infill and delineation wells at Meekwap. The first 2 such "high angle vertical" wells added gross initial production rates of (if memory serves) something in the order of 2400 boepd and 880 boepd (NOTE: Both these wells continue to produce "water free"). TKE has a working interest of ~17% in the unit wells and higher interests of up to ~40% in some adjacent lands also of high potential. TKE plans more drilling on these properties before year end. Given the foregoing, even with today's oil prices, I DON'T SEE ANY DOWNSIDE!!!! But, the stock continues to drift lower and I continue to accumulate. Have a very pleasant day. Now, FORE !!!!!! Later, Grayhairs