LRU

[rossi]

y own call on PFM, after revieiwing all of the evidence, suggests that this near-term upward trend should continue over the next few weeks and months for a variety of reasons.

.....One reason is the fact the Oil patch is heating up (
http://www.stockhouse.com/bullboards/viewmessage.asp?no=14617949&t=0&all=0&StartDir=N&am... ).
The oil and gas sector fell flat on its face after the spring of 2006, as valuations had increased substantially and as investors turned their capital to base and PM plays. THis trend has reversed itself in early 2007, and we are now seeing investors looking for the next big wave.

The other reason for increased interest in this sector is that Oil Prices are expected to increase (
http://www.stockhouse.com/bullboards/viewmessage.asp?no=14591044&t=0&all=0&StartDir=N&am... ).

....another reason is the fact that conventional oil and gas reserves in Canada have been declining for nearly a decade, which is why Oil investmest is shifting to the oil sands (
http://www.stockhouse.com/bullboards/viewmessage.asp?no=14561842&t=0&all=0&StartDir=O&am... ).

However, there arent many junior oil sand plays that are publicly listed ( less than a dozen ) and many of those that are availbale have already seen their market caps increase by an order of magnitude or more ( eg UTS at $2.5 billion ).

So, the choice is limited, and in such cases leverage is the key variable and PFM has the greatest leverage of those that are still attractive.

We also know that evaluation time is very rapid for Oil sand evaluation and that oil sands can be rapidly developed (
http://www.stockhouse.com/bullboards/viewmessage.asp?no=14643364&t=0&all=0&StartDir=N&am... ).

Evaluation of oil sand asset value is fairly straight-forward ,with recent evaluations at $1 per recoverable barrel and increasing with time (
http://www.stockhouse.com/bullboards/viewmessage.asp?no=14809555&t=0&all=0&StartDir=N&am... )

......also junior oil sands are strong asset plays( http://www.stockhouse.com/bullboards/viewmessage.asp?no=14763339&t=0&all=0&StartDir=N&am... )

....Further, as the Q1 report states, PFM is about to make more oil sand acquisitions which , even at 26,000 acres, places us in the elite leagues

....As well, we will soon see the commissioned report on the initial 15,000 acres of oil sands

....Its also possible that management have a JV partner already lined up to take the project to production. Such news could cause the market cap to quarduple or more overnite...

...and, of course, PFM has yet to provide the company with any investor exposure activities and those too are on the way.


For these reasons, and because PFM has existing production to pay for most of the G & A operating costs, I see PFM moving to the $4 level during the summer...perhaps higher should our bitumen-in-place be quantified at better than average recoverable oil densities.

It looks like Cannacord's position was taken out last week, so we could see a more rapid appreciation in the coming week..