Sharon Energy (fka sheyf)

[Bobwins]

Bigpike... I have both Sharon and Choice. I found Choice first and have held thru what I had hoped would be a big well at Pincher Creek that turned out not so big. Sharon has been my more recent favorite because they have big wells, multiple zones and they haven't missed yet.

However both of these guys have the same problem. The numbers look good but it takes a long time for the production to translate into $$$$$$. Choice is currently cheaper and they have more production coming online sooner because of the upcoming merger. In addition, they have kakwa coming up on testing and Pincher Creek drilling to start in the fall.

I really like Sharon but it will take two or three more hits for them to be really cheap. That will likely be towards the end of 2006 or early 2007. The good thing about Sharon is that they have an inventory of big wells for the next 18-24 months. I think they are going to add a second drilling rig to speed up the process this fall because Diaz needs Texas wells to boost their stagnant production and Diaz and Humboldt Capital have plenty of money to throw at the Sharon targets so I think they will make a move to speed things up.

At C$.50, Sharon is cheap because by year end, I think they will cashflow .05/qtr and that's less than three times forward annualized cashflow. I think Choice will get to that same cashflow figure sooner but the stock price is close to double. Sharon has the advantage of having a small current production number so one well makes a big difference. Choice will have a harder time, going forward because it takes a big well to make a difference when you are over 2,000boepd and they issued more shares to get Deep. Sharon is still around 350boepd. Sharon is due to release Hound Dog #2 results any day. This would be a good time to buy before the results are released.

Likewise Choice will release Kakwa results at the end of June. Both are very cheap ngas plays if you are willing to hold for a few months. I plan on holding both for many months because of their excellent drilling inventories.

Bobwins