Replies to post #4 on Pace Oil and Gas Ltd. (fka MDOEF)

[bharveyalamos]

Mick : Shell Question

Pace Oil & Gas Ltd. is no longer a 'shell company' as of June 30, 2010, and with the stock transfer from PVX on July 13, 2010,
this si a full blown operating company.

This si actually a "spin-off" company from Provident Energy Trust. This was Provident Energy Trust' "upstream business" and Provident Energy Trust actually "spun it off" and then Merged Midnight Oil Exploration into it to for Pace Oil & Gas Ltd.

I have not actually sopken with Fred Woods, CEO, but I intend to call him next week. I have spoken with Glen Nelson, the head of Investor Relations with Provident Energy Trust, and he was very helpful with information and with any question that I asked him.

As of Now, Pace Oil & Gas Ltd. is an operating company and has a very good looking financial statement, from what I have seen. This "spin-off" is going to be a very interesting venture because they have fairly good production of oil and natural gas and have a vast selection of available drilling contracts. By the way, Fred Woods, CEO, was previouslu the 'head' person at Midnight Oil Exploration.

To make it more understandable, The current 'upstream production', for Pace Oil & Gas Ltd. came from both Midnight Oil Exploration and Provident Energy Trust and I think that most of the drill locations available came from Midnight Oil Exploration. What this 'spin-off' actually did, as I understand it was to free up Provident Energy from having to run their "upstream business" along with their other oilo and gas business, which includes storage facilities and production and it also gave Midnight Oil Exploration Ltd. a real 'shot in the arm' to be able to have the available funds to increase their extensive drilling operations. It is a complex situation and will prove to be an interesting concept.

The main purpose that Provident Energy Trust "spun-off" their 'upstream business' is because the Tax Laws in Canada are changing as of January 1, 2011. Currently and previously, in Canada, these 'Energy Trust Companies', i.e. PVX, PWE, BTE, HTE, etc. all operated under the premise that as long as approximately 95% of their net profits were returned to the stock holders in Dividends, these 'Energy Trust' Companies Canadian Income Tax was almost nothing compares to just being a regular corporation in Canada. This is why, up until the price of Oil 'went down the tube' last year, these 'Energy Trust' Companies were all paying Dividends of between 10% and 15% per year, either on a quarterly or on a monthly basis. When the Oil Prices 'dumped out' last year, these companies had to Cut Their Dividends by approximately 1/3 to 1/2 because of the drop in the Oil Prices. At the same time, you have to realize that the Oil and Gas that these companies are presently selling is All On A Contract Basis; therefore, the prices that they are shipping Oil today might be, for example, on a months' contract from approximately two (2) to three (3) months ago. They enter new Contracts for Sales and Shipments on a Month to Month basis and Stay about three (3) to five (5) months anead on Contracts.

At one time, until last Fall, we had stock in approximately six(6) or seven(7)of these "Energy Trust Companies", in Canada, and {strictly through Dividends Received} our annual return was averaging approximately 13 1/2% to 14% annually. After the Oil Prices 'crunched down', HTE {Harvest Energy} decided that they were going to sell out to Korean Oil Company, which is owned by the Korean Government. We did not want anything to do with that deal so we sold our HTE stock last December, about two (2) weeks before the 'sell out' took place. After that, since the Dividends were less that we had been previously getting, we sold some of the other 'Energy Trust" Stocks we had and reinvested in some U.S. Companies, such as American Capital (AGNC), currently paying a quarterly Dividend equal to approximately 20% return on your investment per year and some similiar other High Yield Dividend Stocks. We kept our shares in Provident Energy Trust (PVX and Pengrowth Energy Trust (PGH), both Canadian companies and traded on the NYSE.

I hope that this will give you a little background on what is happening with the Oil and Gas business in Canada. If you have further questions or need more information, you can e-mail me here or you can use my regular e-mail at:
[e-mail]

Regards,
BUD HARVEY