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Q2 2010
RELEASED SEptEmbER 2010 / VOLUmE 21ISSN 1718-9799 pm41045505
iq.ir.co Ssd by
I R A D E S S OQ U A R T E R L Y
CANADIAN OIL & GAS COmpARISON
inancial doperating reSultSfor 59 Juniors and23 Intermediates
eaturingact SHeetSfrom Juniors, Intermediatesand Internationals
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For the love of weather clichsIts human nature to want to talk about the weather. Unfortunately,it hasnt really been a pl easant conversation for Albertans this
summer. It seems l ike the eastern part of the country might have
hogged all of the heat and good weather this year.
The weather discussion even made its way into many intermediate
and junior oil and gas companies second quarter reports this year.
We heard numerous times that drilling programs and operations
were stalled by the wet weather. Because of this, many companies
reported lower-than-expected production volumes and cash lows
for the period. In effect, they were blaming their results on the rain.
Investors can take comfort in knowing that oil and gas plays never getcompletely rained out, they only get delayed. And although weather
can play a factor in timing, and on a bigger scale, commodity pricing,
the weather cant totally ruin a crop the way it can in farming.
Speaking of weather clichs, this is an industry where we like to talk
about commodity prices by referencing the perfect storm. The low
natural gas prices we are experiencing now are not the result of a
perfect storm, more like the result of a steady nagging drizzle. Our
comparisons are getting stale when it comes to the high price of oil
relative to cheap cost of the same energy equivalency in natural gas.
It has been more than a year now of the two main commodities in this
industry being grossly out-of-step with one another. It seems to have
become a fact of life, which probably means were due for a change.
The facts are that the fundamentals for natural gas have been too
weak for too long. Even the companies that were most focused on
natural gas have started to give in and shift their focus to oil. The
median junior oil and gas company has actually seen success in
dropping its natural gas production weighting from 75 percent
of production in the third quarter of 2009, to 65 percent of
production in this most recent quarter. The production mixes being
reported by the juniors are starting to relect more investments
being directed to oil. I a nticipate that this drop in gas weighting
will continue over the next year as such a high number of d rilling
programs are targeting oil rather than gas.
For any dismal natural gas-focused company (or investor) out there
that saw disappointing second quarter results from pricing and
weather delays, wed like to help pull you through by remembering
that every cloud has a silver lining, and after the rain comes the
rainbow. If that doesnt do it for you, then how about red ink at
night, sailors delight?
At Bryan Mills Iradesso, we continue to be busy helping
many energy industry companies communicate with their
stakeholders. Its not a surprise that the energy industry has
many communications challenges. These challenges range from
how to communicate about strategy and technical approaches to
exploration and development, to the need to communicate about
environmental and social responsibility from within an industry
that produces pollution-emitting fuel. To invoke another clich, the
oil and gas industry needs to show that it doesnt have its head in
the clouds when it comes to environmental issues. I believe that
just like the end-users who actually burn the fuels, the majority of
this industry doesnt have its head in t he clouds.
Id like to close by emphasizing the purpose of the iQ Report.
This report is meant to educate readers on the dynamic Canadian
intermediate and junior oil and gas industry, while drawing
attention to some of the considerations for making investments in
the sector. We also shamelessly try to build on our credibility while
drawing attention to snapshots we have provided for some of our
ongoing clients. I hope you find this report useful in serving these
purposes.
Blue skies ahead,
Peter Knapp
President, Bryan Mills Iradesso
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Q u a r t e r l Y r e p o r t : Q 2 2 0 1 0 1
400, 805 10h av SWcy, aB cd t2r 0B4
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September 2010 / VOL. 21
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please e-ail us a [email protected]
or fll ou he suscriion or a
iq.ir.co o ensure you receive your
ree coy o he iQ Reor.
r e Le ASe SCHe D U Le
Q3 2010 Q rs:
Wk Dmb 6, 2010
communication
matters
Information for investors
iq.bmir.com
Q2 snapshot
For the junior companies in this report, with production between 500 and
10,000 boe/d, the median operating costs were $13.06 per boe, median general
and administrative costs were $4.24 per boe and median netbacks were $14.92
per boe. By contrast, economies of scales helped the intermediate companies
with production between 10,000 and 100,000 boe/d. The intermediates
reported median operating costs of $10.73 boe/d, me dian general and
administrative costs of $2.00 per boe, and median cash low netbacks of $20.80
per boe. Intermediates are able to have lower costs that enable them to make
more money per unit of production.
During the second quarter, the median junior had a return of negative seven
percent for investors. When the subsequent two months are incorporated, the
median return was negative 11 percent. Investments in intermediates faredslightly better. The median return for intermediate companies was negative
ive percent for the second quarter, recovering to negative one percent when
the subsequent two months are also factored in. In all cases, we are including
dividends and distributions in calculating the total return.
Many junior oil and gas companies have been talking about shifting their
focus from natural gas to oil for more than a year now. The economics are
much more compelling with oil versus natural gas given current commodity
prices. When calculated based on volumes of six thousand cubic feet of natural
gas being equivalent to one barrel of oil, the median junior was weighted 65
percent to natural gas for the second quarter. This is a drop from 71 percent inthe first quarter.
In reading one second quarter report after another, our researchers noticed
a common thread weather delays. Many junior and intermediate producers
made note of the fact that they had to delay their drilling program or postpone
well servicing due to wet conditions. From what we have heard, these challenges
persisted into the third quarter of 2010 for much of western Canada.
We have created and included one-page snapshots for our investor relations
clients and subscribing companies. These snapshots are designed to give youa quick overview of some noteworthy junior, intermediate and international
companies. It is amazing how much information can be communicated in one
page, but we hope it will whet your appetite for to ind out more. In our opinion,
the best source for this information is company websites, where you should head
straight to the latest presentation to ind the most up-to-date information.
Bigger coMpanieS, loWer coStS,HigHer netBacKS
lacKluStre MarKet
JuniorS SHiting to oi l
BlaMe it on tHe rain
SnapSHot oVerVieWS
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c o n t e n t S
B R Y A N M I L L S I R A D E S S O i Q . B M i r . c o M2
1 Q2 SnapSHot
4 Junior & interMeDiateWHeeling anD Dealing
5 Junior coMpariSon cHartS6 Q2 pd b/d
7 Q2 pd M n gs Wh %
8 ch pd Q1 2010 Q2 2010 %
9 ch pd Sh Q1 2010 Q2 2010
10 es V Vss Q2 pd $ b/d
11 Q2 csh w nbk $/b
12 Q2 o d ts ess $/b
13 Q2 g d admsv csh ess $/b
14 Q2 D, D d a ess $/b
15 ad Q2 csh w Ms
16 Q2 n Db ad csh w
17 Q2 t r c s d dsbs dvdds %
18 Js ls D tb
29 interM eDiate coMpariSon cHartS30 Q2 2010 pd b/d
30 Q2 pd M s wh %31 ch pd Q1 2010 Q2 2010 %
31 ch pd sh Q1 2010 Q2 2010
32 es V vss Q2 d $ b/d
32 Q2 csh w nbk $/Boe
33 Q2 o ess d ts ss $/b
33 Q2 g d admsv csh ess $/b
34 Q2 D, D d a ess $/b
34 ad Q2 csh w Ms
35 Q2 n Db ad csh w
35 Q2 c s d dsbs
36 imds ls D tb
42 canaDi an coMpanieSoperating aBroaD
47 eM erging conVen tiona lcoMpanieS WatcH liSt
48 eMerging oil SanDS coMpanieS
i n t H i S i S S u eSepteMBer 2010
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Q U A R T E R L Y R E P O R T : Q 2 2 0 1 0 3
RETURN UNDELIVERABLE CANADIAN ADDRESSES TO:
BRYAN MILLS IRADESSO
400, 805 - 10 AVENUE SW CALGARY AB T2R 0B4
ABBREVIATIONS
bbls barrelofoil
boe barrelofoilequivalent
boe/d barrelofoilequivalentperday
mcf thouandcubicfeet
mmcf millioncubicfeet
NGLs naturalgaliquid
ASSUMPTIONS
Barrelofoilequivalentcalculateduing
6mcf=1boe
Netdebthabeencalculatedbyincludingbankdebtdebenture,preferredconvertiblehareand
workingcapital.
ForcompaniewithA/Bharetructure,
BharehavebeenconvertedtoAhare
uingend-of-periodhareprice.
Fortrut,exchangeableunithavebeenconverted
totrutunituingend-of-periodexchangeratio.
DISCLAIMER
Theinformationuedtocompilethireportipubliclyavailable.
BryanMillIradeoprovidethecompariontohinethe
potlightontheeegmentoftheenergyindutry,andto
communicatetheachievementandgrowthpotentialoftheoil
andgacompanieandtrut.TheiQReportdoenotcontitute
aolicitationorrecommendationforthepurchaeoraleofany
ecurity;itiprovidedforinformationonlyandinotintended
toerveainvetmentadvice.BryanMillIradeocannotbe
heldreponibleforaccuracyandallreaderareencouraged
toconducttheirownreearch.ThireportiprovidedbyBryan
MillIradeoaaervicetothereaderwithoutreponibilityfor
accuracy.BryanMillIradeomutbecreditedwithdeveloping
theiQReportifanypartofitireproduced.Thecompaniethat
haveprovidedacorporateproleforthireporthavepaidBryan
MillIradeoafee.
37 CrecentPointEnergy
38 GalleonEnergy
39 NALOilandGaTrut
40 PerpetualEnergy
41 PetroBakkenEnergy
44 Bengal Energy
45 PetroliferaPetroleum
46 Petrominera le
I N TERMED I ATE
PROFILEs
I N TERN ATI ON ALPROFILEs
20 Arena lEnergy
21 DelphiEnergy
22 EqualEnergy
23 ExallEnergyCorporation
24 NovuEnergy
25 secondWavePetroleum
26 surgeEnergy
27 TamarackValleyEnergy
28 TerraEnergy
JUNIOR
PROFILEs
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junior & intermediatewheeling & dealing
B R Y A N M I L L S I R A D E S S O i Q . B M i r . c o M4
J
Many mergers and acquisitions closed during the
last three quarters, however, the pace seems to have
subsequently slowed. Fewer new corporate deals were
d Jy & as, s s d,
b sd ds s sh.
DONE DEALS
The following deals have closed since our previous iQ Report, which means that in the case of an acquisition, the companies
concerned are no longer included in the comparison charts of this report.
Arc Energy acquired Storm Exploration
Baytex acquired Serrano Energy
Canadian Superior changed name to Sonde Resources
Cequence acquired Peloton Exploration
Compass Petroleum acquired Sun Red Capital
Crescent Point acquired Ryland Oil
Crescent Point acquired Shelter Bay
Iteration and Storm Ventures amalgamated to formChinook Energy
Roadrunner Oil & Gas changed name to Bowood Energy
in connection with corporate restructuring
Tamarack Valley acquired Tango Energy via reverse
takeover
One Exploration changed name to TriOil Resources in
connection with corporate restructuring
Pace Energy formed through the amalgamation of
Midnight with upstream assets of Provident
Paramount Energy Trust changed name to Perpetual
Energy in connection with corporate conversion
Surge Energy acquired Corinthian and
Crystal Lake Resources
Triton Energy changed name to Waldron Energy in
connection with corporate restructuring
Whitecap Resources acquired Spitire via reverse takeover
Whitecap Resources acquired Onyx 2006
Yoho acquired Canoil
DEALS ANNOUNCED, bUt NOt CLOSED
Cequence to acquire Temple Energy (expected close
September 2010)
Pengrowth to acquire Monterey Exploration (expected
close September 2010
Please note that this summary is not exhaustive and is focused
on corporate acquisitions relating to conventional juniors and
intermediate producers meeting the criteria for our comparison charts
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Q u a r t e r l Y r e p o r t : Q 2 2 0 1 0 5
junioroil & gas companies
c o M p a r i S o n
INCLUSION CRItERIA
Primary business must be oil and gas exploration, development and production
Q2 2010 production must fall between 500 and 9,999 barrels of oil equivalent per day (boe/d)
Majority of production must be from Western Canada
Must be publicly traded on the TSX or TSX Venture Exchange
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7,163
7,290
7,655
7,671
7,732
8,035
9,010
9,570
BlackPearl
Angle
FreeholdBellatrix
Anderson
Delphi
Vero
Equal
3,720
3,956
4,053
4,424
4,464
5,717
5,733
6,489
6,531
Rock
Orleans
OpenRange
Orion
Emerge
Legacy
Bonterra
TwinButte
Terra
2 448
2,515
2,532
2,535
2,871
2,892
3,086
3,197
3,221
Crocotta
Bellamont
PaintedPony
Cinch
Insignia
Sonde
ProspEx
Cequence
Seaview
1,770
1,927
1,943
2,043
2,060
2,258
2,270
2,373
,
Artek
Midway
Arcan
Waldron
Arsenal
Surge
Yoho
WestFire
964
980
1,098
1,417
1,439
1,662
1,665
1,671
,
Whitecap
Culane
Argosy
SecondWave
TriOil
GreatPlains
Monterey
Fortress
737
771
774
794
839
853
925
936
951
Tamarack
Sure
NovusPetro-Reef
Exall
WranglerWest
NuLoch
Renegade
Ironhorse
528
528
536
599
659
714
736
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Diaz
Bowood
Palliser
Dejour
IntlSovereign
DeeThree
Twoco
a persistent crowdFor this report, junior oil and gas companies are limited to thosewith production rom 500 barrels o oil equivalent per day (boe/d)to 9,999 boe/d. Other parameters are included on the previouspage. Enterprise valuations or these c ompanies range rom a low
o about $10 million all the way up to a billion dollars.
Intermediate and emerging domestic companies are eaturedin sections beginning on page 30 and 48 respectively. A sectionon Canadian-based international companies is ound startingon page 42.
Over the years, the number o companies meeting our juniorcriteria uctuates, however there are always new names to replacethose that get lost to the steady ow o mergers and acquistions.Overall, this sector has proven it will persist and evolve throughthe changing environment. See our Wheeling and Dealingsection on page 4 or a list o recent transactions.
B R Y A N M I L L S I R A D E S S O i Q . B M i r . c o M6
J
Q2 proDuction (Boe/D)Md = 2,060 b/d
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88
91
91
92
98
98
99
100
Seaview
OpenRange
BowoodCinch
DeeThree
Tamarack
Fortress
Twoco
82
84
84
85
86
86
87
88
IntlSovereign
Anderson
Petro-Reef
Yoho
Sure
Cequence
Orleans
Argosy
76
76
78
79
79
80
80
81
Insignia
Terra
Waldron
Sonde
Vero
Delphi
Diaz
ProspEx
58
58
61
63
65
68
73
73
TriOil
Novus
Angle
Bellamont
WranglerWest
Artek
Crocotta
Bellatrix
39
42
47
47
48
52
55
57
Freehold
Dejour
GreatPlains
Equal
Midway
Orion
Whitecap
WestFire
14
18
25
28
30
32
33
35
38
Arcan
Arsenal
Culane
Surge
NuLoch
Bonterra
SecondWave
Rock
a n e on y
1
3
4
9
12
13
13
0 10 20 30 40 50 60 70 80 90 100
Emerge
Renegade
Legacy
BlackPearl
Palliser
Exall
WildStream
shifting from gas to oilFor a substantial amount o time, oil has been the commoditywith more attractive economics, however rom a volumesstandpoint, natural gas has been the commodity with a higherweighting by volume or juniors. Finally this appears to bechanging. The median natural gas weighting has dropped rom75% in Q3 2009, to 71% in Q1 2010, to 65% this most recentquarter. This is probably a good thing or the short-term fnancialhealth o this sector.
As is standard, we convert natural gas into oil equivalence byusing a ratio o six thousand cubic eet (mc) o natural gasto one barrel o oil equivalent (boe). This ratio comes rom anenergy equivalence at the burner tip. To put this calculation intoperspective, i we were to base the equivalency ratio on spotmarket pricing, it would take around 20 mc to equate to eachbarrel o oil.
orMula
avg. natural gas production per day (boe/d)
avg. total production
Q u a r t e r l Y r e p o r t : Q 2 2 0 1 0 7
Q2 proDuction Mix natural gaS WeigHting (%)Md = 65%
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40.3
41.1
45.3
52.7
54.1
61.0
89.1
Palliser
Midway
Bellamont
WildStream
Waldron
Renegade
Dejour
12.6
14.3
15.0
17.5
27.7
30.8
32.4
33.5
OpenRange
Bonterra
Argosy
SecondWave
GreatPlains
Cequence
Arcan
r on
7.2
7.7
7.9
8.7
9.1
9.110.1
10.4
.
Vero
Emerge
Tamarack
Orleans
PaintedPony
NovusCinch
Anderson
3.2
4.4
5.0
5.1
5.6
5.7
5.8
7.2
Yoho
Freehold
Insignia
Delphi
Rock
TwinButte
Bellatrix
BlackPearl
(3.4)
(2.6)
(0.8)
(0.5)
0.6
0.7
3.1
3.1
Fortress
WestFire
Diaz
Seaview
Ironhorse
Equal
Exall
ProspEx
(9.1)
(8.9)
(8.1)
(7.3)
(7.2)
(7.1)
(6.0)
(4.3)
Terra
Angle
Legacy
Culane
Twoco
Monterey
Crocotta
Arsenal
(19.4)
(19.3)
(18.5)
(15.9)
(14.5)
(13.7)
.
(40.0) (20.0) 0.0 20.0 40.0 60.0 80.0 100.0
Petro-Reef
DeeThree
Sure
Surge
Artek
IntlSovereign
boosting production ratesIncreasing production rates on a steady quarter-over-quarter basisis not easy to do. This is because production rates or most wellsin Western Canada decline at a steady rate. These declines needto be replaced beore any additions can be made. At the sametime, certain natural gas production is uneconomic in the currentpricing environment, meaning that it makes more business senseto shut-in the production or the time being rather than sell the
production or less than it costs to produce.
bowood, Sonde, triOil and Whieca are not included in thischart as these companies were not operating in their currentcorporate orm during the previous quarter.
orMula
current period avg. production previous period avg. production
previous period avg. production
Note: Gas production converted to boe at 6 mc: 1 boe
B R Y A N M I L L S I R A D E S S O i Q . B M i r . c o M8
J
cHange in proDuction Q1 2010 to Q2 2010 (%)Md = 5.6%
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Q U A R T E R L Y R E P O R T : Q 2 2 0 1 0 9
19.8
23.0
26.9
33.5
37.6
40.8
87.2
Bellamont
Cequence
GreatPlains
Orion
WildStream
Midway
Dejour
6.6
7.7
8.7
9.0
9.5
12.6
13.7
14.0
Vero
Emerge
Orleans
PaintedPony
SecondWave
OpenRange
Renegade
Bonterra
1.5
1.7
3.1
3.7
4.8
4.9
5.0
5.5
Delphi
Argosy
ProspEx
Freehold
BlackPearlAnderson
Insignia
Rock
(2.1)
(1.0)
(0.5)
(0.4)
0.2
0.3
0.4
1.0
NuLoch
Twoco
Seaview
Equal
Cinch
TwinButte
Waldron
e a r x
(9.7)
(8.3)
(7.4)
(7.3)
(6.7)
(6.0)
(4.9)
.
Diaz
Novus
Exall
Culane
WestFire
Crocotta
Tamarack
(14.7)
(14.7)
(13.7)
(12.0)
(11.8)
(11.7)
(10.9)
.
Arcan
Artek
IntlSovereign
Legacy
Monterey
WranglerWest
Ironhorse
(43.4)
(27.8)
(19.5)
(18.5)
(18.4)
(16.0)
.
(60.0) (40.0) (20.0) 0.0 20.0 40.0 60.0 80.0 100.0
Surge
DeeThree
Petro-Reef
Sure
Terra
Yoho
per share growth is what countsIt is challenging or oil and gas companies to steadily increase
overall production rates. By extension, it is even more
daunting when production growth is required on a per share
basis. Amazingly, around hal o juniors were able to increase
production rom the rst quarter to the second quarter o 2010
on a per share basis.
It costs money to increase production, whether it be via drilling or
acquisitions. Thereore, junior companies need to deploy their cash
fow careully in order to grow, and they typically need to augment
this with strong access to capital rom equity or debt nancings in
order to be able to keep growing.
FORmULA
current production per share previous production per share
previous production per share
Note: Production per share = average production rate or the period
divided by basic weighted average shares outstanding during
the period.
For the trusts included in this comparison, subsititute shares
or units.
Gas production converted to boe at 6 mc: 1 boe.
ChAngE in PROdUCTiOn PER shARE Q1 2010 TO Q2 2010 (%)mea = 0.1%
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140,210
142,602
144,078153,234
155,091
164,426
197,463
252,069
WildStream
NuLoch
BonterraSecondWave
Renegade
Legacy
Arcan
Monterey
72 962
73,889
97,247
99,025
100,347
111,858
120,899
124,125
136,449
WestFire
Exall
Bowood
Whitecap
BlackPearl
Midway
Novus
PaintedPony
Freehold
61,995
62,238
62,896
66,245
69,769
70,556
72,042
72,834
,
Arsenal
Dejour
Crocotta
Emerge
Angle
DeeThree
Sure
Orion
44,785
45,385
47,392
48,071
51,106
53,786
53,872
57,095
,
Rock
Artek
Cinch
Culane
Bellatrix
Surge
Orleans
Sonde
37,229
38,546
39,121
39,307
40,250
41,554
41,895
43,623
43,946
Waldron
Ironhorse
Yoho
Bellamont
Twoco
Delphi
Vero
Palliser
az
31,134
32,057
33,251
33,957
33,966
34,142
34,365
35,676
36,247
Argosy
Anderson
ProspEx
Petro-Reef
OpenRange
WranglerWest
Cequence
GreatPlains
TwinButte
17,145
18,703
19,416
26,424
29,027
29,083
29,145
0 50,000 100,000 150,000 200,000 250,000 300,000
IntlSovereign
Fortress
Tamarack
Insignia
Seaview
Equal
Terra
production valuationThis chart shows each companys enterprise value (marketcapitalization plus net debt) in relation to its average Q2production levels. The chart does not take into account the valueo land and seismic data or the quality and lie expectancy o oiland gas reserves.
Companies that are high on this chart may be there becauseinvestors deem them to have strong growth prospects,quality long-lie reserves, high feld netbacks, high dividend ordistribution yields, or exceptional management teams. As anindication that these numbers make sense, the company that hasthe highest enterprise value versus production or Q2, monerey,is in the midst o being acquired by an intermediate producer,pengrowh. Companies that are low on this chart may be goodvalue investments with excellent upside potential or investors
who do their homework.
orMula
market capitalization + net debt
avg. production in boe
Notes: Market capitalization = August 31 share price x Q2weighted average basic shares outstanding
Net debt = bank debt + debentures - working capital
For A/B share structure companies, the separate marketprice o B shares is actored into the market capitalization
B R Y A N M I L L S I R A D E S S O i Q . B M i r . c o M10
J
enterpriSe Value VerSuS Q2 proDuction ($ per Boe/D)Md = $51,106 b/d
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25.50
27.35
28.3733.19
33.61
35.31
36.42
41.52
Arcan
Exall
RenegadePaintedPony
Bonterra
WildStream
Freehold
Legacy
19.60
20.83
21.05
21.48
21.99
22.09
22.10
22.28
23.07
O enRan e
NuLoch
WestFire
BlackPearl
Arsenal
Whitecap
IntlSovereign
Midway
Surge
16.01
16.93
17.62
17.76
18.56
19.36
19.48
19.49
Orleans
Vero
Bellamont
Delphi
Rock
Angle
SecondWave
Orion
13.25
13.32
13.99
14.62
14.92
15.01
15.08
15.70
.
Sure
Ironhorse
TwinButte
Artek
Seaview
Yoho
GreatPlains
Culane
10.38
11.43
11.66
11.96
12.27
12.47
12.80
12.86
13.04
Argosy
WranglerWest
Crocotta
Terra
TriOil
Cinch
Anderson
Petro-Reef
qua
6.97
7.61
7.96
9.62
9.63
9.74
9.77
9.90
10.27
Diaz
Palliser
BellatrixInsignia
ProspEx
Waldron
Cequence
Monterey
Dejour
(9.74)
(1.37)
1.02
1.96
5.09
5.53
6.56
(20.00) (10.00) 0.00 10.00 20.00 30.00 40.00 50.00
Novus
Bowood
Twoco
Sonde
Tamarack
DeeThree
Fortress
show me the marginsCompanies near the top o this chart are seeing the mosteconomic beneft rom existing production. Meanwhile, thosenear the bottom have costs that are reducing their margins.
The median cash ow netback this quarter o $14.92 per boe islower than the median o $18.87 per boe or Q1 o 2010. This is areection o lower natural gas prices realized during Q2.
Cash ow is the result o adding back non-cash expenses suchas depreciation and uture taxes to net earnings. Cash ow takesinto account the hard costs o operating as well as general andadministrative costs. It is a measurement that is not defned bygenerally accepted accounting principles (GAAP) in Canada.
orMula
cash ow rom operations
total production in the period
Note: Total production in the period = average daily productionx 91 days in period
Q u a r t e r l Y r e p o r t : Q 2 2 0 1 0 11
Q2 caSH loW netBacK ($/Boe)Md = $14.92/b
8/8/2019 Iradesso Q2 2010
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17.57
17.61
18.71
19.23
19.43
20.64
21.74
27.34
Diaz
Surge
GreatPlainsSecondWave
Culane
Novus
Arsenal
Emerge
15.29
15.76
15.77
15.79
16.23
16.31
16.73
16.91
17.13
Insi nia
TwinButte
WranglerWest
Bowood
TriOil
Fortress
WestFire
Rock
Palliser
14.26
14.28
14.50
14.55
15.00
15.11
15.12
15.28
Bellatrix
Bellamont
IntlSovereign
Cequence
Artek
WildStream
Renegade
BlackPearl
11.98
12.11
12.12
12.40
13.06
13.13
13.38
14.13
.
PaintedPony
Dejour
Arcan
Legacy
Orion
Waldron
Bonterra
Monterey
10.23
10.39
10.44
10.79
11.27
11.29
11.38
11.42
11.48
Sonde
Petro-Reef
DeeThree
Crocotta
Equal
NuLoch
Delphi
Whitecap
ure
7.40
7.59
8.93
9.39
9.45
9.56
9.73
9.89
10.01
Orleans
Argosy
Twoco
ProspEx
Seaview
Terra
Tamarack
Anderson
Vero
3.35
4.16
4.30
4.72
5.70
6.21
7.15
0.00 5.00 10.00 15.00 20.00 25.00 30.00
Ironhorse
Cinch
Freehold
Yoho
OpenRange
Angle
Exall
trying to get more for lessCompanies that do a good job o controlling operating andtransportation costs earn more money rom their production.The ability to be an efcient operator relates to the productivityo wells, the proximity o producing areas, economies o scale,
control over acilities and a companys production methods.Some companies with high operating costs this quarter may beincurring expenses in an operating area that will not increasewhen production increases or the area, showing the potential orimproving economies o scale.
orMula
operating expenses including transportation costs
total production in the period
Note: Total production in the period = average daily productionx 91 days in period
B R Y A N M I L L S I R A D E S S O i Q . B M i r . c o M12
J
Q2 operating anD tranSportation ex penSeS ( $/Boe)Md = $13.06/b
8/8/2019 Iradesso Q2 2010
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9.66
10.24
11.3413.59
13.61
14.11
16.79
18.73
Bowood
NuLoch
ArgosyRenegade
Sonde
Dejour
Palliser
Novus
6.18
6.24
6.27
6.72
6.78
6.80
7.83
8.72
8.97
Midwa
Fortress
Exall
Ironhorse
Surge
SecondWave
TriOil
Arcan
Orion
5.03
5.10
5.34
5.39
5.41
5.53
5.54
5.80
.
Twoco
Equal
GreatPlains
DeeThree
Culane
Arsenal
Tamarack
Petro-Reef
3.99
4.09
4.13
4.20
4.24
4.26
4.34
4.34
.
Whitecap
Cequence
Terra
Artek
Emerge
Sure
Waldron
Cinch
3.27
3.31
3.38
3.51
3.52
3.54
3.80
3.89
3.95
Insignia
WestFire
Crocotta
WranglerWest
Freehold
Bellamont
Rock
Bellatrix
az
2.42
2.44
2.52
2.54
2.63
2.67
2.69
2.77
3.22
Delphi
ProspEx
OrleansIntlSovereign
PaintedPony
Legacy
TwinButte
Anderson
Angle
1.98
2.03
2.16
2.30
2.35
2.38
2.42
0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00
Vero
OpenRange
Yoho
BlackPearl
Bonterra
Seaview
WildStream
watching overheadGeneral and administrative expenses (G&A) pay or theengineering, geology, accounting, business development andother ofce-related expenses o oil and gas companies. G&Ashould be lower per boe or larger companies because many othese costs are fxed and do not increase with the amount oproduction. A lower amount o G&A per boe is good as long as itisnt at the cost o growth or o meeting the regulatory and legalrequirements o being a public company.
A number o the companies at the high end o this chart hadhigh G&A expenses due to corporate activities over the period.In certain cases, anomolous transaction costs were identifed infnancial statements, allowing us to remove those amounts ortaarack Valley and Surge, who completed recapitalizationsduring the quarter. Savvy investors should take the time tounderstand what is happening that causes expenses to be higherthan peers and whether or not it will translate into growth thatwill reward shareholders.
Non-cash compensation expenses, mostly stock options andother share or unit-based incentives, oten make up a signifcantportion o compensation packages at junior oil and gascompanies. These are not included in this chart.
orMula
general & administrative expenses
total production in the period
Note: Total production in the period = average daily productionx 91 days in period
Q u a r t e r l Y r e p o r t : Q 2 2 0 1 0 13
Q2 general anD aDMiniStratiVe caSH expenSeS ($/Boe)Md = $4.24/b
8/8/2019 Iradesso Q2 2010
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24.51
24.76
24.85
24.88
25.15
25.23
25.72
25.93
26.15
26.22
27.37
27.44
27.58
27.69
27.89
27.90
28.01
29.12
29.13
29.27
29.29
29.35
29.59
30.30
30.93
32.35
32.60
34.34
36.26
36.81
37.97
43.23
44.99
56.48
Arcan
Freehold
Bellatrix
OpenRange
Midway
WestFire
WranglerWest
Orleans
Insignia
Tamarack
Bellamont
Culane
Whitecap
PaintedPony
Crocotta
Sonde
SecondWave
Anderson
NuLoch
WildStream
TriOil
IntlSovereign
Palliser
Emerge
Diaz
Bowood
Twoco
GreatPlains
BlackPearlArsenal
Petro-Reef
Renegade
Novus
Legacy
10.00
10.86
13.33
14.66
14.97
15.45
15.65
16.21
16.28
17.68
18.30
18.60
19.01
19.11
19.49
19.72
20.18
20.50
20.64
21.00
21.68
22.09
22.73
24.00
24.35
0.00 10.00 20.00 30.00 40.00 50.00 60.00
Bonterra
Exall
Dejour
Terra
Monterey
Ironhorse
DeeThree
Orion
TwinButte
Vero
ProspEx
Yoho
Angle
Waldron
Surge
Fortress
Seaview
Rock
Delphi
Artek
Cinch
Cequence
Equal
Argosy
ure
accounting for the costof inding reservesDepletion, depreciation and accretion expenses (DD&A) maybe considered an approximation o fnding, development and
acquisition costs or oil and gas reserves. DD&A expenses arean ongoing writedown o assets as they are used up. Increasingamounts may mean reserves were more expensive to acquire inthe frst place and as a result are losing value on the companysbooks at a aster pace.
orMula
depletion, depreciation & accretion expenses
total production in the period
Note: Total production in the period = average daily productionx 91 days in period
B R Y A N M I L L S I R A D E S S O i Q . B M i r . c o M14
J
Q2 Depletion, Depreciation anD accretion expenSeS ($/Boe)Md = $25.15/b
8/8/2019 Iradesso Q2 2010
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9.2
9.5
9.5
9.7
9.9
10.3
10.3
10.3
10.4
10.5
10.5
10.9
10.9
11.5
11.8
12.3
12.8
13.4
13.8
14.8
14.9
15.0
15.7
16.7
17.3
17.6
18.8
21.3
21.6
35.1
70.0
80.0
108.5
OrleansProspEx
WestFire
Cequence
Angle
Orion
PaintedPony
Freehold
Cinch
Tamarack
Waldron
Legacy
WildStream
Emerge
Bonterra
Whitecap
BlackPearl
TriOil
Midway
Crocotta
Sure
Renegade
Palliser
Dejour
Diaz
Bellatrix
NuLoch
Arcan
SecondWave
DeeThreeMonterey
Sonde
Twoco
Bowood
Novus
2.1
4.8
5.3
6.1
6.1
6.4
6.4
6.5
6.6
6.7
6.8
6.9
7.1
7.2
7.3
7.4
7.5
7.7
7.8
7.9
8.2
8.2
8.4
8.5
0.0 20.0 40.0 60.0 80.0 100.0 120.0
IntlSovereign
OpenRange
Seaview
Equal
Bellamont
Surge
Delphi
GreatPlains
Rock
Terra
Vero
Anderson
TwinButte
Yoho
Petro-Reef
Exall
Insignia
Arsenal
Fortress
Ironhorse
WranglerWest
Argosy
Culane
Artek
These two companies had Q2 cash low that was negative or negligiblein comparison to enterprise values and market capitalizations.
a wide range of multiplesWhile the median cash ow multiples dont seem to change allthat much rom one quarter to another, it is normal to see awide range o multiples depending on the markets view o theprospects or each company.
This calculation o annualized cash ow multiples uses theclosing market price on August 31, 2010 combined with Q2 2010weighted average shares outstanding, net debt and cash ow. Thevalues shown on the chart relate to the enterprise value multipleso annualized cash ow denoted by the dark bars. The lighter barsdo not take net debt into account as they are simply a reectiono market capitalization as a multiple o annualized cash ow. Thedierence between the lengths o the two bars shows how muchdebt a company has.
orMulaenterprise value
(cash ow or period x 4)
Note: Enterprise value = (weighted average basic shares xAugust 31, 2010 share price) + net debt
For A/B share structure companies, the separate market priceo B shares is also actored into the market capitalization
Market Capitalization to Annualized Cash Flow
Enterprise Value to Annualized Cash Flow
Q u a r t e r l Y r e p o r t : Q 2 2 0 1 0 15
annualizeD Q2 caSH loW MultipleSes v ad csh w Md = 9.7 Mk c ad csh w Md = 7.7
8/8/2019 Iradesso Q2 2010
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1.5
1.8
1.8
1.9
2.0
2.0
2.0
2.0
2.1
2.1
2.1
2.2
2.2
2.2
2.4
2.5
2.6
2.6
2.7
3.2
3.2
3.3
3.6
3.7
3.8
4.0
4.9
5.3
5.4
5.7
6.1
9.6
Delphi
WranglerWest
Sure
Orleans
Anderson
Vero
Midway
OpenRange
Terra
Dejour
Renegade
Angle
ProspEx
TwinButte
SecondWave
GreatPlains
Cequence
Insignia
Waldron
Arcan
Ironhorse
Culane
Petro-Reef
Bellatrix
Equal
Whitecap
Monterey
Crocotta
ArtekArgosy
Fortress
Diaz
Bowood
Twoco
(9.6)
(3.2)
(2.2)
(1.8)
(1.8)
(1.2)
0.1
0.3
0.3
0.4
0.5
0.6
0.6
0.8
0.8
1.1
1.2
1.2
1.2
1.3
1.3
1.3
1.3
1.4
(15.0) (10.0) (5.0) 0.0 5.0 10.0 15.0
Novus
Sonde
Tamarack
DeeThree
Palliser
BlackPearl
Surge
WestFire
NuLoch
PaintedPony
WildStream
Orion
IntlSovereign
Seaview
Freehold
Cinch
Exall
Bonterra
Arsenal
Emerge
TriOil
Bellamont
Legacy
Rock
o o
Novus has a positive net cash position that isnt shown on this chart because o negativecash low in comparison. The other six companies with negative debt to cash low ratios are
also in good shape with positive cash positions.
debt managementThis measurement compares, in years, how long it wouldtheoretically take to become debt ree i cash low remainedsteady year ater year and it was 100 percent dedicated to payingdown the debt shown at the end o Q2. In times where equitymarkets arent providing capital at a reasonable value, it can beadvantageous or companies to be able to utilize debt to fnancetheir growth. Assuming they are creditworthy, those companieswith less debt may be in the ortunate position o having moreoptions open to take advantage o potential asset-buyingopportunities. Companies with higher debt may not have as manydesirable options.
Companies with negative values on the chart have a positive workingcapital position that they will be able to use to und growth.
orMula
net debt
cash ow or period x 4
Note: Net debt = bank debt + debentures - working capital
Convertible debentures make up a portion o the debtload or Bellatrix, Diaz, Equal, Second Wave, Sonde, Twocoand Whitecap
B R Y A N M I L L S I R A D E S S O i Q . B M i r . c o M16
J
Q2 net DeBt to annualizeD caSH loWMd = 2.0
These two companies had Q2 cash low that was negativeor negligible in comparison to net debt.
8/8/2019 Iradesso Q2 2010
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11.8
12.1
13.8
28.1
33.3
43.7
170.8
Sure
Orleans
BlackPearl
Seaview
DeeThree
Exall
Monterey
2.4
4.2
5.2
5.8
6.7
7.0
8.2
10.2
Freehold
Tamarack
Vero
Rock
SecondWave
Crocotta
Arcan
Bonterra
(6.9)
(6.5)
(5.5)
(4.8)
(4.1)
(3.8)(1.4)
1.5
.
PaintedPon
Delphi
WildStream
Arsenal
Angle
TwinButteWranglerWest
Cinch
o o
(12.8)
(12.1)
(12.0)
(11.6)
(11.1)
(10.1)
(9.6)
(7.4)
NuLoch
IntlSovereign
Waldron
Palliser
Bellatrix
Midway
Anderson
ProspEx
(21.4)
(20.1)
(20.0)
(18.9)
(18.6)
(18.5)
(18.0)
(16.2)
Dejour
Emerge
Diaz
Insignia
Legacy
Terra
Orion
Cequence
(31.4)
(30.7)
(30.3)(29.3)
(26.8)
(25.0)
(24.6)
21.8
Argosy
Renegade
NovusSurge
Twoco
Petro-Reef
Bellamont
OpenRange
(53.1)
(52.3)
(49.0)
(46.3)
(40.5)
(34.3)
.
(100.0) (50.0) 0.0 50.0 100.0 150.0 200.0
Artek
Culane
Fortress
WestFire
Equal
GreatPlains
lacklustre marketFor most juniors, total return (change in share or unit priceplus distributions and dividends) declined during the secondquarter o 2010, recovering slightly in the subsequent twomonths. Overall, median gains o around 14% or juniors inthe irst quarter o 2010 have not been maintained throughthe year.
bowood, Sonde, triOil and Whieca are not included inthis chart as they didnt exist in t he same corporate orm atthe beginning o the period.
orMulacapital gain + total distributions in that period per share or unit
market price at end o the previous period
Note: Capital gain in period = market price at end o period market price at end o previous period
Share price change plus distributions rom April throughAugust 2010
Share price change plus distributions rom April throughJune 2010
Q u a r t e r l Y r e p o r t : Q 2 2 0 1 0 17
Q2 total return - capital gainS anD DiStriButionS or DiViDenDS (%)a hh J Md: 7.0% a hh as Md: 11.1%
8/8/2019 Iradesso Q2 2010
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Shortened
company
name
Chief
executive
Stock
symbol
& exchange
(T=TSX,
V=Venture)
Share
price
August
31/10
($)
Q2/10
average
daily
production
(boe/d)
Q2/10
weighted shares
outstanding
(basic) including
exchangeable &
B shares converted
(000)
June 30/10
net debt before
debentures
($000)
June 30/10
debentures
outstanding
($000)
Q2/10
net income
($000)
Q2/10
cash flow
($000)
Anderson Brian Dau AXL-T 1.03 7,732 172,400 70,284 0 (8,891) 9,004
Angle Gregg Fischbuch NGL-T 6.80 7,290 58,404 111,438 0 (955) 12,845
Arcan Ed Gilmet ARN-V 4.35 1,943 75,029 57,264 0 (992) 4,509Argosy Peter Salamon GSY-T 0.70 1,098 14,995 23,683 0 795 1,037
Arsenal Tony van Winkoop AEI-T 0.80 2,060 134,766 19,886 0 (1,853) 4,121Artek Darryl Metcalfe RTK-V 1.15 1,770 25,488 51,034 0 (1,294) 2,356
Bellamont Steve Moran BMX.A-V 0.52 2,515 150,908 20,814 0 (1,887) 4,032
Bellatrix Raymond Smith BXE-T 3.36 7,671 92,481 34,390 46,906 (10,812) 5,560
BlackPearl John Festival PXX-T 3.05 7,163 268,047 (98,724) )672,01(0 14,003
Bonterra George Fink BNE-T 39.70 5,733 18,730 82,454 0 10,887 17,533Bowood Robert Mercier BWD-V 0.26 528 186,233 2,942 0 (1,616) (66)Cequence Howard Crone CQE-T 1.92 3,197 42,048 29,126 0 (3,751) 2,842
Cinch Sid Dykstra CNH-T 1.36 2,535 81,775 8,942 0 (1,865) 2,878
Crocotta Robert Zakresky CTA-T 1.52 2,448 65,126 54,977 0 (2,935) 2,597
Culane Donald Staus CLN-V 1.16 980 24,520 18,643 0 (819) 1,399
DeeThree Martin Cheyne DTX-V 2.80 714 19,098 (3,133) 0 (550) 359Dejour Robert Hodgkinson DEJ-T 0.33 599 98,698 4,710 0 (344) 560Delphi David Reid DEE-T 2.43 8,035 104,808 79,217 0 (2,742) 12,988
Diaz Robert Lamond DZR-T 0.12 528 85,994 6,357 6,527 (1,112) 335
Emerge Thomas Greschner EME-T 3.18 4,464 82,981 31,803 0 (6,357) 6,412
Equal Don Klapko EQU-T 4.91 9,570 21,935 54,650 115,973 (4,066) 11,357
Exall Frank Rebeyka EE-T 1.02 839 52,154 8,797 0 795 2,088
Fortress Cameron Bailey FEI-T 0.13 1,671 55,295 24,332 0 (39,985) 997Freehold William Ingram FRU.UN-T 16.65 7,655 58,112 76,901 0 9,214 25,367
GreatPlains Stephen Gibson GPX-T 0.34 1,662 109,770 22,520 0 (2,344) 2,280
Insignia Jeffrey Newcommon ISN-T 1.63 2,871 30,660 25,882 0 (4,588) 2,514
IntlSovereign Sharad Mistry ISR-T 0.51 659 16,096 3,092 0 (80) 1,326
Ironhorse Larry Parks IOG-V 0.80 951 27,331 14,799 0 (231) 1,153
Legacy Trent Yanko LEG-T 10.69 5,717 77,442 112,228 0 (7,563) 21,603Midway Scott Ratushny MEL-T 2.95 1,927 62,370 31,577 0 (3,797) 3,908
Monterey Patrick Manuel MXL-T 8.53 1,665 45,765 29,408 0 (1,348) 1,500
Novus Hugh Ross NVS-V 0.76 774 153,288 (22,883) )021,4(0 (686)
NuLoch Glenn Dawson NLR.A-V 1.30 925 101,979 1,915 0 (722) 1,754
OpenRange Scott Dawson ONR-T 1.29 4,053 60,934 59,050 0 (2,495) 7,228
Orion Gary Guidry OIP-T 1.05 4,424 290,668 17,028 0 (99) 7,846Orleans Barry Olson OEX-T 2.60 3,956 65,176 43,641 0 (3,616) 5,763PaintedPony Patrick Ward PPY.A-V 6.70 2,532 55,873 8,592 0 350 7,647
Palliser Kevin Gibson PXL-V 0.76 536 34,368 (2,745) 0 (1,096) 371
Petro-Reef Theodore Donhuysen PER-V 0.35 794 39,210 13,446 0 (1,789) 930
ProspEx John Rossall PSX-T 1.37 3,086 57,385 24,006 0 (1,900) 2,704Renegade Michael Erickson RPL-V 2.87 936 43,384 20,705 0 (2,001) 2,417Rock Allen Bey RE-T 4.36 3,720 30,591 33,230 0 (601) 6,283Seaview Michael Wuetherick CVU.A-V 1.14 3,221 76,006 11,230 0 (1,840) 4,374
SecondWave Colin Witwer SCS-V 2.72 1,417 70,802 20,686 3,890 (1,578) 2,512
Sonde Marvin Chronister SOQ-T 2.97 2,892 62,296 (35,682) 15,771 (17,663) 516
Sure Jeffrey Boyce SHR-T 1.04 771 46,849 6,797 0 (951) 929
Surge Dan O'Neil SGY-V 5.20 2,258 27,589 (22,006) )515,7(0 4,740Tamarack Brian Schmidt TVE-V 0.25 737 74,640 (4,347) )001,3(0 342Terra Cas Morel TT-T 1.32 6,531 98,920 59,765 0 (1,741) 7,105
TriOil Russell Tripp TOL-V 3.75 1,439 20,762 8,050 0 (2,372) 1,606
TwinButte Jim Saunders TBE-T 1.26 6,489 128,153 73,741 0 (1,739) 8,261
Twoco Wayne Malinowski TWO-V 0.21 736 14,941 18,355 8,213 (1,623) 68
Vero Douglas Bartole VRO-T 6.11 9,010 43,472 111,875 0 574 13,879Waldron Ernie Sapieha WDN-V 1.98 2,043 28,620 19,402 0 (1,791) 1,810
WestFire Lowell Jackson WFE-T 4.66 2,373 36,759 1,855 0 (842) 4,546
Whitecap Grant Fagerheim WCP-V 0.41 964 157,989 21,014 9,671 (712) 1,938
WildStream Neil Roszell WSX-V 6.35 1,744 36,938 9,923 0 405 5,602
WranglerWest Steven Johnson WX-V 3.55 853 6,441 6,264 0 (945) 888
Yoho Brian McLachlan YO-V 2.68 2,270 26,545 17,676 0 (1,094) 3,102TOTAL )879,361(059,602778,035,1676,571 283,871AVERAGE 2,978 72,035 25,947 29,564 (2,779) 4,811
MEDIAN 2,060 58,112 20,686 9,671 (1,739) 2,704
For A/B share structures, B shares arenot shown above, but are included in thecalculations or some o our charts. When wecalculate market capitalization, we use the Ashares outstanding times the A share price,plus the B shares outstanding times the Bshare price.
Eastern Canada-ocused juniors(including Queserre , who was includedin previous comparisons), coalbedmethane-ocused junior companies, andoil sands-ocused junior companies arenot included in this comparison.
Coass peroleu is not included in thecomparison as results have yet to be releasedor the quarter and year ended June 30, 2010.Compass began trading on May 31, 2010 withproduction o 795 boe/d or its third quarterperiod ended March 31, 2010.
Yohos year end is September 30. As such,Yohos third quarter ended June 30, 2010 isused to compare with the second quarter orother companies.
Data provided by Canoils database andBMIR researchers.
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For more information, please contact the Calgary ofce at 403-269-6003 www.canoi ls .com
CANOILS
Clockwise from top:
n 23% Salary
n 49% Options and
Stock Awards
n 16% Bonus
n 12% Other
Future Enhancements: Assets Database: Provides reserves/production and drilling data based on a by
company basis as well as a by feld/zone/pool etc. Launch date beginning o October 2010!
Greenhouse Gas Emissi ons: As reported by Alberta Canada, annual greenhouse
gas emissions will be available by oil sands project. Variables rom this data will include
CO2 per barrel produced or in-situ, mining and upgrading projects. Estimated coverage
included in our database is Q3 2010.
Cold Flow Product ion: This is heavy oil production rom oil sands leases, as classifed
by the Albertan Energy Resources Conservation Board (ERCB). Estimated coverage o this
production into our database is Q1 2011.
Financia l and Operat ing Analys is
of Canadian Oi l & Gas Companies
CanOils gives you the edge in discovering actionable opportunities in Canadian oil and gas. Fast, accurate,
complete annual and quarterly data and analysis transorms your ability to analyse and compare the perormance
o Canadas exploration andproduction companies. Additional modules track the deal metrics on allM&AaectingTSX or TSX-V listed E&P companies as well as project and company coverage in the complex Oil Sands sector.
Execut ive Compensat ion 2009Available in October!
An example snapshot of t he analys is
you can draw from t he CanOi ls Key
Personnel Modul e:
In 2009, Named Executive Ofcers o TSX-listed
companies received $485 million in compensation.
O this, 23% or $109 million was paid in cash, 49% in
options or shares and 16% in bonuses.
The average compensation paid to a CEO o a Junior
Producer1 was $750,000, compared to $1.9 million or
an Intermediate Producer2.
Directors received $91 million in compensation,
comprised o $29 million in ees, $48 million in options
or shares and $14 million or other reasons.
1 Analysis o 51 TSX-listed E&P companies, with productionless than 10,000 boe/d.
2 Analysis o 29 TSX-listed E&P companies with productionbetween 10,000 and 100,000 boe/d.
0
50
100
150
200
250
Company
5
Company
1
Company
2
Company
3
Company
4
Fees Options Share Awards
Typical Direct or s Compensat ion
CDN$
Thousand
s
Use CanOils
Key Personnel Module t o:
View and track changes in the Management
and Board o Directors o companies
Access detailed analysis o Executive
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Value or Money metrics
See what other Boards each Director sits on
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This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
HIGH-IMPACT OIL RESOURCE FOCUSED INVENTORY
Listing: TSX-AEIShares outstanding: 134.2 million at June 30, 2010
August 31, 2010 share price: $0.80
Market capitalization: $107 million
Net debt: $20 million
Enterprise value (market cap. + net debt): $127 million
Q2 2010 average daily production:
Crude oil and NGLs 1,695 bbls/d 82%
Natural gas 2.2 mmcf/d 18%
Total 2,060 boe/d 100%
Cash fow netback:
Peer Median
14.92
AEI $21.99
-$50 $50
Strategies: Managementhassoldnon-coreassetsandrefocusedArsenal
Oilweightedexplorationandproductionwithbothlight&heavyoilassets
75%oilweightingbyproduction,85%oilweightingbyreserves
OilcashowenginefundsBakkenDevelopment
OnlyCanadianjuniorwithkeyacreageincoreNorthDakotaBakkenresourceplay
Multi-year,lowrisk,drillinginventoryincludingBakken,ThreeForks,PrincessandEvi
Currentlytradingbelowitspeergroup
from Arsenal August 2010 corporate presentation
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Recent News:August 11, 2010Arsenal Energy releases Q2 results
May 31, 2010ArsenalEnergyreleasesupdateonNorthDakotaBakkenProgram
May 27, 2010Arsenal Energy announces Normal Course Issuer Bid
May 20, 2010ArsenalEnergyannouncessuccessfulThreeForkswellatLindahl,NorthDakota
Contact:1900, 639-5th Avenue SWCalgary,AlbertaT2P0M9
tel 403.262.4854
Analyst Coverage:WellingtonWestCapitalMarkets
OcersTonyvanWinkoop-President&CEO
J.PaulLawrence-VP,Finance&CFO
RonForth-VP,Engineering
JayLaForge-VP,Production
GjoaTaylor-VP,Land
GregKaidannek-ChiefGeophysicist
Wade Hansen - Chief GeologistLeoNolte-VP,Drilling
DirectorsNeil MacKay - ChairmanBillPowers
TonyvanWinkoop
WilliamHews
CurtisStewart
Harley Kempthorne
EviSoutheast Alberta
Central Alberta
NorthDakota
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This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
HIGH-IMPACT EXPLORATION, DEVELOPMENT OPPORTUNITIES
Listing: TSX-DEEShares outstanding: 117.2 million at June 30, 2010
August 31, 2010 share price: $2.43
Market capitalization: $285 million
Net debt: $79 million
Enterprise value (market cap. + net debt): $364 million
Q2 2010 average daily production:
Crude oil and NGLs 1,612 bbls/d 20%
Natural gas 38.5 mmcf/d 80%
Total 8,035 boe/d 100%
Cash fow netback:
Peer Median
$14.92
DEE $17.76
-$50 $50
Strategies:Delphi is well-positioned for organic growth with a large inventory of development
opportunities complemented by a high-impact exploration program:
Disciplinedeldcapitalprograminternallygeneratedandprotectedthroughactive
commodity hedging program
Operatorshipandownershipofinfrastructure,production,capitalandlands
Complementaryconventionalmulti-zonedeepbasinassetbase
Focusedongrowththroughthedrillbitcomplementedwithstrategicacquisitions
within core areas
from Delphi website
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Recent News:July 28, 2010Delphi reports record production of 8,035 boe/dforsecondquarter2010
June 3, 2010Delphi announces closing of $30.25 million
equityoffering
May 27, 2010Delphi announces increased credit facility
Contact:300, 500 4 Avenue S.W.
Calgary, Alberta T2P 2V6
tel 403.265.6171
www.delphienergy.ca
Analyst Coverage:Acumen Capital Partners
Canaccord GenuityGMP Securities
MacquarieCapitalMaison Placements Canada
National Bank Financial
Peters & Co.RBC Capital MarketsThomas Weisel Partners
Wellington West Capital Markets
OcersDavid Reid - President & CEOTony Angelidis - Sr VP, Exploration
Brian Kohlhammer - VP, Finance & CFOHugo Batteke - VP, Operations
MichaelKaluza-COO
Michael Galvin - VP, Land
Rod Hume - VP, Engineering
DirectorsTony Angelidis
Harry CampbellRobert Lehodey
Stephen MulherinAndrew Osis
David ReidDavid Sandmeyer
Lamont Tolley
East CentralAlberta Region
North WestAlberta Region
North EastBritish ColumbiaRegion
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This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
RELAUNCHED AND READY
Listing: TSX-EQU, NYSE-EQUShares outstanding: 21.9 million at June 30, 2010
August 31, 2010 share price: $4.91
Market capitalization: $107.5 million
Net debt: $55 million + $116 million debentures
Enterprise value (market cap. + net debt): $278.5 million
Q2 2010 average daily production:
Crude oil and NGLs 5,118 bbls/d 53%
Natural gas 26.7 mmcf/d 47%
Total 9,570 boe/d 100%
Cash Flow Netback:
Peer Median
$14.92
EQU $13.04
-$50 $50
Strategies:Enterra Energy Trust became Equal Energy Ltd effective June 1, 2010. This name waschosen to represent the balanced approach to asset development, nancial responsibility
and strategic corporate direction. Internally, Equal is continuing with the transition to agrowth oriented exploration and production model.
The 2010 Equal Energy business plan priorities are to:
Proveupgrowthorientedliquids-richresourceplaysthroughthedrillbitand minor acquisitions
Improveoverallbalancesheet
Continuetoimproveoperationalandcapitalefciencies Continuetobuildmarketcondenceandafollowing
from Equal Energy 2009 Annual Report and Q1 2010
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Recent News:August 13, 2010Equal announces increase to capital budget - second half
drilling activity accelerated
August 13, 2010
Equal updates Q2 2010 nancial and operating results
August 12, 2010
Equal adds new director
Contact:2700, 500 - 4th Avenue S.W.
Calgary,AlbertaT2P2V6
tel 403.263.0262
toll free 877.263.0262
Analyst Coverage:Jennings Capital
WellingtonWestCapitalMarkets
OfcersDonKlapko-President&CEO
JohnReader-SrVP,&COO
JohnChimahusky-SrVP,&COO,U.S.Operations
ShanePeet-SrVP,Engineering
MarkRupert-VP,U.S.Operations
RichardDixon-VP,Land,U.S.Operations
PeterLetizia-VP,ProductionforCanadaTerryFullerton-VP,CanadianExploration
DirectorsJohn BrussaPeterCarpenter-Chairman
Michael DoyleVictorDusik
Roger GiovanettoBrian Illing
DonKlapko
formerly Enterra Energy Trust
VikingTrend
PekiskoTrend
Circus Trend
Hunton Trend
CardiumTrends
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This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
CRUDE OIL FOCUS AT MITSUE, MARTEN MOUNTAIN, AB
Listing: TSX-EEShares outstanding: 52.2 million at June 30, 2010
August 31, 2010 share price: $1.02
Market capitalization: $53 million
Net debt: $9 million
Enterprise value (market cap. + net debt): $62 million
Q2 2010 average daily production:
Crude oil and NGLs 729 bbls/d 87%
Natural gas 0.7 mmcf/d 13%
Total 839 boe/d 100%
Cash fow netback:
Peer Median
$14.92
EE $27.35
-$50 $50
Strategies:The Corporation will enhance shareholder value through exploration and developmentand selective acquisition opportunities.
Exall Energy is expected to increase its oil production as a result of the recent Marten
Mountain discovery made during the 2010 winter drilling program, and a disciplinedcapital program focused on developing light sweet crude opportunities and existing good
production practices and pool optimization strategies.
The scal 2010 capital budget of $22.1 million is focused on Mitsue / Marten Mountain
light oil projects. Eight wells are to be drilled in the area during the year, of which four
were already drilled by mid-August.
from Exall Energy Corporation website and August 2010 presentation
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Recent News:August 13, 2010Exall announces new well owing 450 barrels per dayon three day test
August 11, 2010Exall announces Q2 2010 results with year-over-yearproduction increase of 234 percent
July 28, 2010Exall announces results of June 30, 2010 reserves update
including 930.4 Mboe addition to total proved reserves
Contact:400, 715 - 5th Avenue S.W.Calgary, Alberta T2P 2X6
tel 403.237.7820
www.exall.com
Analyst Coverage:
nil
OcersStephen Roman - Executive ChairmanFrank Rebeyka - Vice Chairman & CEO
Roger Dueck - President & COOWarren Coles - VP, Finance & CFO
Glen Kerr - VP, Operations
DirectorsStephen Roman
Frank RebeykaRoger Dueck
Wayne EganBernard Lang
Allan MenziesRoderick Phipps
Mitsue
Aitken Creek
Bow Island
Jayar
Harris County
Q SnapSHot
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This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
VIKING FOCUS, BUILDING THROUGH TRANSACTIONS
Listing: TSXV-NVSShares outstanding: 165.6 million at June 30, 2010
August 31, 2010 share price: $0.76
Market capitalization: $126 million
Net debt: nil, $23 million of working capital
Enterprise value (market cap. + net debt): $103 million
Q2 2010 average daily production:
Crude oil and NGLs 322 bbls/d 42%
Natural gas 2.7 mmcf/d 58%
Total 774 boe/d 100%
Cash fow netback:
Peer Median
$14.92
NVS -$9.74
-$50 $50
Strategies:Novus strategy is to target high-impact growth through acquisitions in highnetback properties, combined with organic growth through the drill bit. Under a newmanagement team, the companys name was changed to Novus Energy Inc. in mid 2009,and a new growth strategy was put in place targeting:
Lightoilresourceplayswithsignicantoriginaloil-in-place
Applicationofhorizontalmulti-stagefracturetechnologytoexponentiallyincreaseoil recovery
Focusonwelldelineated,lowgeologicalriskreserves
Landstopossesslargeaerialextenttosupportlarge-scale,repeatabledrillingprograms
from Novus website
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Recent News:September 9, 2010Novus announces normal course issuer bid
August 27, 2010Novus announces second quarter 2010 results
July 8, 2010Novus announces operational update and closing ofacquisition in its Dodsland Saskatchewan core area
June 2, 2010Novus announces successful closing of previouslyannounced acquisitions
Contact:1200,520-5thAvenueS.W. Calgary,AlbertaT2P3R7
tel 403.263.4310
Analyst Coverage:Canaccord GenuityClarus SecuritiesCormark SecuritiesHaywood SecuritiesGMPSecuritiesJacob SecuritiesJennings CapitalMackie Research CapitalRaymond JamesStifel Nicolaus
OcersHughRoss-President&CEO
KetanPanchmatia-VP,Finance&CFO
GregGroten-VP,Exploration
JulianDin-VP,BusinessDevelopment
JackLane-VP,Operations
DirectorsMichael HalvorsonHarry KnutsonAlKroontje
Bruce MacdonaldLarry MahHugh Ross
Dodsland (Viking) Roncott
Wembley
Wapiti
Rocanville
Garrington
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This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
LARGE OIL PLAYS, JUDY CREEK FOCUS
Listing: TSXV-SCSShares outstanding: 70.9 million at June 30, 2010
August 31, 2010 share price: $2.72
Market capitalization: $193 million
Net debt: $21 million + $4 million debentures
Enterprise value (market cap. + net debt): $218 million
Q2 2010 average daily production:
Crude oil and NGLs 943 bbls/d 67%
Natural gas 2.8 mmcf/d 33%
Total 1,417 boe/d 100%
Cash Flow Netback:
Peer Median
$14.92
SCS $19.48-$50 $50
Strategies: Fastgrowththroughthedrillbit
Utilizeresourceplaypotentialofproperties
Highworkinginterestsandoperatorshipincoreareas
Exploitmulti-zonepotentialonsignicantlandbase
Strengths: Experiencedmanagementteamwithspecialtiesinpropertyareas
andhorizontaldrilling
Largedrillinginventoryofbothhighimpactexplorationwellsandlowerrisk
developmentwells Yearroundaccesswithfacilitiesandservicesavailable
from Second Wave website
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Recent News:August 27, 2010SecondWavereportsnancialandoperatingresultsfor
the three months ended June 30, 2010
July 20, 2010Second Wave announces closing of 27 million bought deal
equitynancingandupdateonfracresultsinJudyCreekJune 28, 2010Second Wave announces $27 million bought deal equitynancing
Contact:1700, 520 - 5th Avenue S.W.
Calgary, Alberta T2P 3R7
tel 403.451.0165
www.secondwavepetroleum.com
Analyst Coverage:Acumen Capital Partners
GMP SecuritiesWellingtonWestCapitalMarkets
OfcersColinWitwer-President&CEO
RandyDenecky-VP,Finance&CFODouglasHibbs-VP,Exploration
Randy Bergmann - VP, LandDevery Neumann - VP, Operations
KellyNovakowski-Controller
DirectorsBrianBaker
NeilBokenfohr
DonaldFoulkes
Robert Goods
Jim ReidAlan Steele
ColinWitwer
BattleCreek
ProvostJudyCreek
Tableland
Q SnapSHot
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This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
STRATEGIC ACQUISITIONS, HIGH NETBACK LIGHT OIL PLAYS
Listing: TSXV-SGYShares outstanding: 31.1 million at June 30, 2010
August 31, 2010 share price: $5.20
Market capitalization: $162 million
Net debt: nil, $22 million of working capital
Enterprise value (market cap. + net debt): $140 million
Q2 2010 average daily production:
Crude oil and NGLs 1,621 bbls/d 72%
Natural gas 3.8 mmcf/d 28%
Total 2,258 boe/d 100%
Cash fow netback:
Peer Median
$14.92
SGY $23.07
-$50 $50
Strategies: Target per share growth via acquisitions with a focused exploitation, development and
exploration plan
Build an oil and liquids rich natural gas resource base through the identication and
capture of new and emerging resource plays
Continue to position Surge in early stage oil resource plays
Optimize base production and exploit signicant undeveloped land base
Apply teams expertise, experience, and proven track record to build core areas with:
Large scalable reserves Signicant undeveloped land
Available infrastructure Multi-zone potential Operatorship All-season access
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Recent News:August 26, 2010Surge announces second quarter 2010 results
July 21, 2010Surge announces stock option grants
July 20, 2010Surge announces increase in bank l ine and closing of
previously announced acquisition
July 12, 2010Surge closes previously announced PrivateCo-1 acquisitio
and acquires additional unit interest at Waskada in
southwest Manitoba
Contact:2300, 635 - 8th Avenue S.W.Calgary, Alberta T2P 3M3
tel 403.930.1010
Analyst Coverage:Cormark SecuritiesFirstEnergy Capital Corporation
GMP SecuritiesMacquarie Equities Research
National Bank FinancialWellington West Capital Markets
OcersDan ONeil - President & CEOMax Lof - CFO
Dan Brown - COOMalcolm Adams - VP, Corporate Development
Margaret Elekes - VP, LandKevin Angus - VP, Exploration
DirectorsPeter Bannister
Paul Colborne - ChairmanColin Davies
Robert LeachKeith Macdonald
Dan ONeilJames Pasieka
Murray Smith
Southern Alberta
Western Alberta
Central Alberta
Manitoba
iQsNAPsHOT
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This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
TARGETED ASSETS, SUSTAINABLE CORPORATE GROWTH
Listing: TSXV-TVEShares outstanding: 123.4 million at June 30, 2010
August 31, 2010 share price: $0.25
Market capitalization: $31 million
Net debt: nil, $4 million of working capital
Enterprise value (market cap. + net debt): $27 million
Q2 2010 average daily production:
Crude oil and NGLs 15 bbls/d 2%
Natural gas 4.3 mmcf/d 98%
Total 737 boe/d 100%
Cash fow netback:
Peer Median
$14.92
TVE $5.09
-$50 $50
Strategies:Tamarack Valley is focused on the identication, evaluation and operation of resourceplays, using a rigorous, proven modelling process to carefully manage risk and identify
growth opportunities. This strategic play model targets:
Longlifereserves
Horizonsthatarerepeatableandhavelargescope
Focusonriskminimization
from Tamarack Corporate Presentation August 2010
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Recent News:August 30, 2010Tamarack Valley les Q2 2010 report
June 24, 2010Tamarack Valley announces stock option grant
June 17, 2010Tango completes business combination with private
companies, changes to management team and changes
name to Tamarack ValleyMay 25, 2010Tango announces conditional approval by TSXV andamended amalgamation agreement
Contact:1800, 407 - 2nd Street S.W.
Calgary, Alberta T2P 2Y3
tel 403.263.4440
www.tamarackvalley.ca
Analyst Coverage:Acumen Capital Partners
OcersBrian Schmidt- President & CEO
RonHozjan-VP,Finance&CFO
LewHayes-VP,Production&Operations
Niels Gundesen - VP, EngineeringKen Cruikshank- VP, Land
DirectorsFloyd PriceAnthony Lambert
Dean Setoguchi
DavidMackenzie
John Gunn
Brian SchmitdtRonHozjan
Inga
Wilder
Ansell
Hanlan
Ferrier
Harmattan
Lochend
Quaich
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This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
STRONG ASSETS, GEOTECHNICAL EXPERTISE
Listing: TSX-TTShares outstanding: 99 million at June 30, 2010
August 31, 2010 share price: $1.32
Market capitalization: $131 million
Net debt: $60 million
Enterprise value (market cap. + net debt): $191 million
Q2 2010 average daily production:
Crude oil and NGLs 1,537 bbls/d 24%
Natural gas 30.0 mmcf/d 76%
Total 6,531 boe/d 100%
Cash Flow Netback:
Peer Median
$14.92
TT $11.96
-$50 $50
Strategies:Over the past year, Terra Energy has focused on building a strong asset base
a high-quality, long-life reserve, production and cash ow base through landacquisitions, seismic data interpretation, and exploration and development drilling.
Terras dened business strategies are as follows:
Consistent growth in per share value
Manage and minimize risks
Both strategic and opportunity driven
Awareness of the time value of assets
Keen sense of stewardship from Terra website and August 2010 Corporate Presentation
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Recent News:September 1, 2010Terra closes Square Creek asset acquisition
August 30, 2010Terra announces normal course issuer bid
August 5, 2010Terra Attributes 13 mmcf/day horizontal Montney test
to best use of technologies and science
Contact:970, 333 - 7th Avenue S.W.Calgary, Alberta T2P 2Z1
tel 403.699.7777
Analyst Coverage:Acumen Capital Partners
GMP Securities
Dundee SecuritiesMackie Research Corporation
Scotia Capital
OfcersCas Morel - President & CEO
Bud Love - VP, Finance & CFO
Tim Beatty - EVP, B.C. Operations
Tony Sabelli - EVP, AB & SASK Operations
John Behr - VP, Exploration
Graham Collins - VP, Production
Gord Oliver - VP, ExploitationYvonne Frame-Zawalykut - Controller
Jan Campbell - Corporate Secretary
DirectorsTed Anderson
Ralph Evans
Colin MacDonaldCas Morel
Robert PennerJames Wong
Brian Yaworski
Northeastern BritishColumbia and PeaceRiver Arch Region
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intermediateoil & gas companies
c o M p a r i S o n
INCLUSION CRItERIA
Primary business must be oil and gas exploration, development and production
Q2 2010 production must fall between 10,000 and 100,000 barrels of oil equivalent per day (boe/d)
Majority of production must be from Western Canada
Must be publicly traded on the TSX or TSX Venture Exchange
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43,520
44,104
54,915
65,855
66,208
75,517
84,909
ProgressBaytex
CrescentPoint
Bonavista
ARC
Pengrowth
Enerplus
24,087
25,365
28,512
29,609
31,950
42,263
42,273
Trilogy
Advantage
NuVista
NAL
Perpetual
PetroBakken
Daylight
12,357
12,787
15,394
16,222
18,029
19,409
22,202
Birchcliff
Paramount
Fairborne
Galleon
Celtic
Compton
Peyto
10,050
,
0 25,000 50,000 75,000 100,000
Zargon
74
77
80
84
84
87
100
Paramount
Celtic
Trilogy
Compton
Peyto
Progress
Perpetual
6063
70
71
72
72
73
BonavistaCrew
Galleon
Advantage
Birchcliff
Fairborne
NuVista
18
21
43
49
51
53
58
PetroBakken
Baytex
Zargon
Pengrowth
NAL
ARC
Enerplus
11
0 10 20 30 40 50 60 70 80 90 100
CrescentPoint
sizing up the peersThis iQ Report defnes intermediate oil and gas companies as those with production rom 10,000boe/d to 100,000 boe/d. In order to produce a relevant peer group, we restrict the intermediate categoryto companies and trusts with conventional oil and gas development and production as their primarybusiness, with the majority o their production in Western Canada, and with their shares or units tradedon the TSX or TSX Venture Exchange. Junior and emerging companies are eatured in sectionsbeginning on pages 5 and 48 respectively. Senior producers, with production in excess o 100,000
boe/d, are not included in this report.
There is only one dierence between the companies in our Q2 2010 comparison and our previous iQReport in Q1 2010. Ieraion Energy has een reoved ro he lis aer eing acquired ySor Venures Inernaional on June 29, 2010 o or a new inerediae coany oil and gasexlorer called Chinook Energy. Chinook sared o rade on he tSX on July 6, 2010.
See our wheeling and dealing section on page 4 or a list o recent transactions.
gas is where its atThe median natural gas weighting oWestern Canadas intermediate oil and gasplayers returned to 69.5% in the secondquarter o 2010 ater a dip to 66.1% in the
frst quarter o the year.The growth strategy o most intermediatescontinues to be ocused on oil, suggestingthat the dependence on natural gas islikely to decline again as the intermediatesintegrate new assets into their portolios.
Oil and natural gas are made comparableby converting natural gas rom thousands ocubic eet (mc) to barrels o oil equivalent(boe) at a ratio o 6:1. I n the current market,oil is priced at 3.2 times the comparableprice o natural gas. This suggests an oil priceo about $23 per bbl or parity with currentgas prices, or, conversely, a natural gas priceo about $12 per mc.
B R Y A N M I L L S I R A D E S S O i Q . B M i r . c o M30
Q2 2010 proDuction (Boe/D)Md = 28,512 b/d
Q2 proDuction Mix natural gaS WeigHting (%)Md = 69.5%
8/8/2019 Iradesso Q2 2010
33/52
7.5
7.7
9.2
11.3
12.6
18.7
24.1
Peyto
Paramount
Perpetual
Fairborne
Advantage
Birchcliff
Progress
0.2
0.2
1.6
3.8
4.2
4.4
5.0
6.3
NuVista
Enerplus
Baytex
Galleon
Celtic
Trilogy
Bonavista
Daylight
(2.0)
(1.9)
(1.7)
(1.5)
(0.1)
(0.1)
(0.0)
CrescentPoint
PetroBakken
NAL
ARC
Pengrowth
Zargon
Compton
(19.7)
(25.0) (20.0) (15.0) (10.0) (5.0) 0.0 5.0 10.0 15.0 20.0 25.0 30.0
Crew
3.7
3.9
7.4
11.3
11.3
12.4
18.3
Galleon
Celtic
Paramount
Zargon
Fairborne
Advantage
Birchcliff
(0.0)
0.0
0.1
0.2
0.8
2.8
3.7
Compton
Enerplus
NuVista
Bonavista
Baytex
Trilogy
Peyto
(10.0)
(6.4)
(4.4)
(3.5)
(2.7)
(2.1)
(2.0)
0.4
PetroBakken
NAL
CrescentPoint
Progress
Daylight
Perpetual
ARC
engrow
(20.9)
(25.0) (20.0) (15.0) (10.0) (5.0) 0.0 5.0 10.0 15.0 20.0 25.0
Crew
production growthOverall production continues to climb. In the second quarter o2010 the median intermediate oil and gas company increased itsoverall production by 4% ater increasing production by 3% inthe frst quarter o 2010. This compares with declines in 2009 o2% in the frst quarter, 1% in the second quarter and 4% in thethird quarter.
There are a variety o reasons why a companys productionuctuates rom quarter to quarter. I no eort were made bya conventional oil and gas company to stabilize or increaseproduction, its production would naturally decline at ratesvarying rom 20 percent to 30 percent per year depending on itscommodity mix, depth o wells and age o assets.
While the astest way to increase production is by making anacquisition, companies can also maintain or increase production
by drilling wells and conducting feld optimization.
orMula
current period avg. production previous period avg. production
previous period avg. production
Note: Gas production converted to boe at 6 mc: 1 boe
holding steadyWhile each companys overall production increased 4% onaverage in the second quarter o 2010, production on a per sharebasis did not change. This means issuers unded most o thegrowth in production by issuing new shares or units. The abilityto maintain production on a per share basis is a noteworthyachievement compared with the second quarter o 2009 whenthe average intermediate reported a decline in production pershare o 5.6% relative to the previous quarter. At that time, onlyfve o the 25 intermediates were able to increase productionon a per share basis rom the frst quarter to the second quarter.
By comparison, 13 o the 23 intermediates managed thisachievement in the second quarter o 2010.
orMula
current production per share previous production per share
previous production per share
Note: Production per share = average production rate orthe period divided by basic weighted average sharesoutstanding during the period.
For the trusts included in this comparison, substituteshares or units.
Gas production converted to boe at 6 mc: 1 boe.
cHange in proDuction Q1 2010 to Q2 2010 (%)Md = 4%
cHange in proDuction per SHare Q1 2010 to Q2 2010 (%)Md = 0.1%
Q u a r t e r l Y r e p o r t : Q 2 2 0 1 0 31
8/8/2019 Iradesso Q2 2010
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95,128
100,467
108,928
110,776
118,323
120,266
159,937
Peyto
Baytex
Paramount
Birchcliff
Crew
PetroBakken
CrescentPoint
61,279
63,713
63,949
67,591
67,682
72,597
86,770
Enerplus
Trilogy
Celtic
NAL
Progress
Bonavista
ARC
36,853
43,039
47,151
53,955
53,976
57,811
59,839
Perpetual
Fairborne
NuVistaPengrowth
Zargon
Advantage
ay g
25,617
,
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000
Galleon
22.79
23.68
24.77
25.43
27.19
36.6440.62
Peyto
NAL
Pengrowth
ARC
Baytex
CrescentPointPetroBakken
18 87
19.5919.76
20.80
20.96
21.19
21.70
22.47
Crew
FairborneAdvantage
Celtic
Zargon
Birchcliff
Bonavista
Enerplus
11.37
13.28
14.94
15.57
18.39
18.54
18.65
.
Perpetual
Progress
NuVista
Trilogy
Galleon
Daylight
Paramount
0.21
0.00 10.00 20.00 30.00 40.00 50.00
Compton
living on the marginDespite all that has happened over the past year, the median cashow netback in Q2 2010 o $20.80/boe is almost unchangedrom the median cash ow netback o $20.24/boe reported in Q22009. These netbacks are well below the heights reached in 2008,when the median intermediate reported a cash ow netback orthe second quarter o $37.43/boe.
Cash low netbacks are equivalent to sales margins. Theyindicate how much cash low a company generates rom eachbarrel o oil equivalent (boe) o production. Companieswith higher netbacks may have a bett er chance o thrivingduring periods o lower commodity prices when higher costproduction may be uneconomical.
orMula
cash ow rom operations
total production in the period
Notes: Total production in the period = Average daily productionx 91 days in the period
value per barrel
This graph shows each intermediate companys enterprise value perowing barrel o oil equivalent per day (boe/d) o Q2 production.Enterprise value is calculated by multiplying the share or unitprice on August 31, 2010 by the weighted average number oshares outstanding during Q2 beore adding debt and debenturesoutstanding net o working capital at the end o the quarter.
A high number means the markets are placing more value on theproduction o a particular company, perhaps or reasons suchas long lie reserves, a higher proportion o oil to gas, high feldnetbacks, or perceived strong production growth prospects.
The Q2 2010 median value was $63,949/boe, almost identicalto the median enterprise value o $63,388/boe reported in theprevious quarter and much higher than the median value o$51,279/boe reported in the second quarter o 2009.
orMula
market capitalization + net debt
average production in barrels o oil equivalentNote: Market capitalization = August 31 share price x Q2
weighted average basic shares outstanding
Net debt = bank debt + debentures - working capital
For A/B share structure companies, the separate market priceo B shares is also actored into the market capitalization
B R Y A N M I L L S I R A D E S S O i Q . B M i r . c o M32
enterpriSe Value VerSuS Q2 proDuction ($ per Boe/D)Md = $63,949/b
Q2 caSH loW netBacK ($/Boe)Md = $20.80/b
8/8/2019 Iradesso Q2 2010
35/52
12.48
12.75
12.91
13.22
13.41
13.51
22.10
CrescentPoint
ARC
Zargon
Pengrowth
Paramount
Crew
Baytex
10.64
10.67
10.7
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