2004 - Iradesso

Transcription

2004 - Iradesso

N
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TI
C
ST
SE
RU
Y
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ER
EW
EN
N
Western
Canadian
Oil & Gas
Comparison
Featuring
Updated
Profiles From:
Aquest Energy
Argo Energy
Bulldog Energy
Burmis Energy
Choice Resources
Connacher Oil & Gas
Delphi Energy
Diaz Resources
Forte Resources
Gentry Resources
Great Plains Exploration
Purcell Energy
RSX Energy
Tempest Energy
True Energy
Veteran Resources
Zapata Energy
Financial and
Operating Results
For 82 Juniors
& 26 Trusts
Q3
2004
ARC Energy Trust
Crescent Point Energy Trust
Freehold Royalty Trust
Pengrowth Energy Trust
PM41045505
Western Canadian Oil & Gas Comparison
Juniors & Trusts
Third Quarter 2004
The information used to
This issue of Iradesso’s IQ report is a milestone. Not
The two-page corporate profiles found throughout the
only is it the biggest issue to date, but it is also the
report are one way to take your research a step further.
first issue in which we have included financial and
The 21 companies and trusts that included their profiles
operating results for oil and gas trusts
have done so because they want you
as well as junior explorers and producers.
to learn more about their operations
juniors have
Adding a section on trusts was an
and their potential. Every quarter, more
important step to make. It’s hard to talk
profiles are being included in this report,
about the juniors without mentioning provided a feeding and it has become a valuable investment
the trusts, with the constant mergers,
research tool.
acquisitions and reorganizations that ground for trusts,
The IQ report continues to get favourable
mark the industry. In addition, trusts
from professional and retail oil and
offer another investment option in
while trusts have reviews
gas investors. As a result of the feedback
the small and mid-size arenas of the
we have received, we feel that the IQ
Canadian oil and gas industry.
provided an exit report is achieving the goals we set out for
Trusts and juniors are tightly linked in
it. The report has helped educate investors
Western Canada. In recent times, juniors
in regards to the Canadian oil and gas
for juniors
-- oil and gas companies that produce
sector, it has attracted more attention
between 500 and 15,000 barrels of oil equivalent per
to the sector in the financial media and with investment
day -- have provided a feeding ground for trusts, while
professionals across Canada, and it has introduced
trusts have provided an exit for juniors. Our overview
numerous companies to potential investors.
of industry entrances and exits on page 17 shows
Best Regards,
some of the recent deals that have been announced,
emphasizing the connections between juniors and
trusts.
The comparison charts in the IQ report provide you
with a chance to benchmark 82 junior exploration
and production companies and 26 trusts. While
benchmarking the operating and financial results of
one company or trust against its peers is useful to
gauge historical performance, it is not necessarily a
sign of future results. More research is required to gain
an in-depth understanding.
compile this report is publicly
available. Iradesso provides
the comparison to shine the
spotlight on this exciting
portion of the energy industry,
and to communicate the
achievements and growth
potential of oil and gas
companies and trusts. It is
provided for information only
and is not intended to serve
as investment advice.
Peter Knapp, President
Samantha Marcelo
Iradesso Communications
December 3, 2004
Highlights of the third quarter 2004 IQ report include the following:
•
Total daily production for the 82 juniors was 200,000 boe, while total daily production for the 26 trusts
was 623,000 boe.
•
For the third quarter, only two of the trusts reported a net loss, while 22 of the juniors (27 percent)
reported a net loss.
•
Share prices climbed for juniors, with an average increase of 10 percent during the quarter and 14 percent
in the two months of October and November, for a total average return of approximately 25 percent over
the five-month period.
•
A2
Unit prices of trusts also rose, with an average increase of 14 percent during the quarter and another
three percent in the subsequent two months of October and November. This return does not take into
account the average annualized yield on distributions of 12 percent, suggesting the total average return
including distributions over the five-month period was approximately 22 percent.
•
For juniors, median production per share was unchanged from the second quarter to the third quarter. For
trusts, the median production per unit decreased three percent from the second quarter to third quarter.
•
For juniors, median cash flow multiples are up on a quarter over quarter basis. The median enterprise
value rose to eight times annualized cash flow from 6.1 times in the second quarter.
•
Trusts appear to be valued slightly higher than juniors on an enterprise value per flowing boe basis.
The median for trusts was $61,700 per boe/d, nine percent higher than the median for juniors of
$56,700 per boe/d.
•
Juniors are weighted more to natural gas than trusts. For juniors, the median weighting was 64 percent
natural gas production, while trusts had a median weighting of 53 percent natural gas.
IRADESSO COMMUNICATIONS • iQ REPORT • THIRD QUARTER 2004
tel : 403.503.0144
toll-free : 1.866.415.1070
contact@iradesso.com
www.iradesso.com
PUBLICATIONS MAIL AGREEMENT
NO. 41045505
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iradesso
c o m m u n i c a t i o n s
TABLE
OF
CONTENTS
IFC
1
Introduction
Inclusion Criteria, Assumptions and Abbreviations
2
Tr us t C o m p ar i s o n C h a r t s
2
Q3 Production (boe/d)
Q3 Production Mix – Natural Gas Weighting (%)
Change in Production per Unit – Q2 2004 to Q3 2004 (%)
Enterprise Value Versus Q3 Production ($ per boe/d)
Q3 Cash Flow Netback ($/boe)
Q3 Operating Expenses ($/boe)
Q3 General and Administrative Expenses ($/boe)
Q3 Depletion and Depreciation Expenses ($/boe)
Q3 Annualized Distribution Yield (%)
Q3 Payout Ratio (%)
Q3 Net Debt to Annualized Cash Flow
Data Table
3
4
5
6
7
8
Tr us t Prof i l e s
8
10
12
14
ARC Energy Trust
Crescent Point Energy Trust
Freehold Royalty Trust
Pengrowth Energy Trust
17
17
Juniors and Trusts Entrances & Exits
Emerging Company Watch List
18
J unio r C o m p ar i s o n C h a r t s
18
19
20
21
22
23
24
25
26
27
28
29
Q3 Production [boe/d]
Change in Production Q2 2004 to Q3 2004 [%]
Change in Production per share Q2 2004 to Q3 2004 [%]
Q3 Production Mix - Natural Gas Weighting [%]
Enterprise Value Versus Q3 Production [$ per boe/d]
Q3 Cash Flow Netback [$/boe]
Q3 Operating Expenses [$/boe]
Q3 General and Administrative Expenses [$/boe]
Q3 Depletion and Depreciation Expenses [$/boe]
Annualized Q3 Cash Flow Multiples
Data Table
30
J unio r C o r p o ra t e P rof i l e s
30
32
34
36
38
40
42
44
46
48
50
52
54
56
58
60
62
Aquest Energy Ltd.
Argo Energy Ltd.
Bulldog Energy Inc.
Burmis Energy Inc.
Choice Resources Corp.
Connacher Oil and Gas Limited
Delphi Energy Corp.
Diaz Resources Ltd.
Forte Resources Inc.
Gentry Resources Ltd.
Great Plains Exploration Inc.
Purcell Energy Ltd.
RSX Energy Inc.
Tempest Energy Corp.
True Energy Inc.
Veteran Resources Inc.
Zapata Energy Corporation
65
Iradesso Q&A
DISCLAIMER
This report is provided by Iradesso Communications Corp. as a service to the reader without responsibility
for accuracy. This report does not constitute a solicitation or recommendation for the purchase or sale of
any security. Iradesso Communications must be credited with developing the IQ report if any part of it is
reproduced. The companies that have provided a corporate profile for this report have paid Iradesso a fee.
JUNI O R S I NC L US I ON C R I TE R I A
• Primary business must be oil and gas exploration,
development and production
• Q3 2004 production must fall between 500 and
15,000 boe/d
• Majority of production must be from Western Canada
• Must be publicly traded on the TSX or TSX Venture
Exchange
TR US TS I NC L US I O N C R I TE R I A
• Primary business must be conventional oil and gas
development and production
• Majority of production must be from Western Canada
• Units must be publicly traded on the TSX
A S S UM P TI ONS
• Barrels of oil equivalent calculated using 6 mcf = 1 boe
• Net debt calculated by including bank debt, debentures
and working capital
• For companies with A/B share structures, B shares have
been converted to A shares using September 30, 2004
share prices.
AB B R E V I ATI O NS
bbls • barrels of oil
boe • barrels of oil equivalent
boe/d • barrels of oil equivalent per day
mcf • thousand cubic feet
mmcf • million cubic feet
NGLs • natural gas liquids
IQ REPORT
RELEASE SCHEDULE
YE/04, Q1/05
week of June 6, 2005
Cover photo by
Rob Sylvan
Q2/05
week of Sept 5, 2005
Q3/05
week of Dec 5, 2005
Please e-mail us at
to ensure you receive
your copy of the
IQ report
CORRECTION NOTICE
In the previous IQ report comparing second quarter 2004 results,
Triloch Resources Inc.’s operating expenses were incorrect. Triloch
actually reported some of the lowest operating expenses of the
juniors, at $4.45 per boe. In addition, Triloch's correct net earnings
for the period were $868,000. For Blizzard Energy Inc., calculations
regarding financial results were incorrect. Blizzard’s cash flow
netback for the second quarter was one of the highest of the juniors
at $27.53 per boe, not $12.23 as was shown.
To access a corrected version of the last IQ report, please go to:
www.iradesso.com/IQ-2004-Q2.pdf
1
CONVENTIONAL ENERGY TRUSTS COMPARISON
Enerplus
78,480
Pengrowth
60,151
ARC
56,096
Bonavista
42,875
Acclaim
40,949
Primewest
35,460
Petrofund
34,951
Baytex
32,454
Harvest
24,759
Vermilion
Does Size Matter?
24,297
Shiningbank
Each trust will tell you there are advantages to being big
and advantages to being small. Large trusts may have more
stability, better market recognition and access to capital,
while small trusts have the ability to act quickly and grow
production without replacing substantial declines.
19,721
Peyto
19,264
APF
18,262
Paramount
17,467
Progress
In the next few quarters there will be at least another five
trusts added to this chart, each with average production in
the lower half of this group. The new additions will include
Daylight Energy Trust, Esprit Energy Trust, Ketch Resources
Trust, Starpoint Energy Trust and TKE Energy Trust.
17,303
Advantage
16,121
Viking
15,375
NAL
12,807
Focus
10,191
Crescent Point
Although Provident Energy Trust had Q3 Canadian oil and gas
production of 32,452 boe/d, we have not included them in
this comparison due to their other business units.
9,527
Zargon
8,405
Calpine Natural Gas
Canadian Oil Sands Trust, with Q3 production of 86,400 boe/d,
has not been included because oil sands production cannot be
compared to conventional production.
7,338
Enterra
6,203
NAV
5,526
Freehold
5,447
Bonterra
3,208
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Median = 53%
Paramount
100%
Peyto
79%
Progress
79%
Advantage
78%
Calpine Natural Gas
74%
Focus
73%
Shiningbank
71%
Primewest
67%
Zargon
59%
Enerplus
59%
Bonavista
55%
Vermilion
54%
ARC
53%
APF
53%
Pengrowth
NAV
During Q3, light oil production should
have offered the best economics
due to high oil prices. In the winter
months, natural gas may offer better
economics.
45%
Acclaim
44%
Petrofund
43%
Viking
35%
NAL
32%
Freehold
As is evident from this chart, some
trusts strive to specialize in one
commodity, while others like to have
a balance of both.
31%
Crescent Point
28%
Bonterra
27%
Baytex
26%
Enterra
17%
Harvest
8%
0%
2
Choose Your Mix
46%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
trust
C O MPA RIS O N
Change in Production per Unit - Q2 2004 to Q3 2004 [%]
Median = -3%
Acclaim
36%
Pengrowth
17%
8%
Vermilion
Enerplus
4%
Crescent Point
4%
Peyto
4%
Primewest
3%
Per Unit Growth - The Best Kind
2%
Zargon
Advantage
Trusts look to conduct development activities
and acquisitions that offer growth on a per
unit basis. Over the long term it is vital for
trusts to at least maintain stable amounts of
production per unit, otherwise distributions
could be affected.
1%
Bonavista
1%
0%
Calpine Natural Gas
APF
0%
Petrofund
-3%
ARC
-5%
Bonterra
-5%
NAL
-5%
Harvest
-5%
Shiningbank
-5%
Freehold
It is important to note that ideally debt levels
are also factored into this measurement as a
trust may have increased debt levels in order
to get more production per unit.
This calculation uses production divided by
weighted average units outstanding in each
period.
-5%
Baytex
-6%
Paramount
This chart does not include Zargon and
Progress because they each became trusts
during Q3 and do not have comparable Q2
results.
-6%
-9%
Focus
NAV
-12%
Viking
-13%
-19%
Enterra
-20%
-10%
0%
10%
20%
30%
40%
Median = $61,718 per boe/d
114,843
Peyto
108,201
Bonterra
107,362
Freehold
90,824
Enterra
82,691
Focus
78,762
Advantage
73,377
Progress
69,453
Shiningbank
67,832
Paramount
64,952
Primewest
NAL
64,154
Enerplus
63,729
ARC
61,963
Capitalizing Production
Crescent Point
61,474
This measurement shows each trust’s
enterprise value per flowing boe/d
of Q3 production. Enterprise value is
calculated by multiplying the unit price
on November 30 by the weighted average
units outstanding during Q3 (market
capitalization) and adding net debt and
debentures outstanding.
60,168
Bonavista
58,443
Calpine Natural Gas
56,523
Viking
55,475
Vermilion
54,605
Pengrowth
52,505
Zargon
Petrofund
50,723
NAV
50,677
A high value means the markets are placing
more value on that trust’s production for
one reason or another.
47,802
Harvest
46,865
APF
45,186
Acclaim
37,995
Baytex
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
3
trust
COM PARISO N
Median = $21.04/boe
34.74
Freehold
30.59
Peyto
26.15
NAL
25.41
Bonterra
Viking
23.70
Shiningbank
23.66
23.39
Focus
22.97
Enterra
Bonavista
22.88
Progress
22.84
22.16
Advantage
21.48
ARC
21.15
Acclaim
20.94
Primewest
20.86
Zargon
Production Economics
20.65
Crescent Point
Cash flow netbacks are similar to
sales margins in other industries. This
indicates how much cash flow a trust
makes for each boe they produce. Higher
netbacks are especially important during
periods of lower commodity prices when
lower netback production may become
uneconomical.
20.64
Calpine Natural Gas
20.44
Vermilion
20.24
Petrofund
19.61
Enerplus
Harvest
19.52
Paramount
19.48
19.23
Pengrowth
18.38
APF
13.66
NAV
10.80
Baytex
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Median = $7.16/boe
15.09
Bonterra
10.42
Enterra
10.18
NAV
9.78
APF
Petrofund
9.62
Viking
9.56
8.59
Acclaim
8.52
Pengrowth
8.34
Harvest
7.45
Zargon
Shiningbank
7.45
Baytex
7.41
7.34
Enerplus
6.98
ARC
6.98
NAL
6.91
Crescent Point
6.88
Vermilion
6.56
Primewest
Paramount
5.87
Progress
5.81
5.68
Bonavista
5.54
Calpine Natural Gas
3.31
Focus
3.05
Freehold
Peyto
0.00
4
The operating expenses shown in this
chart do not include transportation costs
associated with moving the oil and gas
to a market point. Most trusts now show
a separate expense line on their income
statements for transportation, which can
also be a significant cash cost.
6.19
Advantage
The Biggest Cash Cost
The biggest cash cost of producing oil and
gas is often the operating expenses. This
means it is also the most important cost
to control.
1.08
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
trust
C O MPA RIS O N
Median = $1.31/boe
2.75
NAV
2.71
Calpine Natural Gas
2.08
Enterra
1.78
Paramount
1.74
Bonterra
1.71
Focus
1.67
Viking
1.62
APF
1.60
Vermilion
1.57
NAL
1.46
Freehold
1.38
Zargon
Salaries and Rent
1.34
Baytex
This measurement shows efficiency of office related
costs on a per boe basis. Factors include the number
of staff, their salaries and benefits, contractors, service
agreements, lease terms, communications materials,
processes and systems.
1.28
Acclaim
1.22
Progress
1.17
Petrofund
1.11
Pengrowth
Enerplus
1.10
Harvest
1.10
These numbers can also be affected by the method a
company uses in accounting for expenses. We have
only included cash G&A expenses shown on earnings
statements, not management fees or non-cash items.
1.07
Crescent Point
1.04
Primewest
As an example of expenses that are not included, Peyto
has a third quarter non-cash expense of $20.3 million,
or $11.45 per boe, for its future market-based bonus
provision that is not shown in this chart.
0.95
ARC
0.87
Shiningbank
0.61
Advantage
0.36
Bonavista
0.05
Peyto
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Median = $12.84/boe
18.81
Calpine Natural Gas
17.27
APF
NAV
16.33
Shiningbank
16.29
16.27
Advantage
15.91
Paramount
15.39
Primewest
15.03
Acclaim
14.32
NAL
13.06
Petrofund
Baytex
13.02
Enterra
13.01
Progress
12.97
12.71
Freehold
12.57
Enerplus
Viking
12.55
Pengrowth
12.53
12.32
Harvest
11.85
Crescent Point
11.40
ARC
11.18
Vermilion
9.66
Bonavista
9.06
Zargon
8.49
Focus
6.98
Bonterra
6.64
Peyto
0.00
Working Towards the Bottom Line
Depletion and depreciation expenses
are not cash costs. Instead they are
an ongoing normal writedown of assets
as they are used up. Oil and gas trusts’
primary assets are oil and gas reserves,
so depletion and depreciation relates
mainly to accounting for the production
of these reserves. Higher amounts mean
that reserves values are being decreased
more rapidly. This could be because they
were valued too highly in the first place,
or they are losing value at a quicker
pace for any number of reasons.
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
5
trust
COM PARISO N
Q3 Annualized Distribution Yield (%)
Median = 12.3%
17.1%
NAV
16.1%
APF
14.3%
Paramount
Viking
14.1%
Yield from the Field
Pengrowth
14.1%
While yield as a term should really be reserved
for low risk investments such as bonds, we can
come up with a hypothetical yield for a trust
by showing the annualized distributions as a
percentage of unit price on November 30, 2004.
Calpine Natural Gas
NAL
Baytex
Acclaim
13.5%
13.4%
13.4%
13.3%
However, since unit prices and distributions can
fluctuate significantly for oil and gas trusts, one
should not look at this as a guaranteed return.
Primewest
Shiningbank
Advantage
12.7%
12.6%
12.6%
We have calculated the yields based on
distributions declared during the quarter, not
distributions paid.
Petrofund
Progress
Crescent Point
We annualized Zargon’s two
distributions for this calculation.
Bonavista
months
12.4%
12.2%
11.5%
of
10.8%
ARC
10.4%
Harvest
10.3%
Freehold
10.3%
Vermilion
10.3%
10.0%
Enerplus
8.7%
Bonterra
8.7%
Focus
8.2%
Enterra
7.3%
Zargon
4.8%
Peyto
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Q3 Payout Ratio (%)
Median = 77%
NAV
124%
Paramount
106%
Bonterra
94%
Baytex
88%
Pay Some, Keep Some
Calpine Natural Gas
87%
The black bars represent the percentage of Q3 cash flow
that was paid out as distributions. The white bars show
distributions plus capital expenditures as a percentage
of cash flow. The six trusts with the longest white bars
completed significant acquisitions during Q3.
Shiningbank
87%
APF
86%
Advantage
84%
Enterra
83%
Pengrowth
83%
Freehold
81%
NAL
78%
Enerplus
77%
ARC
75%
Crescent Point
75%
Petrofund
73%
Focus
72%
Vermilion
67%
Primewest
61%
Acclaim
60%
Bonavista
52%
Viking
51%
Peyto
43%
Harvest
41%
0%
6
100%
Unless a trust is accessing new capital, it is important that
both the black bar and the white bar average less than 100
percent over time.
We have calculated the payout ratio based on distributions
paid during the quarter, not distributions declared. The
difference being that trusts normally pay distributions a
month after declaring them.
This chart does not include Zargon, as it just became a trust
and paid distributions for only part of the quarter. The chart
doesn’t include Progress for the same reason.
Distributions paid during the quarter as a percentage of cash flow
Distributions plus capital expenditures (including acquisitions and divestitures)
as a percentage of cash flow
200%
300%
400%
500%
600%
700%
800%
900%
1000%
1100%
1200%
1300%
trust
C O MPA RIS O N
Median = 1.1
2.8
Advantage
2.8
Baytex
2.8
Harvest
2.6
Primewest
2.4
NAV
1.7
Paramount
1.7
APF
1.6
Pengrowth
1.3
Acclaim
1.2
Calpine Natural Gas
1.2
Peyto
Leveraging with Lower Cost Capital
1.2
Enerplus
For trusts, it could often be considered cheaper
to access capital by incurring debt at low
interest rates, rather than issuing new units
that often have a higher cost in terms of future
distributions that will need to be paid.
1.1
Crescent Point
1.1
Shiningbank
1.0
Progress
1.0
Viking
1.0
Bonavista
While none of the trusts have a positive working
capital position, there is a large range from
those that have very little debt to those with
higher debt leverage at the top of this chart.
0.9
Petrofund
0.9
Focus
0.8
Enterra
We have included working capital, bank debt
and convertible debentures in our calculation
of net debt.
0.7
NAL
0.5
ARC
0.3
Zargon
0.2
Vermilion
0.2
Freehold
0.1
Bonterra
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Trusts Data Table
Trust Name
Acclaim Energy Trust
Advantage Energy Income Fund
APF Energy Trust
P8
ARC Energy Trust
Baytex Energy Trust
Bonavista Energy Trust
Bonterra Energy Income Trust
Calpine Natural Gas Trust
P 10 Crescent Point Energy Trust
Enerplus Resources Fund
Enterra Energy Trust
Focus Energy Trust
P 12 Freehold Royalty Trust
Harvest Energy Trust
NAL Oil & Gas Trust
NAV Energy Trust
Paramount Energy Trust
P 14 Pengrowth Energy Trust
Petrofund Energy Trust
Peyto Energy Trust
Primewest Energy Trust
Progress Energy Trust
Shiningbank Energy Income Fund
Vermilion Energy Trust
Viking Energy Royalty Trust
Zargon Energy Trust
AVERAGES
TOTALS
TSX
President
Symbol
Paul Charron
AE.UN
Kelly Drader
AVN.UN
Steve Cloutier
AY.UN
John Dielwart
AET.UN
Raymond Chan
BTE.UN
Keith MacPhail
BNP.UN
George Fink
BNE.UN
Gary Guidry
CXT.UN
Scott Saxberg
CPG.UN
Gordon Kerr
ERF.UN
Luc Chartrand
ENT.UN
Derek Evans
FET.UN
David Sandmeyer FRU.UN
Jacob Roorda
HTE.UN
Donald Driscoll
NAE.UN
Thomas Stan
NVG.UN
Susan Riddell Rose PMT.UN
James Kinnear
PGF-B.UN***
Jeffery Errico
PTF.UN
Don Gray
PEY.UN
Donald Garner
PWI.UN
Michael Culbert
PGX.UN
David Fitzpatrick
SHN.UN
Lorenzo Donadeo
VET.UN
John Zahary
VKR.UN
Craig Hansen
ZAR.UN
Nov 30,
2004
Unit
Price
($)
14.68
21.95
11.89
17.35
13.40
27.88
23.35
13.30
17.75
41.85
22.02
20.71
18.19
23.20
13.98
10.51
16.28
19.05
15.45
42.65
26.20
13.80
21.84
19.75
6.82
23.10
YTD
unit
price
change
(%)
22%
22%
-5%
18%
24%
33%
51%
9%
34%
6%
52%
38%
11%
65%
28%
4%
39%
-10%
-18%
57%
-5%
n/a
17%
29%
21%
n/a
23%
Jul-Sep
unit
price
change
(%)
14%
15%
3%
10%
7%
12%
20%
15%
9%
8%
4%
17%
8%
41%
22%
7%
41%
1%
7%
27%
15%
n/a
14%
12%
17%
n/a
14%
Oct-Nov
unit
price
change
(%)
-1%
2%
1%
3%
4%
8%
-8%
4%
8%
2%
20%
15%
12%
12%
-2%
-6%
2%
1%
-3%
12%
-2%
-8%
0%
-1%
3%
0%
3%
Q304
Total
Production
(boe/d)
40,949
16,121
18,262
56,096
32,454
42,875
3,208
7,338
9,527
78,480
6,203
10,191
5,447
24,759
12,807
5,526
17,467
60,151
34,951
19,264
35,460
17,303
19,721
24,297
15,375
8,405
23,947
646,582
Q304
Weighted
Avg Units
Outstanding
basic
(000)
97,567
40,887
54,720
187,629
65,044
80,152
14,737
27,066
28,337
103,781
23,676
37,057
31,499
29,669
52,494
20,379
59,738
135,906
100,267
45,725
61,007
81,016
53,877
66,052
108,366
18,380
62,501
Q304
End of
Period Units
Outstanding
basic
(000)
97,928
44,350
57,692
188,185
65,044
80,536
14,737
27,066
30,200
103,875
25,969
37,094
31,522
36,875
52,913
20,248
64,567
136,449
100,344
45,725
69,077
81,405
53,983
66,309
109,114
18,550
63,837
Q304
Net Debt
Excluding
Debentures
($000)
341,046
195,778
158,967
220,500
361,514
258,426
3,001
68,866
82,693
658,216
42,053
75,235
11,778
403,372
87,772
8,656
167,021
695,541
223,703
262,166
464,800
151,580
193,018
43,328
56,268
16,747
5,252,045
Q304
Debentures
Outstanding
($000)
77,009
176,462
46,247
86,660
91,821
57,204
45,251
240,000
73,740
894,394
Q304
Cash
Flow
($000)
79,674
32,860
30,874
110,835
32,235
90,247
7,499
13,931
18,096
141,616
13,110
21,926
17,409
44,459
30,809
6,943
31,301
106,401
65,075
54,211
68,300
36,355
42,924
45,689
33,518
16,131
1,192,428
Q304
Distributions
Paid
($000)
47,549
27,718
26,517
83,137
28,259
47,321
7,074
12,180
13,490
109,020
10,924
15,738
14,176
18,434
24,084
8,587
33,266
88,293
47,684
23,320
41,900
18,407
37,226
30,700
17,012
4,271**
832,016
Q304
Distributions
Paid
per Unit
($)
0.49
0.69
0.48
0.45
0.45
0.75
0.51
0.45
0.51
1.05
0.45*
0.45
0.47
0.60
0.47
0.45
0.58
0.67
0.48
0.51
0.83
0.42
0.69
0.51
0.24
0.28**
Q304
Net
Earnings
($000)
862
7,102
4,461
39,537
(12,604)
51,169
5,393
1,234
3,058
50,604
4,138
13,546
10,306
5,166
13,279
(1,977)
2,890
51,271
15,147
21,650
20,200
19,149
15,900
11,607
17,590
5,087
375,765
Q304
Capital
Expenditures
Including
Acq. & Div.
($000)
23,981
201,785
15,097
40,634
131,002
62,622
1,570
6,283
74,948
52,584
12,673
20,109
5,210
526,997
16,548
13,275
271,287
64,307
14,252
55,566
786,700
13,709
21,753
11,892
(2,663)
23,640
2,465,761
* Enterra distributed US $0.36, which we have converted to CAN $0.45 at an exchange rate of $0.80 US to $1.00 CAN.
** Zargon became a trust during Q3, and therefore only made distributions for two months, totaling $0.28. This has been prorated to $0.42 for the yield comparison on page 6.
*** Pengrowth has A and B units. We have combined both in order to come up with units outstanding.
New energy trusts have not been included in this comparison if they did not report Q3 results as a trust.
These include Daylight Energy Trust, Esprit Energy Trust, Ketch Resources Trust, Starpoint Energy Trust and TKE Energy Trust.
Provident Energy Trust is not included in the comparison due to its diversified business model.
7
Summer
2004
ARC Energy Trust, located in Calgary, Alberta is one of Canada's largest conventional oil and gas royalty
trusts with an enterprise value, of approximately $3.2 billion. With ongoing internal development and optimization activities on ARC’s properties, production volumes for the remainder of 2004 are expected to average approximately 55,000 boe per day from five core areas in Western Canada. The royalty trust structure
allows net cash flow to be distributed to unitholders in a tax efficient manner.
RECENT HIGHLIGHTS
Production averaged 56,096 boe per day in the third quarter of 2004. Production was above forecast due
to incremental production from ARC's internal development program.
Capital expenditures were up significantly in the third quarter to $55.4 million as ARC's active development program continues to show positive results.
ARC realized cash flow of $110.8 million in the third quarter of 2004 and declared cash distributions of
$83.2 million. The Trust's payout ratio for the third quarter was 75 per cent.
During the third quarter, the West Texas Intermediate ("WTI") oil price reached an all time high closing
price of US$49.64. Subsequent to the third quarter, the WTI oil price traded in excess of US$55.00 per
barrel. The continued strength of oil prices, even with approximately 50 per cent of the Trust's liquids production being hedged at materially lower levels, has resulted in record cash flow for the Trust of $341.1
million for the first nine months of 2004.
During the third quarter, the CAD/USD foreign exchange rate increased to an 11 year high of US$0.79
and further increased to highs of US$0.82 subsequent to quarter end. The increased CAD/USD
exchange rate served to partially offset the impact of rising US$ WTI oil prices for all Canadian energy
companies. However, the strengthening Canadian dollar had a positive financial impact on the Trust by
decreasing the Canadian equivalent of the Trust's long-term $U.S. debt by $14.5 million in the quarter,
and a net $9.4 million decrease in long-term $U.S. debt for the nine month period ending September 30,
2004.
ARC's foreign ownership level currently stands at approximately 25 per cent, well below the level that
would jeopardize the Trust's status as a mutual fund trust.
CASH DISTRIBUTIONS
($/unit)
3.00
2.25
1.50
0.75
FINANCIAL HIGHLIGHTS
($CDN thousands, except per unit and per boe amounts)
FINANCIAL
Revenue before royalties
Per unit
Per boe
Cash flow
Per unit
Per boe
Net income
Per unit
Cash distributions
Per unit
Net debt outstanding
Nine Months Ended September 30
2004
2003
99 00 01 02 03 04*
* 9 months ended September 30, 2004
Cash Flow
Actual Cash Distribution
669,670
3.61
42.80
341,098
1.84
21.80
130,840
0.71
246,447
1.35
220,500
560,626
3.79
38.46
306,564
2.07
21.03
235,736
1.57
200,725
1.35
385,923
COMPOUND ANNUAL
RETURN
45.0%
ARC VS. TSX OIL & GAS PRODUCERS, TSX COMPOSITE INDEX
A N D R O YA LT Y T R U S T I N D E X - Indexed to July 11, 1996
700
600
500
$10 IPO price
$13.79 cumulative distributions
paid to unitholders
400
300
ARC Energy Trust
September 30, 2004
30.0%
Royalty Trust Index
S&P/TSX Oil & Gas
Exp. & Prod. Index*
200
15.0%
TSX Composite Index
100
Ju
l- 9
6
Oc
t- 9
6
Ja
n-9
Ap 7
r-9
7
Ju
l- 9
7
Oc
t- 9
7
Ja
n-9
Ap 8
r-9
8
Ju
l- 9
8
Oc
t- 9
8
Ja
n-9
Ap 9
r-9
9
Ju
l- 9
9
Oc
t- 9
9
Ja
n-0
0
Ap
r-0
0
Ju
l- 0
0
Oc
t- 0
0
Ja
n-0
Ap 1
r-0
1
Ju
l- 0
1
Oc
t- 0
1
Ja
n-0
2
Ap
r-0
2
Ju
l- 0
2
Oc
t- 0
2
Ja
n-0
3
Ap
r-0
3
Ju
l- 0
3
Oc
t- 0
3
Ja
n-0
4
Ap
r-0
4
Ju
l- 0
4
Oc
t- 0
4
-
*As at January 31, 2004 the TXS Producers Index is no longer calculated and has been replaced with the S&P/TSX Oil & Gas Exp. & Prod. Index.
8
1 yr
To September 30, 2004
3 yr
5 yr
CORE PROPERTIES
PRODUCTION
(Mboe/d@6:1)
British Columbia
Alberta
Saskatchewan
1
2
3
4
Northern Alberta & BC
Pembina
Central Alberta
SE Alberta &
SW Saskatchewan
5 SE Saskatchewan
1
Edmonton
2
34%
13%
17%
19%
18%
3
70,000
52,500
35,000
Calgary
Regina
4
5
PRODUCTION
17,500
Gas
Liquids
RESERVES
48%
99 00 01 02 03 04*
52%
* 9 months ended September 30, 2004
RESERVES
(MMboe@6:1)
52%
48%
Natural Gas
Crude Oil & NGLs
Natural Gas
Crude Oil & NGLs
300
*Company interest proved plus probable
O P E R AT I N G H I G H L I G H T S
225
Nine Months Ended September 30
2004
2003
OPERATING
Production
Crude oil (bbl/d)
Natural gas (mmcf/d)
Natural gas liquids (bbl/d)
Total (boe/d)
Average prices
Crude oil ($/bbl)
Natural gas ($/mcf)
Natural gas liquids ($/bbl)
Oil equivalent ($/boe)
22,958
179,529
4,223
57,102
22,897
158,592
4,067
53,396
46.20
6.77
37.52
42.80
37.49
6.61
32.89
38.46
150
75
Gas
Liquids
99
00
01
02
03
Reserve Life Index: 12 yrs
MARKET SUMMARY
Three Months Ended September 30
Toronto Stock Exchange
Trust Units: AET.UN
Exchangeable shares: ARX
Units & Exchangeable shares
outstanding: 188 million
($CDN, except volumes)
High
Low
Close
Average daily volume
2004
17.38
15.02
16.85
383,522
2003
13.88
12.51
13.55
550,503
C O R P O R AT E I N F O R M AT I O N
Management:
Directors:
John P. Dielwart, President and CEO
Mac Van Wielingen, Chairman
Doug J. Bonner, Vice-President - Engineering
Walter DeBoni, Vice-Chairman
David P. Carey, Vice-President - Business Development
John Beddome
Susan D. Healy, Vice-President - Corporate Services
Fred Coles
Steven W. Sinclair, Vice-President - Finance and CFO
Fred Dyment
Myron Stadnyk, Vice-President - Land and Operations
Allan R. Twa, Corporate Secretary
Michael Kanovsky
ANALYST COVERAGE
BMO Nesbitt Burns
Canaccord
CIBC
Desjardins
Dundee Securities
FirstEnergy
Lehman Brothers
National Bank
Peters & Co.
Raymond James
RBC Dominion
Scotia Capital
TD Newcrest
John Stewart
Danny G. Geremia, Treasurer
For Investor Relations Inquiries:
Suite 2100, 440 - 2nd Ave. SW
Calgary, AB T2P 5E9
Phone: (403) 503-8600
Facsimile: (403) 509-8417
Toll Free: 1 (888) 272-4900
E-mail: ir@arcresources.com
Website: www.arcresources.com
9
CORPORATE PROFILE • November 2004 • Page One
THE
TRUST
ADVANTAGE
BUSINESS STRATEGY
Develop & Exploit
Use large, low-risk development drilling inventory to maintain production, reserves and
distributions (>130 locations; >5,500 boe/d)
Acquire
Use excellent balance sheet and growth capital to acquire high-quality reserves and
production in Western Canada
OFFICERS
QUARTERLY HIGHLIGHTS
Total revenue
Cash flow
Per unit, diluted
Net income (loss)
Per unit, diluted
Capital expenditures
Net debt
Production
Natural Gas (mcf/d)
Oil & Liquids (bbls/d)
Equivalent (boe/d)
Crescent Point Energy Trust is a conventional
oil and gas income trust with assets strategically
focused with properties consisting of high quality,
long life, operated, light oil and natural gas reserves
in Western Canada.
Crescent Point uses an integrated approach to grow
through acquisitions, exploitation and development
of high-quality light oil and natural gas reserves.
Risk Management
Hedge up to 50 percent of production
Balance gas and oil commodity mix over time
(000s, except where indicated)
OVERVIEW
Q3 2004
26,577
18,096
0.64
3,058
0.11
74,947
82,693
Q2 2004
23,267
16,348
0.60
2,754
0.10
8,875
59,420
Q1 2004
21,842
15,509
0.59
438
0.02
68,784
58,069
15,733
6,905
9,527
17,097
5,808
8,658
18,084
5,860
8,874
• Paul Colborne, BA, LLB - Chairman
• Scott Saxberg, BSc, PEng - President & CEO
• Greg Tisdale - CFO
• Neil Smith, BASc - VP Engineering & Bus. Development
• Dave Balutis, BSc - VP Geosciences
• Dan Toews, BSc, BComm, CA - Treasurer & Controller
• Tamara MacDonald, BComm - Land Manager
DIRECTORS
• Paul Colborne
• Scott Saxberg
• Gregory Turnbull
• Ken Cugnet
• Hugh Gillard
• Peter Bannister
• Gerald Romanzin
PARTNERS
KEY STATISTICS (November 2004)
Trading Symbol:
Units Outstanding :
Monthly Distribution :
TSX - CPG.UN
30.9 mm
$0.17 per unit
Bank Line :
Net Debt (Sept 30, 2004) :
Debt/Cash Flow Ratio :
>$135 mm
<$83 mm
<1.0 times
• BANKER
Scotiabank, Calgary, AB
Production (2005 Forecast)
Oil & NGLs (bbls/d) :
Gas (mcf/d) :
Total (boe/d) :
Current Production (boe/d):
Reserve Life Index
Proved :
Proved Plus Probable:
COMPENSATION
• No acquisition and disposition fees
• No external management fees
• No option plan
• Comparable industry salaries and benefits
• Restricted unit plan to attract and retain high quality professionals
• One of the lowest G&A expenses per boe in trust sector
10
~7,650
~15,000
~10,150
~10,150
7.1 years
9.5 years
• AUDITOR
PricewaterhouseCoopers LLP, Calgary, AB
• LEGAL COUNSEL
McCarthy Tetrault, Calgary, AB
• EVALUATION ENGINEERS
Gilbert Laustsen Jung Associates Ltd., Calgary, AB
• REGISTRAR AGENT
Olympia Trust Company, Calgary, AB
ANALYST COVERAGE
• Scotia Capital
• First Energy Capital
• Canaccord Capital
• Raymond James & Associates
• CIBC Wood Gundy
• Haywood Securities
• First Associates Investments
CORPORATE PROFILE • November 2004 • Page Two
THE
TRUST
ADVANTAGE
FOCUS AREAS
Production Growth
Trust Conversion /
StarPoint
Reserves Growth
Innes
Cash Flow Growth
SIGNIFICANT RESOURCE BASE
Trust Conversion /
StarPoint
Crescent Point focuses its attention on pools of reserves with large amounts of original oil in
place (OOIP). The Trust’s reserves include OOIP of over 525 million barrels. Less than 13%
has been recovered to date.
From 2003 to 2004, Crescent Point replaced production by 200% through technical and
development revisions. On average, the Trust increased recovery factors by 1.3%, which
equated to over 4 million boe of proved plus probable reserve additions. In this manner,
Crescent Point increased its reserve life index from 8.3 to 9.5 years.
HEDGING STRATEGY
• Provide greater stability to distributions
• Hedge up to 50 percent of after-Crown
royalty volumes
CURRENT HEDGES
CONTACT INFORMATION
Oil
2004
2005
2006 (first half)
2,705 bbls/d
3,450 bbls/d
1,558 bbls/d
tel 403.693.0020
fax 403.693.0070
• Hedge up to 24 month periods
• Use layered approach
$36.58/bbl
$43.37/bbl
$51.46/bbl
Suite 1800
500 - 4th Avenue SW
Calgary, Alberta
Canada T2P 2V6
All prices indicated in Canadian dollars.
info@crescentpointenergy.com
www.crescentpointenergy.com
11
12
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5PDATED.OVEMBER
13
CANADIAN
CANADIAN CURRENCY
CURRENCY
Principal Properties
Western Canada
Murphy
Murphy Acquisition
Acquisition Properties
Properties
Bulrush
Bullrush
Rigel
Squirrel
Oak
Dunvegan
Nipisi
Tupper
Goose River
Swan
SwanHills
Hills
Judy
Judy Creek
Creek
McLeod River
Core Area
Edmonton
Calgary
Calgary
Through the purchase of trust units, unitholders participate in the
ownership of a large portfolio of crude oil and natural gas properties,
HIGHLIGHTS
x
x
x
x
x Geographically diversified asset base
x Average cash-on-cash yield of 15%
over 10 years
x Opportunity for future growth
AVERAGE PRODUCTION MIX
34% Oil
11% Heavy Oil
9% NGLs
46% GAS
Balanced
Production
Profile
OIL & GAS RESERVES
Oil & NGLs
210.5 214.8
Natural Gas
1992 - 2003
Compound
Annual Growth Rate
Sable
Sable Offshore
Offshore Energy
Energy Project
Project
Portsmouth
Dracut
Boston
East Coast Canada
receiving the net cash flow ( after expenses ), paid monthly, as
the oil and gas reserves are produced.
Continuing acquisitions and development of existing properties
replenish and add to the reserve base.
Pengrowth does not engage in high-risk exploration and seeks to
acquire long-life assets with low decline rates and high
development potential to achieve more stable production.
x
x
x
x
x
x
x
x
x
x
x
One of North America's Largest Oil & Gas Trusts
Equity Market Capitalization:
C$ 2.6 billion
Total Enterprise Value:
C$ 3.2 billion
Stock Symbol TSX / NYSE :
PGF.B - PGF.A / PGH
Recent Trading Price (TSX):
C$19.05
52-Week Range:
C$ 15.55 - 22.22
Trailing Cash-on-Cash Yield:
13.6%
Eligibility in Canada:
RRSPs, RRIFs, DPSPs, RESPs
Average Daily Trading Volume TSX: ( YTD )
285,028 units
Average Daily Trading Volume NYSE: ( YTD )
779,936 units
Employees:
289
166.5 160.3
176.6 183.0
Heavy Oil
18 ,14 0
22.3
7 6 6 1,4 6 1
1996 1997
CAGR 1998 - 2003 7.6%
6 0 ,15 1
3 3 ,5 8 1
3 1,8 2 1
2 9 ,7 4 1
46%
1995
Natural Gas
4 9 ,0 3 3
4 3 ,7 8 5
4 0 ,3 2 0
1992 - 2003
Compound
Annual Growth Rate
57.4
1993 1994
NGLs
( boe / day )
41.8
14
SOEP
New
Hampshire
Oil
184.4
43%
1992
Halifax
Nova
Scotia
Bangor
AVERAGE DAILY PRODUCTION
( Established mmboe )
10.8
Sable Is.
CORPORATE PROFILE
15 years of success
10 year reserve life index
Strong balance sheet
High quality assets
5.9
Saint
John
Weyburn
Headquartered in Calgary, Alberta, Canada, Pengrowth Energy Trust
is one of the largest energy royalty trusts in North America. Trust
units trade on the Toronto Stock Exchange ( PGF.B / PGF.A ) and
the New York Stock Exchange ( PGH ). Pengrowth has provided
investors with superior returns and growth in value for 15 years.
Sydney
Glace
Bay
Goldboro
Prince
Edward Island
Charlottetown
Fredericton
Maine
Mass.
Core Area
New
Brunswick
Maritimes &
Northeast Pipeline
Peace
Peace River
River Arch
Arch
Deep
Deep Basin
Basin
Greater
Greater McLeod
McLeod
Lindbergh
Lindbergh
Tangleflags
Tangleflags
Twining
Twining // Three
Three Hills
Hills
Southern
Southern Heavy
Heavy Oil
Oil
Countess
Countess
Princess
Princess
Core Area
Quirk Creek
Enchant
Monogram
Vancouver
Bathurst
DECEMBER
DECEMBER 2004
2004
1998 1999
2000
2001 2002 2003
Natural Gas @ 6:1
4 ,5 6 1
11,8 6 2
6 ,8 7 7
Q3
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Natural Gas @ 6:1
CAGR 1999 - 2003 11.4%
PRODUCTION & RESERVES BY PROPERTY
PRODUCTION PROFILE
60
Production
( mboe /d )
50
Murphy
40
B.C. Assets Oct 2002
June 2004
Other
Non-Operated
Properties
21%
30
20
SOEP Gas June 2001
10%
Judy Creek Oct 1997
6%
Base Properties
Reserves*
SOEP
21%
29%
Judy Creek
8%
14%
20%
8%
23%
B.C. Properties
Other
Operated Properties
8%
10
0
10%
7%
15%
Murphy Properties
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
RELATIVE PERFORMANCE OF A $100 INVESTMENT
Operated
*Proved + Probable
PENGROWTH PERFORMANCE VS. TSX INDICES
$1,600
$1,200
Non-Operated
$800
( C$ )
$1,522
Pengrowth
S&P / TSX Comp TR
S&P / TSX O&G E&P
$800
( C$ )
$600
$773
Pengrowth
S&P / TSX Comp TR
S&P / TSX O&G E&P
$400
$328
$447
$400
$200
$254
$374
$0
Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05
$0
Jan-94
To November 30, 2004
To November 30, 2004
Total Debt
( net )
Total Capitalization*
2000
2001
2002
2003
Q3-2004
286.8
345.5
316.5
259.3
592.0
937.1
1,174.0
1,389.7
1,418.7
1,827.60
204.8
228.9
346.6
383.50
1.7
1.4
0.7
1.5
0.29
0.23
0.18
0.32
Trailing 12 month
207.1
Cash Flow
Debt /Trailing
1.4
Cash Flow
Debt / Total Capitalization* 0.31
ANNUAL & CUMULATIVE DISTRIBUTIONS SINCE INCEPTION
Cumulative
$ 400
Jan-02
Jan-04
( C$ millions )
(%)
10 Year Average Yield
14.7%
21.4% 17.3%
13.8% 13.8%
18.3%
10.6% 10.4% 11.5% 10.8% 10.8%
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
MONTHLY DISTRIBUTIONS TO UNITHOLDERS
Annual
$ 1,600
$ 800
Jan-00
Based on Distributable Income / trust unit divided by the average of high and low trading prices during the year
* Book capitalization ( equity plus debt )
$ 1,200
Jan-98
PENGROWTH AVERAGE CASH-ON-CASH YIELD
CAPITAL STRUCTURE
( C$ millions )
Jan-96
$1.58 Billion
in Distributions
Since inception, the Trust has
paid out $28.25 per trust unit
Annual
Cumulative
$0
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Includes December 15, 2004 distribution
MANAGEMENT TEAM
James S. Kinnear, Chairman, President & CEO
Henry D. McKinnon, Vice President, Operations
Lynn Kis, Vice President, Engineering
Gordon M. Anderson, Vice President
Chris Webster, Vice President, Treasurer
Lianne Bigham, Controller
Charles V. Selby, Corporate Secretary
Jim MacDonald, General Manager, East Coast Operations
$ 500
$ 0.50
$ 400
$ 0.40
$ 300
$ 0.30
$ 200
$ 0.20
$ 100
$ 0.10
$0
$ 0.00
( C$ )
1998
1999
2000
2001
Includes December 15, 2004 distribution
2002
2003
2004
GOALS & OBJECTIVES
Pengrowth's goal is to increase
distributable income per trust unit
over time by maintaining a high
quality asset base.
Head Office - Suite 2900, Petro-Canada Centre - East Tower, 111 Fifth Avenue S.W., Calgary, Alberta, Canada T2P 3Y6
Investor Relations, Calgary · Telephone (403) 233-0224 · Fax (403) 294-0051 · Toll Free 1-800-223-4122
Investor Relations, Toronto · Telephone (416) 362-1748 · Fax (416) 362-8191 · Toll Free 1-888-744-1111
E-mail: investorrelations @ pengrowth.com · Website: http://www.pengrowth.com
15
403.269.7923
16
Entrances & Exits
Emerging Companies
Due to new companies and trusts being created, existing companies being
acquired and private companies going public, the lineup of companies and
trusts included in the IQ report must be adjusted from one issue to the next.
The following lists summarize some of the changes that Canadian oil and gas
companies and trusts have been involved in since our previous IQ report. These
lists may not be all-inclusive, and readers are encouraged to research transaction
details themselves by reading company news releases.
This list of emerging public companies serves as our reference point for tracking
companies’ growth and their potential inclusion in the IQ report. With the current pace
of oil and gas operations in Canada, this list is always changing and is by no means
exhaustive. If you know of any other oil and gas company that belongs on this list,
please feel free to let us know.
NEW TO THIS REPORT
The following companies either didn’t exist, weren’t big enough, had quarters that
didn’t reconcile or were simply overlooked for our last IQ report. All trusts are new
to the report as we didn’t include a trust section in the past.
Cyries
Espoir
Great Plains
Kinloch
Peregrine
ProEx
Rock Creek
West
The following companies were in our last IQ report, but were removed from this
issue due to production numbers that fell below our 500 boe/d cutoff. We are
keeping track of them in our watch list for future inclusion.
C1
Novitas
DEALS ANNOUNCED, BUT NOT CLOSED
As of the writing of this report, the following deals had been announced, but are
yet to close. This will likely be the last IQ report for some of the companies listed
below, while others will emerge in a different form.
Defiant to be acquired by Advantage Energy Income Fund and form a spinoff
Ketch and Bear Creek to form trust plus two spinoffs
Novitas to be acquired by Bonterra Energy Trust
Predator to be acquired by SignalEnergy
Quarry to be acquired by Assure Energy
Starpoint and E3 to form trust plus spinoff
Viking Energy Royalty Trust and Calpine Natural Gas Trust to combine
DONE DEALS
The following deals have closed since our previous IQ report, meaning the nonsurviving entities from these deals are not included in this report.
Midnight reorganized into Daylight Energy Trust and Midnight Oil
Exploration
Rocky Mountain acquired by Enterra Energy Trust
Tusk reorganized into TKE Energy Trust and Tusk Energy Corporation
Company
A.I.S. Resources
Accrete Energy
AltaCanada Energy
Arapahoe Energy
Arrow Energy
Banks Energy
Blue Parrot Energy
C1 Energy
Canadian Spirit Resources
Canex Energy
Cannon Oil and Gas Ltd.
Capitol Energy
Caribou Resources
Chamaelo Energy Inc.
Cheyenne Energy
Chirripo Resources
Cinch Energy
Coral Sea Petroleums
Deep Resources
Deer Creek Energy
Desmarais Energy
Drilcorp Energy
Eastshore Energy
Everest Energy
Exceed Energy
Expedition Energy
Goose River Resources
Grand Banks Energy
Highview Resources
High Plains
Infiniti Resources
Keeper Resources
Kelso Energy
Kootenay Energy
Lamplighter Energy
Launch Resources Inc
LongBow Energy
Loon Energy
Mystique Energy
Novitas Energy Ltd
Pennant Energy
Petro-Reef Resources
Prairie Pacific Energy
ProspEx Resources
Regal Energy
Result Energy
Ripper Oil & Gas
Rock Energy
Rosetta Exploration
San Telmo Energy
Sawtooth Resources
SignalEnergy Inc
Spitfire Energy
Storm Exploration
Tartan Energy
Titan Exploration
Trafina Energy
Trivello Ventures
Twoco Petroleums
Tuscany Energy
Watch Resources
Westchester Resources
Winslow Resources
Yangarra Resources
President/CEO
C. Alan Smith (Chairman)
Peter Salamon
Donald Foulkes
Barry Hemsworth
Eric Gosselin
D. Barry Lee
Bill Elligson
Hugh Pattillo
Phillip Geiger
Stephen Kapusta
Robert Tessari
Monty Bowers
Ross Robertson
Robert Zakresky
Tim Cooney
Issa Abu-Zahra
George Ongyerth
Tom Walton
Eugene Wasylchuk
Glen Schmidt
James Long
Andy Burnett
Gary Burns
Varoujan Basmadjian
Barry Dorin
Scott St. John
Curtis Hartzler
Edward McFeely
John Cassels
Phillip Grubbe
Gordon Holden
Loren Komperdo
Hugh Gillard
Mark Naylor
Wayne Carter
Shelina Hirji (VP)
Mark Ross
Norman Holton (CEO)
Victor Luhowy
George Fink
Thomas Yingling
Joseph Werner
Malcolm Todd
John Rossall
Doug McNichol
William Matheson
Jerry Ball
Allen Bey
Ross Clark
Brian Bass
Gary Waters
J. Cameron Bailey
Keith Chase
Brian Lavergne
John Komarnicki
Trevor Spagrud
J. Terry McCoy
Arndt Roehlig
Wayne Malinowski
Bob Lamond
Steven Bruk
Pat DiCapo
Hugh Ross
James Evaskevich
Symbol
AIS-V
GZ-T
ANG-V
AAO-V
AOF-V
BKL-V
BPA-V
CTT-T
SPI-V
CXO-V
COO-V
CPX-V
CBU-V
CLO-T
CHY-V
CHO-V
CNH
CPO-V
DEP-V
DCE-T
DES-V
DCL-V
EST.A-V
EVV-V
EX.A-V
XPD-V
GRR-V
GBE-V
HVW-X
HYE-V
IRL-V
KEE.P-V
KEL.H-V
KTY.P-V
LL-V
LAU-V
LBV-V
LEY-V
MYS-V
NOS-V
PEN-V
PER-V
PRP-V
PSX-T
RGN-V
RTE-V
RIP-V
RE-T
RSA-V
STU-V
SAW-V
SGI-T
SEL-V
SEO-T
TEW-V
TTN.A-V
TFA.A-V
TRV-V
TWO-V
TUS-V
WR-V
WSR.H-V
WLR-V
AYX-V
Nov 30
Share Price
0.19
3.14
0.66
0.22
0.80
0.40
0.35
1.77
5.65
2.38
0.315
0.78
2.00
5.55
0.45
0.90
2.15
0.15
1.20
9.08
0.75
0.40
3.05
0.135
0.385
0.52
0.67
1.40
0.30
0.46
0.18
0.47
0.235
0.55
0.11
0.02
0.12
0.23
0.42
0.83
0.295
0.660
0.65
3.38
0.21
0.47
1.06
3.90
0.65
0.65
1.59
1.16
0.35
3.36
0.24
2.50
5.50
1.50
2.80
0.14
0.31
0.37
0.20
0.67
17
JUNIOR OIL & GAS COMPANY COMPARISON
Fairborne
Thunder
StarPoint
Real
Ketch
Resolute
Duvernay
NuVista
Petrobank
Hawker
BlackRock
True
Purcell
Atlas
Tempest
Lightning
Celtic
Rider
Flowing
Clear
Vaquero
Zapata
Forte
Endev
High Point
Dynamic
Devlan
Defiant
Argo
Crew
Kick
Cdn Superior
Find
Bear Creek
Gentry
Blue Mtn
Mustang
Aquest
Galleon
Delphi
Crispin
Geocan
Innova
E3
Kensington
Meridian
Blizzard
Bulldog
Choice
Bison
West
Diaz
Cyries
Hawk
Berens
Can Southern
Terra
Grand
Burmis
Raven
ProEx
Masters
TriLoch
Luke
Peregrine
WranglerWest
Tiverton
Connacher
Rock Creek
Quarry
Virtus
Espoir
Milagro
Rival
RSX
Kinloch
Winstar
Veteran
Val Vista
Predator
Great Plains
Globex
5,563
5,367
5,191
5,130
8,814
4,568
4,022
4,001
3,766
3,744
3,670
3,567
3,238
3,190
3,121
3,053
3,018
2,978
2,883
2,701
2,612
2,492
2,428
2,402
2,401
2,146
2,116
Sizing Up the Competition
2,100
1,975
Even
though
we include companies with
1,867
1,822
production up to 15,000 boe/d, there are no
1,781
public companies in this report with production
1,749
over 9,000 boe/d. Companies this size have all
1,702
1,605
been acquired or converted to trusts.
1,545
1,517
The distribution of juniors in this report is skewed
1,450
towards smaller production levels as follows:
1,426
1,426
500 to 1,500 boe/d
38 companies
1,354
1,348
1,501 to 2,500 boe/d
16 companies
1,276
2,501 to 3,500 boe/d
9 companies
1,222
3,501 to 4,500 boe/d
6 companies
1,191
1,142
4,501 to 5,500 boe/d
4 companies
1,134
5,501
to
6,500
boe/d
3 companies
1,123
6,501 to 7,500 boe/d
4 companies
1,103
1,063
more than 7,500 boe/d
2 companies
1,027
1,017
963
total
82 companies
949
932
910
910
904
896
846
814
737
724
716
690
687
681
677
638
593
577
557
531
530
503
0
18
7,774
7,382
7,203
7,124
6,651
6,364
6,113
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
junior
C O MPA RIS O N
Change in Production - Q2 2004 to Q3 2004 [%]
Median = 4%
Peregrine
Meridian
Lightning
Rock Creek
Clear
Argo
Forte
Zapata
Espoir
Rider
Hawk
NuVista
Burmis
Grand
Galleon
Bulldog
Raven
Mustang
Flowing
Fairborne
Bear Creek
Resolute
Crew
E3
Masters
Blizzard
Gentry
Innova
Blue Mtn
Atlas
Virtus
Geocan
Vaquero
Celtic
WranglerWest
StarPoint
Luke
Quarry
Winstar
Tempest
Duvernay
True
Kinloch
Veteran
Real
Milagro
Ketch
Delphi
Rival
Globex
Endev
Devlan
Thunder
Petrobank
BlackRock
Val Vista
Bison
Purcell
Choice
Dynamic
Defiant
Crispin
Cdn Superior
Diaz
Terra
Aquest
High Point
Kick
Hawker
Kensington
Can Southern
West
Find
Predator
Berens
TriLoch
RSX
Tiverton
Connacher
-100%
322%
96%
86%
51%
49%
43%
37%
33%
32%
30%
30%
30%
27%
26%
26%
21%
21%
19%
13%
13%
13%
13%
12%
12%
11%
9%
9%
9%
9%
9%
8%
7%
6%
6%
5%
5%
5%
4%
4%
4%
3%
3%
3%
3%
3%
2%
2%
2%
1%
Moving in the Right Direction
Investors look to junior oil and gas companies
for growth, whereas they look to energy trusts for
stability. Growth in juniors is ideally measured on
a per share basis, so we have added the graph on
the following page.
0%
0%
0%
-1%
-1%
-2%
-3%
-3%
-3%
-4%
-4%
-4%
-4%
-4%
-5%
-7%
-7%
-7%
-7%
-8%
-11%
-12%
-12%
-13%
-15%
-17%
-17%
-20%
-22%
-38%
-50%
0%
Thirty juniors had lower production in Q3 2004
than in the previous quarter. Companies offer
a variety of explanations for the declines from
weather-related issues to the effect of the
maturing Western Canadian Sedimentary Basin.
When reading this chart, one should keep in mind
that production levels may have been influenced
by one-time events. The story could already be
different and it is important to refer to company
materials for the latest trends.
Chart does not include Cyries, Great Plains and ProEx,
companies that didn’t report production for Q2 2004.
50%
100%
150%
200%
250%
300%
350%
19
junior COMPARISO N
Change in Production Per Share - Q2 2004 to Q3 2004 [%]
Median = 0%
Meridian
Peregrine
Rock Creek
Lightning
Zapata
Rider
Grand
NuVista
Bulldog
Raven
Espoir
Hawk
Burmis
Galleon
Flowing
Bear Creek
Resolute
E3
Mustang
Masters
Blue Mtn
Crew
Argo
Fairborne
Celtic
Vaquero
WranglerWest
Luke
Tempest
Winstar
Clear
Veteran
Real
StarPoint
Atlas
Virtus
Delphi
Rival
True
Ketch
Globex
Duvernay
Endev
Devlan
Petrobank
Gentry
Quarry
Val Vista
Bison
Geocan
Purcell
Kinloch
Defiant
Cdn Superior
BlackRock
Crispin
Innova
Diaz
Kick
Dynamic
Terra
High Point
Hawker
Milagro
Can Southern
West
Aquest
Thunder
Kensington
Forte
Blizzard
Find
Predator
Berens
RSX
TriLoch
Tiverton
Choice
Connacher
-60%
20
94%
91%
53%
42%
-1%
-1%
-1%
-1%
-1%
-2%
-2%
-3%
-3%
-3%
-3%
-4%
-4%
-4%
-4%
-5%
-5%
-6%
-7%
-9%
-10%
-10%
-11%
-11%
-12%
-12%
-12%
-13%
-13%
-13%
-14%
-14%
-15%
-17%
-20%
-22%
-26%
33%
26%
26%
22%
22%
20%
18%
16%
15%
15%
14%
13%
12%
12%
11%
11%
8%
6%
6%
6%
6%
6%
5%
5%
4%
4%
3%
3%
3%
3%
3%
2%
2%
1%
1%
0%
Striving for a Bigger Pie with Fewer Pieces
This is a new chart for the IQ report, partially
as a result of requests from readers. The chart
compares production per weighted average share
for Q2 and Q3.
Many companies have been known to say they will
not grow just for growth’s sake; they only want to
grow on a per share basis. This graph is a good
test of that strategy, however it doesn’t take into
account debt levels, another important factor in
the capitalization of a company.
A company could be justified for being near the
bottom of this chart if they just paid down large
amounts of debt.
Companies that can continue to grow on a per
share basis are undoubtedly creating value for
their shareholders.
Chart does not include Cyries, Great Plains and
ProEx, companies that didn’t report production for
Q2 2004.
-35%
-39%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
junior
C O MPA RIS O N
Median = 64%
Blizzard
Can Southern
Choice
Hawker
Luke
Diaz
Ketch
Predator
Espoir
High Point
Thunder
Lightning
Val Vista
Great Plains
Berens
Clear
Rider
Dynamic
Crew
Galleon
Duvernay
Kensington
NuVista
Purcell
Meridian
Resolute
Raven
Cdn Superior
Kinloch
Endev
Defiant
Aquest
TriLoch
Cyries
Rival
ProEx
True
Hawk
Atlas
Devlan
WranglerWest
Tempest
Fairborne
Gentry
Terra
Argo
Innova
Blue Mtn
Real
Burmis
Veteran
Mustang
Crispin
Zapata
Delphi
Petrobank
Globex
Kick
Vaquero
Bear Creek
Tiverton
Find
E3
Rock Creek
Celtic
Masters
Virtus
Milagro
Forte
RSX
West
StarPoint
Grand
Winstar
Flowing
Connacher
Peregrine
Quarry
Geocan
Bulldog
Bison
BlackRock
2%
0%
0%
10%
100%
98%
96%
94%
92%
91%
90%
88%
85%
84%
83%
83%
80%
79%
79%
79%
78%
77%
77%
77%
77%
76%
76%
75%
75%
73%
73%
73%
72%
72%
71%
70%
69%
67%
67%
67%
67%
65%
64%
64%
64%
64%
62%
62%
61%
60%
59%
59%
58%
58%
57%
56%
55%
52%
51%
49%
47%
46%
Oil, Gas or Both
46%
44%
The junior sector offers investors the
41%
opportunity to invest in companies that
40%
38%
range from 100% oil and liquids production
38%
to 100% natural gas production.
36%
35%
The juniors’ median weighting to natural
34%
gas has remained relatively stable over
33%
32%
previous quarters. In the previous four IQ
29%
reports, the median natural gas weighting
29%
has stayed between 61% and 64%.
27%
25%
23%
23%
22%
21%
17%
14%
20%
40%
60%
80%
100%
21
junior COMPARISO N
Median = $56,743 per boe/d
ProEx
West
Cyries
Blizzard
Galleon
Duvernay
Cdn Superior
BlackRock
Meridian
Rider
Luke
RSX
Crew
Bear Creek
Peregrine
Kick
Mustang
NuVista
Veteran
Espoir
Ketch
Defiant
Fairborne
Celtic
Blue Mtn
Vaquero
Lightning
StarPoint
Argo
High Point
Clear
Rock Creek
Gentry
Thunder
Find
Can Southern
Delphi
Real
TriLoch
Crispin
Burmis
Bulldog
Bison
Innova
Berens
E3
Great Plains
Connacher
Globex
Hawk
Forte
Resolute
Zapata
WranglerWest
Purcell
Atlas
Kinloch
Raven
Endev
True
Petrobank
Val Vista
Masters
Aquest
Tempest
Tiverton
Hawker
Winstar
Milagro
Devlan
Terra
Virtus
Predator
Dynamic
Diaz
Choice
Rival
Quarry
Flowing
Grand
Kensington
Geocan
194,833
158,275
149,938
145,021
136,665
136,188
124,298
109,862
102,592
98,647
98,528
96,298
96,152
89,490
87,415
85,370
84,200
76,268
74,381
74,287
73,091
72,637
72,175
71,993
70,712
70,649
70,066
69,892
68,321
66,627
65,241
64,543
64,488
62,935
Valuation of Flowing Production
61,495
60,389
Enterprise value is calculated by adding net
59,043
58,551
debt to market capitalization where market
57,188
capitalization is the weighted average number
57,142
of shares outstanding during Q3 multiplied
56,902
56,584
by the share price on November 30, 2004.
55,249
Using enterprise value as opposed to market
54,850
capitalization alone makes sense because it takes
54,430
53,843
a company’s debt into account.
53,104
52,974
When junior companies are bought by other
52,416
companies or by royalty trusts, the acquiring
51,016
entity usually reports the amount it paid per
50,845
50,687
boe/d of production after setting aside a certain
49,521
value for land, seismic and transaction costs.
49,240
49,210
The chart does not take into account the value
48,736
of land and seismic data or the quality and life
48,559
expectancy of oil and gas reserves. Companies
48,310
44,725
that are high on this chart should be there for
44,628
a reason – they have strong growth prospects,
44,584
quality long-life reserves or an exceptional
43,934
43,579
management team.
42,699
42,444
41,457
41,187
39,812
38,964
38,323
37,554
37,039
36,726
35,713
34,547
31,673
31,234
30,989
30,374
29,262
27,592
24,058
0
22
50,000
100,000
150,000
200,000
250,000
junior
C O MPA RIS O N
Median = $20.57/boe
Rock Creek
Bison
Bulldog
Celtic
Raven
Duvernay
Crew
Blizzard
West
Crispin
Aquest
Bear Creek
Fairborne
NuVista
Vaquero
Meridian
Find
Burmis
Kick
TriLoch
Ketch
Mustang
RSX
WranglerWest
Veteran
Resolute
Tempest
Real
Forte
Espoir
Thunder
ProEx
Globex
Clear
Rider
Zapata
Delphi
Argo
Defiant
StarPoint
Cyries
Endev
Cdn Superior
Diaz
Gentry
Atlas
Kinloch
Hawk
Devlan
Blue Mtn
High Point
BlackRock
E3
Innova
Hawker
Galleon
True
Lightning
Peregrine
Great Plains
Luke
Masters
Grand
Kensington
Virtus
Choice
Dynamic
Milagro
Petrobank
Rival
Can Southern
Berens
Val Vista
Terra
Purcell
Geocan
Tiverton
Flowing
Quarry
Winstar
Connacher
Predator
0.00
29.49
29.48
6.53
6.38
6.26
5.00
9.71
10.00
32.64
31.50
27.59
26.59
26.44
25.92
25.21
24.96
24.49
24.42
24.40
24.33
23.78
23.52
23.49
23.32
23.27
22.95
22.85
22.73
22.41
22.38
22.38
22.22
22.22
22.11
22.10
21.96
21.62
21.56
21.18
21.18
21.10
21.00
20.96
20.84
20.83
20.63
20.63
20.52
20.49
20.11
20.04
19.98
19.97
19.77
19.57
19.15
18.86
18.69
18.64
Producing Cash Flow
18.48
18.45
This is a measure of how much cash
18.31
flow companies received from each boe
18.21
17.92
of production during Q3.
17.92
Cash flow netbacks are influenced by
17.90
17.73
commodity mix, wellhead prices, cash
17.65
taxes, royalties, the amount of refining
17.57
17.48
necessary, operating expenses and
17.18
general & administrative expenses.
16.76
16.68
Cash flow, also referred to as funds from
16.63
operations, is the result of adding non16.49
16.25
cash expenses such as depreciation and
15.46
future taxes to net earnings. Cash flow is
14.93
a measurement that is oil and gas industry
14.89
14.59
specific and is not defined by Generally
13.99
Accepted Accounting Principles [GAAP] in
13.31
13.21
Canada.
13.11
15.00
20.00
25.00
30.00
35.00
23
junior COMPARISO N
Median = $7.63/boe
Quarry
Tiverton
Grand
Winstar
Peregrine
Virtus
Val Vista
Forte
Globex
Geocan
Terra
Rival
Choice
Berens
Delphi
Masters
Kensington
Blue Mtn
Zapata
Veteran
Diaz
RSX
Kinloch
Celtic
Purcell
Defiant
Great Plains
Find
Endev
Dynamic
Rider
Milagro
Cdn Superior
TriLoch
Connacher
Hawk
Predator
Kick
Argo
Real
Atlas
E3
Luke
ProEx
Flowing
Fairborne
West
Gentry
Aquest
StarPoint
WranglerWest
Thunder
Petrobank
Resolute
Lightning
Bison
Burmis
True
Crispin
Bear Creek
Cyries
Hawker
Bulldog
Devlan
Mustang
Clear
Ketch
BlackRock
Raven
Galleon
Innova
Meridian
Vaquero
Espoir
Duvernay
Tempest
NuVista
Crew
Can Southern
High Point
Rock
Blizzard
0.00
24
26.33
18.13
17.57
0.85
15.60
13.01
12.93
12.61
12.59
11.97
11.95
11.73
11.46
11.42
10.99
10.88
10.37
10.30
10.12
10.10
9.97
9.25
9.06
9.03
8.98
8.97
8.93
8.92
8.88
8.88
8.78
8.69
8.54
8.47
8.44
8.20
8.14
8.00
7.88
7.76
7.69
7.68
7.59
7.58
7.56
7.48
7.46
7.42
Costs from the Field
7.27
7.27
Companies that are efficient operators are
7.18
attractive because they can generate more cash
7.15
flow and profits from their production. The ability
7.02
6.94
to be an efficient operator often relates to the
6.86
productivity of wells, the proximity of producing
6.82
areas, economies of scale, control over facilities
6.78
6.75
and whether a company uses conventional or
6.74
unconventional production methods.
6.67
6.63
Wherever possible, we have not included
6.55
transportation expenses with operating expenses.
6.44
6.25
Many companies are now showing transportation
6.21
expenses as a separate line on their income
6.18
6.03
statements, whereas they used to be hidden in
5.98
the net revenue line.
5.97
5.86
5.77
5.35
5.21
4.90
4.80
4.78
4.60
4.31
3.96
3.77
3.08
3.02
5.00
10.00
15.00
20.00
25.00
30.00
junior
C O MPA RIS O N
Median = $2.56/boe
Winstar
Connacher
Can Southern
Cdn Superior
Virtus
Predator
RSX
Peregrine
Veteran
Great Plains
Luke
Argo
Terra
Berens
Innova
Mustang
Bear Creek
Kensington
Cyries
Lightning
Petrobank
Rival
Burmis
Kinloch
Globex
Gentry
Quarry
Endev
Rock Creek
Aquest
Blizzard
Dynamic
Tiverton
Masters
Geocan
High Point
West
TriLoch
Galleon
Espoir
Val Vista
Diaz
WranglerWest
Defiant
Bison
Milagro
Forte
Purcell
Hawker
Grand
Crispin
Zapata
Clear
Resolute
Choice
Vaquero
Bulldog
Fairborne
Hawk
Duvernay
True
Find
Flowing
Thunder
Blue Mtn
Devlan
Delphi
Atlas
Rider
Celtic
ProEx
Kick
Tempest
E3
Raven
Real
StarPoint
Crew
Ketch
Meridian
BlackRock
NuVista
0.00
6.47
6.46
6.25
6.17
5.96
5.67
5.34
5.05
4.98
7.80
7.78
7.65
7.53
7.33
8.96
4.52
4.43
4.15
4.14
3.78
3.66
3.61
3.60
3.53
3.52
3.49
3.48
3.48
3.44
3.31
3.30
3.19
3.12
3.10
3.01
3.00
3.00
2.99
2.96
2.63
2.58
2.55
2.46
2.45
2.35
2.34
2.30
2.16
2.16
2.10
2.02
2.00
1.96
1.94
Costs from the Office
1.90
1.89
To a degree, general and administrative [G&A] expenses
1.86
1.82
are normally lower on a per boe basis for companies that
1.73
are larger. This is because certain costs do not change
1.69
regardless of the amount of production. G&A includes
1.58
1.57
payroll, office leases, travel and expensed office items.
1.52
These
expenses can also include restructuring costs if
1.51
necessary. The lower the G&A per boe is, the better.
1.49
1.48
Median G&A expenses of $2.56 per boe for the juniors in
1.44
1.36
Q3 2004 are more than double the median for the trusts
1.36
group of $1.28 per boe in the same period.
1.36
1.32
1.23
1.20
1.15
1.02
0.98
0.91
0.81
0.57
0.45
0.41
0.37
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
25
junior COMPARISO N
Median = $13.66/boe
Cdn Superior
Kinloch
Kensington
West
Rock Creek
Raven
Argo
Connacher
Devlan
Hawker
Bison
Forte
Berens
Peregrine
Quarry
Innova
Endev
Virtus
Atlas
Winstar
Milagro
Aquest
Diaz
Espoir
Petrobank
Fairborne
Lightning
Veteran
Tempest
TriLoch
Masters
Globex
Purcell
Clear
Val Vista
Tiverton
Galleon
RSX
Blue Mtn
Celtic
High Point
Blizzard
Delphi
Predator
StarPoint
Rival
Geocan
Grand
Kick
Dynamic
Burmis
WranglerWest
Bear Creek
Defiant
Thunder
Cyries
Great Plains
Find
Crispin
Crew
NuVista
Gentry
Bulldog
Mustang
Rider
Ketch
Real
Terra
Resolute
Vaquero
Duvernay
Choice
Luke
Flowing
Meridian
Hawk
ProEx
Zapata
Can Southern
True
BlackRock
E3
0.00
26
28.09
26.95
26.33
5.94
5.75
5.00
24.22
23.86
22.51
21.48
21.04
21.02
20.74
20.22
19.41
19.37
19.11
18.42
18.33
18.26
18.22
17.75
16.83
16.79
16.64
16.45
16.34
15.86
15.85
15.70
15.26
15.25
15.05
14.87
14.56
14.26
14.24
14.07
13.99
13.89
13.89
13.88
13.84
13.69
13.64
13.53
13.47
13.42
13.41
13.33
13.30
13.13
13.07
Working Towards the Bottom Line
13.07
13.03
Depletion and depreciation expenses
12.84
are not cash costs. Instead they are an
12.61
ongoing normal write down of assets as
12.18
12.17
they are used up. Oil and gas companies’
12.04
primary assets are oil and gas reserves,
12.03
11.98
so depletion and depreciation relates
11.95
mainly to accounting for the production
11.86
of these reserves. Higher amounts mean
11.72
11.67
that reserves values are being decreased
11.58
more rapidly. This could be because they
11.50
were valued too high in the first place,
11.38
11.12
or they are losing value at a quicker
11.07
pace for any number of reasons.
11.05
10.17
9.57
8.83
8.76
8.69
8.44
8.41
8.07
7.89
7.84
7.12
10.00
15.00
20.00
25.00
30.00
junior
C O MPA RIS O N
Annualized Q3 Cash Flow Multiples
Enterprise Value to Annualized Cash Flow Median = 8.0
Market Price to Annualized Cash Flow Median = 6.5
ProEx
Connacher
Galleon
Cyries
West
Winstar
Cdn Superior
BlackRock
Predator
Blizzard
Luke
Duvernay
Peregrine
Rider
Meridian
RSX
Lightning
Can Southern
Mustang
Blue Mtn
Kick
Bear Creek
Berens
Crew
High Point
Purcell
Defiant
StarPoint
Espoir
Veteran
Argo
Gentry
Ketch
Quarry
Tiverton
NuVista
Clear
Vaquero
Innova
Great Plains
Fairborne
Val Vista
Thunder
E3
Delphi
Petrobank
Real
Find
Hawk
Terra
TriLoch
Globex
Masters
True
Celtic
Burmis
Atlas
Kinloch
Zapata
Milagro
Flowing
Forte
Crispin
Resolute
Hawker
WranglerWest
Endev
Virtus
Dynamic
Rock Creek
Devlan
Rival
Bulldog
Tempest
Choice
Geocan
Bison
Raven
Aquest
Diaz
Grand
Kensington
17.1
16.6
16.5
16.0
15.9
15.2
15.1
20.3
19.8
22.6
24.6
13.9
13.3
12.7
11.9
11.7
10.6
10.6
10.1
10.0
10.0
10.0
9.9
9.9
9.6
9.6
9.5
9.2
9.2
9.0
8.9
8.7
8.7
8.7
8.5
8.5
8.4
8.1
8.1
Multiple Multiples
8.1
8.0
This calculation uses the market close price at the
8.0
end of November combined with Q3 2004 weighted
7.9
7.9
average shares outstanding, net debt and cash
7.7
flow. The values shown on the chart relate to
7.3
the enterprise value multiples of annualized cash
7.2
7.1
flow denoted by the black bars. The white bars on
7.0
the other hand do not take debt into account as
7.0
6.8
they are simply a reflection of market price as a
6.7
multiple of annualized cash flow.
6.7
6.7
The most successful investors are able to forecast
6.6
cash flow in future quarters because changes in
6.6
6.6
cash flow normally correspond to changes in share
6.6
price.
6.4
6.4
Average cash flow multiples were higher in this IQ
6.3
report than the previous report. Median levels in
6.3
6.2
the prior report were 6.1 times for enterprise value
6.2
to cash flow and 5.1 times for market price to cash
6.1
flow. This is probably because companies have
6.0
5.9
issued more shares and debt in this time without
5.9
adding a proportional amount to cash flow.
5.8
5.4
5.3
5.2
5.2
5.2
Enterprise Value to Annualized Cash Flow
5.1
4.9
4.8
Market Price to Annualized Cash Flow
4.8
4.7
4.7
4.5
4.3
0.0
5.0
10.0
15.0
20.0
25.0
30.0
27
junior COMPARISO N
Median = 1.0
Connacher
Predator
Quarry
Petrobank
Purcell
Tiverton
Lightning
High Point
Peregrine
Flowing
Choice
Defiant
Argo
Rival
Delphi
Geocan
Val Vista
RSX
Hawker
Winstar
Thunder
Endev
Gentry
Great Plains
Kensington
Blue Mtn
Real
StarPoint
Kinloch
Tempest
Forte
Fairborne
Zapata
Burmis
Find
Terra
Bison
Veteran
Globex
Bear Creek
Bulldog
Aquest
Dynamic
Berens
E3
Rider
Crispin
Vaquero
Diaz
West
Ketch
Resolute
Cdn Superior
Kick
Galleon
Virtus
Milagro
Duvernay
Clear
Atlas
WranglerWest
NuVista
Mustang
Celtic
True
Masters
Devlan
Meridian
TriLoch
Raven
Crew
Hawk
Rock Creek
Espoir
Grand
Cyries
Innova
Blizzard
BlackRock
ProEx
Luke
Can Southern
(8.0)
28
6.2
4.0
3.7
(3.7)
(6.2)
(6.0)
(4.0)
(0.0)
(0.1)
(0.2)
(0.3)
(0.4)
(0.4)
(0.6)
(0.7)
(1.2)
(1.7)
(2.0)
-
7.4
3.2
2.8
2.8
2.6
2.5
2.5
2.2
2.1
2.1
1.9
1.8
1.8
1.8
1.7
1.7
1.6
1.6
1.5
1.5
1.4
1.3
1.3
1.3
1.2
1.2
1.2
1.2
1.2
1.2
1.2
1.2
1.2
1.1
1.1
1.1
1.0
1.0
1.0
1.0
1.0
0.9
0.9
Leveraging Returns with Debt
0.9
0.9
Debt to annualized cash flow offers a
0.9
0.8
good measure of a company’s leverage
0.8
to debt. It compares, in years, how
0.8
long it would theoretically take to
0.8
0.8
become debt free if all the company’s
0.8
cash flow was dedicated to paying
0.8
0.7
down debt. A certain amount of
0.7
debt is often good for shareholders
0.7
because it leverages their potential
0.7
0.7
gains. High levels may sometimes be
0.6
warranted due to a company’s ability
0.6
to bring on additional cash flow
0.5
0.4
or bring down debt in subsequent
0.4
quarters.
0.3
0.2
Connacher Oil and Gas, who is once
0.2
again at the top of this list, recently
0.1
reported that they had completely
paid off the company’s debt through
asset sales and an equity financing.
2.0
4.0
6.0
8.0
10.0
junior
C O MPA RIS O N
Juniors Data Table
P 30
P 32
P 34
P 36
P 38
P 40
P 42
P 44
P 46
P 48
P 50
P 52
P 54
P 56
P 58
P 60
P 62
Company
President/CEO
Symbol/
Exchange
Aquest
Argo
Atlas
Bear Creek
Berens
Bison
BlackRock
Blizzard
Blue Mtn
Bulldog
Burmis
Canada Southern
Canadian Superior
Celtic
Choice ***
Clear
Connacher
Crew
Crispin
Cyries
Defiant
Delphi
Devlan
Diaz
Duvernay
Dynamic
E3
Endev
Espoir
Fairborne
Find
Flowing
Forte
Galleon
Gentry
Geocan
Globex
Grand
Great Plains
Hawk
Hawker
High Point
Innova
Kensington
Ketch
Kick
Kinloch
Lightning
Luke
Masters
Meridian
Milagro
Mustang
NuVista
Peregrine
Petrobank
Predator
ProEx
Purcell
Quarry
Raven
Real
Resolute
Rider
Rival
Rock Creek
RSX
StarPoint
Tempest
Terra
Thunder
Tiverton
TriLoch
Daryl Connolly
Bradley Johnson
Richard Lewanski
Russell Tripp
Bob Steele
Nicolas Swagor
John Festival
John Rooney
Randy Pawliw
Ken McKay
Aidan Walsh
John McDonald
Greg Noval
David Wilson
Gordon Harris
Jeff Boyce
Richard A. Gusella
Dale Shwed
Murray R. Nunns
Don Archibald
David Evans
David Reid
Marty Cheyne
Bob Lamond
Michael Rose
Wayne Babcock
Paul Starnino
John Driscoll
Bruce Beynon
Richard Walls
Bill Davis
Robert Bowman
Doug Baker
Steve Sugianto
Hugh Ross
Wayne Wadley
Ash Bhasin
Andrew Hogg
Stephen Gibson
Steve Fitzmaurice
David Tuer
Glen Yeryk
Kevin Gibson
Donald Wood
Grant Fagerheim
Tim Hunt
Paul Read
Ken Woolner
Harold Pedersen
Geoff Merritt
Philip E Collins
Jeffrey Rekunyk
Richard Todd
Alex G Verge
Peter Malenica
John D. Wright
Jim Silye
David Johnson
Jan Alston
Harvey Lalach
Laurie Smith
Lowell Jackson
Brian Lemke
Craig Stewart
Colin Ogilvy
Mickey Taylor
Lee Baker
Paul Colborne
Scott Dawson
Brad Haack
Doug Dafoe
Blake Lowden
Jim McIndoe
AEX-T
AAE-T
AED-T
BCK-T
BEN-V
BIS.A-V
BVI-T
BZZ-T
GAS-T
BDE.A-T
BME-T
CSW.LV-T
SNG-T
CLT-T
CZE-V
CEN-T
CLL-T
CR-T
CEY-T
CYS-T
DEF-T
DEE-T
DXI-T
DZR.SV.A-T
DDV-T
DOL-T
ETE-T
ENE-T
ESX.A-V
FEL-T
FE-T
FLO-T
FRZ-T
GO.A-V
GNY-T
GCA-T
GBX-V
GPP-V
GPX-T
HK.A-V
HKR-T
HPR-T
IXL-T
KNN-T
KER-T
KEC-T
KTE-T
LEL-T
LKE-T
MSY-T
MDE-V
MIG-T
MUS.A-T
NVA-T
PEG-T
PBG-T
PXL-V
PXE-T
PEL-T
QUC-V
RVL-V
RER-T
RSE-T
RRZ-T
RGY-V
RCR.A-V
RSX-V
SPN-T
TMY.A-T
TTR-V
THY-T
TIV-T
TLR.A-V
True
Paul Baay
TUI-T
Val Vista
Vaquero
Veteran
Virtus
West
Winstar
Wrangler West
Zapata
AVERAGES
TOTALS
Greg Davidson
Robb Waldner
Phillip Loudon
Peter Carwardine
Ken McCagherty
David Monachello
Bill Kerr
George Paulus
VVR-V
VAQ-T
VTI-T
VEL-V
WTL-T
WRL-V
WX-V
ZCO-V
Nov. 30,
2004
Share
Price
($)
$2.00
$2.80
$3.57
$8.60
$1.27
$4.55
$7.65
$2.50
$8.50
$1.84
$1.99
$7.31
$2.63
$9.65
$0.56
$4.65
$0.61
$9.00
$1.45
$7.58
$4.70
$3.10
$4.17
$0.58
$19.70
$3.49
$2.41
$1.15
$3.80
$13.00
$4.10
$1.59
$3.52
$11.35
$3.30
$1.48
$2.45
$2.40
$1.30
$3.80
$3.80
$1.84
$3.73
$0.43
$17.20
$4.45
$0.91
$4.70
$3.20
$2.65
$3.95
$0.50
$8.35
$10.89
$2.41
$2.25
$0.44
$7.75
$3.03
$0.79
$1.44
$12.51
$4.85
$7.50
$0.70
$2.65
$1.50
$5.40
$7.00
$1.24
$7.80
$0.27
$2.45
$3.46
$1.18
$4.60
$0.65
$0.58
$4.25
$0.58
$6.50
$15.70
YTD
Share
Change*
(%)
Jul-Sep
Share
Change
(%)
Oct-Nov
Share
Change
(%)
Q304
Total
Production
(boe/d)
-25%
12%
-11%
118%
-21%
74%
85%
81%
35%
53%
62%
8%
-19%
21%
-26%
31%
-62%
137%
26%
30%
7%
77%
77%
-24%
61%
-45%
80%
-53%
85%
136%
58%
-40%
39%
244%
67%
6%
58%
0%
4%
33%
-25%
-29%
70%
-70%
91%
102%
-48%
114%
82%
-15%
80%
-58%
86%
37%
-20%
-20%
-32%
38%
19%
-14%
-20%
127%
50%
117%
-39%
-5%
79%
20%
20%
3%
-7%
-46%
-14%
111%
-18%
48%
-28%
-32%
n/a
-52%
10%
133%
29%
-6%
19%
7%
24%
6%
61%
-10%
54%
-6%
65%
19%
-19%
17%
14%
16%
20%
-20%
30%
12%
n/a
-20%
10%
2%
12%
14%
-24%
19%
18%
-9%
-4%
10%
-3%
0%
28%
32%
10%
13%
25%
14%
5%
-27%
12%
27%
-18%
19%
71%
-1%
-5%
21%
13%
21%
-20%
41%
18%
-17%
-11%
4%
n/a
8%
10%
-6%
26%
24%
24%
2%
5%
18%
16%
16%
-3%
0%
17%
0%
55%
-30%
31%
-20%
-8%
n/a
-21%
9%
33%
10%
-13%
18%
10%
26%
-9%
16%
13%
16%
12%
16%
28%
29%
12%
10%
-2%
11%
91%
33%
8%
11%
24%
53%
38%
4%
33%
-6%
30%
1%
4%
33%
18%
-14%
14%
11%
23%
-7%
40%
19%
6%
13%
3%
-2%
30%
-43%
27%
15%
-20%
19%
23%
-2%
36%
13%
3%
13%
0%
12%
-10%
16%
-2%
16%
-5%
33%
9%
53%
4%
18%
27%
9%
22%
12%
10%
-28%
-2%
23%
13%
9%
81%
32%
n/a
-25%
10%
12%
14%
1,822
2,492
4,022
2,116
1,123
1,276
5,191
1,426
1,975
1,354
1,017
1,103
2,401
3,744
1,348
3,238
814
2,428
1,702
1,142
2,612
1,749
2,701
1,191
6,364
2,883
1,517
3,018
690
8,814
2,146
3,567
3,053
1,781
2,100
1,605
503
1,027
530
1,134
5,367
2,978
1,545
1,450
7,124
2,402
638
3,766
910
932
1,426
687
1,867
6,113
904
5,563
531
949
4,568
724
963
7,203
6,651
3,670
681
737
677
7,382
4,001
1,063
7,774
846
910
5,130
557
3,190
577
716
1,222
593
896
3,121
2,436
199,723
Q304
Weighted
Average
Shares
Outstanding
basic**
(000)
Q304
End of
Period
Shares
Outstanding
basic**
(000)
30,874
46,789
48,908
19,711
43,427
11,831
80,235
86,589
14,256
33,623
24,017
14,418
107,997
25,800
44,209
41,482
47,400
25,981
57,442
23,062
31,354
25,408
23,437
57,800
41,671
24,559
29,935
86,749
13,919
41,620
26,980
40,941
35,539
20,633
33,893
16,619
9,018
13,508
17,910
15,471
42,270
78,681
24,429
64,943
27,415
42,515
27,615
41,546
34,873
14,364
36,332
47,780
17,696
39,643
26,492
54,732
27,104
25,541
49,739
15,276
31,300
27,738
60,534
44,870
19,233
18,608
37,168
82,572
18,579
26,897
50,259
89,300
20,631
61,734
16,191
43,636
57,929
39,814
43,302
36,658
5,968
8,030
36,768
30,893
54,159
48,930
19,724
43,427
11,831
83,757
86,829
19,002
32,968
27,216
14,418
108,200
25,823
44,209
47,312
47,668
25,981
57,585
24,218
31,375
25,424
29,469
58,296
41,677
24,559
29,935
87,000
13,758
46,059
29,442
42,255
38,137
21,761
34,005
16,630
9,550
18,553
25,913
15,471
43,072
79,386
24,913
64,958
27,541
42,515
27,615
41,643
36,181
14,364
36,342
47,780
18,818
40,557
30,124
54,732
27,104
27,454
49,739
15,276
31,400
27,729
60,721
44,870
19,233
18,608
37,171
83,099
18,582
30,976
50,328
89,288
20,631
61,771
16,191
43,694
57,929
39,814
43,706
36,667
5,968
8,033
37,682
Q304
Net Debt
Including
Working
Capital
($000)
Q304
Cash
Flow
($000)
Q304
Net
Earnings
($000)
16,049
39,247
21,415
19,847
5,973
16,667
(43,504)
(9,672)
18,481
14,749
10,075
(38,787)
14,408
20,572
17,938
18,358
14,207
(373)
13,965
(3,581)
42,364
24,501
5,777
7,622
45,782
17,251
9,536
35,218
(1,634)
95,091
21,351
43,247
30,133
9,215
23,577
14,017
4,271
(2,367)
4,862
(938)
60,422
53,641
(6,377)
12,408
49,163
15,867
5,851
68,604
(21,933)
2,551
2,785
3,117
9,439
34,517
15,177
124,872
7,576
(13,046)
74,081
10,368
1,451
74,738
43,532
25,509
7,807
(1,743)
9,442
70,055
39,766
6,568
97,240
11,408
1,495
15,342
5,366
24,644
5,264
3,428
9,379
2,347
5,327
28,485
4,105
4,779
7,393
4,753
1,543
3,698
8,927
3,401
3,479
3,673
2,182
1,569
4,526
10,155
2,078
6,308
478
5,906
3,909
2,167
5,005
3,372
4,864
2,204
15,570
4,423
2,601
5,698
1,394
19,784
4,637
4,303
6,208
3,000
3,871
1,965
980
1,660
873
2,063
9,110
5,166
2,627
2,332
14,973
5,143
1,172
6,208
1,484
1,513
3,085
1,051
3,904
13,682
1,490
8,440
306
1,882
5,878
647
2,444
14,653
13,598
7,123
1,018
2,213
1,396
14,013
8,180
1,427
15,460
1,028
1,921
8,593
763
6,980
1,188
1,132
2,834
356
1,845
6,029
536
(111)
330
2,771
(512)
925
3,436
843
445
1,502
561
445
(2,267)
3,594
418
1,308
(869)
2,064
1,384
380
935
855
(707)
26
5,881
(378)
1,226
(140)
262
3,463
1,398
(313)
408
307
1,115
(801)
200
357
124
632
614
542
(15)
(6,872)
3,810
1,114
(231)
(995)
282
79
1,219
(16)
871
4,335
920
210
(302)
663
(688)
(556)
266
3,863
4,108
1,636
65
376
348
2,323
1,058
(265)
3,325
(53)
372
2,295
14
2,278
329
(132)
(85)
(420)
396
2,672
1,590,843
383,791
61,786
* Year-to-date share change has been calculated using the close price for the first day of trading for companies that began trading in 2004.
** For companies with A/B share structures, B shares have been converted using September 30, 2004 close prices.
*** Choice Resources' most recent quarter was used for this report. Choice's quarter ended on July 31, 2004.
29
FACT SHEET
TSX: AEX
Aquest Energy Ltd. is a junior oil and gas exploration and development
company. Our business plan is to focus on the acquisition and
development of primarily natural gas assets in the central region of Alberta.
This strategy involves the staged development of a lower risked drilling
inventory against the backdrop of acquisitions. Aquest’s ultimate objective
is to become a 7,000 to 9,000 boe/d intermediate producer over the next
few years.
Recent Highlights
•
Participated in the drilling of 10 wells during the third quarter resulting in six
(3.9 net) oil wells and four (2.8 net gas wells);
•
Estimated production potential of an additional 300 boe/d will be added to
current corporate production of 2,200 boe/d levels by the end of
November, despite wet weather hampering the completion, testing and tie-in
of the wells during the third quarter.
•
Achieved record revenues for the first nine months of 2004 ($20.5 million)
with a resultant 23% increase in cash flow for the nine months ($9.8 million)
and a 109% increase for the quarter ($4.1 million);
•
Established a fourth quarter drilling program focused in the Sylvan Lake, AB
property area involving the drilling of up to 4 gas and 3 oil prospects; and
•
Committed to drilling one new well and one re-entry at the Clarke Lake, BC
gas pool this winter season in addition to the drilling of at least one new
exploration well targeting a similar structure west of the Clarke Lake activity.
MANAGEMENT
Daryl Connolly
President & CEO
Brian Baker
VP Finance & CFO
Bill McKenzie
VP Exploration
Lee Anderson
VP Operations
Bruce Hall
VP Land
History
Glenn D. Hockley
Chairman of the Board
Daryl H. Connolly
President & CEO
Robert L. Phillips
Director
James H. Rawls
Director
Christopher J. Robb
Director
Harley L. Winger
Corporate Secretary
and Director
30
Q4 2002
Pembina discovery
Q1 2003
Acquired assets
$15.35 million financing
Q3 2003
Lexoil acquisition
Q1 2004
Eravista merger
Sale $4.2 million
Clarke Lake discovery
Q2 2004
Clarke Lake production
$6 million financing
Q3 2004
Drilling success
3500
3000
2500
boe/d
DIRECTORS
Quarterly Production Growth
2000
Shut In Production
1500
1000
500
0
Q1
Q2
Q3
Q4
Q1
Q2
2003 2003 2003 2003 2004 2004
Q3
Q4
04
2004 2004 Exit
F
F
Q1
Exit
F
TSX: AEX
“Aquest’s ultimate
objective is to
become a 7,000 to
9,000 boe/d
intermediate
producer over the
next few years”
Areas of Operation
Clarke Lake, BC
BC
AB
• Focus of first quarter 2005 drilling program.
• Winter access only
Clarke Lake
• Short re-entry planned for B-A89-K gas
discovery well (26.55% working interest) to
produce the formation at a point up to 60
meters from the gas water contact.
• Second vertical development well proposed
for the B-8-C location.
Alexander
Edmonton
Cooking Lake
Pembina
Edberg
Wilson Creek
Q3 Results
Summary
Production
natural gas
oil & liquids
oil equivalent
Cash flow
per share
Net income
per share
Net debt
Shares outstanding
Sept. 30
Q3 weighted avg
• Exploration well targeting a potential 50 bcf
Keg River reef to be drilled by Aquest.
Location is west of the Clarke Lake gas pool.
Aquest currently holds a 100% interest in
this farm in prospect.
Bellshill
Sylvan/
Prevo/Gilby
Innisfail
Provost
Calgary
Sylvan Lake, AB
7,677 mcf/d
542 bbls/d
1,822 boe/d
• Currently accounts for approximately 600
boe/d, or 28% of current production.
• Aquest will focus on Sylvan for its six to
eight well Alberta drilling program during
the fourth quarter of 2004.
$4.1 mm
$0.13
$0.5 mm
$0.02
$13.5 mm
• Four gas tests and two oil prospects
planned, including a follow-up on the
successful Viking oil producer drilled at
6-35, three shallow gas prospects and
exploration wells targeting both Ostracod
oil and an Ellerslie gas channel.
30.9 mm
30.9 mm
Drilling
Aquest Energy Ltd.
1000, 734-7th Avenue SW
Calgary, Alberta T2P 3P8
Phone: 403-444-0251
Fax: 403-444-0999
Toll Free: 1-877-827-8378
www.aquestenergy.com
Investor Relations
Contact
Rhonda Bennetto
rbennetto@aquestenergy.com
403-444-0251 Ext. 222
Aquest participated in the drilling of 10 gross (6.60 net) wells resulting in 4 (2.80 net) gas
wells and 6 (3.80 net) oil wells. Testing operations confirmed the success of the drilling
program with approximately 500 boe/d of net production increases anticipated for completion
in the fourth quarter. Current production has increased to approximately 2,200 boe/d (7,800
mcf/d and 900 bbls/d) with a further 300 boe/d awaiting pipeline construction and compressor
installation. For the three month period ended September 30, 2004, Aquest averaged
production of 7,677 mcf/d of natural gas and 542 bbls/d of oil and natural gas liquids.
Outlook
Aquest maintains an aggressive growth plan which depends on the drill bit to drive our
volume increases. Our success will depend not only on drilling success but also our ability to
execute in the areas of facility construction and equipment procurement in an extremely busy
environment. Development drilling at Clarke Lake will provide the majority of the production
increase for the first quarter of 2005. Wet weather conditions have impeded our ability to
bring new Alberta production on stream. These delays lower our average 2004 volumes to
an estimated 2,100 boe/d with a fourth quarter average targeted at 2,600 boe/d. This results
in a forecasted 2004 cash flow of $14.5 million or $0.48 per share. Aquest will continue to
look for new opportunities that bring access to transportation and processing infrastructure,
thereby improving our ability to meet and exceed these aggressive objectives.
31
NOVEMBER 2004 . CORPORATE PROFILE
TSX : AAE
Argo Energy is a growing junior energy company with a solid operational and technical team. The nature of our roots, the wide
exposure to the energy business, and varied experiences within the industry give us our competitve advantage.
Our
solid roots in this business are the reason we can deliver measurable growth.
RECENT NEWS
OVERVIEW
Share price (Nov. 30, 2004)
52-week high
52-week low
AAE
$2.80
$3.05
$1.70
In the third quarter of 2004, Argo increased quarter-over-quarter
production by 45 percent to 2,492 barrels of oil equivalent per
day. This represents a 563 percent increase over the 362 boe/d
realized in the third quarter of 2003.
Shares outstanding (Nov.1, 2004)
55.7 million (basic)
58.2 million (diluted)
Argo also increased its cash flow by 43 percent to $4.8 million
$156 million
in the third quarter of 2004 compared with $3.3 million in the
Market capitalization
second quarter of 2004.
Average Q3 ‘04 production - actual
Oil and NGLs (43%)
Natural gas (57%)
Total average barrels of oil equivalent
989 bbls/d
9,016 mcf/d
2,492 boe/d
Average Q4 ‘04 production - forecast
3,500 boe/d
Reserves (Dec 31, 2003)
Proved
Proved plus probable
4,731 mboe
6,746 mboe
Reserve life index (P+P)
Argo had a 100 percent drilling success rate in the third quarter
of 2004 on 16 gross (10 net) wells.
On July 30, 2004, Argo completed the acquisition of Energy
North Inc. for $50.4 million including net debt. Argo’s third
quarter results reflect 62 days of combined activity between
the two companies.
6.1 years
Argo graduated from the TSX-V to the TSX on August 5,
Undeveloped land
Gross acres
Net acres
2004, significantly increasing Argo’s average daily trading
124,620
76,420
STRATEGY
FINANCIAL INFORMATION
• Build focused, controlled core areas
• Sustain multi-year inventory of organic prospects
• Aggressively produce reserves to maximize economics
• Secure accretive acquisitions with exploitation upside
• Target assets with multi-zone potential
• Pursue balanced commodity exposure
• Develop strategic partnerships to enhance value
• Continue per share growth to establish industry leadership
000s, except per share amounts
REASONS TO INVEST IN ARGO
• Veteran team with track record of delivering results
• Management’s interests are aligned with shareholders’
• Large, tangible organic development inventory
• Solid core asset base and infrastructure control
• Uniquely positioned for acquisitive growth
32
volume.
Financial
Petroleum and natural gas revenue
Cash flow
Per share basic
Per share diluted
Net income
Per share basic
Per share diluted
Capital expenditures,
including asset retirement obligations
Net debt
Shares outstanding at end of period
Basic
Diluted
Q3 ‘04
Q2 ‘04
(unaudited)
(unaudited)
10,052
4,779
0.09
0.08
(111)
0.00
0.00
6,847
3,346
0.10
0.08
113
0.003
0.003
77,567
39.2
9,262
23.7
54,159
58,151
34,065
40,927
NOVEMBER 2004 . CORPORATE PROFILE
PROPERTIES
DRILLING PROGRAM
DIRECTORS:
During the third quarter of 2004, Argo was
active at Sylvan Lake, Alberta, where the Company drilled 16 gross wells (10 net), resulting
in 16 gross gas wells (10 net).
Argo continues to expand its gathering system
as it ties-in wells at Sylvan Lake in the fourth
quarter of 2004. Argo plans to drill an additional 12 wells before the end of the year. At
September 30, 2004, Argo had 43 producing
gas wells at Sylvan Lake with an additional 13
awaiting tie-in, all of which are expected to be
completed by December 31, 2004.
Dennis Chorney
Chairman & Managing Director
Bradley Johnson
Chief Executive Officer
• First production in February 2003
Willey Wong
Vice President, Finance & CFO
• Junior exploration and production
company recapitalized by former
PanCanadian Energy executives in
November 2002
• Initial core area established at Sylvan
PRODUCTION
OFFICERS:
During Q3 2004, Argo continued its workover
and optimization program at Gift/Little Horse
in northern Alberta. Argo also completed four
interventions at Sounding Lake and initiated a
four-well drilling program at Vulcan.
HISTORY
Lake in 2002
Dennis Chorney
Richard Edgar
David Hall
Earl Hickok
James Howe
Bradley Johnson
Daniel Remenda
David Tuer
John Zang
Dave Hall
President & COO
• Acquired Advantage Energy
Corporation in December 2003
• Acquired Energy North Inc. on July
30, 2004
• Began trading on the TSX on
August 5, 2004
Ted Hanbury
Vice President,
Business Development
Dwayne Romansky
Vice President, Operations
John Zang
Corporate Secretary
CONTACT:
Argo Energy Ltd.
Suite 750
330 - 5th Avenue S.W.
Calgary, Alberta
T2P 0L4
T: (403) 770-6300
F: (403) 770-6303
E: info@argoenergy.ca
www.argoenergy.ca
Disclaimer: Forward-looking information, barrels of oil equivalent and cash flow all involve risks of interpretation and misinterpretation.
Please refer to Argo’s most recent financial report on the web at www.argoenergy.ca for an exclusion of liability as well as a description of the relevant risks and uncertainties.
TSX : AAE
33
B U L L D O G
E N E R G Y
I N C.
NOVEMBER
2004
B
ulldog Energy is a Calgary based junior oil and natural gas company. Our focus is the exploration, exploitation, and development
of hydrocarbon reserves in the Western Canadian Sedimentary Basin. We commenced operations in early 2002 in Rosevear,
Alberta and since then have assembled a significant portfolio of light crude oil operations in Southeast Saskatchewan and a
concentration of natural gas producing properties in the Rosevear area of West Central Alberta.
We have initiated a sale process for the Rosevear natural gas property. This is a strategic move to crystallize the gain in value that
we have achieved through our drilling, re-entry and acquisition activities in this area. The sale proceeds will be used to fund the
drilling of additional wells in our high growth areas in Saskatchewan.
Bulldog’s Class A and Class B common shares are listed for trading on the TSX Exchange under the symbols BDE.A and BDE.B. As of
September 30, 2004, Bulldog had 30,608,397 Class A common shares and 372,768 Class B common shares outstanding.
Three months
ended September 30
2004
2003
Average
daily production
(boe/day)
1,354
1,115
FINANCIAL (000s except per share)
Revenues
Cash flow from operations
Per share
Net income
Per share
Capital expenditures *
866
557
Q3
612
Q4
Q1
Q2
Q3
Average sales
price
($/boe)
49.03
45.36
39.23
36.56 36.09
Q3
Q4
Q1
Q2
Q3
$
$
$
$
$
$
6,108
3,673
0.11
1,502
0.04
5,642
$
$
$
$
$
$
1,873
853
0.04
101
–
1,090
Nine months
ended September 30
2004
2003
$ 13,800
$ 7,758
$
0.24
$ 2,639
$
0.08
$ 11,549
$
$
$
$
$
$
5,552
2,648
0.15
854
0.06
2,901
($000)
3,673
2,419
1,666
853
Q3
* excluding business combinations
OPERATING
Production volumes
Crude oil and NGL's (bbls/day)
Natural gas (mcf/day)
Oil equivalent (BOE/day)
Average price realizations
Crude oil and NGL's ($/bbl)
Natural gas ($/mcf)
Operating expense ($/boe)
Field netback ($/boe)
General and administrative ($/boe)
Corporate netback ($/boe)
Cash flow
947
Q4
Q1
Q2
Q3
Earnings
1,225
772
1,354
$
$
$
$
$
$
50.09
6.70
6.24
32.54
1.86
29.49
365
1,149
557
$
$
$
$
$
$
35.76
6.35
6.66
20.68
2.64
16.65
963
893
1,112
$
$
$
$
$
$
45.77
7.01
6.23
29.00
2.34
25.45
330
1,048
505
$
$
$
$
$
$
38.64
7.73
6.51
23.82
2.97
19.14
($000)
1,502
754
383
101
100
Q3
Q4
Q1
Q2
Q3
SOUTHEAST SASKATCHEWAN
Since early 2003, Southeast Saskatchewan is the dominant area of activity for our company as we successfully pursued drilling
opportunities on our undeveloped lands. This focused land position is highly prospective for light oil (34 degree API) in reservoirs at
depths ranging from 1,000 to 1,200 meters. We are concentrating our exploration and development efforts on specific zones, which
can have initial production rates per well of over 150 bbls/day and recoverable reserves in excess of 150,000 barrels per well.
34
BULLDOG ENERGY INC.
2 0 0 4 FAC T S H E E T
Bulldog recently announced a 51 section (32,800 net acres) farm-in which provides the opportunity to define and control a large
natural gas resource play that is near pipeline infrastructure. We have access to over 1,200 kms of 2-D seismic data. Bulldog has
drilled two wells with a rolling option to drill additional wells.
EXCELLENT DRILLING SUCCESS
Over the first nine months of 2004, Bulldog has drilled or re-entered 14 wells in Southeast Saskatchewan resulting in 14 oil wells for
a 100% success rate. This successful exploration and development drilling, which included two new pool discoveries, has defined a
large development drilling inventory for light oil. Our drilling success has continued into the fourth quarter of 2004
❚
At Carlyle/Manor North (100% working interest), we have drilled three wells in the Spearfish zone which has resulted in two
new pool discoveries and a successful pool extension. We have the potential to drill 20 horizontal legs on lands we control.
❚
At Wauchope (90% working interest), the successful drilling of our first four wells has established locations for an additional 12
multi-leg horizontals wells.
2004 AND 2005 FORECAST
Bulldog’s current production is averaging approximately 1,600 boe/day, consisting of 1,440 bbls/day of light oil and natural gas
liquids and 1,000 mcf/day of natural gas. We expect to make or exceed our previous guidance for 2004 average production of 1,200
boe/day with a 2004 exit production rate of 1,625 boe/day. Our current estimate for 2004 cash flow is $11.6 million or $0.35 per
diluted share. In 2005, Bulldog projects an initial capital expenditure budget of $15.0 million. We will consider an expansion of this
capital program as we progress through 2005. Our production forecast for 2005 reflects an average 1,750 boe/day, resulting in a cash
flow of $16.5 million or $0.49 per diluted share.
MARKET AWARENESS INCREASING
Trading volumes in the third quarter averaged 340,600 shares per day – more than twice the 141,600 shares per day average through
the second quarter of 2004. This has resulted in improved liquidity and wider distribution of our shares.
Our research analyst coverage includes four institutions: Acumen Capital Partners, Canaccord Capital, FirstEnergy and Tristone Capital.
SHAREHOLDER INFORMATION
BOARD OF DIRECTORS
OFFICERS
CONTACT INFORMATION
E. Craig Lothian, LLb. (1) (2)
Kenneth D. McKay, P. Geol.
Regina, Saskatchewan
President
& Chief Executive Officer
Claudio A. Ghersinich, P. Eng. (1) (2)
S. Bruce McKay, C.E.T.
Calgary, Alberta
Vice President Production
& Chief Operating Officer
For further information on Bulldog Energy
Inc., please contact Ken McKay, President
& CEO, by phone at (403) 266-6902, email at info@bulldogenergy.ca., or visit
our website at www.bulldogenergy.ca
S. Bruce McKay, C.E.T.
Calgary, Alberta
Kenneth D. McKay, P. Geol.
Michael H. Flanagan, P. Land
Vice President Land
Calgary, Alberta
Ailsa Brereton, C.A.
James M. Pasieka, LLb. (2) (3)
Controller
& Chief Financial Officer
Calgary, Alberta
John A. Thomson, C.A. (1) (3)
Calgary, Alberta
(1) Members of the Audit Committee
(2) Members of the Reserve Committee
(3) Members of the Governance &
Compensation Committee
Suite 805, 734 - 7th Avenue S.W.
Calgary, AB, T2P 3P8
Telephone (403) 266-6902
Facsimile (403) 264-7470
STOCK EXCHANGE
The TSX Exchange
Symbols: BDE.A & BDE.B
35
Burmis Energy Inc. is a growing junior oil and gas company with headquarters in Calgary,
Alberta. The Company is focused on developing longer life, natural gas and light crude oil production in its core area of west central Alberta. This area features multi-zone targets at medium
depths. The Company is also developing multi-zone shallow natural gas in east central Alberta.
HISTORY
Burmis trades on the TSX under the symbol "BME".
• Created on January 28, 2003 as a result of a Plan of
Arrangement involving the sale of Elk Point
2005 - CAPITAL PROGRAM $13.5 MILLION
Resources Inc. to Acclaim Energy Trust
• Completed two private placements in 2003, resulting in the issuance of 6.5 million shares raising
gross proceeds of $5.5 million
•
Focussed in west central and east central Alberta
•
High impact Nisku locations at Pembina
•
Lower risk development and medium risk exploration at Pembina, Whitecourt, Kidney,
Ferrier, Minnehik/Hoadley and Kehiwin
• Completed two private placements in 2004, resulting in the issuance of 5.4 million shares raising
gross proceeds of $8.4 million
HIGH IMPACT PROSPECTS
•
• Completed 350 boe/d property acquisition in August
2004 for $11.2 million
Burmis has successfully drilled 3 out of 3 Nisku wells on the Nisku bank / patch reef
regional play in the Pembina / Brazeau area
•
The Company has two additional locations and further potential on approximately 2,600
net acres of undeveloped land in the Pembina Nisku bank edge fairway
HISTORICAL SHARE PRICE
FINANCIAL & OPERATING HIGHLIGHTS
($000’S, except where indicated)
FINANCIAL
Q3/04
$
4,085
$ 2,831
$
2,320
Cash Flow
$
2,182
$ 1,725
$
1,062
$
0.09
$
$
0.05
Earnings
Per share
TSX - BME
$
561
$
531
$
158
0.02
$
0.02
$
0.01
Basic
27,216,133
Diluted
29,362,633
Market capitalization
Mgmt & directors (diluted)
Credit facility
36
24,017
21,816
Capital Expenditures
$ 14,164
$ 3,114
$
5,112
Working capital deficit
$ 10,075
$ 5,921
$
4,532
$53 million
25%
$13.1 million
21,811
OPERATIONS
Natural gas (mcf/d)
Shares outstanding
0.08
$
Weighted Average Shares ('000's)
Stock symbol
Q1/04
Revenues, before royalties
Per share
OVERVIEW
Q2/04
Average price ($Cdn/mcf)
3,520
2,831
$
6.24
430
331
$
52.01
$ 41.98
1,017
803
Operating netback
$
27.22
Cash flow netback
$
23.31
Oil and NGL's (bbl/d)
Average price ($Cdn/bbl)
Barrels of oil equivalent per day
$
7.16
2,320
$
6.52
$
36.36
$ 29.47
$
21.93
$ 23.61
$
18.31
251
638
PRODUCTION GROWTH
COMPANY FOUNDATIONS
• Experienced Management Team
• Proven track record
• Grew production from 0 to 6,700 boe/d at Elk
• Committed (25% ownership)
• Over 120 years combined industry experience
• Focus in west central Alberta
• Operational and technical expertise
• Multi-zone potential
• Portfolio of Exploration Prospects and Development Projects
BOARD OF DIRECTORS
• 66,000 net acres of undeveloped land
Kenneth R. King
• Pembina, Brazeau, Kidney, Whitecourt, Kehiwin, Raspberry,
Ferrier, Minnehik
Geologist, Phd., Mineral Economics
Peter M.S. Longcroft, UK CA
Rodger A. Tourigny, CA
• Financial Strength
• Board of Directors
• Integrity, Independence, Experience
Aidan M. Walsh, P. Eng., MBA
President & Chief Executive Officer of the Company
CURRENT CORE AREA ACTIVITIES
• Brazea
MANAGEMENT & OFFICERS
Troy K. Brazzoni, P.Geol.
Vice President, Exploration
Darrin R. Drall, P. Eng.
Vice President, Corporate Development
Scott R. Dyck, CA
Chief Financial Officer
Brian J. Goodfellow, P.Eng.
Vice President, Production & Operations
James P. Junker, B.Comm.
• Nisku gas/condensate well Dec 2004
• Ferrier
• three Cardium locations for gas & ngls
• Kehiwin
• optimization, uphole completions and development drilling
for shallow gas
• gas well tie-in Dec 2004
• Kidney
• Two Keg River oil locations
• Minnehik/Hoadley
Vice President, Land
• three shallow gas locations
Aidan M. Walsh, P.Eng., MBA
• CBM - Ardley Pembina lobe
President & Chief Executive Officer
Dallas L. Droppo, Q.C.
Corporate Secretary
CORPORATE OFFICE
1000, 736 – 6th Avenue S.W.
Calgary, Alberta T2P 3T7
Telephone: (403) 781-7230
Fax: (403) 261-9028
• Pembina/Easyford
• two Nisku oil locations
• three Rock Creek gas locations
• Whitecourt
• equip & tie-in three wells
• one Nordegg gas location
Please visit Burmis Energy's website at www.burmisenergy.ca
for more detailed information on the Company.
37
DECEMBER 2004
TSX Venture: CZE
“High Impact”
Winter Drilling Program
Choice Resources is an energy resource development company engaged in the exploration and
production of petroleum and natural gas. Choice’s head office is located in Calgary and the company
also has a field office in Pincher Creek. Choice is currently producing approximately 1,350 boepd from
73 wells located in three core areas: Bow Island, Viking, and Pincher Creek. Choice has proven and
probable reserves of 33.8 Bcf natural gas plus 966 MBBLs NGLs. The Corporation owns 45,000 acres of
undeveloped land in southwestern Alberta and plans to drill 14 wells by February 2005 with a capital
budget of $9 million.
Stock Chart (May 2004 – November 2004)
Stock Information
Industry:
52-Week Range:
Recent Price:
Shares Issued:
Warrants:
Options:
Public Float:
Listed:
Avg. Daily Volume:
Market Cap:
oil & gas exploration
$0.40 - $1.50
$0.57
44 million
20.7 million @ $0.74 avg.
4.4 million @ $0.58 avg.
85%
February 2001
190,000 (3-month avg.)
$25 million
Investment Highlights
x
x
x
x
x
x
x
x
x
x
Current production of ~ 1,350 boepd is 100% gas; hedged 1 MM/day with an $8.50 floor price.
Recorded a 50% increase in production for the six months ended August 31, 2004.
Three core areas with an average working interest of 85%.
New balance sheet, new management, new strategies.
Net debt decreased 40% from year end.
Proven and probable reserves before tax present value at 10% = $45.5 million.
Gas reserves increase over 100% and associated liquid reserves increase over 80% compared to April 2003.
Solid land position of 45,000 undeveloped acres.
“Harvest” drilling program complemented by high reserves potential at Pincher Creek.
Estimated cash flow of $0.23 per share in FY 2005.
Recent News
Choice Metrics (Share Price @ $0.57)
November 17, 2004: Choice Announces $1.7M Financing
October 28, 2004: Choice Announces Record First Half Results
July 29, 2004: Choice Announces Record First Quarter Results
June 3, 2004: Choice Announces Year End Reserves Increase
May 20, 2004: Choice Closes $4.1M Flow-through Offering
March 8, 2004: Choice Closes $7.3M Financing
EV / boe
$6.65
EV / boepd
$30,800
P / CF (Feb. 2005 Estimate)
2.5 X
CF / share (Feb. 2005 Estimate) $0.23
NAV / share
$0.80
Debt / CF
1.6 X
Reserve Life Index
12.9 years
All statements and expressions are the opinions and property of Choice Resources Corp. and are issued solely for information purposes, and are not to be
construed as a solicitation or offer to buy or sell any securities or investment. Certain statements contained in this document constitute forward-looking
statements. The Corporation does not undertake any obligation to publicly update or revise any forward-looking statements.
38
Core Area Review
Pincher Creek: Discovered by Gulf Canada, the field has produced
approximately 520 Bcf (0.5 TCF) of natural gas since 1957 with a peak
production of over 150 mmscf/d. The Company has 100% working
interest in the eight wells. Pincher Creek has a current decline rate of less
than 3% and a proven reserve life index of over 20 years. A 6 mile2 3D
seismic program has been shot and has been analyzed. The
Company is currently targeting additional well opportunities this
winter. New wells are capable of 10 MMscf/d and would
significantly impact the Corporation. Two re-entry candidates have
been identified, which could add significant incremental production.
The Company may seek partners for these investments.
Harvest Properties: Choice has 100%
working interest in Bow Island and 90%
working interest in Viking. The Company
has targeted 3 additional locations in the
Bow Island and Sawtooth with 2 Second
White Specs tests. An additional 8
locations have been mapped contingent on
these locations. Choice has access to
infrastructure and facilities in Bow Island
and Viking.
Coal Bed Methane: Choice has initiated
a project by accumulating 7 sections of
land at 100% working interest. Choice is
testing 2 wells and is testing 2 others
shortly before deciding on the 2005
program expenditure level.
Exploration
Financials (February Year End)
Viking
Bow Island
Pincher Creek
6 Months Ended
Sales
Income (loss)
per share
Operating cash flow
per share
Net Debt
Equity
August 31, 2004
$10,144,142
1,325,153
$0.03
4,313,393
$0.11
17,324,915
21,599,579
Key Personnel and Directors
Gordon Harris, President, CEO and
Exploration
Director
Choice is exploring north and west of Edmonton in an area with moderate
well depths with multiple zone potential. Exploration will take place this
winter at Wallace, Heart River and Goose River. Several lines of 2D
Seismic have been analyzed and at least three wells will be drilled this
winter with targets of potential 20 to 30 Bcf.
Steve Austin, VP Finance and Chief
Financial Officer
Dennis Forgeron, VP Operations and
Chief Operating Officer
William Elligson, Director
President, Blue Parrot Energy Ltd.
Choice has also identified 4 exploratory targets in the Pincher Creek area.
Steven Bruk, Director
Partner, First Merit Group
Chris Cooper, Director
Partner, First Merit Group
Choice Resources Corp.
1150, 606 – 4 Street SW
Calgary, AB T2P 1T1
www.choiceresources.ca
Contact: Gordon Harris,
President & CEO
T: (403) 216-5821
E: gharris@choiceresources.ca
Contact: Steve Austin, CA
Chief Financial Officer
T: (403) 216-5821
E: saustin@choiceresources.ca
All statements and expressions are the opinions and property of Choice Resources Corp. and are issued solely for information purposes, and are not to be
construed as a solicitation or offer to buy or sell any securities or investment. Certain statements contained in this document constitute forward-looking
statements. The Corporation does not undertake any obligation to publicly update or revise any forward-looking statements.
39
Corporate Profile
November 2004
TSX: CLL
1
Connacher is a Calgary-based oil and gas exploration and production company. Connacher owns a 100% working interest in 83 sections (53,1 20 acres) of oil sands rights at its highly
prospective Great Divide SAGD oil sands project in the Divide/Hangingstone region southwest of Fort McMurray, Alberta. Its principal conventional assets are located at Battrum and
Tompkins in southwest Saskatchewan. Additionally, Connacher now owns 61% of Petrolifera Petroleum Limited, which owns 100% of Connacher's former Argentinean property.
Quarterly Production*
1500
REFINANCING
1,314 AND ELIMINATION
1,228 1,237
OF DEBT
1200
boe/d
1,008
975
924
900
814
785
365
Argentina
713
CLL
Share Price:
$0.59 on November 29, 2004
Shares O/S (Nov 29/04):
84.5 million (93.7 million fully diluted)
Warrants:
3.4 million @ average $0.57 per share
Options:
3.3 million @ average $0.50 per share
Areas:
Large land position in Great Divide oil sands project
with conventional focus on southwest Saskatchewan
544 551
600
TSX Listing:
Tax Pools:
>$30 million
460
610
Canada
300
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2002
Current
2004
2003
*Q3 2004 production was impacted by the sale
of approximately 500 boe/d effective July 1,
2004 for gross proceeds of $17.8 million.
CONNACHER'S GOAL IS TO MAXIMIZE SHAREHOLDER VALUE
STRATEGY
• Operate with large, focused interests
• Secure exposure for sustainability and repeatability
• Be opportunistic
• Capitalize on management's experience and contacts
• Secure company-maker exposure
Cash Flow
1200
RESERVES
1,008
1000
Reserves evaluated on October 1, 2004 by DeGolyer and MacNaughton Canada Limited
944
779
800
$M
REFINANCING
AND ELIMINATION
OF DEBT
821
745
600
Gross [before royalty deduction, net to company]
Total proved
Total proved plus probable
Total proved plus probable plus possible
Oil, natural gas and liquids
1,718,000 boe
3,578,000 boe
57,694,000 boe
NPV 10%
$17.7 million
$32.2 million
$290.9 million
516
496
478
RECAPITALIZATION
400
257
234
200
60
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2002
2003
2004
Connacher recently refinanced in order to capitalize on the best and most prospective
assets the company owns. With this process nearing completion, Connacher will refocus
on growth and value enhancement. Connacher's assets at Battrum and Tompkins are
attractive with recognized upside potential for both oil and natural gas. The company's
Great Divide oil sands project has the potential to be a company maker and the company
is endeavouring to secure the financing to realize the underlying value.
on the road to success
40
Corporate Profile
November 2004
TSX: CLL
CONNACHER OIL AND GAS LIMITED
2
BOARD OF DIRECTORS
SELECTED QUARTERLY I NFORMATION (U NAUDITED)
Richard A. (Dick) Gusella
Three Months Ended
Jun 30
2003
Sept 30
Dec 31
Mar 31
2004
Jun 30
Sept 30
Financial Highlights
($000 except per share amounts) - Unaudited
Total Revenue, gross
Cash flow from operations (1)
Basic, per share
Diluted, per share
Net earnings (loss)
Basic, per share
Diluted, per share
Capital Spending
Bank debt
Working capital deficiency
Net debt
Shareholders’ equity
Total assets
2,474
821
0.02
0.02
44
4,272
12,500
179
12,679
9,469
25,325
2,491
745
0.02
0.02
2,815
0.08
0.07
5,715
13,800
2,695
16,495
13,315
33,565
2,853
1,008
0.03
0.02
653
0.03
0.03
15,015
12,100
8,994
21,094
24,182
49,669
3,290
944
0.02
0.02
(689)
(0.01)
(0.01)
10,391
20,600
9,850
30,450
21,355
60,038
3,556
516
0.01
0.01
(1,268)
(0.03)
(0.03)
2,603
23,655
8,357
32,012
20,933
60,531
2,383
478
0.01
0.01
(869)
(0.02)
(0.02)
681
7,563
6,644
14,207
20,217
39,501
1,033
752
924
1,012
839
1,008
1,496
978
1,228
2,268
859
1,237
1,860
1,004
1,324
1,068
636
814
33.10
2.18
29.40
2.35
26.96
3.02
30.41
4.42
29.46
5.11
36.58
2.21
29.37
0.04
5.20
7.46
16.75
26.84
0.03
5.08
7.89
13.90
25.17
0.10
4.23
10.29
10.75
29.22
5.37
10.09
13.76
29.74
5.95
11.26
12.53
31.48
0.33
6.06
8.70
17.05
36,512
45,903
46,153
47,368
47,668
35,820
38,817
10,027
39,022
42,138
15,045
46,067
50,119
20,706
47,042
48,496
17,820
47,400
47,504
8,880
0.87
0.65
0.75
1.60
0.74
1.60
1.75
0.73
0.78
1.08
0.34
0.40
0.44
0.28
0.32
President & CEO, Connacher
Charles W. Berard
Partner, Macleod Dixon LLP
Colin M. Evans
President, Evans and Co., Inc.
Gary W. Freeman
Cofounder and Director, Spirit Energy
Stewart D. McGregor
President, Camun Consulting Ltd.
MANAGEMENT
Richard A. (Dick) Gusella
President & CEO, Connacher
Peter D. Sametz
Richard Kines
Chief Financial Officer
Tim O'Rourke
General Manager, Production
Songning Shen
Exploration Manager
EMPLOYEES / CONTRACTORS
GEOLOGY:
Gary Wine - Argentina
Sherry Wang
LAND:
Gordon Johnston - Negotiations
Lara Bec - Administration
PRODUCTION AND FIELD OPERATIONS:
Russ Huck - Operations Supervisor
Kevin Beaudette - Area Foreman
ADMINISTRATION:
Pat Clark - Corporate
Irena Holcak - Operations
Operating Highlights
Production
Natural gas (mcf/d)
Crude oil (bbl/d)
Equivalent (boe/d) (6:1)
Pricing
Crude oil ($/bbl)
Natural gas ($/mcf)
Selected Highlights ($/boe)
Weighted average sales price
Other income
Royalties, net of ARTC
Operating expenses
Netback
Common Share Information
Shares outstanding at end of period (000)
34,082
Weighted average shares outstanding for the period
Basic (000)
29,421
Diluted (000)
31,945
Volume traded during quarter (000)
8,342
Common share price ($)
High
0.76
Low
0.40
Close (end of period)
0.71
(1) Cash flow from operations and cash flow per share are not measures that have any standardized meaning prescribed by Canadian GAAP.
(2) BOE at 6mcf = 1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value
equiboency at the wellhead.
RECENT NEWS
CONNACHER OIL AND GAS LIMITED
Suite 2600, 530 - 8th Avenue SW
Calgary, Alberta Canada T2P 3S8
Phone : (403) 538-6201
Fax : (403) 538-6225
inq u i ri e s @c o n n a c h e ro il.c o m
• Connacher closed the first and second tranches of a $20.25 million equity financing on November 26 and 29,
2004, eliminating all debt
• Connacher acquired the remaining 50 percent interest in the producing 95,000 acre Puesto Morales/Rinconada
concession in the Neuquen Basin, Argentina, then transfered its 100 percent interest to a 61 percent-owned
subsidiary, Petrolifera Petroleum Limited; Petrolifera to go public in 2005
• Connacher sold its interest at Islay, Lloydminster and Cabri in July 2004 for $17.8 million, strengthening the company's
financial condition
• Connacher is continuing to proceed with the long-term development of the Great Divide oil sands project with
a target startup in 2006 at 10,000 bbl/d
w w w. c o n n a c h e r o i l . c o m
on the road to success
41
1500, 444 - 5 Avenue S.W.
Calgary, Alberta T2P 2T8
delphi energy corp.
CORPORATE
Telephone:
Facsimile:
Website:
Email:
(403) 265-6171
(403) 265-6207
www.delphienergy.ca
info@delphienergy.ca
DECEMBER 2004
PROFILE
Delphi Energy is a public junior oil and natural gas company based out of Calgary, operating mainly in east central and north western Alberta. The
company is well-positioned for organic growth, with a large inventory of development opportunities complemented by a high impact exploration
program. Delphi closed two significant acquisitions in the latter half of 2003 following a merger between DT Energy and Rise Energy that created
Delphi in June 2003.
overview
strategy
Share price
Shares O/S
• Growth through the drill bit with strategic acquisitions that enhance
DEE
$3.17 (Nov. 29, 2004)
26.8 million basic
28.7 million diluted
Production (Nov. 29, 2004)
~1,900 boe/d
Reserves (Jan 1, 2004):
Proved
3.20 million boe
Proved plus Probable
4.48 million boe
Reserve life index (P+P)
7.4 years
drilling inventory
• Concentrate efforts where expertise lies and success has been achieved
• Focus 80% of CAPEX program to lower risk development and acquisition
opportunities with the remaining 20% of the CAPEX targeting high-impact
exploration projects
• Capitalize on relationships with industry partners to enhance opportunity flow
recent highlights
• Announced on October 26, 2004 the proposed acquisition of a private company (“PrivateCo.”) for $56.85 million. The deal is expected to close
on Dec. 9, 2004.
• Announced a $16 to $20 million financing, which closed on November 23, 2004, with proceeds to be used for the acquisition of PrivateCo.
Closed a $4 million flow-through share financing on November 10, 2004.
• Increased cash flow 147 percent to $3.6 million in the third quarter of 2004 ($0.14/share) compared to $1.4 million ($0.06/share) in the same
period of 2003.
• Achieved the highest quarterly cash flow in the Company’s history, increasing nine percent over the second quarter of 2004 and eight percent on
a per share basis.
• Earned $0.9 million ($0.03 per share) compared to a loss of $0.2 million ($0.01 per share) for the same period in 2003.
• Increased average production 41 percent to 1,749 barrels of oil equivalent per day (boe/d), from production of 1,245 boe/d in the third quarter of
2003, a result of successful well reactivations combined with acquisition and development volume additions.
• Accomplished the most active capital program in the Company’s history with $11.1 million expended on projects primarily in east central Alberta.
• Graduated from the TSX-V to the Toronto Stock Exchange on August 3, 2004.
production growth profile (boe/d)
DT Energy
2,400
Delphi
cash flow ($000s)
14,500
2004 Estimates
1,716 1,749
• $6.50 CDN per GJ natural gas
• $40.00 US WTI oil
• $0.76 CDN/US exchange rate
1,900
1,461
1,364
1,245
Cash Flow Sensitivity
6,666
• CDN $0.10/GJ : $160K CDN / yr
• US $1.00 WTI : $165K CDN / yr
877
590
225
770
Q4
2002
Q1
2003
Natural Gas
42
Q2
2003
Q3
2003
Oil and NGLs
Q4
2003
Q1
2004
Q2
2004
Q3 2004
2004 (F)
* does not include PrivateCo
99
Exit
2004
(F) *
2001
2002
2003 2004(F)
management
AB
North West Alberta Region
David J. Reid
• President & CEO, Director
-high impact exploration
-shallow gas development
Tony Angelidis
• Senior Vice President Exploration, Director
Brian Kohlhammer
• Vice President Finance & CFO
East Central Alberta Region
- low risk development
Frank Lowe
• Vice President Production
Edmonton
Tim Malo
• Vice President Land, Corporate Secretary
core areas
Calgary
north west alberta
board of directors
•
•
•
•
•
•
•
Tony Angelidis
• Senior Vice President Exploration,
Delphi Energy Corp.
Harry S. Campbell
• Partner, Burnet, Duckworth, Palmer LLP
10% to 25% working interest in non-operated properties
Focus of winter CAPEX programs
Large undeveloped land base
Multi-zone / natural gas prospects
Exploration drilling targeting Devonian prospects defined on 3D seismic
Current production 600 boe/d, 32% of corporate production
97% natural gas, 3% NGLs
In the Edson area of west central Alberta, Delphi recently cased a Cardium light oil
development well. Testing and completion operations will be conducted on the well
over the next two weeks. Delphi holds a 32 percent interest in the well.
Henry R. Lawrie
• Former chief accountant of
Alberta Securities Commission
At Berland River, a 10-22 Cadomin development well has been cased. As part of a
joint venture with a senior Canadian producer, the company expects to participate in
the drilling of two more exploration wells in the area prior to year end. The area
provides Delphi with strong upside potential due to the prolific nature of natural gas
wells in the area.
Robert A. Lehodey
• Partner, Bennett Jones LLP
David J. Reid
• President & CEO, Delphi Energy Corp.
In Fontas in north west Alberta, Delphi is preparing to launch its winter drilling
program. The company expects to drill 15 to 20 gross wells at a 20 percent working
interest. Delphi also plans to install a refrigeration unit that is expected to restore
production of 250 boe/d of shut-in natural gas during the first quarter of 2005.
Lamont Tolley
• Independent businessman
east central alberta
• Focus of the Company's summer and fall CAPEX programs
• Targeting development opportunities on our high working interest operated
properties
• The Company continues to successfully pursue an active acquisition program
in the area
• 1,250 boe/d, 68% of corporate production
• 15% natural gas / 85% crude oil
contact information
Delphi continues to conduct exploitation and optimization activity in east central
Alberta that will add more production volumes prior to year end. To date, this activity
has resulted in a doubling of production and significant improvements in operating
costs on a per boe basis.
Delphi Energy Corp
1500, 444 - 5 Avenue SW
Calgary, Alberta
T2P 2T8
The properties owned by Delphi in east central Alberta are classified by the company
as low-risk development assets. Delphi is the operator for these properties and
maintains high working interests. Future growth is expected to come from more than
50 infill and step-out drilling locations identified by Delphi’s team on the company’s
lands.
T : 403-265-6171
F : 403-265-6207
info@delphienergy.ca
www.delphienergy.ca
outlook
Toronto Stock Exchange : DEE
Delphi’s growth through the drill bit is expected to come from more than 50 infill and
step-out drilling locations identified on the company’s lands. Delphi is well positioned
to continue this organic growth model while aggressively pursuing other opportunities.
DELPHI ENERGY CORP.
•
CORPORATE PROFILE
•
DECEMBER 2004
•
TSX - DEE
43
DIAZ RESOURCES LTD.
Corporate Profile
T O R O N T O
S T O C K
E X C H A N G E
DZR.a/DZR.b
September 2004
Diaz is a Calgary based independent, engaged in the
exploration for and production of natural gas and oil in
Canada and Texas. The Company’s success in drilling
gas wells in Texas and southern Alberta has provided
significant production growth which should continue
through the first quarter 2005.
Shares outstanding
Net debt (Sept. 30-04)
Natural gas – 90% gas production
Production growth
– Exploration:
Southern Alberta gas, Texas gas
– Development: Southern Alberta gas, Sask. oil, Texas gas
Financial Control
– Cash flow / expenditure balance
– Conservative leverage target
Market Cap
(Millions)
58.3
$ 35.0
7.6
$ 42.6
Options – $0.31
1.8
Fully diluted
60.1
44%
Cash Flow History
3.0
2.5
2.0
$Millions
h
(Millions)
Management ownership
Company Focus
h
h
Capitalization
1.5
1.0
Nine Months Ended September 30, 2004
0.5
0.0
h
h
h
h
h
Cash flow (millions)
Cash flow per share
Production (BOEd)
Net debt
Debt repayability (years)
2004
2003
$ 6.7
$ 0.12
1,162
$ 7.6
0.8
$ 4.5
$ 0.10
862
$ 10.0
1.7
Cash flow (millions)
Cash flow per share
Production (BOEd)
Net debt
Debt repayability (years)
Production History
BOEd
Est.
2004
2003
$ 9.6
$ 0.16
1,200
$ 9.0
0.9
$ 5.8
$ 0.12
904
$ 7.1
1.2
750
500
250
0
Q1 2 3 4Q1 2 3 4 Q1 2 3 4
2002
2003
2004 Est.
Reserves History
5
Oil
Millions BOE
4
Growing production
Active exploration / development program
Discount to net asset value
Low cash flow multiple
Low financial leverage
Gas
1,250
Investment Merit
h
h
h
h
h
Oil
1,500
1,000
2004 Estimates
h
h
h
h
h
Q1 2 3 4Q1 2 3 4 Q1 2 3 4
2002
2003
2004 Est.
Gas
3
2
1
0
1999 2000 2001 2002 2003
44
DIAZ RESOURCES LTD.
Board of Directors
Net Asset Value
Heading
Robert W. Lamond, Chairman
Summary of Reserves
Heading
Sept. 30
2004
Dec. 31
2003
September 30, 2004
$ 56.9
$ 40.9
Proved and Probable
4.8
4.5
$ 61.7
$ 45.4
7.6
7.1
$ 54.1
$ 38.3
$ 0.92
$ 0.66
Gross
Net
• Natural gas (Bcf)
23.5
19.6
• Oil (MBbl)
216
185
28
20
• BOE
4,161
3,472
• Bcfe
25.0
20.8
Charles A. Teare
• Oil & gas reserves @ 10%
Donald K. Clark
• Undeveloped land
Clive M. Stockdale
• Net debt
Allan R. Twa
• Net asset value
per share
Raj Agrawal
• NGLs (MBbl)
Management Team
Robert W. Lamond
Executive Vice President
Donald K. Clark
$10
$1.00
$0.90
$8
$0.80
$0.70
$/Mcf
Charles A. Teare
Henry Hub Gas Price
Share Trading - 2003/04
Chairman
$0.60
$0.50
Ray D. Arsenault
$0.40
Controller
$0.30
Senior Geologist
$4
$2
$0.20
Marshall M. Kis
$6
$0
Jan MarMayJun Aug Oct DecFeb Apr MayJulySepNov
2002
2003
2004
Jeffrey A. Smith
Senior Geologist
Wayne Radcliffe
Principal Properties
Consulting Landman
For further information contact:
Robert W. Lamond or Charles A. Teare
Telephone: (403) 269-9889
Texas
Fax: (403) 269-9890
www.diazresources.com
Forward-Looking Statements
This summary is management’s assessment of selected
historical, financial and operating results of Diaz and should be
read in conjunction with the annual report and consolidated
financial statements of the Company for the year ended
December 31, 2003, the Annual Information Form filed on
SEDAR, as well as interim reports and other materials
released by the Company from time to time.
Statements throughout this summary that are not historical
facts may be considered “forward-looking statements.” These
forward-looking statements sometimes include words to the
effect that management believes or expects a stated condition
or result. All estimates and statements that describe the
Company’s objectives, goals or future plans are forwardlooking statements. Since forward-looking statements address
future events and conditions, by their very nature they involve
inherent risks and uncertainties. Actual results could differ
materially from those currently anticipated due to any number
of factors, including such variables as new information
regarding recoverable reserves, changes in demand for, and
commodity prices of crude oil and natural gas, legislative,
environmental and other regulatory or political changes,
competition in areas where the Company operates and other
factors discussed in this summary.
Basis of Presentation
BOE Presentation – The term barrels of oil equivalent (BOE) or
billions of cubic feet of gas equivalent (Bcfe) may be
misleading, particularly if used in isolation. A BOE or Bcfe
conversion ratio of 6 Mcf: 1 Bbl is based on an energy
equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. All BOE conversions in this report are derived by
converting gas to oil in the ratio of six thousand cubic feet of
gas to one barrel of oil.
Canada
45
2450, 500 - 4 Avenue SW Calgary, Alberta T2P 2V6
Telephone 403.237.5163 Facsimile 403.237.5256
Website www.forteresources.ca Email forte@forteresources.ca
CORPORATE PROFILE
November 2004
TSX: FRZ
Forte’s Game Plan
• Achieve consistent growth
• Continue with the current record of success
• Build through the drill bit and strategic acquisitions
• Light oil production
• Explore for natural gas and impact gas
Forte Resources is a Calgary-based
junior oil and gas exploration and
production company focused on
adding shareholder value through
development of properties in the
Western Canadian Sedimentary Basin.
Forte’s Track Record
Capitalization
FRZ
$3.52 (Nov. 30, 2004)
35,591,000
38,153,000
1,341,000
1,221,000
7.5%
$4.00
Share Price
Share price
Shares outstanding (basic)
(diluted)
Convertible performance shares
Share purchase options
Management ownership
$5.00
Forte Energy
$3.00
$2.00
Forte Oil/
Forte Resources
$1.00
$0.00
1997
Recent Highlights
1998
1999
2000
2001
2002
2003
2004
• Forte announced a bought deal financing to issue 1.5 million flow-through shares at $4.30 per share closing December 16, 2004.
• Forte planned an aggressive drilling program for the second half of 2004. To date, six wells have been completed.
• The acquisition of Oiltec Resources Ltd. on June 23, 2004 added 1,200 boe/d of production, two new core exploration areas and an
addition of 4.4 million boe of proven plus probable reserves.
• Forte Oil Corporation acquired the oil and gas assets of Denison Energy Inc. in March of 2004, adding 500 boe/d of production and
reorganizing as Forte Resources Inc.
Three months ended September 30,
FINANCIAL ($000s except per share data)
Oil and Gas sales
Cash flow from operations
Per share - basic
Net income (loss)
Per share - basic
Capital expenditures (excluding acquisitions)
Net debt
Average shares outstanding
Shares outstanding end of period
OPERATIONS
Daily production
Oil and NGLs (bbls/d)
Natural gas (mcf/d)
Barrels of oil equivalent (boe/d)
Average sales prices
Oil and NGLs ($/bbl)
Natural gas ($/mcf)
Nine months ended September 30,
2004
2003
% Change
2004
2003
% Change
12,963
6,208
0.17
408
0.01
5,952
30,133
35,539
38,137
5,591
2,364
0.14
(453)
(0.03)
2,178
12,881
16,399
19,507
132
162
21
190
133
173
134
26,464
11,821
0.45
370
0.01
9,337
30,133
24,721
26,480
13,476
5,763
0.35
106
0.01
18,878
12,881
16,399
19,507
96
105
29
249
2,071
5,890
3,053
1,288
2,073
1,634
61
184
87
1,703
3,775
2,332
1,102
957
1,263
48.95
39.34
24
41.98
38.91
8
6.71
5.39
24
6.65
4.96
34
(51)
134
55
294
85
Barrels of oil equivalent (boe) are reported with a 6:1 conversion with six mcf=one boe
46
Building Through The Drill Bit
LAPRISE, BC
• 11 firm and 14 contingent locations
• 40% working interest
• Targeting Baldonnel, Bluesky and Coplin prospects
• Major 3D seismic program
PEACE RIVER ARCH, AB
• Six firm locations and seven contingent locations
• 55-100% working interest
• Halfway, Montney and Banff formations
WEST CENTRAL, AB
• Three firm and 10 contingent locations
• Targeting Rock Creek and Belloy formations
Production
boe/d quarterly
Cash Flow
CENTRAL, AB
• Six firm and five contingent locations
• Targeting Ellerslie, Basal Quartz and Bruderheim
formations
• Horizontal drilling
($000)
3,500
$7,000
3,000
$6,000
2,500
$5,000
An Impact Gas Explorer
2,000
$4,000
1,500
$3,000
SOJER, BC
• Slave Point well drilling
• 20% interest
• Analogous well produces 25 mmcf/d
1,000
$2,000
500
$1,000
0
WEBSTER, AB
• One firm, two contingent locations
• Seismically controlled
• Analagous pool producing 40 mmcf/d
• 55% interest
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3
2003
2004
Q1 Q2 Q3 Q4 Q1 Q2 Q3
2003
2004
Directors
Management
Doug N. Baker
• President & CFO, Forte Resources Inc.
James S. Blair
• President & CEO, ExAlta Energy Inc.
W. Peter Comber
• Managing Director,
Barrantagh Investment Management Inc.
Gregory S. Fletcher
• President, Sierra Energy Inc.
R. Bruce Hammond
• Senior VP & COO, Forte Resources Inc.
Thomas J. MacKay
• Chairman & CEO, Forte Resources Inc.
David V. Richards
• Managing Director, Network Capital Inc.
Glen D. Roane
• Independent businessman
Thomas J. MacKay
• Chairman & CEO, Director
Doug N. Baker
• President & CFO, Director
R. Bruce Hammond
• Senior VP & COO, Director
Christine Robertson
• VP Engineering
Bankers
ATB Financial
3rd Floor, 239 8 Avenue SW Calgary, AB T2P 1B9
Legal Counsel
Burnet, Duckworth, and Palmer, LLP
Auditors
Deloitte and Touche, LLP
Transfer agent and Registrar
Computershare Trust Company of Canada
Reserves Evaluation Consultants
Sproule Associates Limited
TSX: FRZ
CORPORATE PROFILE
November 2004
47
Three
years ago we became a full-cycle exploration company. Months later we drilled a huge gas
discovery, in an area that was abandoned decades before. Since then, we’ve drilled a number of new
pool discoveries. Our team has opened up three more exploration areas. Our drilling success rate in
2003 was 73%. In the first three quarters of 2004 we achieved an 84% drilling success rate. Our
team keeps going. Diligence pays off.
Reserves (proved & probable, mboe)
Annual Revenues ($000s)
Five-year
Stock Chart
52 week low/high: $1.71/$3.54
As of November 30, 2004
48
Production(boe, 6:1 conversion)
Cash Flow per Share ($)
PRINCESS CORE AREA
PRINCESS CORE AREA
Tide Lake
Princess/Bantry
•
50-100% working interest in 41 sections
with the majority Gentry-operated
•
77% average working interest in 166
sections; Gentry operated
•
Eight wells drilled in 2004, three more
planned by year-end
•
Highly productive Mississippian and
Devonian reservoirs
•
Cretaceous, Mississippian and Devonian
reservoirs
•
Pekisko oil battery planned by January 15,
2004. Possible second battery in 2005
•
Ten wells planned for 2005
•
•
20 sq. km of 3D seismic shot in 2004, 30
sq. km planned for 2005
Four wells drilled in 2004, four more planned
by year-end.
•
20 wells planned for 2005
SEDALIA CORE AREA
WHITECOURT CORE AREA
•
75% average working interest in 115
sections, all Gentry-operated
•
20-50% working interest in 48 sections
•
•
14 wells drilled in 2004, ten successful.
Three more planned by year-end
Multi-zone gas potential at depths of 400 to
2000 meters
•
•
Low-risk, quick cash flow wells
Eight wells drilled in 2004 with six
successful
•
10 wells planned for 2005
•
Five wells planned for 2005
•
15 sq. km of 3D shot in 2004, with 30 sq
km planned for 2005
•
10 sq. km. 3D program planned for 2005
Listing: Toronto Stock Exchange; “GNY”
Shares outstanding:
Basic – 33,942,757
Fully diluted – 36,937,757
Production: 1,785 boe/d average 2003
2,550 boe/d current production
3,000 boe/d exit rate 2004
Reserve life index: 8.9 years (oil)
7.0 year (gas)
2500, 101 – 6 Avenue SW
Calgary, AB T2P 3P4 CANADA
Ph: (403) 263-6161
Fax: (403) 266-3069
Website: www.gentryresources.com
Current Debt to Fwd Year’s Cash Flow: 1.2:1
52 week low / high: $1.71 / $3.54
BOARD OF DIRECTORS
MANAGEMENT TEAM
Hugh G. Ross, B.A.
President & C.E.O
21 years
A. Bruce Macdonald, B.Sc.
President, Stoneyfell Investment
Director since 1995
Ketan Panchmatia, B.Mgt., CMA
V.P. Finance & C.F.O.
14 years
Michael Halvorson, B.Comm.
President, Halcorp Capital
Director since 1994
R. Gordon McKay, B.E.S.
V.P. Exploration & C.O.O.
23 years
Walter O’Donoghue, Q.C.
Partner, Bennett Jones LLP
Director since 1998
Cameron Fraser, M.B.A.
Manager, Land & Negotiations
23 years
George Hawes, B.B.A., C.A.
President, G.T. Hawes & Co.
Director since 1999
Robert Poole, B.Eng.
Operations Manager
23 years
Hugh G. Ross, B.A.
President & C.E.O, Gentry Resources
Director since 1988
George Magarian, B.Sc.
Exploration Manager
21 years
49
Corporate Profile
November 2004
Great Plains Exploration Inc. is a Calgary, Alberta based oil
and natural gas company launched in June 2004. Great Plains
will grow from corporate acquisitions and will create value from
full-cycle exploration.
The Great Plains Team Has A
Proven Track Record In:
• Identifying and executing corporate acquisition
opportunities
• Generating growth from full-cycle exploration
Corporate Strategy
• Growth from corporate mergers and acquisitions;
• Providing shareholders with opportunities for
liquidity and profitable monetization
Who We Are
• Value-creation through drilling and exploitation;
• Operating focus through profitable rationalization;
• Conservative capital structure with low debt-to-cash-flow ratios; and
• Maximization of shareholder value through timely monetization.
Stephen P. Gibson, President & CEO
Formerly Rider Resources & Probe Exploration
Thomas K. Rouse, VP Finance & CFO
Formerly Rider Resources, Petrorep & Amoco
Carlos Salas, VP Exploration
Formerly EnEx, Berkley Petroleum & Shell Canada
Great Plains At a Glance
• GPX launched June 11, 2004 on the TSX
• Top-notch multi-disciplinary team all of whom are invested in
GPX
• Current production of 825 boe/d, a 65% increase from initial
base of 500 boe/d; 86% weighted to natural gas
• Reserve base of 1.7 mmboe, 83% weighted to natural gas, 6.8 year
reserve life index
• 180,000 acre net undeveloped land base, with two-year prospect
inventory
• Moved land program ahead with $1.0 MM of acquisitions in core
areas plus farm-in activity
• Established $14 MM bank line, recently increased to $22 MM
• Implemented internal systems and controls appropriate for a
growth-oriented company
Robert R. Padget, VP Engineering & Operations
Formerly Seventh Energy & Encal
Randall Faminow, VP Land
Formerly EnEx, Rider Resources & Enerplus
Recent Highlights
• Increased fourth quarter capital expenditure
program from $3.0 MM to $7.8 MM, including
$4.4 MM for drilling/completion of 13 gross
(7.5 net) wells
• Expanded Peace River Arch operating base
through $1.5 MM acquisition of assets in Altares
area, NE BC, adding an average 30% interest in
four wellbores, 20,000 acres of land and a 400,000
acre Area of Mutual Interest
• Established new reserves in all operating areas
Q4 2004 Cap. Ex.
$7.8 MM
GPX Completes First Acquisition
• Great Plains acquired Energy Explorer (EnEx) for $12.9 MM
(9.6 MM GPX shares, $2.8 MM cash) in September 2004
• 200 boe/d production; 509 mboe of reserves valued at $5.3 MM;
$6.0 MM cash; $4.4 MM tax pools; 14,474 net undeveloped acres
valued at $1.6 MM
• Transaction designed primarily to provide access to higher
impact prospect inventory in the Peace River Arch
50
Facilities
$1.2 MM
Exploratory
Drilling
$3.5 MM
Land
$2.1 MM
Seismic
$0.1 MM
Development
Drilling
$0.9 MM
2005 Proposed Capital Expenditure Budget
GPX and EnEx Combined
$14.0 MM
Facilities
$1.6 MM
• Preliminary 2005
budget is in process
and does not include
acquisition activities
Exploratory
Drilling
$3.7 MM
Land
$2.0 MM
Seismic
$0.9 MM
• Includes the drilling
of 45 gross (25 net)
wells
Development Drilling
$5.8 MM
Great Plains’ capital
expenditure program
includes a full spectrum
of low, medium and high
risk prospects, employing
internally generated
prospects as well as
non-operated projects
with established industry
partners.
Peace River
Arch
Edmonton
Hamilton
Lake
SW
Sask.
Operational & Financial Highlights
Realizations ($/boe)
0.27
0.23
0.19
0.15
0.11
700
0.32
0.27
0.23
0.18
0.14
800
Proved
Probable
1,407
379
15,780
2,916
Total
1,787
18,696
Reserves are evaluated by GLJ, effective Jan. 1, 2004
Price Deck: US $29.00 WTI, Cdn $5.85 per mcf
Donald K. Charter
President & CEO, Dundee Securities Corp.
Stephen P. Gibson
President & CEO, Great Plains Exploration Inc.
Donald R. Leitch
Partner, Carscallen Lockwood LLP
Julio Poscente
Chairman & CEO, Eurogas Corporation
Share Information
Toronto Stock Exchange: GPX
Number of Shares Outstanding
Basic:
26,602,662
52 Week Trading Range: $0.90 - $1.40
Directors and management own or represent
approximately 41%
Cash Flow Per Share Matrix ($)
0.23
0.19
0.16
0.12
0.09
600
NPV 10%
Before Income Taxes
($M)
William A. Bell
President, Bellport Resources Ltd.
• Multi-zone potential
• Year-round access
• Reasonable transportation availability and
production infrastructure
50
45
40
35
30
Total Oil
Equivalent
(mboe)
Garth A.C. MacRae, Chairman of the Board
Director & Former Vice Chair, Dundee Bancorp
Great Plains’ core areas generally exhibit:
Calgary
Reserve
Category
Directors
Property Overview
Pembina
Reserve Volumes and Values
0.37
0.31
0.26
0.21
0.16
900
0.41
0.36
0.30
0.24
0.18
1000
0.46
0.40
0.33
0.27
0.21
1100
Daily Production (boe)
Corporate Info
Bankers:
National Bank of Canada
Engineers:
Gilbert Laustsen Jung Associates Ltd.
Auditors:
KPMG LLP, Chartered Accountants
Netbacks $/boe (Three Months Ended Sept. 30, 2004)
Oil & Gas Revenue
Royalties
Production Expense
Operating Netback
Other Income
General & Administrative Expense
Interest Expense
Current Income Tax
Cash Flow Netback
40.05
(6.76)
(8.93)
24.36
0.09
(6.17)
(0.21)
(0.17)
17.90
440, 333 5th Avenue S.W., Calgary, Alberta T2P 3B6
Tel: (403) 262-9620 Fax: (403) 262-9622
www.greatplainsexp.com
51
Corporate profile | December 2004
Purcell Energy is a dynamic Canadian junior oil and gas exploration
and production company. Purcell stands out as one of the few companies
its size with significant exposure to high-impact full-cycle exploration
targeting deep natural gas pools. Building on the strength of its Fort
Liard natural gas discovery in the Northwest Territories, Purcell is actively
broadening its production base and seeking growth through exploration.
Core Areas
Drilling Success Precedes Production Gains: Purcell continued to execute its
development-drilling program in the third quarter of 2004. The Company achieved an 84
percent net drilling success rate in the first nine months and an 83 percent net success rate
in the third quarter of 2004. The Company drilled a total of 28 wells (11 net) in the first
nine months and 12 wells (5.3 net) in the most recent quarter. Further success continued
after the end of the quarter with completion of four gas wells (2.2 net), one of which in
Pembina tested at restricted rates over five mmcf/d (2.5 mmcf/d net) of gas that should be
tied in by the second quarter of 2005.
FORT LIARD
MILO/CLARKE LAKE
RAINBOW
TENAKA
Operating and Financial Highlights (Quarterly)
BLUEBERRY
EDSON/PINE CREEK
PEMBINA
($000s, except per share amounts)
DORIS
PIGEON LAKE
PENHOLD
TURIN
WEYBURN
MINTON
Revenue (net)
Cash flow*
Per share, diluted
Net income (loss)
Per share, diluted
Net Debt
Production
Natural Gas (mmcf/d)
Oil & Liquids (bbls/d)
Equivalent (boe/d)
Q3 2004
11,488
5,878
0.118
(688)
(0.014)
12,870
74,081
Q2 2004
12,098
6,445
0.130
261
0.005
5,298
66,585
Q1 2004
13,231
8,241
0.165
2,885
0.058
18,481
67,854
Q4 2003
12,367
6,343
0.132
(1,623)
(0.034)
8,819
56,794
Q3 2003
9,025
4,538
0.135
525
0.016
5,252
60,795
20.67
1,123
4,568
21.84
1,070
4,710
23.17
980
4,842
26.62
1,209
5,656
19.97
760
4,088
* Adjustments of certain accounting estimates made in Q1 2004 had the effect of reducing Q2 cash flow by approx. $670,000.
A Solid Base
• Eight key producing properties
• 329,000 net acres of undeveloped land
• Repositioned with more year-round access and company-operated properties
Fort Liard, NWT - The new operator at Fort Liard has been moving quickly to increase production from this core area. The 2M-25 well was placed on
production in late October. Also in October, the operator completed a workover of the 2K-29 well. A workover of M-25 was completed in September and
the well was brought back on production in late October. The M-25 well had been shut-in since January 2004 pending pipeline repairs that were completed
in August. A scheduled workover of the K-29 well should be completed in December. Once all of the wells are on production, Purcell expects net production
to be about 1,700 boe/d compared to 1,400 boe/d in the third quarter.
Pembina, AB - Purcell has enjoyed excellent drilling success in the Pembina area. A total of 10 gas wells and only one dry hole have been drilled in this
expanding core area since 2003. The Company recently drilled a 50 percent interest offset well. The well tested over 24 hours at restricted rates over 5
mmcf/d. Tie-in will occur in the first half of 2005. In October, Purcell drilled another successful Pembina well encountering three potential gas zones. The well
has been completed and the first zone tested at rates over one mmcf/d. Several other recent gas discoveries at Pembina are tied in or at various stages of
being tied in. The Company has working interests ranging from 30 percent to 50 percent in approximately 16,100 gross acres (7,100 net acres).
Pigeon Lake, AB - The Company completed a pipeline and recently tied in production from three wells drilled last summer following up the original discovery
well. A test of the prospective Glauconitic zone in the original well exceeded 4 mmcf/d. This zone appears to have good aerial extent. Purcell expects initial
net production for the new wells of about 400 boe/d.
Doris, AB - Current net production to Purcell at Doris is approximately 750 boe/d. During the third quarter, compression equipment was installed to
maintain production levels. Three wells (1.5 net) were drilled late in the third quarter in the southern portion of the greater Doris area known as Barrhead,
resulting in two gas wells (1 net) and one dry hole (0.5 net). Purcell holds working interests ranging from 34 to 56 percent in 122,000 gross acres (61,000
net acres) in the greater Doris area northwest of Edmonton in central Alberta.
52
Purcell's Growth Strategy
Production
1. Exploration - full-cycle - from concept through to drilling
boe/d
bbls of oil & NGLs production
equivalent gas production
(6 mcf = 1 boe)
2. Acquisitions - used to balance exploration risks
3. Technology - used to reduce risk
4. Partnerships - with senior companies offering technical expertise
4,568
4,710
4,088
4,842
5,656
5. Financing - prudent combination of debt and equity used to finance growth
3,774
3,340
Q3 04
Q2 04
Q1 04
Q4 03
Q3 03
Q2 03
Q1 03
Cash Flow
$ per share (basic)
$ million
0.82
Management Team
Name
Title
Jan Alston, B.A., LL.B
Bruce Murray, B.Comm.
Terry Lindquist, B.Comm., C.A.
Rick Fedoruk, M.Sc., P.Geol.
Lawrence Backmeyer, B.Sc., P.Eng.
Mike Lambros, B.A.
John Emery, B.Sc., P.Eng.
President & CEO
Chief Operating Officer
Chief Financial Officer
VP, Exploration
VP, Engineering
VP, Land
Manager, Engineering Operations
22
23
28
24
23
23
20
Analyst Coverage
Directors
Brian Kristjansen, Dundee Securities
Stephen Calderwood, Raymond James
Josef Schachter, Maison Placements Canada
Memet Kont, Jennings Capital Inc.
Jim Welykochy, Acumen Capital Partners
Bruce Lazier, ISPYOIL, LLC.
Jan Alston, B.A., LL.B.
Bruce Murray, B.Comm.
John Niedermaier, B.Sc., P.Eng.
Owen Pinnell, P.Eng.
Murray Todd, B.Sc., P.Eng.
Harry Wheeler, B.Sc.
Ronald Will, B.Sc. (Chairman)
Reserves (NI 51-101) (Jan.1, 2004)
Net Asset Value (Dec. 31, 2003)
0.73
Oil &
NGLs
(mbbls)
Natural
Gas
(mmcf)
Total
(mboe)
Proved
2,860
65,425
13,764
Proved plus
probable
3,583
91,441
18,823
0.62
0.55
21.2
20.7
10% NPV reserves, plus land
and seismic value, less net debt
Net asset value
$ 167.4 million
Per share - basic
$3.34
Per share - diluted
$3.34
14.7
17.9
0.09
Years Experience
Common Shares - TSX.PEL (Q3-2004)
2.0
99
00
01
02
03
Q3 weighted average - basic
49.7 mm
Q3 weighted average - diluted
49.8 mm
Insiders & Associates - basic
~8%
Institutions (estimate) - basic
~ 30 %
Public Float
~ 62 %
Corporate profile | December 2004
Jan Alston, President & CEO
2810, 605 - 5 Avenue SW Calgary, Alberta T2P 3H7
Tel: 403.269.5803 Fax: 403.264.1336
Email: info@purcellenergy.com
Web: www.purcellenergy.com
53
TSX-V : RSX
PAGE ONE
Corporate Profile | November 2004
RSX Energy Inc. is committed to increasing shareholder
value by using technical expertise to develop oil and gas
reserves through acquisitions and drilling.
HIGHLIGHTS
36 well (17.5 net) fall and winter drilling
program
AREAS OF OPERATION
RSX has increased its fall 2004 and winter 2005 drilling budget from 32 to
36 gross wells (17.5 net) based on early drilling success in two core areas.
A total of 20 exploration wells (9.85 net) are planned to be drilled with the
remaining 16 wells (7.65 net) classed as development.
12 prospect areas, 7 operated by RSX
Randell, AB
• 50% working interest in 8.5 sections
• Gilwood Sand - light sweet oil
• 200 to 300 bbls/d initial production per well
• 4 to 6 well winter drilling program
Capex budget $15 mm for Oct 01/04 to
April 30/05
$7.7 mm “E”, $4.7 mm “D”
Otter, AB
• 17.5 to 50% working interest in 17 sections
• Light sweet crude
• Extensive 3D seismic data over the area
• 3 to 5 well winter drilling program
Combination of development drilling,
low risk exploration and high impact,
high potential prospects
Bezanson, AB
• 100% working interest in 10 sections
• 5 mmcf/d gas plant
• 2 to 3 locations in winter 2005
Targeting Exit April 2005 with production
of 2,100 to 2,300 boepd, 50/50 mix of
oil and natural gas
Cash Flow Per Share
Average Production
(boe/d)
Gold Creek, AB
• Multi-zone gas and NGLs
• 2 recent gas discoveries
• 2 to 3 well development program
Karr, AB
• 98.33% working interest in 1 section
• Dunvegan oil, light sweet crude
• Infill development to 80 acre spacing
• 1.76 mmbbls in place
Willesden Green, AB
• Multi-zone gas potential
• 3 recent Rock Creek gas discoveries
• 13 well deep and shallow gas development
program
54
PAGE TWO
FINANCIAL AND OPERATING HIGHLIGHTS
FINANCIAL ($000s except per share
data)
Petroleum and natural gas sales
Cash flow from operations
Per share - basic
Net income
Per share - basic
Working capital (deficiency)
OPERATIONS
Average daily natural gas (mcfd)
Average daily oil and NGLs (bbls/d)
Average daily oil equivalent (boe/d)*
2004
2003
% Change
2004
2003
% Change
$3,054
1,396
0.04
348
0.01
2,007
$1,449
802
0.03
273
0.01
1,820
111
74
33
27
10
$9,477
4,556
0.13
984
0.03
10,307
(9,443)
$4,762
2,454
0.09
961
0.03
8,299
(3,171)
100
86
44
2
24
198
1,177
481
677
743
296
420
58
63
61
1,353
534
759
879
277
423
54
93
79
*Barrels of oil equivalent (boe) are reported with a 6:1 conversion with six mcf=one boe
CAPITALIZATION
Share price (Nov.29, 2004) $1.50
Growth
Shares Outstanding
Basic
42.0 million
Diluted 45.0 million
through the drill bit
RSX Energy Inc.
Suite 1030, 407 – 2nd Street SW
Calgary, Alberta T2P 2Y3
Management & Directors
Basic
13%
Diluted 17%
DIRECTORS
MANAGEMENT TEAM
James H. Coleman
Lee Baker
Partner, MacLeod Dixon LLP
President
Edward G. Smith
Rene Levesque
The Woodman Financial Group Inc.
VP Exploration
Ian Fergusson
Dave England
Principal, Camcor Capital Inc.
VP Development
Mike Rose
Mike Charles
President & CEO, Duvernay Oil Corp.
VP Land
Lee A. Baker
Wayne Fast
President, RSX Energy Inc.
VP Operations
John Polnick
VP Finance
Telephone: (403) 266-0600
Fax: (403) 266-0604
w w w. r s x e n e r g y. c o m
TSX-V : RSX
Daryl Zemek
Corporate Profile | November 2004
Controller
55
56
57
as at Nov 26, 2004
Corporate Profile, Strategy and Objectives
* True is a Calgary based junior oil and gas exploration and production company focused on Alberta and Saskatchewan.
* True is focused on value-added exploration & exploitation, enhanced by complimentary acquisitions.
* True targets a maximum net debt to historical cash flow of 1.3x.
Current Snapshot
* Current production:
* 2005F average production:
* 2004F drilling
* Undeveloped land (Sept 04):
6,100 boe/d
6,600 boe/d
92 (77.7 net) wells
291,700 net acres;
Common Share Information
Basic shares outstanding
(avg.price $1.31/ sh.)
Options
Total diluted
Directors and officers (diluted shares)
61,922,979
4,083,567
66,006,546
14%
weighted 68% gas
141,150 Saskatchewan & 150,550 Alberta
TSX: "TUI"
$1.30 - $3.25
$3.04
$201
$212
Share price: 52 week trading range:
Share price: 10-day wtd. avg. price, ending Nov 23/04:
Market capitalization (mm): $ $3.04/ FD share
Enterprise value (at Sept 04) (mm):
Key Growth Parameters
Production (BOE/d)
Cash Flow from Operations
($mm)
$33.0
Oil
3,003
$15.8
$1.1
2000
1,880
2001
2002
3.0
2,042
0.9
$5.9
$4.2
Net Debt to Cash Flow
Ratio
4.1
3.4
5,000
Gas
354
2003
2004F
2000
2001
2002
2003
2004F
2000
2001
2002
2003
0.8
2004F
Four Year Comparative
2004F
2003
2002
% change
2001
1,625
20.25
5,000
32% / 68%
32.50
41.50
6.45
5.90
0.76
20.00
6.00
1.90
300
n/a
92
77.7
n/a
1,192
10.87
3,003
40%/ 60%
26.93
31.10
6.51
5.50
0.72
18.15
7.44
2.47
218
7,127
45
29.5
91%
809
7.40
2,042
30%/ 70%
27.36
26.13
4.05
3.36
0.64
12.60
6.87
2.86
153
6,041
38
17.8
74%
47%
47%
47%
-2%
19%
61%
64%
12%
44%
8%
-14%
42%
18%
18%
66%
23%
566
7.89
1,881
30%/ 70%
20.61
25.93
4.81
4.05
67.5
33.0
0.54
8.4
0.14
n/a
n/a
56.00
24.5
4,900
0.8
37.6
15.8
0.32
4.3
0.09
12.49
1.19
20.04
14.5
4,815
0.9
19.0
5.9
0.16
0.2
0.01
8.78
1.10
18.8
19.9
9,742
3.4
98%
167%
100%
2050%
800%
42%
8%
7%
-27%
-51%
-73%
OPERATIONAL
Production Oil and NGLs
Natural Gas
Total (6:1)
Oil/ gas ratio
Prices
Oil and NGLs - True
WTI
Natural Gas - True
NYMEX
Exchange
Per BOE
Operating netback
Operating expenses
General and administrative
Undeveloped land (net)
Reserves (proved and probable)
Drilling
Gross
Net
Success rate
FINANCIAL
(mmcf/d)
(boed)
(C$/ bbl)
(US $/bbl)
(C$/ mcf)
(US$/ mcf)
($/ boe)
($/ boe)
($/ boe)
(000's acres)
(mboe)
10.83
7.23
2.37
116
4,065
25
19.2
80%
($ mm, except per share amounts)
Revenue
Cash flow from operations
Per share - diluted
Net earnings (loss)
Per share - diluted
Finding and development costs
Net asset value (PV 10%)
Net debt (net of working capital)
Net debt per boed
Net debt to historical cash flow
58
(bbls/d)
($/share)
($/share)
($/ proved boe)
($/ basic share)
($/ boed)
18.1
4.2
0.21
(19.3)
(0.99)
17.03
0.69
37.8
17.2
9,100
4.1
Core Areas
Currently producing 6,100 boe/d, approximately 68% gas, 29% heavy oil, and 3% light oil and liquids. At Sept 30, 2004 - 291,700
net undeveloped acres. By Sept 30, 2004 drilled 66 (55.0 net) wells at 90% net success. True anticipates drilling 92 (77.7 net)
wells in 2004.
ALBERTA
Currently producing 1,000 boe/d, 95% gas. At Sept 30, 2004 - 150,550 net undeveloped acres. By Sept 30, 2004 drilled 15 (7.0
net) wells, anticipates drilling 22 (12.2 net) wells in 2004.
Doris
> True holds working interests ranging from 44% to 67% at Doris, plus an interest in two under-utilized gas plants.
> In 2003, Doris produced an average of 154 boe/d, weighted 98% natural gas.
> In 2004, True drilled three wells and tied in three other stranded gas wells.
> Current production averages 337 boe/d.
Whitecourt
> In 2003 True participated in one successful natural gas well at Goodwin.
> True plan to drill up to six wells at Goodwin, three wells at Thunder and up to 10 wells in the greater Whitecourt area in 2004.
> Current production averages 237 boe/d.
Rosevear
> Rosevear is currently producing 231 boe/d, 87% natural gas wells. In 2003, average production was 368 boe/d.
> With 14 zones contributing to production, the main target zone is the Cretaceous Viking sandstone at approximately 2,000 meters.
> In 2003, True drilled two gas wells, and recompleted two gas wells.
Currently producing 5,100 boe/d, 62% gas. At Sept 30, 2004 - 141,150 net undeveloped acres. By Sept 30, 2004 drilled 51 (48.0
SASKATCHEWAN
net) wells, anticipates drilling 70 (65.5 net) wells in 2004.
Coleville Driver
> Average natural gas production in 2003 was 2,610 mcf/d, or 435 boe/d. Currently producing 8,765 mcf/d.
> The shallow 700 to 825 meter wells produce primarily from the Bakken and Mannville zones
> True owns a natural gas compressor station with dehydration and sweetening capabilities, running close to capacity at current inlet pipeline pressures.
> True drilled three gas wells in 2003 and plan to drill up to nine wells in 2004.
Smiley
> Produces primarily natural gas, along with heavy oil, at depths of 700 to 900 meters from the Viking, Colony, Waseca, Detrital and Bakken zones.
> Production in 2003 averaged 2,069 mcf/d of gas and 105 bbls/d of heavy oil. Currently producing 3,974 mcf/d of gas and 215 bbls/d of heavy oil.
> In 2003, True drilled five gas and five heavy oil wells. In 2004, True have drilled six heavy oil and plan to drill four gas wells at Smiley.
Coleville South
> In 2003 production averaged 299 bbls/d of heavy oil. Current production is 703 mcf/d of gas and 101 bbls/d of heavy oil.
> True drilled one gas well in 2003, and tied in the solution gas from the area heavy oil wells.
> In 2004, True drilled one gas and three heavy oil wells.
Kerrobert
> Currently producing 1,364 bbls/d of heavy oil from the McLaren channel, 150 bbls/d of light oil from the Viking channel and 1,304 mcf/d of gas.
> Heavy oil production averaged 523 bbls/d and light oil averaged 106 bbls/d in 2003.
> In 2003, True drilled 10 light, four horizontal heavy oil, and recompleted two light oil wells. In 2004, True have drilled eight oil and gas wells.
Dodsland/ Druid
> In 2003, production averaged 2,979 mcf/d of natural gas. Current production is 4,932 mcf/d of gas.
> At year end 2003, True have approximately 67,900 net undeveloped acres in the area, of which approximately 43,600 acres are freehold.
> True Energy operates an 89.2% owned 3 mmcf/d capacity natural gas plant with compression, dehydration and liquids extraction capabilities.
> True drilled seven gas wells in 2003, and plan to drill up to 41 wells in 2004, of which eight are yet to drill.
Summary Of Working Interest Reserves (as evaluated by GLJ)
July 1, 2004
January 1, 2004
Gas Oil/ NGLs
Total NPV 10%
Gas Oil/ NGLs
Total NPV 10%
(Bcf)
(mbbls)
(mboe) BIT (mm)
(Bcf)
(mbbls)
(mboe) BIT (mm)
Proved developed producing
Proved non-producing
Proved undeveloped
Total Proved
Probable
Total proved & probable
22.72
7.24
3.92
33.88
13.93
47.81
2,179
155
240
2,574
876
3,450
5,965
1,362
894
8,221
3,197
11,418
78.2
22.4
6.7
107.4
29.9
137.3
16.92
2.29
0.62
19.83
6.29
26.12
1,828
50
2
1,879
895
2,774
4,648
432
105
5,185
1,942
7,127
50.1
3.5
1.4
55.0
12.2
67.2
Reader Cautions:
> The term barrels of oil equivalent (“BOE”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6
mcf/ bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. All BOE conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet
of gas to one barrel of oil.
> This information sheet contains the term cash flow from operations, which should not be considered an alternative to, or more meaningful than, cash flow
from operations as determined in accordance with Canadian generally accepted accounting principals (“GAAP”) as an indicator of the Company’s
performance. The Company presents cash flow from operations per share whereby per share amounts are calculated consistent with the calculation of
earnings per share. The consolidated statements of cash flows in the audited annual and unaudited interim financial statements present the reconciliation
between net earnings and cash flow from operations.
> This information sheet contains forward-looking information. The reader is cautioned that assumptions used in the preparation of such information may prove
to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks,
uncertainties, and other factors, many of which are beyond the control of the Company. The reader is cautioned not to place undue reliance on this forwardlooking information.
Corporate Information
Head Office
TRUE ENERGY INC.
2300, 530 - 8th Avenue SW
Calgary, Alberta T2P 3S8
Telephone: (403) 266-8670
Facsimile: (403) 264-8163
Web site: www.trueenergy.ca
Email: investor.relations@trueenergy.ab.ca
TSX Listing: Symbol "TUI"
Auditor:
KPMG LLP
Legal:
Burnet Duckworth and Palmer
Banker:
National Bank of Canada
Independant Engineer:
Gilbert Laustsen Jung Associates Ltd.
Registrar:
Computershare Trust Co. of Canada
Officers
Paul R. Baay, President and CEO
Clinton T. Broughton, Vice President
Joan E. Dunne, Vice President, Finance & CFO
Brad Maynes, Vice President, Exploration
Directors
W.C Mickey Dunn, Chairman
Kenneth P. Acheson
Paul R. Baay
John H. Cuthbertson
James R. Glass
Robert G. Rowley
Kim M. Ward
59
Trading
Symbol
“VTI”
VETERAN RESOURCES INC.
Strong Growth in 2005 Through Full Cycle Exploration
CORPORATE FACT SHEET
November 30, 2004
2200, 635 – 8th Avenue SW, Calgary, AB T2P 3M3
Website: www.veteranresources.net
Phone (403) 266-3005 Fax (403) 263-2569
E-mail: veteran@veteranresources.net
Corporate Profile
BC
• Veteran Resources Inc. is a Calgary based junior oil and gas exploration
and development company with operations focused in Alberta and
British Columbia.
• The Company applies its technical and operational skills in pursuit of
aggressive growth through full-cycle, internally generated exploration in
selected core areas that have been identified as having significant potential.
AB
Gunnell
100 boe/d
Snowfall
20 boe/d
FORT ST. JOHN
Peace River Arch
Focus Area
Cecil
125 boe/d
• The Company’s land base at October 1, 2004 included 79,000 net
undeveloped acres in Western Canada.
• Four geologists and a geophysicist have identified over $60 million in
projects in the Company’s three main core areas; the Peace River Arch and
Kessler areas of Alberta and Gunnell, B.C.
Little Horse
EDMONTON
80 boe/d
Vega
Watch/Plante
25 boe/d
115 boe/d
Provost
CALGARY
80 boe/d
Highlights
• Current production of 600 boe per day
Barons
• Estimated 2004 exit production of 900 boe per day increasing to 1,900 boe
per day for 2005.
• $16 million capital program approved for 2005, funded internally and
through bank debt.
• Drilling program for 2005 totals 30 wells (21.4 net wells) of which Veteran will operate
60 percent.
25 boe/d
Average Daily
Production
(boe per day)
1,300-1,400
• Large land position of 123,000 net undeveloped acres.
• Significant Peace River Arch land position of 24,000 net undeveloped acres under
Veteran control.
• High quality tax pools totaling $25 million at September 30, 2004, of which $10 million
are available for write-off at 100 percent.
2005 Estimate
Production Volumes
average
exit
Funds from Operations
per common share fully diluted
Net Income
per common share fully diluted
Pricing Assumptions
Oil WTI
Natural Gas
Foreign Exchange
60
$16 million
1,300 – 1,400 boe per day
1,900 boe per day
$12 – $13 million
$0.19 – $0.21
$3.0 – $3.5 million
$0.05– $0.06
US $40.87 per bbl
C$7.00 per mcf
C$1.00 = US$0.78
575-600
329
193
02
03
04
est.
05
est.
Financial and Operations Highlights to September 30, 2004
2004
2003 Change
2004
2003 Change
(Restated)
(Restated)
FINANCIAL (unaudited)
Oil and natural gas revenues
$ 2,415,500
$ 802,863
201%
$ 6,566,625
$ 3,229,449
103%
Funds from operations
Per common share – basic
Per common share – diluted
$ 1,187,555
$
0.02
$
0.02
$ 353,277
$
0.01
$
0.01
236%
$ 3,130,765
$
0.05
$
0.05
$ 1,337,869
$
0.03
$
0.03
134%
Net earnings
Per common share – basic
Per common share – diluted
$
$
$
328,815
0.01
0.01
$ 105,472
$
–
$
–
212%
$
$
$
$
$
$
460,398
0.01
0.01
(26%)
Capital expenditures, net
$ 1,640,250
$ 573,662
186%
$ 5,541,440
$ 3,118,773
78%
Working capital (deficiency), including
bank loan
$ (5,264,440)
$
1,759,999
(399%)
Shareholders' equity
$ 22,365,517
$ 16,249,205
38%
1,813
217
26
545
997
88
19
273
82%
147%
36%
100%
7.36
42.71
38.15
(7%)
13%
11%
OPERATIONS
Average daily sales
Natural gas (mcf per day)
Crude oil (bbl per day)
Natural gas liquids (bbl per day)
Barrels of oil equivalent (boe per day)
Average sales price
Natural gas (per mcf)
Crude oil (per bbl)
Natural gas liquids (per bbl)
1,969
216
33
577
$
$
$
6.79
52.58
46.41
$
$
$
836
85
15
239
136%
154%
121%
141%
5.82
40.30
33.00
17%
30%
41%
$
$
$
340,259
0.01
0.01
6.82
48.38
42.18
$
$
$
SHARE CAPITALIZATION
As at November 1, 2004
BASIC
57.9 million shares (16% insiders)
Warrants
5.0 million
($0.40 – $0.90; expiring in 2005)
Stock Options
4.4 million
($0.30 – $1.01)
FULLY DILUTED
67.3 million shares (26% insiders)
DIRECTORS
OFFICERS
Derrick R. Armstrong
Larry J. Comeau
Donald Jewitt
Philip J. Loudon
Ken S. Woolner
Philip J. Loudon, President & CEO
Dave M. Bardwell, VP Exploration
J. Peter Henry, VP & CFO
Ivan M. Wytrychowski, VP Operations
M. Brady Webb, VP Engineering
61
December 2004
www.zapata.ca
C O R P O R AT E
ZAPATA
Energy Corporation
TSX-V : ZCO
PROFILE
STOCK CHART (as of December 1, 2004)
Z
APATA ENERGY CORPORATION
is a junior public Canadian resource
corporation with production, operations
and petroleum and natural gas rights in
Alberta and B.C. Financially sound and
conservatively managed, the corporation
continues to develop its diversified asset
portfolio by thoroughly evaluating riskreward potential.
Trading Symbol (TSX Venture) :
ZCO
Share Price (Close Nov. 30/04) :
$15.70
Basic Shares Outstanding :
8,037,922
Diluted Shares Outstanding:
8,662,922
Market Capitalization :
$126 million
3,500
PRODUCTION
3,000
Q3 RESULTS
(boe/d)
2,500
Three months
ended Sept. 30
2004
2003
Production sales in the third quarter of 2004 averaged 3,121 barrels
of oil equivalent per day, a 60 percent increase over the same period
in 2003. Zapata’s production consists of 42 percent oil, 53 percent
natural gas and five percent natural gas liquids.
FINANCIAL
2,000
1,500
1,000
(000 unless otherwise noted)
Net Revenue
Cash Flow
Per share (basic)
Per share (diluted)
Net Earnings
Per share (basic)
Per share (diluted)
Bank Debt
Working Capital Deficiency
Shares Outstanding
(weighted average)
Basic
Diluted
$ 9,781
6,029
0.75
0.70
2,672
0.33
0.31
7,395
23,050
5,435
8,030
8,648
$ 4,789
1,648
0.20
0.20
1,295
0.17
0.16
4,599
13,000
6,832
7,755
8,258
500
Production Mix
42% Oil
0
99 00 01 02 03 04 04 04
Q1 Q2 Q3
5% NGL
53% Natural
Gas
NAV @
10% discount
($000s)
NET ASSET VALUE
Zapata trades near its net asset value per share based on 2003 yearend reserves. As at December 31, 2003, management estimated
Zapata’s net asset value to be $118.7 million discounted 10 percent.
The corporation’s net asset value per basic share was $14.79 at the
end of 2003 based on Sproule’s April 1, 2004 price forecasts.
150,000
15.00
$ per share
(diluted)
120,000
12.00
90,000
9.00
60,000
6.00
30,000
3.00
0
0.00
99
OPERATIONAL
Natural Gas Sales (mcf/d)
Average Sales Price ($/mcf)
Field Netback ($/mcf)
Oil Sales (bbls/d)
Average Sales Price ($/bbl)
Field Netback ($/bbl)
NGL Sales (bbls/d)
Average Sales Price ($/bbl)
Field Netback ($/bbl)
Total Sales (Boe/d at 6:1)
Average Sales Price ($/boe)
Field Netback ($/boe)
62
9,816
6.33
3.55
1,321
46.18
25.38
164
43.90
30.87
3,121
41.76
23.54
5,602
5.76
3.46
901
32.59
13.96
120
32.58
24.10
1,954
30.84
17.20
00
01
02
03
12000
9000
RESERVES
Zapata’s gross proved plus probable reserves, evaluated by Sproule
Associates Limited, increased significantly in 2003 to 10.7 mmboe
as at December 31, 2003, from 7.5 mmboe at year end 2002.
6000
3000
0
99
00
01
02
03
December 2004
www.zapata.ca
C O R P O R AT E
TSX-V : ZCO
PROFILE
2003 SALES BY AREA (Numbers may not add exactly due to rounding)
Gas
mcf/d
1,427
2,654
716
566
621
176
6,160
West Central Alberta
South East Alberta
East Central Alberta
North West Alberta
NE BC/Northern Alberta
Minor Properties
TOTAL
Oil/NGL
bbls/d
82
47
629
15
132
16
922
Total
boe/d
320
489
748
109
236
45
1,948
2003
%
Sales
16%
25%
38%
6%
12%
2%
100%
Gas
mcf/d
950
3,184
122
111
263
123
4,753
Oil/NGL
bbls/d
78
39
143
2
10
32
304
Total
boe/d
236
570
163
20
54
53
1,096
2002
%
Sales
22%
52%
15%
2%
5%
5%
100%
LAND
DRILLING PROGRAM
As of mid-November, 2004, Zapata’s field estimated production was averaging 3,500 boe/d.
Zapata expects to drill up to 20 (18.8 net) wells in the fourth quarter as part of an aggressive
drilling program. With additional wells being brought onstream, Zapata anticipates production
to reach more than 4,000 boe/d during the first quarter of 2005. The corporation has more than
100 additional drilling prospects to exploit.
IN 2003, ZAPATA ADDED TO ITS LAND
BASE, INCREASING its inventory by 38
percent to 224,792 gross (133,210 net) acres, of
which two-thirds is undeveloped. Zapata had a net
equivalent 211 sections to use for further reserve
growth.
DIRECTORS & MANAGEMENT
North East B.C./Northern Alberta
LLOYD DRISCOLL
Chairman & CEO
ALBERTA
Fort St.John
GEORGE PAULUS
President & CFO
ROBERT BRAWN
Chairman Emeritus
Acclaim Energy Trust
North West Alberta
ALLEN EMES
Investment Banker
Woodstone Capital
Edmonton
CONTACT INFORMATION
Lloydminster
East Central Alberta
West Central Alberta
Suite 500,
435 - 4th Avenue SW
Calgary, Alberta
Canada
T2P 3A8
Tel : (403) 261-7355
Calgary
South East Alberta
Fax : (403) 294-7877
E-mail : invest@zapata.ca
ZCO Land
Core Areas
Website : www.zapata.ca
TSX Venture Exchange : ZCO
63
Investor Q&A with Iradesso Communications
QA
Q. Why does Iradesso publish and distribute the
Q. What is attractive about investing in energy
IQ report?
trusts?
A.
A. Energy trusts capitalize on the maturing nature of the
Iradesso’s IQ report serves a number of purposes. It helps
bring attention to a very vibrant and interesting sector of the
Canadian economy — small and medium sized oil and gas
companies and trusts. These entities happen to be some of
our best clients, and we feel we owe them this opportunity.
The report educates investors on how to understand their
investments in the energy sector.
&
Iradesso’s IQ report is also useful because it features a range
of parameters on which investors can compare one investment
opportunity against another. The IQ report’s comparison charts
allow investors to quickly determine which companies look
strong or weak in relation to their peers. These findings allow
investors to ask managers pointed questions.
In addition, Iradesso gets to profile a number of clients
in more detail by including their two-page fact sheets.
These fact sheets give readers the opportunity with a
quick glance to go to the next step beyond the numbers.
Q. What is the most important factor when
investing in an oil and gas company or trust?
A.
Iradesso’s survey of 67 professional investors in January
2002 showed that the number one factor influencing
investment decisions in the energy sector relates to the quality
of the management team. A strong management team comes
with a proven path to success. Success breeds success. A
premium stock or unit price makes it easier for companies to
raise money in order to drive their growth.
After the quality of a company’s management team,
professional investors look at the near-term growth
prospects, previous growth record and the value of the
company in relation to its peers. Iradesso’s quarterly IQ
report offers an ideal vehicle for investors to see how one
company or trust compares to the benchmarks set by others.
Q.
If investors buy and sell based on
management, growth prospects and results, why
do companies need investor relations?
A. In the same survey referenced above, professional investors
ranked the quality of a company’s communication initiatives as
more important than debt levels, analyst recommendations or
tips from associates. Good two-way investor communication
builds trust and should help investors see that they are on the
same side as management.
Investor presentations, detailed financial reports and
comprehensive websites are three of the ways in which public
companies communicate with shareholders to ensure all
investors are on a level playing field.
Western Canadian Sedimentary Basin by developing and
harvesting reserves and distributing the resultant cash flow
directly to investors.
Many investors like the regular cash distributions paid by
trusts. Receiving distributions every month is like having a
slow ongoing exit from your investment. It allows investors to
take some gains off the table each month, and they can decide
what to do with them. In addition, the returns from investing
in trusts are often treated favourably in terms of taxation.
Q. What are the advantages of investing in
juniors as compared to trusts?
A.
While investors look to energy trusts for stable
distributions, they look to junior oil and gas companies for
growth. The Western Canada Sedimentary Basin offers both.
Much of the basin’s remaining geological potential will be
discovered by enterprising juniors who offer investors the
possibility of exponential growth through their drilling and
exploration programs. Because of their size, the reinvestment
of cash flow and their ability to balance risk and reward
decisions, juniors may have potential to deliver 50 to 100
percent production growth per year. Many juniors eventually
reach a size where all investors can exit at once through a
takeover, merger or conversion into an energy trust.
The following statements are applicable to all segments of the
IQ report, including the two-page corporate profiles supplied by
companies and trusts for this report.
Non-GAAP Measures
Included in this report are references to cash flow, a term commonly
used in the oil and gas industry. This term is not defined by generally
accepted accounting principles (“GAAP”). As a result, it is referred
to as a non-GAAP measure. By default, cash flow is calculated by
starting with net income and adding non-cash items, as shown in
the statements of cash flows.
BOE Presentation
Production information is commonly reported in units of barrel
of oil equivalent (“boe”). Readers should note that boe may be
misleading, particularly if used in isolation. Because conversion is
based on an energy equivalency primarily applicable at the burner
tip, it does not represent a value equivalency at the wellhead.
Where amounts are expressed on a boe basis, natural gas volumes
have been converted to barrels of oil at six thousand cubic feet per
barrel (6:1).
Forward-Looking Statements
The corporate profiles in this report contain forward-looking
statements that involve risk and uncertainties. Such information,
although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ
from those anticipated in the profiles.
65
Your company’s vision is important to us
Iradesso strives to make things clear. Whether you are an investment professional seeking clear information about public companies, or
a public company needing to clarify your message for potential and existing investors, Iradesso is a vital source to satisfy your needs.
Our team of communications experts has the investor relations tools needed to deliver a clear message. We create and maintain websites, profiles
and multimedia presentations. We write and design top-notch financial reports. We set up meetings and we speak to the investment community.
We bring YOUR vision into focus.
calgary, alberta
tel: (403) 503-0144
toll free: 1-866-415-1070
www.iradesso.com

2004 - Iradesso

Transcription

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