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Thursday, 11/16/2006 8:45:17 PM

Thursday, November 16, 2006 8:45:17 PM

Post# of 506
Pescod on O & G
OILEXCO INC. (T-OIL) $7.04 +0.09
DELPHI ENERGY (T-DEE) $2.78 +0.07
TRICAN WELL SERVICES (T-TCW) $20.50 -0.15
SAVANNA ENERGY SVCS. (T-SVY) $17.07 -0.03
CALFRAC WELL SERVICES (T-CFW) $18.80 -0.21
ENSIGN ENERGY SERVICES (T-ESI) $18.00 -0.36
CRUDE OIL $56.26 -2.50
NATURAL GAS $7.755 -0.365
According to “Bloomberg” today, the reason for the
enormous drop in oil prices was a very slight increase in
inventory of natural gas. Mind you, this is the time of year
you would expect the first signs of winter, which of
course is happening in Edmonton where we’ve had minus
10 for weeks and ten inches of snow.
Unfortunately it matters more if you have winter in
places like Toronto, Chicago, New York and the like, and
so far it’s been warmer than normal. So supplies continue
to build and there’s ample supplies of both oil and
natural gas.
So all in all, a very ugly day for those who are bullish
on gas and oil, but we’ve got the cure for those bruised
bulls today...simply go to www.robtv.com (watch past videos,
click on Wednesday, 7:00 PM ET) and turn on Josef
Schachter’s interview from yesterday and get the soothing
tones of one who is a definite bull on things both oily
and gassy.
(Continued on next page)
Trican Well Services Savanna Energy Services
www.trican.ca www.savannaenergy.com
Oilexco Inc.
Delphi Energy
www.oilexco.com
www.delphienergy.ca

DEB’S DITTY:
I’m CANADIAN
It’s like American, but without a gun.
Disclosure: Trican Well Services, Savanna Energy Services, Ensign Energy Services and Oilexco Inc.: Canaccord Capital covers
these stocks and has a Buy rating on them. (Buy: The stock is expected to generate risk-adjusted returns of over 10% during the next 12
months.) AfriOre Limited: Canaccord Capital covers this stock and has a Speculative Buy rating on it. (Speculative buy: Stocks bear significantly
higher risk that typically cannot be valued by normal fundamental criteria. Investments in the stock may result in material loss.)
Canaccord has recently led a financing for Oilexco Inc.
More importantly, he gives a really good look at
such companies as Oilexco, which was his top pick for
the show, but also takes a look at some of the gassy
stocks such as Delphi Energy and explains the potential
leverage that they might deliver, should natural gas
ever decide to get up and at it.
Meanwhile, there is a sector that is definitely being
hurt over the last few months and that’s the oil and gas
drilling and service sector. It’s hard to remember that
last winter, you couldn’t get a drilling rig for no matter
what you were willing to pay—they were all busy and
all tied up for some time in the future. Not any more.
Here we go, once again, flirting with winter and only
40% of the rigs are currently being utilized. That’s an
almost unheard of percentage for this time of year
when it’s usually closer to 80%.
The charts around show you that the service sector
and the drilling stocks are currently starting to be affected
by that. And more importantly when you have
big companies such as Canadian Natural Resources
almost boycotting the service companies and slashing
their exploration budget by $1.5 billion (to protest both
low gas prices and high drilling costs) that’s telling you
that some drills and services might not be needed for a
while.
For those who have a bullish point of view that goes
on to say, 12 months from now instead of next Tuesday,
all of this is good as it suggests that with the big
cut backs in exploration and the huge initial depletion
rates on new wells these days, that should set us up
for another bull cycle for gas if we have patience.
But either way, in the short term we know we have
ample supplies of oil and gas and it’s going to be dependant
upon winter.

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