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   Gold/Mining/EnergyOil & Gas Exploration & Production Co.'s


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To: Ed Ajootian who wrote (79)8/12/2003 9:07:38 AM
From: John Carragher
   of 112
 
hey, I come back here for every post... holding upl xto, mhr crk.... why> there were on raymond james list of several.. and seemed at the time the best for my money.. I also wanted to buy a mix of stocks. now to wait until late oct to see if they move... thanks for the posts. John

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To: Ed Ajootian who started this subject8/12/2003 7:54:40 PM
From: David Michaud
   of 112
 
Powermax Energy Inc. (PWR:TSX-V)

QUICK FACTS SHEET

HIGHLIGHTS:

* recent drilling success has led to a 40% increase in production to 350 boepd
* 2003 first quarter cash flow of $632,556 or $0.075 per share ($0.30 annualized)
* expected 2003 cash flow of $2.0 to $2.5 million or $0.25 to $0.30 per share (trading at only 2.0 to 2.5 times)
* estimated net asset value of $1.10 to $1.30 per share (trading at 0.48 to 0.68 times)
* debt free (debt net of working capital position as at March 31, 2003)

Powermax is an emerging company engaged in the exploration, development, and production of petroleum and natural gas in western Canada. The Company has demonstrated tremendous growth in the past 6 months, going from a corporation burdened with debt and generating negative cash flow and earnings, to a company with no debt, significant financial growth, and numerous projects.

Powermax has recently tied-in a number of new wells raising net production to about 350 barrels of oil equivalent per day. Approximately 70% of current production is comprised of natural gas. The Company plans to drill up to 6 wells over the balance of 2003, and to exit this year with production of over 500 boepd.

At its core area of Galahad, Powermax has identified 3 to 6 multi-zone development drilling locations. Another 3 wells in the area are categorized as ideal recompletion candidates, which provide the potential for incremental production.

The Company’s newly acquired Peace River Arch property has the potential for significant oil and natural gas additions and has the added benefit of accessibility to infrastructure. The area offers numerous shallow drilling opportunities. In particular, a 50% interest well is expected to be drilled in 2003, targeting a zone that blew out in the early 1900’s at rates approaching 10 mmcf/d of natural gas.

Powermax has entered into an agreement with Western Petrochemicals Corp. to explore and develop a shale bed methane gas play in the Pasquia Hills region of eastern Saskatchewan. Powermax can earn a 100% working interest in 188,000 acres in exchange for completing a $625,000 work program over a period of 30 months. In addition to completing the work obligations, the corporation made an initial payment of $50,000, and will issue 50,000 common shares. Powermax also recently acquired exploration permits covering a contiguous 106,000 acre parcel of land in the Moose Jaw region of Saskatchewan which is prospective for natural gas.

Production and Projects…

Galahad, Alberta
# multiple drilling locations
# 3 wells planned for 2003
# 93% average working interest
# gas targets in the Ellerslie and Glauconite zones
# immediate potential for production through the Powermax operated pipeline system

Eagle Butte, Alberta
# exploration project surrounded by production
# seismic and geological work to delineate property underway
# 2004 project development proposed
# 100% interest for oil targets in Sawtooth, Mannville, gas targets in Bow Island and 2nd White Secs zones
# potential for phased development in 2004-2005

Exploration Projects…

Peace River/Cadotte, Alberta
# exploration project backed by seismic and geology
# one well planned for 2003
# 50% working interest
# shallow gas prospects
# nearby infrastructure including services, roads, and pipelines
# potential for commercial development in 2004

Saskatchewan
# 188,000 acres prospective for shale gas
# 106,000 acres of historical gas
# preliminary geological and seismic work for 2003-2004
# historical gas shows to be delineated
# 50% working interest
# future development potential

FINANCIAL AND OPERATIONAL SUMMARY

BALANCE SHEET
(As at March 31, 2003)
Current Assets $ 1,352,662
Total Assets 4,240,789
Current Liabilities 1,349,881
Long-Term Debt nil
Shareholders' Equity 2,775,914

FINANCIAL & PRODUCTION
3 months ended March 31 Year ended December 31
2003 2002 2002 2001
FINANCIAL
Revenues $ 1,000,794 $ 408,632 $ 2,279,978 $ 2,033,193
Cash Flow 632,556 (13,742) 924,907 693,625
per share 0.075 (0.002) 0.143 0.114
Net Income 430,403 (177,742) 64,675 146,103
per share 0.051 (0.028) 0.010 0.024
PRODUCTION
Natural Gas (mcf/d) 1,600 636 998 719
Oil & NGLs (bpd) 73 124 103 81
Boepd (6:1) 334 229 270 201

SHARES OUTSTANDING (As at March 31, 2003)
Basic: 8,405,100 *
Fully-diluted: 11,402,900 *

* Investors should take note that the official number of common shares (9,722,300) is presently subject to revision. This total includes 1,047,200 shares which are subject to performance escrow. The position of Powermax is that the conditions for release of these shares were not satisfied and that the share certificate evidencing their issue should be cancelled. The Company is currently taking steps to effect this cancellation. In addition, 270,000 common shares purchased pursuant to an issuer bid are also subject to cancellation at this time.* management and insiders own approximately 38% of the total shares issued and outstanding

CONTACT INFORMATION:
Suite 1000, 330 - 5th Ave. SW, Calgary, AB, T2P 0L4
Phone: (403) 237-5535
Fax: (403) 264-3734
Email: kingma@powermaxenergy.net
Website: www.powermaxenergy.net
Contact: Johannes (Jo) Kingma

QIS CAPITAL COMMENTS:
Powermax Energy has come a long way in the past 12 months and now appears poised to show considerable growth and gain increased attention from the investment community. While the Company underwent some restructuring to reduce debt and streamline costs during the first half of 2002, new banking arrangements and the appointment of a professional staff have now positioned Powermax to exploit its vast potential. It should also be noted that the Company has an untapped $2.1 million line of credit as well as a $1 million acquisition line of credit.

The first quarter of 2003 is the first real indication of the positive financial outlook for Powermax. Annualized first quarter cash flow is approximately $0.30 per share based on a production base of about 330 boepd. The Company anticipates this production to continue to increase with a year-end target rate of 500 boepd. Ignoring this potential production increase, Powermax’s shares are trading at just over 2 times annualized cash flow, at a significant discount to net asset value, and the Company is debt free. This enviable financial position should enable Powermax to capitalize on its aggressive growth plans.

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To: Ed Ajootian who started this subject9/26/2003 8:01:35 PM
From: tom pope
   of 112
 
Ed, is there an index, other than yours, for E&P companies that are not of the behemoth rank? I'm looking for a proxy for a company like APC.
Thanks

Tom

EDIT. I guess that was a pretty dumb question. If there was such an index, you wouldn't have started this thread!

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To: tom pope who wrote (86)9/28/2003 1:14:39 PM
From: Ed Ajootian
   of 112
 
Tom, Actually there is an S&P index that appears to be what you're looking for, see its components listed at finance.yahoo.com^GSPOILP

As you can see it includes APC.

My portfolio on this thread needs to be adjusted for some stock splits, etc., but I have not had the time or inclination to deal with it. I oughtta try to do this by year-end just to see how the year really went.

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To: Ed Ajootian who wrote (87)9/28/2003 1:39:41 PM
From: tom pope
   of 112
 
Thank you, Ed.

Tom

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To: Ed Ajootian who wrote (81)10/3/2003 1:10:52 PM
From: DELT1970
   of 112
 
I've been searching the Canadian sheets lately, Ed, and entered True Energy today (TUI.TO and TUENF:OTCBB). They gave an interesting presentation at the Peters Conference Sept. 16 and reported Q3 yesterday at an exit rate of 3,600 boed. They gave a target of 5,000 boed in 2004 at Peters. They have a nice land position, including an oil and gas target within Nexen's CBM play in Alberta.
newswire.ca
click on archived events and scroll back to Sept. 16 at 3:30pm

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To: DELT1970 who wrote (89)10/4/2003 3:40:43 PM
From: Ed Ajootian
   of 112
 
Delt, Thanks, will try to look at that one. I've been considering looking at Canadian companies also but have not looked at many yet (other than ones that are operating in areas I'm otherwise familiar with).

I notice that many Canadian E&P companies trade at very low multiples of cash flow and EV/EBITDA. Not sure what would be a valid catalyst to get a higher stock price in Canada, although even at a low mulitiple I suppose if you are increasing your production as much as someone like True Energy believes they can, then your stock should go up.

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To: Arktic who wrote (25)10/4/2003 3:45:50 PM
From: Ed Ajootian
   of 112
 
Paul, I've slowly built up a pretty healthy position in FX Energy, see my latest tout on it at Message 19371527

Are you still holding? Should be interesting to see how high it goes before drilling results are out. The last financing included some warrants @ $3.60, I wonder if that will serve as a cap to the price.

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To: Ed Ajootian who started this subject10/6/2003 12:26:39 PM
From: Ed Ajootian
   of 112
 
KCS has done well during the first half and grew proved reserves by 20% over 2002’s year-end number of 196 bcfe. The
company’s reserve life is now at nine years. The focus of the first half has been on cash-generating development projects.
For the second half, KCS is drilling a number of high-impact exploration wells like the Ray George, 5-Mile Creek and SKA.
If successful, we could see significant reserves addition at year-end 2003.
• In addition to the exploration projects, the company’s low-risk “bread and butter” assets at Elm Grove, Louisiana, and
Sawyer Canyon, Texas, continue to yield additional low-risk, high-return drilling locations. These two assets equate to 44%
of KCS Energy’s proved reserves. We like the fact that KCS could have multiple years of drilling inventory in these
“manufacturing” plays.
• We think the company is firing on all cylinders. We are confident of our 2003E production estimate of 34 bcfe. If the
drilling program continues to be successful during the second half, we would expect our 2004E volume estimate of 36 bcfe
to increase. We reiterate our Buy recommendation on this gassy story with organic growth. Our 12-month price target is
$8.00.

Company Profile
KCS’s primary focus areas are the Mid-Continent region and onshore Gulf Coast. The company has key operations in the
Anadarko and Arkoma basins, North Louisiana, West Texas and Michigan. Along the Gulf Coast, the focus properties are in
South Texas, Coastal Louisiana and the Mississippi Salt Basin. With the financing of the $61 million Senior Notes completed
in January 2003, KCS has been totally focused on the drill-bit, an effort that resulted in 50 bcfe of proved reserves for the midyear.
The reserves are booked based on $27.00/bbl (WTI) and $5.17/mmbtu (Henry Hub). At a lower gas price assumption of
$4.25/mmbtu, the reserves could swing by 5 bcfe to 6 bcfe. Of the 234 bcfe of proved reserves, 75% are proved developed and
80% are natural gas; KCS operates 80% of the assets. The reserve life is nine years. The geographic mix is 27% Elm Grove;
17% Sawyer Canyon; 25% Gulf Coast and 31% in other Mid-Continent Assets, the Rocky Mountains, Michigan and
California.
By mid-year, the company had drilled 40 wells with a 95% success rate, and each successful well opens up more prospective
locations. We think the company has plenty of running room with this growing prospect inventory. The company increased its
2003 capital budget to $65 million from $55 million during the second quarter. We expect KCS to generate cash flow in
excess of $88 million for 2003, which is sufficient to fund its new spending program and reduce debt. With a robust drilling
inventory and strong commodity prices, we would not be surprised if KCS increased its 2003 spending plan again.

Be on the Lookout for High-Impact Drilling during the Second Half
The company has begun its high-impact exploration program in South Texas. If successful, any of these prospects can make a
meaningful impact on the company’s 2003 year-end reserves:
Ray George: WI 50%, pre-drill target size of 40 bcfe (in progress). The prospect is located 200 to 260 feet updip of an old gas
well, a fault-bounded structure.
5 Mile Creek: WI 30%, pre-drill target size of 20 bcfe (in progress). The prospect is located in the prolific Mission Valley
area. It is a structural trap defined by 3-D seismic data, with amplitudes on the crest.
SKA: WI 30%, pre-drill target size is 30 bcfe (in progress).
Coquat Deep: WI 50%, pre-drill target size is 25 bcfe. This prospect is defined by 3-D seismic. The area is faulted with
multiple pay zones. The main target is the Wilcox, and there are shallower zones supporting additional drilling locations.
Austin Deep: WI 50%, pre-drill target size is 50 bcfe. This prospect is defined by 3-D seismic; the area is faulted with
multiple pay zones. The well will likely be drilled in 2004. There are existing discoveries in shallower zones nearby, which
lowers the risk for the Austin Deep prospect.

Core Areas: Generating More Drilling Locations
As of mid-2003, KCS drilled 40 wells, with 38 successful (95% success rate). During the first half, the company did most of
its drilling in the Elm Grove area of Louisiana and the Sawyer Canyon area in Texas. Combined, these two areas contribute
44% of the company’s proved reserves. We like these plays, as the programs are repeatable, relatively low-risk and have quick
payout periods.
The Elm Grove Field in North Louisiana: (100% WI in 8 sections, 33% in 1 section). KCS drilled 9 wells by mid-year and
expects to drill 9 more before year-end. The company is prospecting for the Hooston interval and the Cotton Valley group.
The average well cost is $1.2 million and the initial production rate is 3 mmcf/d. The reserve potential is 1 bcfe to 3 bcfe. The
company has 50 to 100 additional locations—at 20 wells per year, this could support a 2- to 5-year drilling program. This Elm
Grove area is competitive, but KCS Energy has made long-term agreements with drilling and service companies to keep a lid
on drilling and fracturing costs. These agreements and contracts enhance the economics of the Elm Grove Play.
At the Sawyer Canyon Field, in Sutton County, Texas (90%-100% WI), KCS drilled 14 wells by mid-year, with IP averaging
370 mcf/d per well. The average well cost is $400,000, with reserve per well at 0.4 bcfe/well. The acreage can support 35 to
100 more well locations, and KCS plans to drill 20 wells per year in the Sawyer Canyon field in 2004 and 2005. Spacing is
currently 80 acres; it could be down-spaced to 40-acres at selective locations if commodity prices continue to stay high.
In East Texas at the Joaquin Field: (74%-100% WI), the company drilled 2 wells by mid-year and expects to do three more
by year-end. Average well cost is $1.5 million, with an initial production rate of 1 mmcf/d to 3 mmcf/d. The reserve potential
is 2 bcf to 4 bcf per well; the company has 5 to 10 additional well locations.
At the Talihina Field in Oklahoma (30% to 100% WI), the Weyerhauser 2-22 discovery flowed 4.0 mmcf/d. The
Weyerhauser 3-22 and Blake 11-21 are being completed. The company expects to drill 5 wells by year-end in this Arkoma
Basin play. The well cost is $1.6 million, with an initial production rate of 2 mmcf/d to 4 mmcf/d. The reservoir is the
Jackfork Formation (up to 200 to 400 feet thick). The structures are complex, with steep dips, and reserves per well average 2
bcfe to 6 bcfe. The company has 5 to 15 additional locations. The partners in this play are Chesapeake Energy (CHK/NYSE-
$10.76; Not Rated) and Ward, which is private.

Valuation and Price Target
In valuing our E&P companies, we use a price-to-cash flow multiple. We establish a reasonable range based on historic
averages of a group of broad-based E&P companies, which includes twelve E&P companies with market capitalizations
ranging from $900 million to over $11 billion.
Our 12-month price target of $8.00 is based on approximately 4 times our 2004 cash flow per share estimate of $1.92. We
used a low cash flow multiple to reflect KCS’s high leverage, which is currently about 93%. We are very encouraged by
KCS’s drilling success and believe that, if commodity prices continue to be strong, the company could end 2004 with a debt-tocap
ratio in the low-60% range. We also revised our net asset value (NAV) analysis for KCS using the company’s mid-year
reserves of 234 bcfe. Using our 2004 price forecast of $26.00/bbl for oil and $4.75/mmbtu for gas, we arrived at $10 per share,
net of debt. We reiterate our Buy rating on KCS.
Investment Risks
• KCS has a small market capitalization, a relatively thin float and light trading volume, which, under certain circumstances,
could make the stock more volatile.
• The company’s production mix is roughly 80% natural gas: with each $0.10/mmbtu change in Henry Hub natural gas prices,
both 2004E EPS and CFPS could be impacted by $0.05 each. Also, with each $1.00/bbl change in WTI oil price, the 2004E
EPS and CFPS could both be impacted by $0.03.
• In addition, the high debt level makes KCS more sensitive to positive or negative moves in U.S. natural gas prices.

***********************************************************

Above is from Sanders Morris Harris report 9-5-03

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To: Ed Ajootian who wrote (91)10/6/2003 1:05:10 PM
From: Arktic
   of 112
 
Yes, I'm holding in a big way. I picked up about 80,000 shares below $2.10 a share last year. I have a lot of confidence in management and their acquisition of the Fences I,II,&III properties is beyond amazing. This company is set to fly as far as I can tell. I think we'll all be very pleased with this stock during the next 12 to 24 months. If the first well with CE is a dry hole, the stock may temporarily tank. However, this is much more than a one hole game.

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